Market Segmentation, Targeting, and Positioning Strategies Chapter 8 Market Segmentation, Targeting, and Positioning Strategies 1

Objectives Define market Explain market segmentation Relate marketing mixes to target markets Identify various marketing strategies Understand key market segment selection considerations Identify and apply segmentation variables Understand positioning strategy

What is a Market? Ability Willingness Resources

Segmentation Works Because ... Not all buyers alike Subgroups may be identified Subgroups smaller and more homogeneous Easier to satisfy smaller groups 3

Major Steps in Segmentation & Targeting 1. Break market down 2. Group into segments TARGET MARKET 3. Choose target market 4

Choosing Market Segments We need a YES response to each of these! Distinguishing/stable characteristic Significant size Accessible with distribution & promotion Responsive (similar needs) Measurable potential 5

Segment Cross-Classification: Aerobic Shoes Gender F M Geography Japan Western Europe U.S. Age 14 - 21 22 - 29

Matching the Marketing Mix to Target Market Our target market: Women aged 14-21 living in the United States The right… Product? Price? Promotion? Place? 7

Possible Strategies for Target Marketing Undifferentiated marketing 8

Possible Strategies for Target Marketing Concentrated Marketing 80 / 20 Principle Majority fallacy 9

80/20 Rule A relatively small percentage of customers accounts for a disproportionately large share of the sales Target customers 20% Share of Target customers 80% Share of sales

Possible Strategies for Target Marketing Differentiated marketing Multiple market segmentation 11

Possible Strategies for Target Marketing Custom Marketing: “To each his/her own.” 12

Custom Marketing One-to-one marketing FOR REPEAT HOTEL GUESTS One-to-one marketing Uses data based-marketing and information technology For example... Your name Room preferences Special requests Smoking or non smoking Credit card number Frequent hotel user discount 13

Bases for Segmenting Consumer Markets Demographic Sociographic Lifestyle Geographic Behavior Consumption Predispositions 16

Bases for Segmenting Business Markets Geography Organizational charateristics Purchase behavior Usage patterns Organizational predispositions 16

Positioning Positioning The way consumers perceive the brand relative to its competition ID competitive advantage Stress salient characteristics Differentiate Positioning 27

Market Positioning Map: Tea - 1980s Traditional flavor Unique flavor Luzianne Lipton Tetley Celestial Seasons Nestea Iced Hot

Repositioning: Tea - Late 1990s Iced Hot Traditional flavor Unique flavor Luzianne Lipton Tetley Celestial Seasons Nestea Arizona Iced Tea Snapple Lipton Rounds Tetley Rounds Lipton Natural Teas Lipton Flavored

Review Define market Explain market segmentation Relate marketing mixes to target markets Identify various marketing strategies Understand key market segment selection considerations Identify and apply segmentation variables Understand positioning strategy