© 2009 South-Western, Cengage LearningMARKETING 1 Chapter 7 COMPETITION IS EVERYWHERE 7-1Focusing on Market Segments 7-2Positioning for Competitive Advantage 7-3Competing for Market Segments 7-4Learning about the Competition CHAPTER 7

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 2 Courtesy of PJ Madison’s. Used with permission. Focus Questions: In what ways is PJ Madison’s trying to suggest its ice cream is different and better than other brands? What types of consumers do you believe will be attracted to the advertisement? In your view, is the ad effective at encouraging customers to try PJ Madison’s ice cream? Why or why not?

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 3 FOCUSING ON MARKET SEGMENTS GOALS Describe how markets can be segmented by geographic location, demographic characteristics, psychographics, product usage, and benefits derived. Explain how to evaluate market potential and calculate market share. 7-1

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 4 Market Segmentation The benefits of segmentations Segmentation categories Geographic segmentation Demographic characteristics Psychographics Product usage Benefit expectations Segmenting the business market

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 5 Demographic Characteristics of Education and Income

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 6 Identifying and Analyzing Market Segments Identifying Possible Segments Determining Market Potential

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 7 Determining Market Potential 1.Number of potential customers 2.Interest in the product or service and other mix elements 3.Money available to make the purchase 4.Ability to communicate with and distribute product to consumers

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 8 Market Potential Market potential is the total revenue that can be obtained from the market segment.

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 9 Market Share Market share is the portion of the total market potential that each company expects to get in relation to its competitors.

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 10 POSITIONING FOR COMPETITIVE ADVANTAGE GOALS Explain the various bases for positioning a product to distinguish it from the competition. Describe the three common positioning strategies. 7-2

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 11 Basis for Positioning Attribute Price and quality Use or application Product user Product classification Competitor

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 12 Laundry Product ALaundry Product B AttributeCleans quickly and easily Leaves fresh scent Price and Quality Low price, good valueHigher price for highest quality Use or Application Use as pre-wash on tough stains Use for hand-washing delicates Product UserHomemaker’s reliable friend New generation’s discovery Product Classification Used by Olympic athletes Used by professional laundries CompetitorGets out dirt Product B can’t Gentler on clothing than Product A Market Position

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 13 Selecting a Positioning Strategy Consumer perceptions Competition Business environment

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 14 COMPETING FOR MARKET SEGMENTS GOALS Explain direct vs. indirect competition and price vs. non-price competition. Describe the benefits of competition to consumers. 7-3

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 15 Types of Competition for Positioning Decisions Direct competition Indirect competition Price competition Non-price competition

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 16 Benefits of Competition Consumer receives the best price for products. Competition encourages improvements in products with the addition of unique features and benefits. Businesses are always looking for new and improved products to match their competition. Competition offers consumers the benefit of a wide variety of products from which to choose.

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 17 LEARNING ABOUT THE COMPETITION GOALS Discuss the types of information businesses need to know about their competitors. Describe the kinds of activities businesses engage in to gain marketing intelligence. 7-4

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 18 Types of Competitive Information Pricing strategies Distribution decisions Product/Service planning Promotional efforts Competitor’s market position

© 2009 South-Western, Cengage LearningMARKETING Chapter 7 19 Collecting Competitive Information Information sources Salespeople and other employees Analysis of competitors’ products. Articles, research reports, and public information Professional and trade publications Customers and customer records Trade shows The Internet Ethics in information gathering