PRINCIPLES OF MARKETING

Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
Technopreneurship
Segmentation, Targeting, and Positioning
1. Identify Bases
for Segmenting the Market
2. Develop Profiles
of Resulting Segments
3. Develop Measures
of Segment Attractiveness
4. Select Target
Segment(s)
5. Develop Positioning
for Each Target Segment
6. Develop Marketing
Mix for Each Target Segment
Market
Positioning
Market
Targeting
Market Segmentation
What kind of Dog?
Which one?
Specification?
Special purpose?
Special trait?
Step 1. Market Segmentation
Bases for Segmenting Consumer Markets
Geographic
Demographic
Age, gender, family size
and life cycle, or income
Psychographic
Social class, lifestyle,
or personality
Behavioral
Occasions, benefits,
uses, or responses
Nations, states,
regions or cities
Market Segmentation
Market Segmentation
Segmentation Variables
Geographic
Demographic
Psychographic
Behavioral
Other (anything!)
No single best way to segment a market.
Often best to combine variables and identify smaller, better-
defined target groups.
Geographic Segmentation
Divide markets into different geographic
units
Examples:
World Region or Country: North America, Western
Europe, European Union, Pacific Rim, Mexico, etc.
Country Region: Pacific, Mountain, East Coast, etc.
City or Metro Size: New York, San Francisco
Population Density: rural, suburban, urban
Climate: northern, southern, tropical, semi-
tropical
Geodemographics
MOSAIC is a geodemographic segmentation system developed by
Experian and marketed in over twenty countries worldwide. The resulting
segmentation system consists of 60 segments which are presented as
twelve separate groups. MOSAIC is based on the premise of assigning
lifestyle groups to differing geographic catchment
areas.
Geodemographics
Geodemographics profiles by income and household composition
around Bristol, UK.
Demographic Segmentation
Age
Gender
Family Size
Family life Cycle
Income
Cultural
Language, Religion,
Ethnic, Value,
Customs
Occupation
Education
Religion
Generation
Nationality
Women vs Man
Women vs Man
Women vs Man
Women vs Man
Segmenting by
gender
Marketers must
ensure that
traditional
assumptions are not
false
Other firms start by
targeting one gender
and then switch to
both
To some companies
market successfully
to both genders
8-21
n Segmenting by Age
(Seniors) - By 2025,
Americans who are over
age 65 will make up
nearly 20 percent of the
population.
n The current median age
is now 35.2 years, up
from 32.8 years a decade
ago. The average life
expectancy in the U.S. is
74 for men and to age 79
for women.
n In the U.S., heads of
households aged 55-plus
control about three-
quarters of the countrys
total financial assets.
8-22
Ethnic Group
Segmentation
Census Bureau projects
that by 2050, nearly
half of the population
of the US will belong to
nonwhite minority
groups.
The three largest and
fastest-growing
racial/ethnic groups in
the US are African
Americans, Hispanics,
and Asian Americans.
8-23
n Family Life Cycle Stages
Segmentation
The process of family
formation and
dissolution.
The underlying theme
is that life stage, not
age per se, is the
primary determinant of
many consumer
purchases.
Today, the average
woman gives birth to
two children .
She usually has her
children at a later
ageabout 35.
Behavioral Segmentation
Occasion
Special promotions &
labels for holidays.
Special products for
special occasions.
Benefits Sought
Different segments
desire different benefits
from the same
products.
Loyalty Status
Nonusers, ex-users,
potential users, first-
time users, regular
users.
Usage Rate
Light, medium, heavy.
User & Loyalty Status Segmentation
Step 1. Market Segmentation
Requirements 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
Accessible
Substantial
Differential
Actionable
Segments must respond
differently to different marketing
mix elements & actions.
Must be able to attract and serve
the segments.
