Principles of Marketing Customer-Driven Marketing Strategy: Creating Value for Target Customers

Steps in Segmentation, Targeting and Positioning Market Segmentation Steps in Segmentation, Targeting and Positioning

Market Segmentation Market segmentation is dividing a heterogeneous market into smaller groups with distinct needs, characteristics, or behavior that might require seperate marketing strategies

Segmenting Consumer Markets Market Segmentation Segmenting Consumer Markets What customers will we serve? Geographic Demographic Psychographic Behavioral

Segmenting Consumer Markets Market Segmentation Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, counties, or cities

Segmenting Consumer Markets Discussion Question Segmenting Consumer Markets Geographical climate is a legitimate means of segmentation for many products or services. Name examples of products for which need (and demand) would vary on a geographical basis.

Segmenting Consumer Markets Market Segmentation Segmenting Consumer Markets Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality Most popular type of segmentation Demographics are closely related to needs, wants and usage rates

Demographic Segmentation Market Segmentation Demographic Segmentation Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups – travel, holiday Gender segmentation divides the market based on sex (male or female) – clothing, cosmetics, magazines Income segmentation divides the market into different income groups – clothing, automobiles

What type of demographic segmentation is reflected by this ad? Discussion Question What type of demographic segmentation is reflected by this ad?

Market Segmentation Segmenting Consumer Markets Psychographic segmentation divides buyers into different groups based on; social class, lifestyle, personality traits

Market Segmentation Psychographic Segmentation - Life Style

Market Segmentation Swatch targets those with an active lifestyle

Segmenting Consumer Markets Market Segmentation Segmenting Consumer Markets Behavioral segmentation divides buyers into groups based on; knowledge, attitudes, uses, responses to a product Typically done first

Behavioral Segmentation Market Segmentation Behavioral Segmentation Occasion segmentation Different shaped chocolates for Easter, Valentine’s Day or Christmas Benefit segmentation Serious sportsmen vs. value-seeking moms for a sport wear User status Nonusers, ex-users, potential users, first-time users, regular users

Behavioral Segmentation Market Segmentation Behavioral Segmentation Usage rate Light, medium and heavy users Loyalty Mac users, Coke drinkers Multiple segmentation is used to identify smaller, better-defined target groups

Market Segmentation Segmenting International Markets Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

Market Segmentation Intermarket Segmentation What do majority of teens find appealing all over the world?

Requirements for Effective Segmentation Market Segmentation Requirements for Effective Segmentation Measurable Size, purchasing power, and profile of segment Accessible Can be reached and served Substantial Large and profitable enough to serve Differentiable Respond differently Actionable Effective programs can be developed

Market Targeting Market targeting (Targeting) is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Which customers will the company serve?

Evaluating Market Segments Market Targeting Evaluating Market Segments Segment size and growth Segment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliers Company objectives and resources

Selecting Target Market Segments Market Targeting Selecting Target Market Segments Company objectives, strenght, resources - Segment attractiveness (size & growth) - Segment structure

Selecting Target Market Segments Market Targeting Selecting Target Market Segments

Target Marketing Strategies Market Targeting Target Marketing Strategies Undifferentiated marketing targets the whole market with one offer Mass marketing Focuses on common needs rather than what’s different

Selecting Target Market Segments Market Targeting Selecting Target Market Segments Differentiated marketing targets several different market segments and designs separate offers for each Goal is to achieve higher sales and stronger position More expensive than undifferentiated marketing

Market Targeting Targets high-end casual appearel Jeanswear Targets outdoor enthusiasts Workwear like jeanswear Durable boots and apperal for all gender Targets those who like up-scale activewear Targets from college students to professionals

Selecting Target Market Segments Market Targeting Selecting Target Market Segments Concentrated (niche) marketing targets a large share of one or few niches. Greater knowledge of consumer needs Special reputation More effective marketing More efficient targeting Few competitiors

Selecting Target Market Segments Market Targeting Selecting Target Market Segments Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations Local marketing Wal-Mart uses more than 200 finely tuned shelf plans to match soup assortments Individual marketing Each customer can create his/her sneakers at NikeID Web site

Market Targeting Individual marketing

Choosing a Targeting Strategy Market Targeting Choosing a Targeting Strategy Which strategy is best depends on: Company resources Product variability Product life-cycle stage Market variability Competitor’s marketing strategies

Choosing a Targeting Strategy Market Targeting Choosing a Targeting Strategy Mass Marketing Differentiated Marketing Niche Marketing Company resources Not limited Limited Product variability Uniform Variable PLC Stage Introduction Maturity Market variability Not variable Highly variable Competitor’s strategy Competitor use the other two

Socially Responsible Target Marketing Market Targeting Socially Responsible Target Marketing Concern for vulnerable segments Children Alcohol Cigarettes

Differentiation and Positioning How will we serve the customers?

Differentiation and Positioning Product 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 It must serve the needs and preferences of well-defined target markets

Differentiation and Positioning Positioned on; Cadillac - Luxury Nissan - Economy Porsche - Performance

Differentiation and Positioning Positioning maps show consumer perceptions of company brands versus competing products on important buying dimensions

Differentiation and Positioning Positioning Map

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position by providing superior value from: Product differentiation - Bose Service differentiation - Lexus Channels – Amazon.com, Migros People – Singapore Airlines Image – Ritz Carlton

Differentiation and Positioning Competitive Advantage Competitive Advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices

Differentiation and Positioning Selecting an Overall Strategy Value proposition is the full mix of benefits upon which a brand is positioned

Differentiation and Positioning Choosing the Right Competitive Advantages More for More – Ritz Carlton, Mont Blanc, Mercedes, Apple More for the Same – Toyota Lexus vs. BMW The Same for the Less – METRO Cash&Carry, Online stores Less for Much Less – Easy Jet More for Less – Ikea