Focusing Marketing Strategy with Segmentation and Positioning www.mhhe.com/fourps CHAPTER THREE Focusing Marketing Strategy with Segmentation and Positioning Chapter Three Focusing Marketing Strategy with Segmentation and Positioning For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2008 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2008 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

When we finish this lecture you should This slide relates to material on page 60. Know how to define generic markets and product-markets. Know what market segmentation is and how to segment product-markets into submarkets. Know three approaches to market-oriented strategy planning. Know dimensions that may be useful for segmenting markets. Know what positioning is and why it is useful. At the end of this lecture, you should: Know how to define generic markets and product-markets. Know what market segmentation is and how to segment product-markets into submarkets. Know three approaches to market-oriented strategy planning. Know dimensions that may be useful for segmenting markets. Know what positioning is and why it is useful.

Focusing Marketing Strategy with Segmentation and Positioning Target Market In a broad sense, this chapter is about understanding and analyzing customers in a market.

Focusing Marketing Strategy with Segmentation and Positioning (Exhibit 3-1) Defining markets Dimensions to use Identifying segments Identifying segments to target Segmentation approaches Positioning Understanding customer’s view Positioning techniques Evaluating segment preferences Differentiating the marketing mix Relationship between positioning & targeting

Taking Advantage of Opportunities This slide relates to material on pp. 60-61. Summary Overview Glad “Stand and Zip” bags is one of many brands of plastic bag products. Key Issues Prior to introducing a product, however, a firm such as Glad Products Company has to have a good understanding of the target market. It also needs to assess the current state of competition, including how consumers perceive the differences and similarities among alternative brands. Should the organization then decide to proceed with the development of a marketing mix to serve a particular target market, it must differentiate its offering. This presentation will cover how marketers can use market segmentation, differentiation, and positioning to take advantage of opportunities in the marketplace.

Naming Product Markets and Generic Markets This slide relates to material on pp. 63-64. : Indicates place where slide “builds” to include the corresponding point. Product Type Product Type Product-Market Definition Customer Needs Customer Needs Summary Overview A complete product-market definition includes four parts: Key Issues Managers need to think about more than the product they already produce and sell. This can be done by naming product markets and generic markets with a four-part description. First, The product type--the type of good and/or service offered. It should meet customer needs. Next, customer needs--refers to the needs of the customer (user) that are being met by the product. Customer types--identify who specifically is using the product. Geographic area--identifies where the market is located. In defining product-markets, marketers provide names for each level of definition. Discussion Question: What are the components of the product-market definition for Skippy peanut butter? In defining generic markets, there is no product type; the definition consists of the customer needs, customer type, and geographic area. Geographic Area Customer Type Customer Type : : : No Product Type in Generic Market Definition : :

Interactive Exercise: Product-Market Definition © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Product-Market Definition For complete information and suggestions on using this Interactive Exercise, please refer to the “Notes on the Interactive Exercise” section for this chapter in the Multimedia Lecture Support Package to Accompany Essentials of Marketing.

What Is the Product-Market? © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What Is the Product-Market? Courtesy of Apple This ad demonstrates the benefits of an iDVD from Apple. From what you see in the ad, try to define the product-market for this product, in terms of: product type (video editor, DVD recorder); customer need (recording, archiving and distributing video); customer type (young adults); geographic area (in the world). Video Operation: Use the onscreen player controls to operate the video. To view the video at Full Screen, right-click the video and choose Full Screen. To go back to your presentation you can either hit the Escape key, right-click on the video and uncheck Full Screen or type Alt+Enter. You can do this at anytime during the video playback. Under certain circumstances, the video may not fill the video player window. To restore, right click the video player object and select Zoom 200%. The videos will only play in Slide Show View. Macros must be enabled in order to play the videos from within PowerPoint.

