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 CHAPTER THREE

Target Market Focusing Marketing Strategy with Segmentation and Positioning

Segmentation 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 Focusing Marketing Strategy with Segmentation and Positioning (Exhibit 3-1)

Customer Needs Customer Needs Customer Type Product Type Product-Market Definition Product Type Customer Needs Customer Needs Customer Type Geographic Area Geographic Area No Product Type in Generic Market Definition Naming Product Markets and Generic Markets

Single target market approach Multiple target market approach Combined target market approach Selecting target marketing approach Homogeneous (narrow) product- markets Segmenting into possible target markets All customer needs Some generic market One broad product- market Narrowing down to specific product-market Search for Opportunities Can Begin by Understanding Markets (Exhibit 3-3)

In a product-market area A segmenter Using single target market approach – can aim at one submarket with one marketing mix Using multiple target market approach – can aim at two or more submarkets with different marketing mixes A combiner Using combined target market approach – can aim at two or more submarkets with the same marketing mix Target Marketers Aim at Specific Targets (Exhibit 3-6)

Too Much Combining Is Risky Segmenters Try to Satisfy “Very Well” Combiners Try to Satisfy “Pretty Well” Too Much Combining Is Risky Combiners Try to Satisfy “Pretty Well” Segmenters Try to Satisfy “Very Well” Segmenting May Produce Bigger Sales Segment or Combine? Segment or Combine? Segment or Combine? Profit Is the Balancing Point Key Issues Key Issues Segmenting May Produce Bigger Sales Segmenting vs. Combining

Benefits sought Benefits sought Thoughts Benefits sought Benefits sought Thoughts Needs Behavioral Segmenting Dimensions Behavioral Segmenting Dimensions Rate of use Purchase relationship Purchase relationship Brand familiarity Brand familiarity Type of problem- solving Type of problem- solving Kind of shopping Kind of shopping Information required Information required Needs Rate of use Purchase relationship Purchase relationship Brand familiarity Brand familiarity Type of problem- solving Type of problem- solving Kind of shopping Kind of shopping Behavioral dimensions for segmenting consumer markets

Demographic dimensions for segmenting consumer markets Demographic Segmentation Dimensions Demographic Segmentation Dimensions Income Sex or age Family size or family life cycle stage Family size or family life cycle stage Family size or family life cycle stage Family size or family life cycle stage Occupation or education Occupation or education Ethnicity or social class Ethnicity or social class Occupation or education Occupation or education

How customers will use the product Kind of relationship Type of customer Segmenting Dimensions for Business Markets Kind of relationship Type of customer Demographics How customers will use the product Type of buying situation Purchasing methods Demographics Type of buying situation Segmenting business markets

What Dimensions Are Used to Segment Markets? OR Qualifying Dimensions Qualifying Dimensions Relevant to including a customer type in a product-market Help identify “core benefits” Determining Dimensions Determining Dimensions Affect the customer’s purchase of a product or brand Can be further segmented

Identify potentialcustomer Needs Identify potentialcustomer Needs Identify potential customer needs Identify potential customer needs Estimate size of each product-market segments Estimate size of each product-market segments Select (name) the broad product-market Form homogeneous submarkets Form homogeneous submarkets Identify determining dimensions Identify determining dimensions Name possible product-markets Name possible product-markets Evaluate product-market segments Evaluate product-market segments Select (name) the broad product-market Form homogeneous submarkets Form homogeneous submarkets Identify determining dimensions Identify determining dimensions Name possible product-markets Name possible product-markets Evaluate product-market segment behaviors Evaluate product-market segment behaviors Segmenting Product Markets Best Practice Approach for Segmenting Product-Markets Best Practice Approach for Segmenting Product-Markets