Step 1. Market Segmentation
Levels of Market Segmentation
Mass Marketing/Undifferentiated Marketing
Same product to all consumers
(no segmentation)
Segment Marketing/Differentiated Marketing
Different products to one or more segments
(some segmentation)
Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)
Niche Marketing/Concentrated Marketing
Different products to subgroups within segments
( more segmentation)
Step 2. Market Targeting
Choosing a Market-Coverage Strategy
Company
Resources
Product
Variability
Products Stage
in the Product Life Cycle
Market
Variability
Competitors
Marketing Strategies
Choosing Target Segment
Patterns of Target Market Selection:
Product x Market Matrices
8-34
Strategies for Reaching
Target Markets
Undifferentiate
d Marketing
Differentiated
Marketing
Concentrated
Marketing
Micromarketing
8-35
Undifferentiated marketing: when a firm
produces only one product or product line
and promotes it to all customers with a single
marketing mix
Sometimes called mass marketing
Much more common in the past
Undifferentiated
Marketing
8-36
Differentiated marketing: when a firm
produces numerous products and
promotes them with a different marketing
mix designed to satisfy smaller segments
Tends to raise costs
Firms may be forced to practice differentiated
marketing to remain competitive
Differentiated
Marketing
Differentiated Marketing
Lunchables
Using a Differentiated Marketing Strategy
Differentiated marketing
Differentiated marketing
Concentrated marketing (niche marketing):
when a firm commits all of its marketing
resources to serve a single market segment
Attractive to small firms with limited resources
and to firms offering highly specialized goods and
services
Concentrated
Marketing
Micromarketing:involves targeting potential
customers at a very basic level, such as by ZIP
code, specific occupation, lifestyle, or
individual household
Micromarketing
Step 3. Positioning for Competitive
Advantage: Strategies
Against a Against a
Competitor
Usage Usage
Occasions
Away from Away from
Competitors
Product Product
Attributes
Product Product
Class
Benefits Benefits
Offered
Users
B
A
EE
DD
CC
HH
GG
FF
Product Differentiation &
Positioning
Differentitationcan be achieved on
Product Attributes
Service Factors
Image of the product / company
Positioning: The image created in the minds
of target consumers
Developing Competitive Differentiation
Products
Services
People Image
Areas for Competitive
Differentiation
Channels
Positioning
Criteria for meaningful differences:
Important
Superior
Preemptive
Distinctive
Communicable
Affordable
Profitable
Generic Product Positions
& Value Propositions
Positioning and Product Differentiation
Questions to Choosing and Implementing
a Positioning Strategy
v What businessareyouin?
v What areyour company'sstrengthsandweaknesses?
v Describeyour market. Isit mature?What isitsgrowthrate?
v What do you think the public considers to be your strengths and
weaknesses?
v Whoareyour competitors?What aretheir strengthsandweaknesses?
v What directionswill your companytakeinthenear future? Longer term?
Consider aspects such as technology, pricing, distribution channels, and
newapplicationareas.
v What are the key factors for success in each of the above market
segments?
v Howlongwill it taketoimplementyour strategyineachsegment?
v What arethetrendsineachmarket segment?
v What percentageof companyresourceswill bedevotedtoeachsegment?
Stage I: Identify Segmentation
Process
Marketers follow two methods to determine
the bases on which to identify markets:
Segments are predefined by managers based
on their observationof the behavioral and
demographic characteristics of likely users
Segments are defined by asking customers
which attributes
are importantand then
clustering the responses
Stage II: Develop Relevant Profile
Next, marketers seek further understanding of
the consumer in each promising segment
Must develop a profile of the typical consumer
and each segment
Helps to accurately match consumer needs with
the firms marketing offers
Stage III: Forecast Market Potential
Market segmentation and market opportunity
analysis combine to produce a forecast of market
potential within each segment
Defines a preliminary go or no-go decision since
the sales potential in each segment must justify
resources devoted to further analysis
Stage IV: Forecast Market Share
The next step is to forecast the firms
probable market share
Competitors positions in targeted
segments must be analyzed
A specific marketing strategy must be
designed to serve the targeted segments
The firm determines the expected level of
resources it must commit
to tap the potential
demand in each segment
Forecast Market Share
Forecast Market Share
Stage V: Select Specific Segment
The preceding information, analysis, and
forecasts allow management to assess the
potential for achieving company goals and to
justify committing resources in developing one
or more segments
Marketers also weigh more than
monetary costs and benefits
at this stage
Conclusion
PRODUCT
Conclusion
PRODUCT
PRINCIPLES OF MARKETING
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
Technopreneurship