Market Segmentation, Targeting, and Positioning Chapter 6 Market Segmentation, Targeting, and Positioning McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Goals Related concepts: market segmentation, target marketing, and positioning Process of market segmentation, its benefits and conditions for use Target-market strategies Steps in developing a positioning strategy Methods of forecasting demand of market segments McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Markets MARKET SEGMENTS TARGET MARKET MARKET SEGMENTATION Groups of customers with different wants, buying preferences or product-use behavior TARGET MARKET A market segment for which the seller designs a marketing mix MARKET SEGMENTATION The process of identifying and describing potential target markets

Market Segmentation Process of dividing the total market for a good or service into several smaller, internally homogeneous groups Members of each group are similar with respect to the factors that influence demand

Process of Market Segmentation Identify wants within a market Identify characteristics Determine size and satisfaction

Market Segmentation Conditions Measurable and Obtainable Data Large enough to be Profitable Segment is Accessible MICROMARKETING Treat each single customer as a separate segment

Market Segmentation - First Cut Customer’s reason for buying CONSUMER Purchase for personal use BUSINESS Purchase to use in organizations, to resell, or to make other products

Segmentation Bases for Consumer Markets

Segmenting Business Markets

Target-Market Strategy Market-aggregation Strategy “mass-market” “undifferentiated-market” and Product differentiation Single Marketing Strategy “shotgun”

Target-Market Strategy One Marketing Mix Single-Segment Strategy “concentration ” NICHE MARKETERS

Target-Market Strategy Multiple Marketing Mixes Multiple-Segment Strategy

Selecting a Target Market Guidelines Compatible with company’s goals Match market opportunity with resources Profit that justifies investment Competitors are few and/or weak

Positioning Firm creating and maintaining in the minds of a target market a particular image relative to competing products Select position concept THREE STEPS Design the feature that conveys position Coordinate the marketing mix to convey position

Perceptual Map

Forecasting Market Demand MARKET SHARE Proportion of total sales of a product during a stated period in a specific market that is captured by a single firm MARKET FACTOR 1) exists in the market 2)is measurable 3)is related to the demand for a product in a known way

Forecasting Market Demand MARKET POTENTIAL Total product sales of a product during a period in a market under ideal conditions

Forecasting Market Demand SALES POTENTIAL Portion of market potential that a specific company could expect under ideal conditions

Forecasting Market Demand SALES FORECAST Estimate of sales For one company a stated period during a period in a specific market assuming a defined marketing plan

Methods of Sales Forecasting Market-Factor Analysis Survey of Buyer Intentions Test Marketing Past Sales and Trend Analysis Sales-Force Composite Executive Judgment

Key Terms and Concepts Market segments Target market Market segmentation Micromarketing Geographic segmentation Demographic segmentation Psychographic segmentation Personality Lifestyle Values Behavioral segmentation Market-aggregation strategy Product differentiation Single-segment strategy Niche marketers Niche markets McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Key Terms and Concepts Multiple-segment strategy Position Positioning Repositioning Demand forecasting Market share Market factor Market potential Sales potential Sales forecast Market-factor analysis Direct-derivation method Correlation analysis Multiple correlation Survey of buyer intentions Test marketing Past sales analysis Trend analysis McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Key Terms and Concepts Sales-force composite Executive judgment Delphi method McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.