Segmentation, Targeting, Positioning. 1.Identify segmentation variables and segment the market...
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Transcript of Segmentation, Targeting, Positioning. 1.Identify segmentation variables and segment the market...
Segmentation, Targeting, Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingSegments
MarketMarketSegmentationSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketMarketTargetingTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketMarketPositioningPositioning
Levels of Market Segmentation
Mass – Marketing
Segment Marketing Niche Marketing Local Marketing Individual Customer Marketing
Levels of Market Segmentation (cont.)
Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and
Services That Match Their Unique Needs.
Mass MarketingSame product to all consumers
(no segmentation)
Segment MarketingDifferent products to one or more segments
(some segmentation)
Niche MarketingDifferent products to subgroups within segments
(more segmentation)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Levels of Market Segmentation (cont.)
Local Marketing
Tailoring brands/ promotions to local customer groups
Individual Marketing
Tailoring products and programs to the needs of
individual customers
Levels of Market Segmentation (cont.)
Niche Marketing
Niches can be identified by dividing a segment into subsegments or by defining a group seeking a distinctive mix of benefits
Niches are fairly small and attract one or a few competitors
Niche marketers understand their niches’ needs so well that their customers willingly pay a price premium
Both small and large companies can practice niche marketing
Levels of Market Segmentation (cont.)
Characteristics of an attractive niche:
The customers in the niche have a distinct set of needs
They will pay a premium to the firm best satisfying their needs
The nicher has the required skills to serve the niche in a superior fashion
The nicher gains certain economies through specialization
The niche has sufficient size, profit and growth potential
Niche MarketingDifferent products to subgroups within segments
(more segmentation)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Levels of Market Segmentation (cont.)
Local Marketing
Tailoring brands/ promotions to local customer groups
Individual Marketing
Tailoring products and programs to the needs of
individual customers
Levels of Market Segmentation (cont.)
Local Marketing Local marketing leads to ğ marketing
programs tailored to the needs and wants of local customer groups
Those in favor of localizing a company’s marketing ğ see national advertising as wasteful since it fails to address local target groups
Those against local marketing ğ argue that it drives up manufacturing and marketing costs by reducing economies of scale
Levels of Market Segmentation (cont.)
Individual Marketing The ultimate level of segmentation leads to ğ
“customized” or “one-to-one marketing” Technological developments ğ permit
companies to return to customized marketing
Mass customization ğ the ability to produce on a mass basis individually designed products to meet each customer’s requirements
Bases for Segmenting Consumer Markets
Geographical segmentation Region, City or Metro Size, Density, Climate
Demographic segmentation Age, Gender, Family size and Family life cycle,
Occupation, Income... Most popular segmentation
Psychographic segmentation Lifestyle, Social class, and Personality
Behavioral segmentation Occasions, Benefits, Uses, Attitudes, ...
Major Segmentation Variables for Consumer Markets
GeographicRegion West North Central, West South Central, East
North Central, East South Central,....
City or metro size
Under 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000; 100,000-250,000; 250,000-500,000; 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 or over
Density Urban, suburban, rural
Climate Northern southern
DemographicAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64,
65+
Family sizeFamily life cycleGender
1-2, 3-4, 5+Young, single; young, married, no children; ....Male, female
Step 1. Market SegmentationGeographic Segmentation
World region or country
Region State City
Neighborhood City Density Climate
Goal 2: List and discuss major bases for segmentation
Step 1. Market SegmentationDemographic Segmentation
Age Gender Family size or
life cycle Income Occupation
Education Religion Race Generation Nationality
Step 1. Market SegmentationPsychographic Segmentation
Social Class
Lifestyle
Personality
“Brand personality”
Step 1. Market SegmentationBehavioral Segmentation
Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product
Behavioral Segmentation Breakdown
DemographicsDemographics
Operating VariablesOperating Variables
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
Personal CharacteristicsPersonal Characteristics
Segmenting Business Markets
Business Marketers Use
Many of the Same
Consumer Variables,
Plus:
Major Segmentation Variables for Business Markets
Demographic1. Industry: Which industries should we serve?2. Company size: What size companies should we
serve?3. Location: What geographical areas should we serve?Operating Variables4. Technology: What customer technologies should we
focus on?5. User or nonuser status: Should we serve heavy users,
medium users, light users, or nonusers?6. Customer capabilities: Should we serve customers
needing many or few services?Purchasing Approaches7. Purchasing-function organization: Should we serve
companies with highly centralized or decentralized purchasing organizations?
