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Chapter SevenSegmentation, Targeting and

Positioning:

Building the Right Relationships with the Right Customers

with Duane Weaver

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Segmentation/Positioning• Segment markets.

• Identify bases for segmentation.• Develop segmentation profiles.

• Target segment(s).• Measure of segment attractiveness.• Select the target segment(s).

• Position for target segment(s).• Develop positioning for each segment.• Develop appropriate marketing mix.

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Segmentation Variables• Geographic.

• Area, population density, climate, etc.

• Demographic.• Age, sex, life cycle, income, job, etc.

• Psychographic.• Lifestyle, personality, etc. Dividing a market into different

groups based on: » Social class.» Lifestyle.» Personality characteristics.

• Behavioural.• Benefits sought, status, usage rate, loyalty, attitudes, etc.

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Market Segmentation (How To)

• Best to use multiple approaches in order to identify smaller, better-defined target groups.

• Start with a single base and then expand to other bases.

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Segmenting Business Markets• Consumer and business markets use many of

the same variables for segmentation.

• Business marketers can also use:– Operating characteristics.– Purchasing approaches.– Situational factors.– Personal characteristics.

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Evaluating Market Segments• Segment size and growth.

– Analyze current segment sales, growth rates and expected profitability.

• Segment structural attractiveness.– Consider effects of: competitors, existence of

substitute products, the power of buyers/suppliers.

• Company objectives and resources.– Examine company skills and resources needed to

succeed in that segment.– Offer superior value/gain competitive advantage.

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Segment Success Criteria• Measurable – Ability to measure

numerically.• Accessible – Ability to reach segment.• Substantial – Ability to support the

business.• Differentiable – Ability to find unique

position in segment.• Actionable – Ability to pursue and

capture the segment.

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Levels of Segmentation• Mass marketing.

– No segments and single marketing mix.

• Differentiated marketing.– Large segments with specific marketing mixes.

• Niche marketing.– Small segments with specialized marketing

mixes.

• Micro-marketing.– Customized marketing to individuals.

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Undifferentiated (Mass Marketing)

• Focus is on common (not different) needs of consumers.

• Product and marketing program are geared to the largest number of buyers.

• Uses mass advertising and distribution.

• Henry Ford’s Model T is an excellent example of undifferentiated or mass marketing.

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Differentiated Marketing• Firm targets several market segments

and designs separate offers for each.• The goal is to have higher sales and a

stronger position with each market segment.

• This approach increases the costs of doing business.

• General Motors claims to make a car for every segment.

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Niche Marketing

• The focus is acquiring a large share of one or a few segments of niches.

• Generally, there are fewer competitors.

• The Internet is ideal for targeting small niche markets.

• There is some risk in focusing on only one market.

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Micromarketing

• Tailoring products and marketing programs to suit the tastes of specific individuals and locations.– Local Marketing: Tailoring brands and promotions

to the needs and wants of local customer groups—cities, neighbourhoods, specific stores.

– Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

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Mass Customization

• The process of creating customer-unique value by designing products and services tailor-made to individual needs, on a large scale.

• Having your next car or sneakers built to order? (life insurance e.g.)

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Successful Positioning• Product position.

– How a product is viewed by consumers relative to competing products.

• Three positioning steps.1. Identify competitive advantages on which

to build a differentiated position.2. Choose the right competitive

differentiation.3. Select an overall positioning strategy.

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Gaining Competitive Advantage• Key to winning target customers is to

understand their needs better than competitors do and to deliver more value.

• Competitive advantage – extent to which a company can position itself as providing superior value.

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Identifying Competitive Advantage

• Product differentiation.• Consistency, durability, reliability, reparability.

• Services differentiation.• Speed, convenience, careful delivery.

• Image differentiation.• Convey benefits and positioning.

• People differentiation.• Hiring, training better people than the competition.

• Get into Groups of three and select a product you think has market dominance. Discuss the competitive advantage that company holds in the market place. What is it? (be prepared to share with the class).

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Successful Differentiation• Important – of value to consumers.• Distinctive – obvious and clear.• Superior – better value than the

competitors.• Communicable – explainable.• Pre-emptive – defendable and unique.• Affordable – delivers value for cost.• Profitable – company can make

money.

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Positioning Errors• Under-positioning.

– Failing to really position the company at all.

• Over-positioning.– Giving buyers too narrow a picture of the

company.

• Confused positioning.– Leaving buyers with a confused image of a

company.

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Value Propositions

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Benefits

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THANKS!Does Market Segmentation and Customer Positioning enable marketers to hit the right buttons;

providing differentiated value at a profit???

IT’S ALL ABOUT THE LEVERAGE…BABY!