CHAPTER - 7 Market Segmentation, Targeting and Positioning www.AssignmentPoint.com

STEPS IN MARKET SEGMENTATION, TARGETING AND POSITIONING Identify bases for segmenting the market Develop segment profiles Target Marketing Develop measure of segment attractiveness Select target segments Market Positioning Develop positioning for target segments Develop a marketing mix for each segment www.AssignmentPoint.com

MARKET SEGMENTATION Dividing a market into smaller groups of buyers on the basis of needs, characteristics or behavior who might require separate products or marketing mixes. www.AssignmentPoint.com

SEGMENTING CONSUMER MARKETS Major segmentation variables Geographic segmentation Behavioral segmentation Demographic segmentation Psychographic segmentation www.AssignmentPoint.com

Geographic segmentation Dividing a market into different geographical units. Country City Density (Urban, suburban, rural) Climate (Northern, Southern) www.AssignmentPoint.com

Demographic segmentation Dividing the market into groups based on demographic variables. Age Gender Family life cycle Income Occupation Religion www.AssignmentPoint.com

Psychographic segmentation Dividing the market into groups based on social class, lifestyle and personality. Social class Lifestyle Personality www.AssignmentPoint.com

Behavioral segmentation Dividing the market into groups based on consumer knowledge, attitude, use or response to a product. Occasions Benefits User status Usage rate Loyalty status www.AssignmentPoint.com

SEGMENTING BUSINESS MARKETS Major segmentation variables Demographics Industry Company size Locations Operating variables Technology User-nonuser status Customer capabilities www.AssignmentPoint.com

Purchasing approaches Personal characteristics Purchasing function organization Power structure Nature of existing relationships General purchase policies Purchasing criteria Situational factors Urgency Specific applications Size of order Personal characteristics Buyer-seller similarity Attitudes toward risks Loyalty www.AssignmentPoint.com

SEGMENTING INTERNATIONAL MARKET Major segmentation variables Geographic location Economic factors Political and legal factors Cultural factors www.AssignmentPoint.com

TARGET MARKETING The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. www.AssignmentPoint.com

EVALUATING MARKET SEGMENTS Segment size and growth Major structural factors affecting segment attractiveness Competitors Substitute products Power of buyers Powerful sellers Company objectives and resources www.AssignmentPoint.com

SELECTING MARKET SEGMENTS Target marketing strategies / Market coverage strategies / Levels of market segments : Undifferentiated (Mass) marketing Differentiated (Segmented) marketing Concentrated (Niche) marketing Micro- Marketing Targeting broadly Targeting narrowly www.AssignmentPoint.com

Undifferentiated (mass) marketing A market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Company Marketing Mix Market www.AssignmentPoint.com

Differentiated (segmented) marketing A market coverage strategy in which a firm decides to target several market segments and design separate offers for each. Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 Company Marketing Mix 3 Segment 3 www.AssignmentPoint.com

Benefits of segment marketing over mass marketing – The company can market more efficiently toward the consumers that it can serve best and most profitably. The company can market effectively by fine-tuning its marketing mixes to the needs of carefully defined segments. The company may face fewer competitors. www.AssignmentPoint.com

Concentrated (niche) marketing A market coverage strategy in which a firm goes after a large share of one or a few submarkets with distinctive traits that may seek a special combination of benefits. Company Marketing Mix Segment 1 Segment 2 Segment 3 www.AssignmentPoint.com

Benefits of niche marketing over mass/segment marketing: Niches are Smaller and normally attract only one or a few competitors. Marketers understand their consumers’ needs so well that their customers willingly pay a price premium. It offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant to or overlooked by larger competitors. www.AssignmentPoint.com

Micromarketing A market coverage strategy in which a firm tailors its products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes – Local marketing - Cities, neighborhoods and specific stores Individual marketing – Mass customization www.AssignmentPoint.com

Choosing a market-coverage strategy Company resources Product variability Product’s life-cycle stage Market variability Competitor’s marketing strategies www.AssignmentPoint.com

POSITIONING FOR COMPETITIVE ADVANTAGE Market positioning is the process of arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. A product’s 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. www.AssignmentPoint.com

CHOOSING A POSITIONING STRATEGY (3 steps) Identifying possible competitive advantages : Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. www.AssignmentPoint.com

Positioning on specific product features The most common basis for constructing a product positioning strategy are – Positioning on specific product features Positioning on specific benefits, needs or solution Positioning on specific use categories Positioning on specific usage occasions Positioning on a reason to choose an offering over the competition Positioning against another product Positioning by cultural symbols www.AssignmentPoint.com

2. Choosing the right competitive advantages : How many differences to promote? Which differences to promote? The differences must have the following criteria - Important Distinctive Superior Communicable Preemptive Affordable Profitable www.AssignmentPoint.com

3. Selecting an overall positioning strategy : Price More The same Less More More for more More for the same More for less Benefits The same The same for less Less Less for much less www.AssignmentPoint.com