8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentiableDifferentiable
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
ActionableActionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to
different marketing mix elements
• Must be able to attract and serve
the segments.
Effective Segmentation
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.
Patterns of Target Market Selection
Single-segmentSingle-segmentconcentrationconcentration
ProductProductspecializationspecialization
M1 M2 M3 P1
P2
P3
SelectiveSelectivespecializationspecialization
M1 M2 M3 P1
P2
P3
M1 M2 M3
Full marketFull marketcoveragecoverage
P1
P2
P3
MarketMarketspecializationspecialization
M1 M2 M3 P1
P2
P3
P1
P2
P3
M1 M2 M3
P = ProductP = ProductM= MarketM= Market
Choosing a Target Marketing Strategy
Considerations include: Company resources The degree of product variability Product’s stage in the life-cycle Market variability Competitors’ marketing strategies
Step 3. Choosing a Positioning Strategy
Positioning ğ The place the product occupies in consumers’ minds relative to competing products.
Typically defined by consumers on the basis of important attributes. Involves implanting the brand’s unique benefits
and differentiation in the customer’s mind. Positioning ğ the act of designing the
company’s offering and image, to occupy a distinctive place in the target market’s mind
Step 3. Choosing a Positioning Strategy (cont.)
Definition by Ries and Trout: “Positioning starts with a product. A piece
of merchandise, a service, a company, an institution, or even a person. Perhaps yourself. But positioning is not what you do to a product.
Positioning is what you do to the mind of the prospect.That is, you position the product in the mind of the prospect. ”
Positioning according to Ries and Trout:
Strengthen the current position Grab an unoccupied position De-position Re-position
Step 3. Choosing a Positioning Strategy (cont.)
Step 3. Choosing a Positioning Strategy (cont.)
Step 1. Identifying Possible
Competitive Advantages
Step 2. Selecting the Right
Competitive Advantage
Step 3. Communicating and
Delivering the Chosen Position
Identifying Possible Competitive Advantages
Key to winning and keeping customers is ğ to understand their needs and buying processes better than competitors do, and deliver more value.
Competitive advantage ğ an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits.
Differentiation can be based on : Products, Services, Channels, People, Image,...
Identifying Possible Competitive Advantages Differentiation Variables
Product Services Personne
Channel Image
Form Ordering ease
Competence
Coverage Symbols
Features Delivery Courtesy Expertise Media
Performance Installation Credibility Performance
Atmosphere
Conformance
Customer training
Reliability Events
Durability Customer consulting
Responsive-ness
Positioning ğ successful creation of a “market-focused value proposition” :
A simple statement of why the target market should buy the product.
How many ideas to promote? One benefit – “Unique selling
proposition” (USP) Double-benefit positioning Number-one on an attribute
Selecting the Right Competitive Advantage
Developing a Positioning Statement
Positioning statements summarize the company or brand positioning Example: “to (target segment and
need) our (brand) is (concept) that (point-of-difference)”
Goal 4: Discuss how companies position their products
Choosing an Overall Positioning Strategy
Price
More The same
Less
Benefits
MoreMorefor
More
Morefor thesame
Moreforless
SameThe same
forLess
LessLess formuch less
Positioning Strategies
Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning
Communicating and Delivering the Chosen Position
Once position is chosen, 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 in consumer needs and competitor’s strategies.