mkt420 chapter(5) seven i

8/9/2019 MKT420 Chapter(5) Seven i

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Principles of Marketing

Customer-DrivenMarketing Strategy:Creating Value for TargetCustomers

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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 consumerand business markets

3. Explain how companies identify attractive consumer andbusiness markets

4. Discuss how companies position their products for maximumcompetitive advantage in the marketplace

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Chapter Concepts:

1. Market Segmentation

2. Marketing Target3. Differentiation and Positioning4. Positioning for Competitive Advantage

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Market Segmentation

Market segmentation

is theprocess that companies use to dividelarge heterogeneous markets into smallmarkets that can be reachedmore efficiently

and effectively with products and services thatmatch their unique needs

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Market Segmentation

Segmenting consumer markets

Segmenting business markets

Segmenting international markets

Requirements for effective segmentation

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Market Segmentation

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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Market Segmentation


Geographic segmentation divides the marketinto different geographical units such asnations, regions, states, counties, or cities

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Market Segmentation


Demographic segmentation divides the market intogroups based on variables such as age, gender,

family size, family life cycle, income, occupation,

education, religion, race, generation, andnationality

Demographic segmentation is the most popularsegmentation method because consumer needs,

wants, and usage often vary closely withdemographic variables and are easier to measurethan other types of variables

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Market Segmentation

Psychographic segmentation dividesbuyers into different groups based onsocial class, lifestyle, or personalitytraits

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Market Segmentation


Behavioral segmentation divides buyers intogroups based on their knowledge, attitudes,uses, or responses to a product:-

Occasion Benefits sought User status Usage rate Loyalty status

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Market Segmentation


Occasionsegmentation divides buyers into groupsaccording to occasions when they get the idea to buy,actually make purchases, or respond to a product

Benefitsegmentation requires finding the major

benefits people look for in the product class, thekinds of people who look for each benefit, and themajor brands that deliver each benefit

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Market Segmentation


User status divides buyers into ex-users, potentialusers, 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 totheir degree of loyalty

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Market Segmentation

Using Multiple Segmentation Bases

Multiple segmentation is used to identifysmaller, better-defined target groups

Geo-demographic segmentation is anexample of multivariable segmentation that

divides groups into consumer lifestylepatterns

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Market Segmentation


PRIZM NE System classifies every American household

into 66 unique segments organized into 14 differentsocial groups.

These groups segment people and locations into marketablegroups oflike-minded consumers that exhibit

unique characteristics and buying behaviorbased on a host of demographic factors.

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Market Segmentation

Age Educational level Income Occupation Family composition

Ethnicity Housing

Behavioral and lifestylefactors

Purchases Free-time activities

Media preferences

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Prizm classifications include


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Market Segmentation

Segmenting Business Markets

In addition to the same segmentation variables asconsumers, business can also be segmented by:

Customer-operating characteristics Purchasing approaches Situational factors Personal characteristics

* American Express targets consumers, merchants,corporations and small businesses.

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Market Segmentation

Segmenting International Markets

Four factors:-

Geographic location

Economic factors Political and legal factors

Cultural factors

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Market Segmentation

Intermarket segmentation

divides consumers into groups withsimilar needs and buying

behaviors even though they arelocated in differentcountries

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Segmenting International Markets


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Market Segmentation

Requirements for Effective Segmentation

To be useful, a market segment must be: Measurable size, purchasing power and

profiles Accessible market can be effectively reached

and served Substantial large or profitable enough to

serve Differentiable segments are distinguishedand respond differently to marketing mix

Actionable programs can be designed forattracting and serving the segment

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Target Marketing

Evaluate the various segment and decide howmany and which segments the company can

serve best

Target market : A set of buyers who sharecommon needs or characteristics that thecompany decides to serve.


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Market Targeting

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

Company objectives and resources Competitive advantage Availability of resources Consistent with company objectives

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Market Targeting

Selecting Target Market Segments Different Level of

Target Marketing

Undifferentiated marketing (Very Broad) Differentiated marketing

Concentrated marketing Micromarketing (Very Narrow)

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Market Targeting

Target Marketing Strategies

Undifferentiated marketing targets the wholemarket with one offer

Mass marketing

Focuses on common needs rather thanwhats different

Example: Colgate, KFC

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Market Targeting

Selecting Target Market Segments

Differentiated marketing targets several

different market segments and designs separateoffers for each

Goal is to achieve higher sales and strongerposition

More expensive than undifferentiatedmarketing

Padini Men Women, Vincci, Seed MenWomen, Kids

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Market Targeting


Concentrated marketing targets a small shareof a large market Limited company resources

Knowledge of the market

More effective and efficient Example: La Mer, I-Pod, Annick Goutal

Parfum, Ken Apothecary Shop, Bangsar

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Market Targeting


Micromarketing is the practice of tailoringproducts and marketing programs to suit thetastes ofspecific individuals and

locations Local marketing Individual marketing

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Market Targeting


Local Marketing

Benefits: Increased marketing effectiveness in competitive markets More customer-specific offerings

Challenges: Increased manufacturing and marketing costs Less economy of scale Logistics Dilution of company image

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Marketing Targeting

Individual marketing involves tailoringproducts and marketing programs to theneeds and preferences ofindividualcustomers

Also known as: One-to-one marketing Mass customization Markets-of-one marketing

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Market Targeting


Mass customization is the process through whichfirmsinteract one-to-one with masses of customersto design products and services tailor-made tomeet individual needs. Has made relationships

with customers important in the new economy. Provides a way to distinguish the company against

competitors

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Market Targeting

Choosing a Targeting Strategy

Depends on: Company resources Product variability

Same taste, buy the same amount, react the same wayto same advertisement, use undifferentiated

Market variability Competitors marketing strategies Product life-cycle stage

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Market Targeting

Socially Responsible Target Marketing

Benefits customers with specific needs

Concern for vulnerable segments Children

Alcohol Cigarettes

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Differentiation and Positioning

Product position is the way theproduct is

defined by consumers on importantattributesthe place the product occupies inconsumers minds relative to competingproducts

Perceptions

Impressions

Feelings

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Differentiation and PositioningPositioning maps show consumer perceptions of

their brands versus competing products onimportant buying dimensions

Price (Y-axis) and orientation (X-axis) Refer to page 192, Figure 7.3

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Example of Positioning Map Car Brands

in USA


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Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitiveadvantages to build a position

Choosing the rightcompetitive advantages

Selecting an overallpositioning strategy

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Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages to builda position by providing superior value from:

Product differentiation Service differentiation Channels People Image

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Identifying Possible Value Differences and

Competitive Advantage

Competitive Advantage is the advantage overcompetitors gained by offering greater value eitherthrough lower prices or by providing more benefits thatjustify higher prices

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Choosing the Right Competitive Advantages

A difference is worth establishing to the extent that itsatisfies the following criteria:

Important

Distinctive different from other competitors

Superior

Communicable communicable and visible to buyers

Preemptive cannot easily copied by competitors Affordable introduce the difference profitably

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Selecting an Overall Strategy

Value proposition is thefull mix of benefits uponwhich a brand is positioned

Five Possible Value Propositions

More for more upscale, expensive products More for the same Lexus vs Mercedes Same for less good deal Less for much less Tune Hotel More for less - Ikea

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Positioning for Competitive Advantage

Developing a Positioning Statement

Positioning statementstates the productsmembership in a category and then shows its point-of-difference from other members of the category.

Now, everyone can fly- AirAsia

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mkt420 chapter(5) seven i

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