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Customer-Driven Marketing Strategy: Segmentation, Targeting & PositioningTRANSCRIPT
Chapter 7- slide 1Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Chapter Seven
Customer-Driven Marketing Strategy: Segmentation, Targeting &
Positioning
Chapter 7- slide 2Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Learning Objectives
After studying this chapter, you should be able to:
1. Define the three steps of target marketing: market segmentation, target marketing, and market positioning
2. List and discuss the major bases for segmenting consumer and business markets
3. Explain how companies identify attractive consumer and business markets
4. Discuss how companies position their products for maximum competitive advantage in the marketplace
Chapter 7- slide 3Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Chapter Concepts:
1. Market Segmentation
2. Marketing Target
3. Differentiation and Positioning
4. Positioning for Competitive Advantage
Chapter 7- slide 4Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs.
Chapter 7- slide 5Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
Chapter 7- slide 6Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Segmenting Consumer Markets
• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
Chapter 7- slide 7Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Geographic segmentation
• Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities.
Chapter 7- slide 8Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Demographic segmentation
• Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.
• Most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables.
Chapter 7- slide 9Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Demographic segmentation
Occupation segmentation
• Different occupations could mean different buying power
• eg. Doctors earn more than nurses
• Different occupations could mean different needs for different types of products
• eg. Office workers need to buy work clothes, while blue-collared workers usually attired differently
Chapter 7- slide 10Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Demographic segmentation
• Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups.
Eg: Age: 18-24, 25-34, 35-44, 45+
Chapter 7- slide 11Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Life Cycle Segmentation
Bachelor stage – young, single people;
Young married couples – early married years before the arrival of children;
Full nest I – young married couples with children;
Full nest II – older married couples with dependent children;
Empty nest – older married couples with no dependent children; and
Older single people - still working or retired
Chapter 7- slide 12Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Demographic segmentation
• Gender segmentation divides the market based on sex (male or female).
• Income segmentation divides the market into affluent or low-income consumers.
Chapter 7- slide 13Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Psychographic segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits.
Example:Social Class Upper, upper middle, lower middle, etc.
Lifestyle Activities (golf, travel); interests (politics, art); Opinions (conservation, capitalism)
Personality Ambitious, self-confident, aggressive, introverted, extroverted, sociable
Chapter 7- slide 14Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Behavioral segmentation
• Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.
• Occasion
• Benefits sought
• User status
• Usage rate
• Loyalty status
Chapter 7- slide 15Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Behavioral segmentation
• Occasion segmentation divides buyers into groups according to occasions when they get the idea to buy, actually make purchases, or respond to a product.
Eg: consumers buy special items for occasions like birthdays
Chapter 7- slide 16Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Behavioral segmentation
• Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.
Eg: Quality, Service, Economy, Convenience, Speed
Chapter 7- slide 17Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Behavioral segmentation
• User status divides buyers into ex-users, potential users, first-time users, and regular users of a product.
• Usage rate divides buyers into light, medium, and heavy product users.
• Loyalty status divides buyers into groups according to their degree of loyalty.
Eg: Completely loyal, somewhat loyal (2-3 brands), Not loyal
Chapter 7- slide 18Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Using Multiple Segmentation Bases
• Multiple segmentation is used to identify smaller, better-defined target groups.
• Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns.
Chapter 7- slide 19Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Eg: To segment attitude towards Internet usage & online purchasing among the Malaysian urban adult population, AC Nielsen uses multivariable segmentation based on ownership of PCs, mobile phones, PDAs, satellite TV subscription to find 4 segments
E-Savvy
Mainly Chinese, young, high-income households
The Mobiles
Malay & Chinese, 20s & 30s, mid-income households
Homebodies
15 to 20, mid-income households
Not interested
Mainly Malays, 50s
Chapter 7- slide 20Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• What variables can a bank use to identify “wealthy” individuals which it wants to target for a new investment scheme?
Chapter 7- slide 21Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Segmenting Business Markets
• Business can be segmented by:
• Geographics• Location
• Demographics• Industry, company size
• Customer-operating
characteristics• Technology, user status, service
Chapter 7- slide 22Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Segmenting Business Markets
• Business can be segmented by:• Purchasing approaches
• purchasing function-organization, power structure, relationship, policy, purchasing criteria
•Situational factors
• Urgency, application, order size
•Personal characteristics• Buyer-seller similarity, attitude towards risk, loyalty
Chapter 7- slide 23Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Segmentation
Segmenting International Markets
• Geographic location• Region or nations
• Economic factors• Population income levels, economic development
• Political and legal factors• Type and stability of government, receptivity to foreign firms,
monetary regulations, bureaucracy
• Cultural factors• Languages, religions, values and attitudes, customs, behavior
Chapter 7- slide 24Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries.
• Examples:
• IKEA targets global middle class
• Mercedes-Benz targets worldwide well-to-do
• MTV, Sony, Adidas, Coca-cola – worldwide teenagers
Adidas “Impossible is Nothing”
Chapter 7- slide 25Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Requirements for Effective Segmentation• Measurable: The size, purchasing power, and
profiles of the segments can be measured.• Accessible: The market can be effectively
reached and served• Substantial: The markets are large and profitable
enough to serve• Differentiable: The markets are conceptually
distinguishable and respond differently to marketing mix elements and programs
• Actionable: Effective programs can be designed for attracting and serving the segments
Chapter 7- slide 26Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Few companies target left handers. Why?
