Marketing Winter SEGMENTATION, TARGETING AND POSITIONING Session 4 Wednesday, April

Marketing Winter SESSION OUTLINE Definition and usefulness of segmentation A priori vs. a posteriori segmentation Case: Sally Goodman Visits Hydro-Québec Segmentation variables Targeting strategies Positioning strategies

Marketing Winter SEGMENTATION A segment is a homogeneous group of buyers who react in a similar fashion to marketing stimuli Adapting the marketing mix (programme) to suit the specific characteristics of the segment The targeted segment must be large enough to justify a segmented approach

Marketing Winter TYPE OF SEGMENTATION A priori segmentation: –use a known segmentation variable, such as socio-demographic, geographic, … –compare buying patterns A posteriori segmentation: –compare buying patterns –identify useful segmentation variables

Marketing Winter Business Demographics or Macro-segmentation Industry Company size Location Operating Variables Technology Customer capabilities

Marketing Winter Purchasing Approaches Organization of purchasing function Power structure Nature of existing relationships General purchase policies Purchasing criteria

Marketing Winter Personal Characteristics Buyer-seller similarity Attitudes toward risk Loyalty

Marketing Winter A good segmentation pattern should... Be performed on a market which is segmented identify measurable and quantifiable segments segments which can be reached, is stable over time, and is profitable

Marketing Winter Company marketing mixMarket A. Undifferentiated marketing Company marketing mix 1 Company marketing mix 2 Company marketing mix 3 Segment 1 Segment 3 Segment 2 B. Differentiated marketing Segment 1 Segment 3 Segment 2 Company marketing mix C. Concentrated marketing

Marketing Winter Undifferentiated or Mass Marketing Mass producing, mass distributing and mass promoting the same product in the same way to all consumers –Largest potential market helps lower costs –Difficult to access fragmented markets –Problems in selecting from multiple ad media and distribution channels

Marketing Winter Differentiated or Segmented Marketing Marketing recognizes buyers differ in needs, perceptions and buying behaviours –Isolate broad segments comprising a market –Adapt offers to best match segment needs –Gain efficiency through strategic fit –More focus and less competition

Marketing Winter Concentrated or Niche Marketing Marketing that focuses on subgroups within large identifiable groups in a market –Dividing a segment into subsegments –Defining group with special traits –Seeking unique combination of benefits –Few or no significant competitors –Improves focus of limited resources

Marketing Winter Micromarketing Tailoring products and marketing programs to suit the specific tastes of specific individuals or locations –Local marketing –Local tailoring of brands and promotions –Overcomes regional differences –Dilutes brand image and operation efficiency

Marketing Winter POSITIONING Give a distinct image to the product Relative to competitors In the minds of prospects (actual or potential customers)

Marketing Winter Positioning Competitively Defined by customers on important attributes Place in mind relative to competing products Simplify evaluation Position happens - planned or not

Marketing Winter Positioning Strategies Product attributes Benefits offered Usage occasions Classes of users Directly on competitor Around competitor Against product class

Marketing Winter Choosing and Implementing Communicate and deliver chosen position Communicate and deliver chosen position Select the right competitive advantage Select the right competitive advantage Identify possible competitive advantage Identify possible competitive advantage

Marketing Winter Steps in Market Segmentation, Targeting, and Positioning Market segmentation 1. Identify bases for segmenting the market 2. Develop profiles of resulting segments Market targeting 3. Develop measures of segment attractiveness 4. Select the target segment(s) Market positioning 6. Develop marketing mix for each target segment 5. Develop positioning for each target segment

Marketing Winter NEXT SESSION Friday, April The Marketing Plan Chapter 16 and readings Submit Essay I