Chapter 4 Marketing Segmentation, Target Marketing & Positioning
Market Strategy Primary role of placing the firm in an optimal position with respect to customer needs.
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Market Segmentation Decisions related to targeting the entire market for a product or one or more segments of the total market This information to make these decisions should come from the “situation analysis” specifically the analysis of the customer environment!
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Market Segmentation Traditional approaches to market segmentation include: –mass marketing –differentiated marketing –niche marketing
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What are some of the key benefits of market segmentation?
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Mass Marketing... Aimed at the total market for a particular product – undifferentiated marketing – assumes all customers have similar needs – single marketing mix 1 1 price 1 promotional program 1 distribution system
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What products are mass marketed? For example...
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Differentiated Marketing Dividing the total market into groups common needs & attempting to develop a marketing mix that appeals to 1 or more of these groups May be necessary when needs are similar within a group, but differ across groups Involves two options: –multisegment approach –market concentration approach
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What products are mass marketed?...
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Niche Marketing... Narrow the market concentration approach even more –focus on a small market –segment has a unique, specific set of needs
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved.
Individualized Approaches to Market Segmentation Resulting from advances in technology (communications & the Internet) Occur as companies are able to track customers Allow firms to combine demographic data with information on past & current purchasing behavior (marketing mix variables can match customer’s needs, wants & preferences)
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. One-to-One Marketing Involves the creation of an entirely unique marketing mix for each customer in the target segment More common in business than consumer marketing However, a fast growing approach in luxury & custom-made products as well as services
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Mass Customization Provides unique products & solutions to individual customers on a mass scale Is more cost effective and practical because of advances in supply chain management, just-in-time inventory control & electronic data exhange Often is used in business marketing
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Permission Marketing A one-to-one technique whereby customers give companies permission to specifically target them in their marketing efforts Is commonly executed through opt-in lists, where a customer gives permission to send e- mails regarding products & services Customers who opt-in are already interested in the goods & services
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Consumer Needs vs. Wants... What is the difference between needs & wants? Are most products & services marketed to consumers based on needs or wants?
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Three general categories that can be used to divide markets- state of being segmentation –using demographic factors (age, gender, income & education) state of mind segmentation –deals with how consumers think & feel benefits sought –wants
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. The Role of Differentiation & Positioning Involves the development & maintenance of a relative perception for a product in customers’ minds –the goal is to create a favorable image versus all competing products Perceptions are fundamentally based on brand image & experience Requires attention to product descriptions, customer support services & image
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. USING PRODUCT DESCRIPTORS TO DIFFERENTIATE AND POSITION A PRODUCT ProductFeaturesAdvantagesBenefits Dell Inspiron 5000e laptop computer 850-MHz Pentium IIIBlazingly fastApplications run faster Weighs 6.75 lbLightweightGreater mobility Pontiac Gran Prix GTP automobile 240-HP engineSpeed and PowerBetter self-image WideTrack designExcellent handlingSafety Fun to drive Crest MultiCare Advanced Cleaning Toothpaste Dissolving micro- cleansing crystals Teeth stay cleaner longer Fresher breath Bounty Extra Paper Towels 20% larger sheetsSuperior absorbencyHandles bigger messes More sheets per rollWon’t run out as oftenFewer buying trips USING PRODUCT DESCRIPTORS TO DIFFERENTIATE AND POSITION A PRODUCT
COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Considerations in Business Marketing Requires an understanding of: –the role of the buying center –the nature of hard & soft costs –reciprocity –mutual dependence Must build client relationships Requires a firm to closely align their buying & selling operations to identify & remove an inefficiencies in the process