GLOBAL MARKETING
Marketing Segmentation
Market Attractiveness
Positioning

What is Market Segmentation?
• Process of dividing a potential market into distinct subsets of consumers with common needs or characteristics.
• Separating a heterogeneous market into smaller homogeneous units.

Important Elements of Market
Segmentation
• Each market segment has unique needs and wants and will have a unique demand curve.
• Each market segment requires its own marketing strategy and marketing plan.

• Market segmentation produces increased costs to the firm in the short run.
• Increased costs are generally offset by increasing sales in the long run.

The Segmentation Process
Needs-Based
Segmentation

The Segmentation Process
Needs-Based
Segmentation
Segment
Identification

Segmentation Bases
• Geographic
– Country
– Region
– County size
– SMSA population
– Density
• Demographic
– Age
– Sex
– Education
– Occupation
– Race
– Family life cycle

Segmentation Bases
• Psychographic
– Social class
– Personality
– Lifestyle
– Activities, interests, & opinions (AIO’s)
• Behavioralistic
– Decision unit
– Usage rate
– Readiness
– Benefits sought
– Occasion
– Brand loyalty

The Segmentation Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness

Market Attractiveness
• Market attractiveness represents the degree of market opportunity offered by a market segment and the ability of the firm to meet the segment’s needs within a competitive setting.
• Determining market attractiveness is a four-step process.

Determining Market
Attractiveness...
• First, pre-select criteria that will be used to evaluate market attractiveness and competitive position.

Market Attractiveness Factors
• Market/customer
– Size ($’s, units)
– Market potential
– Market growth rate
– Product life cycle stage
– Differentiation potential
– Customer loyalty
– Price elasticity
• Economic/technological
– Investment intensity
– Industry capacity
– Level & maturity of technology utilization
– Ability to pass through inflation effects
– Barriers to entry/exit
– Access to raw materials

Market Attractiveness Factors
• Competitive
– Industry structure
– Competitive groupings
– Substitution threats
– Perceived differentiation among competitors
– Individual competitors’ strengths
• Environmental
– Regulatory climate
– Degree of social acceptance

Competitive Position Factors
• Market Position
– Relative market share
– Rate of change in share
– Perceived actual or potential differentiation
– Breadth of current or planned product line
– Company image
• Economic/technological
– Relative cost position
– Capacity utilization
– Technological position
– Patented technology

Competitive Position Factors
• Capabilities
– Management strength & depth
– Financial
– R&D/product development
– Manufacturing
– Marketing
– Salesforce
• Capabilities, con’t
– Distribution system
– Labor relations
– Relations with regulators
• Interactions with other segments
– Market synergies
– Operating synergies

Determining Market
Attractiveness (continued)...
• Second, weight the market attractiveness and competitive position factors.
– What is the relative importance of each factor to your firm?
• Third, rate each segment on attractiveness and competitive position.

Example of Weighting and
Rating
Factor Group
Market
Econom ic/technolgy com petition
Environm ent
Total
Attractiveness
Weight Rating*
50
20
20
10
100
8
9
9
10
36
Attractivenes s rating = 860/10 = 86
Factor Group
Business Strengths
Weight Rating*
Market pos ition
Econom ic/technology
Capabilities
Interaction with other s egm ents
Total
Bus ines s s trength rating = 890/10 = 89
*Rating s cale = 0-10.
20
20
50
10
100
9
8
9
10
36
Total
400
180
180
100
860
Total
180
160
450
100
890

Determining Market
Attractiveness (continued)...
• Fourth, evaluate the implications of alternative positions within the market attractiveness/competitive position matrix for target market selection, strategic objectives, and resource allocation.
– Select segment(s) that offer best opportunity for profits.

Market
Attractiveness
Competitive Position
Strong Medium Weak
High
-
Desirable
Protect position:
Invest to grow
Concentrate on maintaining strength
Medium Desirable
Build selectively:
Emphasize profitability by increasing
Low Protect & refocus:
-Defend strengths
-Seek ways to increase earnings without speeding market’s decline productivity
Build up ability to counter competition
-
-
Desirable
Invest to build:
Challenge for leadership
Build on strengths
Reinforce vulnerable areas
Manage for earnings:
Protect existing strengths
Invest to improve position only in areas where risk is low
Manage for earnings:
Protect position
Minimize investment
Build selectively:
Specialize around limited strengths
Overcome weaknesses
Withdraw if sustainable growth is not possible
Limited expansion or harvest:
Look for ways to expand without high risk
Minimize investment and focus operations
Divest:
Sell when possible to maximize cash value

The Segmentation Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy

Positioning
• Match offerings of firm to the needs and wants of market segments.
• Effective positioning involves understanding customers’ perceptions about both the psychological and physical characteristics of offerings.
• Positioning starts with a product. But positioning is not what you do to a product —it’s what you do to the mind of the customer. That is, you position the product in the mind of the customer.

Positioning Strategy
• Learn the customer’s viewpoint. Create positioning statement based on unique customer needs.
Primary Needs
Articulated Needs
Exciting Needs

Positioning Statements
• To communicate positioning, a marketing plan should include a positioning statement following the form:
“To (target group and need) our (brand) is (concept) that (point of difference).”

Example:
“To young, active soft-drink consumers who have little time for sleep, Mountain
Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. With
Mountain Dew, you can stay alert and keep going even when you haven’t been able to get a good night’s sleep.”

Points to Remember About
Positioning:
• Based on consumer perceptions of tangible and intangible characteristics of offering.
• The intensity of the brand will affect positioning.

The Segmentation
Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy
Positioning
“Acid” Test

Testing the Positioning
Statement
• Test the positioning statement with target consumers--what do they think, how do they react to the statement?
• Assess need level: the stronger the need, the higher the expected customer interest.
– “Do you see this product as solving a problem or filling a need for you?”

Testing, continued...
• Communicability and believability: if the scores on these dimensions are low, the positioning must be refined or revised.
– “Are the benefits clear to you and believable?”

Testing, continued...
• Perceived value: The higher the perceived vale, the higher the expected consumer interest.
– “Is the price reasonable in relation to the value?”

Testing, continued...
• Gap level between the new product and existing products: The greater the gap, the higher the expected consumer interest.
– “Do other products currently meet this need and satisfy you?”

The Segmentation
Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy
Positioning
“Acid” Test
Strategy
Implementation

Segmentation Strategies
Mass
Marketing
Mass
Customization

Multisegment Strategy
• Pursue two or more segments that are attractive and profitable, but not the whole market.

Sequential Segment Strategy
• Multisegment approach, but rather than pursuing all the attractive segments simultaneously, pursue the most attractive first; when cash flow from that segment is positive, then pursue the next most attractive segment, and so on.

Single-Segment Strategy
• Focus on just one attractive segment.

Niche Segment Strategy
• Focus on a smaller group within a segment.
• Requires a further customization of marketing strategy.

Mass Customization Strategy
• Focus on all niches within a segment by customizing strategies to each subsegment.