Segmentation is a Two-Step Process This slide relates to material on pp. 65-66. : Indicates place where slide “builds” to include the corresponding point. 1. Naming broad product-markets and Summary Overview Market segmentation is a two-step process. This process fails too often because marketers do not realize the complexities of consumer behavior and they attempt to categorize a market around too few consumer-related variables of distinction. Key Issues The steps in market segmentation are: Naming broad product-markets, or disaggregating. Marketers must break apart all possible needs into some generic markets and broad product-markets in which the firm may be able to profitably operate. Segmenting is an aggregating process--clustering people with similar needs into individual market segments. Market segment: a relatively homogeneous group of consumers who will respond to a marketing mix in a similar way. 2. Segmenting markets and selecting targets :

specific product-market Search for Opportunities Can Begin by Understanding Markets (Exhibit 3-3) This slide relates to material on pp. 61-65. : Indicates place where slide “builds” to include the corresponding point. Single target market approach Multiple Combined Selecting marketing All customer needs Some generic market One broad product- Narrowing down to specific product-market Homogeneous (narrow) product- markets Segmenting into possible target markets Summary Overview Market segmentation is a two-step process. This process fails too often because marketers do not realize the complexities of consumer behavior and they attempt to categorize a market around too few consumer-related variables of distinction. Key Issues All customer needs: Marketers should break apart or disaggregate all customer needs. Generic market: a market with broadly similar needs and sellers offering various ways of satisfying those needs. Defining the market broadly can help the marketer to uncover some potential new opportunities. The marketer can then narrow down to specific product-markets. Product-market: a market with very similar needs and sellers offering various close substitute ways of satisfying those needs. Segmenting: the next step is an aggregating process – the marketer groups together people with similar needs into a market segment. Here we look for similarities. Discussion Question: Using Exhibit 3-3 as a guide, think of the generic market for transportation and the broad product-market of customers for motorcycles. Can you segment the broad product market into several submarkets? After defining the market, marketers can select a particular target market approach. : :

Market Segmentation Defines Possible Target Markets (Exhibit 3-4) This slide relates to material on pp. 65-66. : Indicates place where slide “builds” to include the corresponding point. Broad product-market (or generic market) name goes here (The bicycle-riders product-market) Submarket 1 (Exercisers) Submarket 2 (Off-road adventurers) Submarket 3 (Transportation riders) Submarket 4 (Socializers) Submarket 5 (Environmentalists) Summary Overview Market segmentation groups customers with similar needs. Key Issues Here we can see five different submarkets for the broad product market of bicycle riders. Discussion Question: What are the primary needs for each of these submarkets for bicycles? :

How Far Should the Aggregating Go? (Exhibit 3-5A and 3-5B) This slide relates to material on pp. 66-67. : Indicates place where slide “builds” to include the corresponding point. B. Product-market showing six segments A. Product-market showing three segments Summary Overview As shown in this exhibit, one can segment a market into any number of segments, but how far should a marketer go in aggregating similar consumers into target markets? Key Issues Criteria for segmenting: Homogeneous within--the customers in a market segment should be as similar as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions. Heterogeneous between--the customers in different segments should be as different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions. Substantial--the segment must be big enough to be profitable. Discussion Question: Some firms, like Dell Computer, are able to market directly to individuals and to customize products and services to their unique needs. What advancements make this mass customization possible? Operational--the segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables. : : Status dimension Dependability dimension

Target Marketers Aim at Specific Targets (Exhibit 3-6) This slide relates to material on pp. 67-69. : Indicates place where slide “builds” to include the corresponding point. In a product-market area A segmenter Using single target market approach – can aim at one submarket with one marketing mix A combiner Using combined target market approach – can aim at two or more submarkets with the same marketing mix Using multiple target market approach – can aim at two or more submarkets with different marketing mixes Summary Overview Market-oriented strategies refine the segmentation process into actionable submarkets. Key Issues Single target market approach--the marketer segments the market and picks one of the homogeneous segments as the firm’s target market. Multiple target market approach--the marketer segments the market, chooses two or more segments, and then treats each segment as a separate target market needing a different marketing mix. Discussion Question: Suppose you are an entrepreneur who is preparing to start a small business. Would you be more likely to select a single or multiple target market approach? Why? Combined target market approach--the marketer combines two or more submarkets into one larger target market as a basis for one strategy. Seeks economies from having one effort serve more than one market. : : :

