Week 5 – 10.13.04
On Line
http://www.snipits.com
http://www.cartoon-cuts.com
http://www.kidscuts.com
Market Segmentation,
targeting and
Positioning for
Competitive Advantage
A Market is...
(1)
people or organizations with
(2)
needs or wants, and with
(3)
the ability and
(4)
the willingness to buy.
A group of people that lacks any one of
these characteristics is not a market.
Steps in Market Segmentation,
Targeting, and Positioning
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop segment profiles
Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments
Market positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each segment
Definition:
Market Segmentation
Dividing a market into distinct groups with
distinct needs, characteristics, or behavior
who might require separate products or
marketing mixes.
The Importance of
Market Segmentation
 Markets have a variety of product
needs and preferences
 Marketers can better define
customer needs
 Decision makers can define objectives
and allocate resources more accurately
Segmentation Bases
Characteristics of individuals,
groups,
or organizations used
to divide a total market
into segments.
(variables)
The Concept of Market
Segmentation
Step 1. Market Segmentation
Requirements for Effective Segmentation
Measurable
• Size, purchasing power, profiles
Accessible
• Segments can be effectively
of segments can be measured.
reached and served.
Substantial
Differentiable
Actionable
• Segments are large or
profitable enough to serve.
• Segments must respond
differently to different marketing
mix elements & programs.
• Effective programs can be
designed to attract and serve
the segments.
Geographic Segmentation
World Region or Country
City or Metro Size
Density or Climate
Market Segmentation
Demographic
 Dividing the market into groups
based on variables such as:
Age
Gender
Family size or life cycle
Income
Occupation
Education
Religion
Race
Generation
Nationality
This video features an executive from Levi-Strauss
speaking the necessity of segmentation to meet the
needs of customers in all age groups.
C li ck pic ture to pl ay
Cl ick to return
Bases for Psychographic
Segmentation
On Line
http://www.marthastewart.com
http://www.goodhousekeeping.com
Personality
Motives
Lifestyles
Psychographic
Segmentation
Geodemographics
Taxonomy of Porsche
Buyers
Multi-bases Segmentation
Claritas
Step 1. Market Segmentation
Behavioral Segmentation
Dividing the market into
groups based on variables
such as:
Occasions
Benefits
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
Benefit Segmentation
of the Snack-Food Market
Segmenting International
Markets
Geographic
Location
Cultural
Factors
Factors Used
to Segment
International
Markets
Political and
Legal Factors
Economic
Factors
Step 2. Market Targeting
Evaluating Market Segments
Segment Size and Growth
Analyze current sales, growth rates and expected
profitability for various segments.
Segment Structural Attractiveness
Consider effects of: competitors, availability of
substitute products and, the power of buyers &
suppliers.
Company Objectives and Resources
Company skills & resources needed to succeed in
that segment(s).
Look for Competitive Advantages.
Step 2. Market Targeting
Market Coverage Strategies
Company
Marketing
Mix
Market
A. Undifferentiated Marketing
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 3
Segment 1
Segment 2
Segment 3
B. Differentiated Marketing
Segment 1
Company
Marketing
Mix
Segment 2
Segment 3
C. Concentrated Marketing
Undifferentiated
Targeting Strategy
Advantages:
 Potential savings on
production and marketing
costs
Disadvantages:
 Unimaginative product
offerings
 Company more
susceptible to competition
Multisegment
Targeting Strategy
Advantages:
 Greater financial success
 Economies of scale
Disadvantages:
 High costs
 Cannibalization
Cannibalization
Situation that occurs when
sales of a new product
cut into sales of a
firm’s existing products.
Concentrated
Targeting Strategy
Advantages:
 Concentration of resources
 Meets narrowly defined
segment
 Small firms can compete
 Strong positioning
Disadvantages:
 Segments too small, or
changing
 Large competitors may
market to niche segment
Socially Responsible Target
Marketing
Smart targeting helps companies and
consumers alike.
Target marketing sometimes generates
controversy and concern.
Disadvantaged and vulnerable can be targeted.
Cigarette, beer, and fast-food marketers have
received criticism in the past.
Internet has come under attack because of the
loose boundaries and lack of control in
marketing practices.
Step 3. Choosing a Positioning
Strategy
Product’s Position - the way the product is
perceived by consumers on important
attributes
Marketers must:
Positioning:
On what does
Volvo position?
Wha t a bout:
•Saab?
•Le xus?
Plan positions to give their products the
greatest advantage in selected target markets,
Design marketing mixes to create these
planned positions.
C li ck or pre ss spa cebar to ret urn .
Step 3. Choosing a Positioning
Strategy
Step 1. Identifying
Possible Competitive
Advantages
Step 2. Selecting the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position
Choosing the Right Competitive
Advantage
Important
Profitable
Criteria
For Determining
Which Difference
To Promote
Affordable
Preemptive
Distinctive
Superior
Communicable
Communicating and Delivering
the Chosen Position
 Company must take strong steps to deliver
and communicate the desired position to
target consumers.
All the company’s marketing mix must
support the positioning strategy.
Positioning strategy must be monitored and
adapted over time to match changes.
Positioning of
Procter & Gamble Detergents
Perceptual Mapping
A means of displaying or
graphing, in two or more
dimensions, the location of
products, brands, or groups
of products in customers’
minds.
Perceptual Map and Positioning
Strategy for Levi Strauss Products