PRINCIPLES OF MARKETING

Market Segmentation, Targeting, and Positioningfor Competitive Advantage

Steps in STPSteps in STP

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

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)

Local marketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Local marketingProducts 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)

Local marketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Local marketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups, i.e

Sears

Individual Marketing

Tailoring products and programs to the needs of

individual customers, i.e. Dell

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 , attitude

Nations, states, regions or cities

Descriptive

Age and Life-Cycle Segmentation

P&G targets kids with Crest Kid’s Cavity Protection toothpaste. It’s gentle on tooth enamel and has “fun- filled sparkles and sparkle fun flavor just for kids.”

Psychographic Segmentation

When Honda markets its ACTIVA , it appeals to the rebellious, independent women & girls.

Using Multiple SegmentationBases: GeodemographicsUsing Multiple SegmentationBases: Geodemographics

Step 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

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

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.

• Choose a partner and make a list of the market segments to which you belong. What segmentation variables did you take into consideration when you placed yourself into those segments?

Interactive Student Assignment

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.

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

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

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

• Positioning Positioning – the act of designing company offering & image to occupy distinctive place in the mind of target market

• Points -of -difference (PODs)– Attributes or benefits consumers strongly associate with brand

» E.g.- FedEx (overnight delivery), Nike (performance)

• Points-of-parity (POPs)– Associations that are not necessarily unique to brand but may be

shared with other brands

Developing Competitive DifferentiationDeveloping Competitive Differentiation

ProductProduct ServiceService

PersonnelPersonnel ImageImage

Areas for CompetitiveDifferentiation

Areas for CompetitiveDifferentiation

ServicesDifferentiation

(e.g., speed, convenience, careful

delivery)

Product Differentiation

(e.g., consistency, durability, reliability,

repairability)

People Differentiation

(e.g., hiring, training better people than

competitors)

ImageDifferentiation

(e.g., convey benefits and positioning)

ChannelDifferentiati

on

Identifying Possible Competitive Advantages

ImageImage

symbols

media Events

Atmosphere

Steps 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 adn delivering the chosen position to the market.

Selecting the Right CompetitiveAdvantagesSelecting the Right CompetitiveAdvantages

Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable

Positioning Errors

• Under positioning:– Failing to really position the company at all.– E.g.

• Over positioning:– Giving buyers too narrow a picture of the company.– E.g.

• Confused Positioning:– Leaving buyers with a confused image of a company.– E.g.

• Doubtful positioning:– Buyers may find hard to believe the brand claims in view of product

features , price or manufacturer.– E.g.

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

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