Segmenting vs. Combining This slide relates to material on pp. 68-69. : Indicates place where slide “builds” to include the corresponding point. Combiners Try to Satisfy “Pretty Well” Combiners Try to Satisfy “Pretty Well” Profit Is the Balancing Point Too Much Combining Is Risky Too Much Combining Is Risky Key Issues Summary Overview There are many factors that affect the choice between being a “segmenter” and a “combiner.” Key Issues Combiners try to satisfy customers “pretty well.” Too much combining is risky, because an innovative segmenter may “chip away” at the various segments of the combined target market. Discussion Question: What companies that you are familiar with have suffered because segmenters have “chipped away” pieces of their target markets? Segmenters try to satisfy customers “very well.” Segmenting may produce bigger sales, if the segmenter can capture a large share of a smaller market segment. Many consumers are willing to pay more in order to satisfy their needs more precisely. Segment or combine? Depends on: firm’s resources; competition in the various segments; similarity of customer needs, attitudes, and buying behavior. Profit is often the balancing point, because the profit potential often dictates how specialized a marketing mix can be. Segment or Combine? Segment or Combine? Segmenters Try to Satisfy “Very Well” Segmenters Try to Satisfy “Very Well” : : Segmenting May Produce Bigger Sales Segmenting May Produce Bigger Sales : : : :

Checking your knowledge This slide relates to material on pp. 67-68. A neighborhood restaurant in a diverse market area sought to appeal to a wide range of consumers by offering a menu with a few choices from each of several different styles of cuisine—American, Italian, Chinese, German, Thai, and Indian. Recently, the restaurant has lost sales to newer restaurants that offer many choices from a single style of cuisine. This example illustrates the danger of adopting a _______________ approach. ANSWER: C Checking your knowledge (answer explanation): The neighborhood restaurant has combined two or more submarkets (American, Italian, Chinese, German, Thai, and Indian) into one larger target market as a basis for one strategy. This is the definition of the combined target market approach. Selection ‘C’ is the best option. single target market multiple target market combined target market structured target market mixed-mode market

Behavioral dimensions for segmenting consumer markets This slide relates to material in Exhibit 3-8 on page 71. : Indicates place where slide “builds” to include the corresponding point. Needs Needs Behavioral Segmenting Dimensions Information required Benefits sought Thoughts Benefits sought Thoughts Type of problem-solving Kind of shopping Type of problem-solving Kind of shopping Summary Overview Segmenting dimensions guide marketing mix planning. Market segmentation forces marketing managers to decide which product-market dimensions might be useful for planning marketing strategies. A product-market may be described by behavioral segmentation dimensions. Key Issues Needs – for example, customer needs could be economic, functional, or psychological; Benefits sought tend to be situation specific – for example a car buyer could be looking for good gas mileage or the ability to seat seven people. Thoughts – buyers may be grouped by whether they have favorable or unfavorable attitudes or beliefs about the brand or product category. Rate of use – some customers may be heavy, medium, light or even non-users Purchase relationship – customers could be segmented by whether they have an ongoing relationship, intermittent use, or a bad relationship. Brand familiarity – might vary from insisting on a brand to nonrecognition or rejection. Kind of shopping – refers to whether buyers do comparison shopping or perhaps buy on a convenience basis. Buyers might use different problem solving approaches – and could be grouped in this way. Or buyers may have different information needs – some customers want a lot of information while others need little. Discussion Question: What benefits do consumers seek in purchasing and using toothpaste? How do these benefits affect segmentation among consumers of toothpaste? Rate of use Purchase relationship Rate of use Purchase relationship : Brand familiarity : Brand familiarity : : :

Geographic dimensions for segmenting consumer markets This slide relates to material in Exhibit 3-8 on p. 71. : Indicates place where slide “builds” to include the corresponding point. Region of world or country Region of world or country Region in a country Region in a country Geographic Segmentation Dimensions Summary Overview Geographic dimensions are often used for segmentation. There may be different languages or laws in different countries – or a business may only be located in a certain geography. Key Issues Region of the world or country – for example, North America versus Europe, or New Zealand versus Japan. Region in a country – for example in the United States, the Rocky Mountain Region, Southeast, or Northeast may provide a basis for segmentation. The size of a city may also be useful for segmentation. Size of city : :