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Market Targeting
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
Chapter 7- slide 28Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Evaluating Market Segments• Segment size and growth:
• Smaller versus larger segments
• Growth potential
• Segment structural
attractiveness:
• Competition
• Substitute products
• Power of buyers
• Power of suppliers
Market Targeting
• Company objectives and resources:
• Competitive advantage
• Availability of resources
• Consistent with company objectives
Chapter 7- slide 29Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Selecting Target Market Segments
Market Targeting
Target market: the set of buyers who share common needs or characteristics that the company decides to serve
Chapter 7- slide 30Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Target Marketing Strategies
Market Targeting
Chapter 7- slide 31Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Target Marketing Strategies
• Undifferentiated marketing targets the whole market with one offer.
• Mass marketing
• Focuses on common needs rather than what’s different
Market Targeting
Chapter 7- slide 32Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Target Marketing Strategies
• Differentiated marketing targets several different market segments and designs separate offers for each.
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
Market Targeting
Chapter 7- slide 33Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Differentiated marketing – Colgate targets different market segments with different types of toothpaste.
Chapter 7- slide 34Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Target Marketing Strategies
• Concentrated marketing targets a small share of a large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
Market Targeting
Chapter 7- slide 35Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Target Marketing Strategies
• Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
• Local marketing
• Individual marketing
Market Targeting
Chapter 7- slide 36Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Burger King introduce rendang burgers in Singapore and Malaysia, where local palates prefer spicy food.
•Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups by cities, neighborhoods or stores.
•Benefits of local marketing
•Increased marketing effectiveness in competitive markets
•More customer-specific offerings
•Challenges of local marketing:
•Increased manufacturing and marketing costs
•Less economy of scale
•Logistics
•Dilution of company image
Chapter 7- slide 37Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers.
• Also known as:
• One-to-one marketing
• Mass customization
• Markets-of-one
marketing
• Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs.
Chapter 7- slide 38Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Which Strategy is Best? Depends on:• Company resources
• Limited resources – concentrated marketing
• Product variability• Uniform products – undifferentiated marketing• Vary in design –differentiation or concentrated marketing
• Product life-cycle stage• Introduction– undifferentiated marketing, Maturity - differentiated
marketing
• Market variability• Same taste, amounts, reaction to 4P- Undifferentiated marketing
• Competitor’s marketing strategies• Competitors using undifferentiated marketing - differentiated or
concentrated marketing.
Chapter 7- slide 39Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Market Targeting
Socially Responsible Target Marketing
• Benefits customers with specific needs
• Concern for vulnerable segments
• Children
• Alcohol
• Cigarettes
Chapter 7- slide 40Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Differentiation and Positioning
• Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products.
In the automobile industry how are brands positioned?
Volvo is positioned on safety
Mercedes is positioned on luxury
BMW is positioned on performance
Toyota Prius is positioned as a high tech solution to energy shortage
Chapter 7- slide 41Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
•Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions.
Positioning map: Large luxury SUVs
Chapter 7- slide 42Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
Chapter 7- slide 43Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Differentiation and Positioning
Identifying Possible Competitive Advantage
• Product differentiation
• Service differentiation
• Channels
• People
• Image
Chapter 7- slide 44Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• Product differentiation takes place along a continuum. – Little variation: chicken, steel, and aspirin. – Highly differentiated: autos, clothing, and furniture.
Differentiated on features, performance, style, or design.• Services differentiation
– Speedy, convenient, or careful delivery– Installation
• Channel differentiation: coverage, expertise, performance.• People differentiation
– hiring and training better people than competitors.• Even when competing offers look the same, buyers may perceive a
difference based on company or brand image differentiation
Chapter 7- slide 45Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Singapore Airlines may charge a higher price, but provides excellent services – product and service differentiation.
© Rick Hall© James Cridland
© Nakedsky.org
© juandazeng | Flickr.com
Chapter 7- slide 46Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Choosing the Right Competitive Advantages
• A difference is worth establishing to the extent that it satisfies the following criteria:
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
Differentiation and Positioning
Chapter 7- slide 47Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
• Important
• The difference delivers a highly valued benefit to target buyers.
• Distinctive
• Competitors do not offer the difference, or the company can offer it in a more distinctive way.
• Superior
• The difference is superior to other ways that customers might obtain the same benefit.
• Communicable
• The difference is communicable and visible to buyers.
• Preemptive
• Competitors cannot easily copy the difference.
• Affordable
• Buyers can afford to pay for the difference.
• Profitable
• The company can introduce the difference profitably.
Chapter 7- slide 48Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Differentiation and Positioning
Selecting an Overall Positioning Strategy
• Value proposition is the full mix of benefits upon which a brand is positioned.
• More for more
• More for the same
• Same for less
• Less for much less
• More for less
Chapter 7- slide 49Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Figure 7.7Possible value propositions
Chapter 7- slide 50Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Developing a Positioning Statement
• To (target segment and need) our (brand) is (concept) that (point of difference)
Chapter 7- slide 51Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Communication and Delivering the Chosen Position
• Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to target consumers.
• If the company decides to build a position on better quality and service, it must first deliver that position. Designing the marketing mix—product, price, place, and promotion—involves working out the tactical details of the positioning strategy.
Chapter 7- slide 52Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
Communication and Delivering the Chosen Position
• Establishing a position or changing one usually takes a long time. In contrast, positions that have taken years to build can quickly be lost.
• Once a company has built the desired position, it must take care to maintain it through consistent performance and communication.
• It must closely monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.