CHAPTER 3 SEGMENTATION & POSITIONING

Generic vs Product Market

Narrowing Down to Target Markets

The bicycle-riders product market A Market Grid Diagram with Submarkets Submarket 3 Transportation Riders Submarket 5 Environmentalists Submarket 4 Socializers Submarket 1 Exercisers Submarket 2 Off-Road Adventurers Concept: divide a broad product-market (or generic market) into homogeneous submarkets

Three Ways to Develop Market- Oriented Strategies Single Target Market Approach  select one homogeneous segment as the target Multiple Target Market Approach  select two or more target segments  develop a different marketing mix for each segment Combined Target Market Approach  combine submarkets into a single target market  develop one marketing mix for the combined target

Criteria for Segmenting Homogeneous  similar responses to marketing mix  similar segmenting dimensions Heterogeneous  different responses to marketing mix  different segmenting dimensions Substantial  segment is big enough to be profitable Operational  useful for identifying customers  helpful in deciding on marketing mix

Some Examples of Possible Segmenting Dimensions and Typical Breakdowns for Consumer Markets Needs (Benefits Sought)  Economic, functional, physiological, social, and more detailed needs Attitudes  Favorable or unfavorable attitudes Lifestyles Purchase relationship  Favorable and ongoing; intermittent; none; bad relationship Brand familiarity  Insistence, preference, recognition; nonrecognition; rejection Geographic  By country, region, size of city Income  Under $20,000, $20,000 to $39,999, $40,000 or over

Examples of Possible Segmenting Dimensions for Business Markets Type of organization (computer software) Closeness of relationship with customer (travel services) Size (buildings) North American Industry Classification System (NAICS) codes (machinery) Geographic location (electronic parts) Type of product (X-ray film) Buying situation (automobile components) Source loyalty (office supplies) Reciprocity (transporting services)

Kind of relationship  Weak loyalty > strong loyalty to vendor  Single source > multiple vendors  "Arm's length" dealings > close partnership  No reciprocity > complete reciprocity Type of customer  Manufacturer, service producer, government agency, military, nonprofit, wholesaler or retailer (when end user), and so on Demographics  Geographic location (region of world, country, region within country, urban > rural)  Size (number of employees, sales volume)  Primary business or industry (North American Industry Classification System)  Number of facilities Possible Segmenting Dimensions for Business/Organizational Markets

How customer will use product  Installations, accessories, components, raw materials, supplies, professional services Type of buying situation  Decentralized > centralized  Buyer > multiple buying influence  Straight rebuy > modified rebuy > new-task buying Purchasing methods  Vendor analysis, inspection buying, sampling buying, specification buying, competitive bids, negotiated contracts, long-term contracts Possible Segmenting Dimensions for Business/Organizational Markets

Toothpaste Market Segment Description

Positioning analysis is based on how (potential) customers think about a firm's current or potential offering Positioning considers how customers think about competitors' offerings as well as the firm’s own offering Positioning analysis identifies what kind of offering different segments see as ideal Differentiation focuses on developing a marketing mix that target customers will see as distinct from competing mixes Positioning and differentiation help with combining and segmenting, by revealing which segments view the market in similar (or dissimilar) ways Positioning and Differentiation