Demographic dimensions for segmenting consumer markets This slide relates to material in Exhibit 3-8 on p. 71. : Indicates place where slide “builds” to include the corresponding point. Income Sex or age Income Sex or age Family size or family life cycle stage Demographic Segmentation Dimensions Summary Overview In addition to behavioral and geographic dimensions, there are also demographic segmentation dimensions. Key Issues Income provides one basis – a marketing mix may appeal most to families with a particular income. Gender and age provide another demographic base of segmentation. Family size or family life cycle stage. Family life cycle stages include young singles, young married with no children, families with young children, divorced, empty nesters, or seniors. Occupation and education can also be used for segmentation. Finally, social class – lower, middle or upper And ethnicity – for example: Hispanic, Asian, Native American, white, or multiracial. Discussion Question: Considering the demographic variables of age and education levels, can you provide examples of products or services that are targeted to college students? Family size or family life cycle stage Occupation or education Ethnicity or social class Occupation or education : : : :

Segmenting business markets This slide relates to material in Exhibit 3-9 on p. 72. : Indicates place where slide “builds” to include the corresponding point. Kind of relationship Kind of relationship Type of customer Type of customer Segmenting Dimensions for Business Markets Demographics Demographics Purchasing methods Summary Overview There are also many possible segmentation dimensions in the business or organizational market. Key Issues Among these dimensions are: Kind of relationship between buyer and seller – relationships might range from weak loyalty to strong loyalty to a vendor. Type of customer – customers may be segmented by whether they are service producers, a government agency, or a manufacturer. Demographics variables include geographic locations, size of the company, or industry. How the customer will use the product –will the product being sold be used in an installation, as a component or as a raw material . Type of buying situation – some characteristics of the buying situation might include the number of people involved in the purchase or whether the buying process is centralized or decentralized. Purchasing methods refer to factors like whether the buyer uses bids, vendor analysis, e-commerce websites, or other methods of buying. How customers will use the product How customers will use the product : Type of buying situation Type of buying situation : : : :

Business-to-Business Segmentation This slide relates to material on p. 72. Summary Overview This ad from Baldor shows how business-to business marketers incorporate segmenting dimensions in their marketing tactics. Key Issues For example, this ad is targeted at a particular type of customer—firms that have large vehicle fleets and a need for industrial electric motors. The type of buying situation is also relevant. It most likely represents a modified rebuy purchase—if the fleet buyer is considering alternative sources for replacement parts.

Checking your knowledge This slide relates to material on pp. 70-72. The pastor of a new church decides to start prospecting for new members. He focuses first on people who live within a mile radius of the church, and contacts them via mail and by visiting them door-to-door. He then moves on to people who live from one to two miles away from the church, then two to three miles away, and so on, up to a limit of ten miles away. The pastor appears to be focusing on a __________ segmenting dimension. behavioral demographic benefit geographic relationship ANSWER: D Checking your knowledge (answer explanation): The pastor is segmenting potential church members based on physical location in proximity to the church. This proximity to the church is a geographic segmenting dimension; therefore, selection ‘D’ is the best option.

What Dimensions Are Used to Segment Markets? This slide relates to material on p. 71. : Indicates place where slide “builds” to include the corresponding point. Qualifying Dimensions Relevant to including a customer type in a product-market Help identify “core benefits” Determining Dimensions Affect the customer’s purchase of a product or brand Can be further segmented OR Summary Overview To select the important segmenting dimensions, think about two different types of dimensions: qualifying and determining. Key Issues Qualifying dimensions are those relevant to including a customer type in a product-market. Help identify the “core features” that must be offered to everyone in a product-market. Determining dimensions are those that actually affect the customer’s purchase of a specific product or brand in a product-market. Can be further segmented into groups. Discussion Question: Can you describe a qualifying dimension and a determining dimension that help to define a product-market? : :

Determining vs. Qualifying Dimensions This slide relates to material on pp. 72-73. : Indicates place where slide “builds” to include the corresponding point. Determining Dimensions May Be Very Specific Determining Dimensions May Be Very Specific Key Issues Determining Dimensions May Change Determining Dimensions May Change Summary Overview Several factors affect the specificity and use of determining and qualifying dimensions in segmenting markets. Key Issues Determining dimensions may be very specific, depending on whether the marketer is concerned with a general product type or a specific brand. Determining dimensions may change over time, because needs may change or because competitors enter the market. Qualifying dimensions are important, too, because they help identify the “core” features that must be offered to everyone in a product-market. Within a broad product-market, there may also be different dimensions for different submarkets. Discussion Question: Think about the various submarkets of bicycle riders--exercisers, off-road adventurers, environmentalists, etc. Can you describe how the determining and qualifying dimensions differ from submarket to submarket? : Different Dimensions For Different Submarkets : Qualifying Dimensions Are Important Too Qualifying Dimensions Are Important Too : :

