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Chapter 7

Chapter 7

PRINCIPLES OF MARKETING

Market Segmentation, Targeting, and Positioningfor Competitive Advantage

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Steps in Segmentation, Targeting, and PositioningSteps in Segmentation, Targeting, and Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

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Step 1. Market SegmentationLevels of Market SegmentationStep 1. Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

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Step 1. Market SegmentationBases for Segmenting Consumer Markets

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

DemographicAge, gender, family size and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

7-57-5Using Multiple SegmentationBases: GeodemographicsUsing Multiple SegmentationBases: Geodemographics

7-67-6Step 1. Market SegmentationBases for Segmenting Business Markets

Step 1. Market SegmentationBases for Segmenting Business Markets

Basesfor Segmenting

BusinessMarkets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches

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Step 1. Market SegmentationBases for Segmenting International Markets

Step 1. Market SegmentationBases for Segmenting International Markets

Political/Legal

Political/Legal

Cultural Cultural IntermarketIntermarket

Economic EconomicGeographicGeographic

Industrial MarketsIndustrial Markets

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Step 1. Market SegmentationRequirements for Effective Segmentation

Step 1. Market SegmentationRequirements for Effective Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments must be effectively reached and served.

• Segments must be large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

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Step 2. Market TargetingEvaluating Market Segments

Step 2. Market TargetingEvaluating Market Segments

• Segment Size and GrowthSegment Size and Growth– Analyze sales, growth rates and expected profitability.

• Segment Structural AttractivenessSegment Structural Attractiveness– Consider effects of: Competitors, Availability of Substitute

Products and, the Power of Buyers & Suppliers.

• Company Objectives and ResourcesCompany Objectives and Resources– Company skills & resources relative to the segment(s).

– Look for Competitive Advantages.

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Step 2. Market TargetingMarket Coverage Strategies

Step 2. Market TargetingMarket Coverage Strategies

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

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Step 2. Market TargetingChoosing a Market-Coverage Strategy

Step 2. Market TargetingChoosing a Market-Coverage Strategy

Company Resources

ProductVariability

Product’s Stagein the Product Life Cycle

Market Variability

Competitors’Marketing Strategies

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Step 3. Positioning for Competitive AdvantageStep 3. Positioning for Competitive Advantage

• Product’s Position Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i.e. Volvo positions on “safety”.

• Marketers must:– Plan positions to give products the greatest advantage

– Develop marketing mixes to create planned positions

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Step 3. Positioning for Competitive Advantage: StrategiesStep 3. Positioning for Competitive Advantage: Strategies

Against aCompetitor

Against aCompetitor

UsageOccasions

UsageOccasions

Away fromCompetitors

Away fromCompetitors

ProductAttributes

ProductAttributes

ProductClass

ProductClass

BenefitsOffered

BenefitsOffered

UsersUsers

BB

AA

EEDD

CCHHGG

FF

7-147-14Steps to Choosing and Implementing a Positioning Strategy

Steps to Choosing and Implementing a Positioning Strategy

• Step 1. Identifying a set of possible competitive advantages: Competitive Differentiation.

• Step 2. Selecting the right competitive advantage.

• Step 3. Effectively communicating and delivering the chosen position to the market.

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Developing Competitive DifferentiationDeveloping Competitive Differentiation

ProductProduct ServiceService

PersonnelPersonnel ImageImage

Areas for CompetitiveDifferentiation

Areas for CompetitiveDifferentiation

7-167-16Selecting the Right CompetitiveAdvantagesSelecting the Right CompetitiveAdvantages

Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable