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7-1
Market Segmentation, Targeting, andPositioning for Competitive
Advantage
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Steps in Market Segmentation,Targeting, and Positioning (Fig. 7-1)
Step1 Step2 Step3
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Step 1. Market Segmentation Levels of Market Segmentation
Dividing Markets into Smaller Segments that Can beReached More Efficiently And Effectively With Products
and Services That Match Their Unique Needs.
Mass MarketingSame product to all consumers
(no segmentation, i.e Coca-Cola at one time)
Segment MarketingDifferent products to one or more segments
(some segmentation, i.e. Marriott)
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Niche MarketingDifferent products to subgroups within segments
(more segmentation, i.e. Standard or Luxury SUV’s)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Step 1. Market Segmentation Levels of Market Segmentation
Local Marketing
Tailoring brands/promotions tolocal customer groups, i.e
Sears
Individual Marketing
Tailoring products andprograms to the needs of
individual customers, i.e. Dell
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Density or Climate
City or Metro Size
World Region or Country
Step 1. Market Segmentation
Geographic Segmentation
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Step 1. Market Segmentation Demographic Segmentation
Dividing the market intogroups based on variablessuch as:
Age
Life-cycle stage or family size
Gender
Income
Occupation
Education
Religion
Race
Nationality
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Step 1. Market Segmentation Psychographic Segmentation
Divides Buyers Into Different Groups Based On:
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Step 1. Market Segmentation Behavioral Segmentation
Dividing the market intogroups based on variables
such as:Occasions
Benefits sought
User statusUsage rate
Loyalty status
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Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
Segmenting Business Markets
Business
Marketers UseMany of the
Same Consumer Variables, Plus:
S i I i l
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Factors Usedto SegmentInternational
Markets
Geographic
Location
Economic
Factors
Political and
Legal Factors
Cultural
Factors
Segmenting International Markets
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Step 1. Market Segmentation Requirements for Effective Segmentation
Measurable: size,
purchasing power, and
profiles of segmentscan be measured.
Accessible: segments
can be effectively
reached and served.Substantial: segments
are large or profitableenough to serve.
Differential: segmentsare conceptually
distinguishable andrespond differently todifferent marketing mixelements and programs.
Actionable: effective
programs can bedesigned for attractingand serving thesegments.
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Step 2. Market Targeting Evaluating Market Segments
Segment Size and Growth
Analyze current segment sales, growth rates, and expected
profitability for various segments.
Segment Structural Attractiveness
Consider effects of: competitors, availability of substituteproducts, and the power of buyers & suppliers.
Company Objectives and Resources
Examine company skills & resources needed to succeed inthat segment(s).
Offer superior value & gain advantages over competitors.
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Step 2. Selecting Market Segments Market Coverage Strategies (Fig. 7-3)
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Company Resources
Product Variability
Product’s Life-Cycle Stage
Market Variability
Competitors’ Marketing Strategies
Step 2. Selecting Market Segments Choosing a Market-Coverage Strategy
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Socially Responsible Target Marketing
Smart targeting helps companies andconsumers alike.
Target marketing sometimes generatescontroversy and concern.
Disadvantaged and vulnerable can be targeted.
Cereal, cigarette, beer, and fast-food marketershave received criticism in the past.
Internet has raised fresh concerns aboutpotential targeting abuses.
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Step 3. Positioning for Competitive Advantage
Product’s Position - the way the product is definedby consumers on important attributes.
Product is compared with competing products.Simplifies the buying process by helpingconsumers organize products into categories.
Marketers must:Plan positions to give their products the greatestadvantage in selected target markets,
Design marketing mixes to create these planned
positions.
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Step 3. Choosing a Positioning Strategy
Step 2. Choosing theRight Competitive
Advantage
Step 3. Communicatingand Delivering theChosen Position
Step 1. IdentifyingPossible Competitive
Advantages
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Identifying Possible Competitive Advantages
Key to winning and keeping customers is tounderstand their needs and buying
processes better than competitors do anddeliver more value.
Competitive advantage – extent that a
company can position itself as providingsuperior value to selected target markets.
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ServicesDifferentiation
i.e. Delivery, Installation,Repair Services, CustomerTraining Services
ProductDifferentiation
i.e. Features, Performance,Style & Design, Attributes
Identifying Possible Competitive Advantages
PeopleDifferentiation
i.e. Hiring, Training BetterPeople Than Competitors
Do
ImageDifferentiation
i.e. Symbols, Characters
ChannelDifferentiation
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CriteriaFor DeterminingWhich Differences
To Promote
Affordable Superior
Profitable
Preemptive
Distinctive
Important
Communicable
Choosing the Right Competitive Advantages
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Selecting an Overall Positioning Strategy (Fig. 7-4)
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Communicating and Delivering the Chosen Position
Company must take strong steps to deliverand communicate the desired position to
target consumers. All the company’s marketing mix mustsupport the positioning strategy.
Positioning strategy must be monitored andadapted over time to match changes inconsumer needs and competitors’
strategies
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