Broader Issues in Selecting Segmenting Dimensions This slide relates to material on p. 73. : Indicates place where slide “builds” to include the corresponding point. Ethical Issues Exploitation Creates Unnecessary Wants Does Harm Summary Overview Along with the segmenting dimensions, there are other considerations for marketers in market segmentation. Key Issues Ethical issues--some critics argue that target marketing: exploits consumers; makes them want things they don’t need; may even cause physical, emotional, or financial harm. Discussion Question: What types of companies are criticized the most for exploiting particular target markets? Success in international marketing requires even more segmenting, because there are so many countries, languages, and unique cultures. However, segmenting international markets adds just one step to the whole process of segmentation. First, marketers must segment by country or region, and then proceed with the same basic segmentation approaches already discussed. : :

What Are the Relevant Segmenting Dimensions? This slide relates to material on pp. 71-73. Summary Overview This “TRY-OUT” product from Just for Men would not appeal to everybody, but this ad is a good example of importance of demographic and behavioral segmentation. Key Issues What would be the qualifying dimensions for the produce above? What about the determining dimensions?

Checking your knowledge This slide relates to material on pp. 71-73. A father taking his family of four on vacation was trying to make hotel reservations for a trip to Disney World. He first eliminated all hotels that were in excess of two miles from the main gate to Disney World. Then he focused exclusively on hotels offering suites so that his family would have more space. He eventually selected the Excelsior Hotel because he knew the hotel offered suites and a complementary breakfast. For him, the available of the complementary breakfast was a ______________ segmenting dimension. qualifying determining differentiated geographic demographic ANSWER: B Checking your knowledge (answer explanation): Qualifying dimensions are those relevant to including a customer type in a product-market. In the above question, after the father narrowed his search to within two miles from Disney World, the qualifying dimension was a hotel offering suites. After he selected hotels offering suites, he made his decision based on the availability of the complementary breakfast. The breakfast offering is a determining dimension. It was the one that actually affected the customer’s purchase (reservation) of a specific product (hotel) in a product-market (p. 71). Therefore, selection ‘B’ is the best option.

Segmentation and Advertising © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Segmentation and Advertising Courtesy of San Diego Zoo Comparing these two commercials for the San Diego Zoo, what are the dimensions of the market segments that are being targeted? Video Operation: Use the onscreen player controls to operate the video. To view the video at Full Screen, right-click the video and choose Full Screen. To go back to your presentation you can either hit the Escape key, right-click on the video and uncheck Full Screen or type Alt+Enter. You can do this at anytime during the video playback. Under certain circumstances, the video may not fill the video player window. To restore, right click the video player object and select Zoom 200%. The videos will only play in Slide Show View. Macros must be enabled in order to play the videos from within PowerPoint.

Segmenting Product Markets Select (name) the broad product-market Segmenting Product Markets This slide relates to material on pp. 65-73. Identify potential customer needs Best Practice Approach for Segmenting Product-Markets Select (name) the broad product-market Identify potential customer Needs Form homogeneous submarkets Form homogeneous submarkets Identify determining dimensions Identify determining dimensions Summary Overview This seven-step process for segmenting markets will help to find the determining dimensions for product types. Key Issues Select (name) the broad product market: Decide what broad product-market the firm wants to be in—based on the firm’s objectives or current position. Identify potential customers’ needs: Write down as many basic needs as possible—reasons why people buy current offerings in this product-market. Form homogeneous submarkets—that is, narrow product markets: Start by forming one submarket around a typical type of customer; aggregate similar people into the submarket. Write down important need dimensions and customer-related characteristics. Put people who don’t fit into one or more new submarkets. Identify the determining dimensions for each submarket—the ones that determine the choice of a product or brand. Name the possible product-markets—based on the relative importance of the determining dimensions. Evaluate why product-market segments behave as they do. Make a rough estimate of the size of each product-market segment—using available demographic data to determine which market segments are large enough to be profitable. Use this process to outline the kinds of marketing mixes that would appeal to various markets—whether we want to serve new customers or better serve current customers. Name possible product-markets Name possible product-markets Evaluate product-market segment behaviors : : Evaluate product-market segments : Estimate size of each product-market segments : : : :

More Sophisticated Techniques May Help in Segmenting This slide relates to material on pp. 74-75. : Indicates place where slide “builds” to include the corresponding point. Clustering Clustering Customer Database Summary Overview Computer-aided methods afford marketers additional help in segmenting markets. The ability of the computer to record, sort, recombine, and analyze a great many variables relating to consumer behavior at the same time allows marketers to develop much more sophisticated market segments. Key Issues Among the techniques are as follows: Clustering techniques: try to find similar patterns within sets of data. Customer databases: Past customer behavior is often the source of information. Database sorting is especially helpful in providing services. Discussion Question: How do you provide information to marketers that are attempting to meet your needs? Customer relationship management (CRM): Sophisticated modeling techniques can predict the types of products or services an individual customer might want, based on the information stored in the database. Anticipation of emerging needs helps a marketer to maintain a long-term relationship with customers. Customer Database Customer Relationship Management (CRM) : : :

Cluster Analysis This slide relates to material on p. 74. : Indicates place where slide “builds” to include the corresponding point. Summary Overview Cluster analysis is used by firms such as Impact Media. Key Issues In this example, the firm is marketing its capabilities in finding clusters of consumers. Once the clusters are identified, the consumers within the clusters can receive free samples of products that Impact Media’s clients wish to promote.

Positioning This slide relates to material on pp. 75-77. Summary Overview Marketers can differentiate the marketing mix in order to meet customer needs better than competitors and build a competitive advantage. Key Issues Differentiation: How the marketer tries to distinguish her or his offering in the marketplace -- how it is set off from the competition. What really matters is that the consumer perceives the marketer’s product to be different. Positioning: How customers think about proposed and/or present brands in a market. Marketing research techniques are designed to collect information about consumer perceptions and determine differences among competing products in the mind of the consumer. In this ad, Coleman sells garage storage solutions, but it faces the same problem faced by many other storage product makers: It's hard to identify the product with the brand name. Customers tend not to be very loyal to any particular brand of storage equipment. These characteristics of the storage/shelving industry make the positioning challenge difficult? Discussion Question: Can you think of other brands of garage storage solutions? In your opinion, how are they positioned against each other in the market? Does the marketer’s intended positioning match consumer perceptions?

An Example of Positioning (Exhibit 3-11) This slide relates to material on pp. 77-79. : Indicates place where slide “builds” to include the corresponding point. High moisturizing low moisturizing 2 1 4 5 7 3 8 6 Zest Lever 2000 Safeguard Dial Lifebuoy Tone Dove Lux Coast Lava Summary Overview This diagram shows the output of a computer program that does positioning analysis. Key Issues Two attributes of soap that account for the greatest difference in consumer perceptions: degree to which the soap is a deodorant soap. degree to which the soap is a moisturizing soap; The closer that any two dots are to each other, the more similar those brands are in the minds of consumers. Each segment may have its own preferences. The circles refer to the size of market attracted to a combination of attributes. Discussion Question: What is the largest segment in the diagram? What brands serve that segment best? Positioning may also lead to combining instead of segmenting, if a firm can successfully appeal to several segments with the same product. Therefore, positioning studies can be part of a broader analysis because they: identify important attributes of the product offerings in a market; identify what offerings are likely to appeal to segments; provide a basis for changing the marketing mix, should a marketer decide to reposition a product. Nondeodorant Deodorant : : : :

Positioning and Advertising © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Positioning and Advertising Courtesy of Apple Apple used this advertising campaign to position its Macintosh computer system against Windows based personal computers. Apple is trying to position the Macintosh as easier and more fun than other personal computers. Video Operation: Use the onscreen player controls to operate the video. To view the video at Full Screen, right-click the video and choose Full Screen. To go back to your presentation you can either hit the Escape key, right-click on the video and uncheck Full Screen or type Alt+Enter. You can do this at anytime during the video playback. Under certain circumstances, the video may not fill the video player window. To restore, right click the video player object and select Zoom 200%. The videos will only play in Slide Show View. Macros must be enabled in order to play the videos from within PowerPoint.

Positioning and Advertising © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Positioning and Advertising Courtesy of Apple [ Apple used this advertising campaign to position its Macintosh computer system against Windows based personal computers. In this ad, Apple is trying to show that a perceived advantage of PC’s – that they are more appropriate for the office – may not be an advantage. In this way, Apple is trying to position itself more closely to PC. Video Operation: Use the onscreen player controls to operate the video. To view the video at Full Screen, right-click the video and choose Full Screen. To go back to your presentation you can either hit the Escape key, right-click on the video and uncheck Full Screen or type Alt+Enter. You can do this at anytime during the video playback. Under certain circumstances, the video may not fill the video player window. To restore, right click the video player object and select Zoom 200%. The videos will only play in Slide Show View. Macros must be enabled in order to play the videos from within PowerPoint.

Checking your knowledge This slide relates to material on pp. 77-79. The “product space” graph (perceptual map) resulting from a positioning study for shampoo shows a substantial target market that is currently served by only one product—“Exotic Balsam.” Which of the following is a reasonable course of action for a competing manufacturer? ANSWER: E Checking your knowledge (answer explanation): Perceptual mapping graphically displays consumer views on competing products based on two product features. It is a tool that can help managers understand how customers see their market (p. 77). Positioning analysis of this sort focuses on specific products and features. Thus a manager might need to cast a wider net and evaluate customer-related dimensions before moving forward. In the above question, selection ‘E’ is the best option because all of the scenarios presented could be reasonable courses of action with a perceptual map result such as the one described in the question. Develop a new product to compete with Exotic Balsam. Look for an area on the map where there is a smaller target market that is not served by any current products. Attempt to reposition a current product as an alternative to Exotic Balsam. Do a broader analysis that includes an examination of customer needs and attitudes. Any of the above might be reasonable, depending on the circumstances.

Know how to define generic markets and product-markets. You now This slide relates to material on p. 60. Know how to define generic markets and product-markets. Know what market segmentation is and how to segment product-markets into submarkets. Know three approaches to market-oriented strategy planning. Know dimensions that may be useful for segmenting markets. Know what positioning is and why it is useful. You should now: Know how to define generic markets and product-markets. Know what market segmentation is and how to segment product-markets into submarkets. Know three approaches to market-oriented strategy planning. Know dimensions that may be useful for segmenting markets. Know what positioning is--and why it is useful.

Key Terms Market Generic market Product market Market segmentation This slide refers to boldfaced terms appearing in Chapter 3. Market Generic market Product market Market segmentation Segmenting Market segment Single target market approach Multiple target market approach Combined target market approach Combiners Segmenters Qualifying dimensions Determining dimensions Clustering techniques Customer relationship management (CRM) Positioning Summary Overview These are key terms you should be familiar with based upon the material in this presentation. Key Issues Market: a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services--that is, ways of satisfying those needs. Generic market: a market with broadly similar needs--and sellers offering various and often diverse ways of satisfying those needs. Product-market: a market with very similar needs--and sellers offering various close substitute ways of satisfying those needs. Market segmentation: a two-step process of: (1) naming broad product-markets and (2) segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes. Segmenting: an aggregating process that clusters people with similar needs into a market segment. Market segment: a relatively homogeneous group of customers who will respond to a marketing mix in a similar way. Single target market approach: segmenting the market and picking one of the homogeneous segments as the firm's target market. Multiple target market approach: segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix. Combined target market approach: combining two or more submarkets into one larger target market as a basis for one strategy. Combiners: firms that try to increase the size of their target markets by combining two or more segments. Segmenters: aim at one or more homogeneous segments and try to develop a different marketing mix for each segment. Qualifying dimensions: the dimensions that are relevant to including a customer-type in a product-market. Determining dimensions: the dimensions that actually affect the customer's purchase of a specific product or brand in a product-market. Clustering techniques: approaches used to try to find similar patterns within sets of data. Customer relationship management (CRM): an approach in which a seller fine-tunes the marketing effort with information from a customer database. Positioning: an approach that refers to how customers think about proposed and/or present brands in a market.