1. Principles of Marketing 541 1

2.  This is possibly the most important topic of this entire course.  All marketing strategy and tactics need a good understanding of the principles you will be shown in this topic. ◦ Listen ◦ Absorb ◦ Study and ◦ Reflect 2

3. 3 1. Identify Bases for Segmenting the Market 2. Develop Profiles of Resulting Segments 3. Develop Measures of Segment Attractiveness 4. Select Target Segment(s) 5. Develop Positioning for Each Target Segment 6. Develop Marketing Mix for Each Target Segment Market Positioning Market Targeting Market Segmentation

4.  Market Segmentation Definition: ◦ Dividing a market into distinct groups with distinct needs, characteristics, or behaviour who might require separate products or marketing mixes.  A total market is divided into clusters, or sub- groups or ‘segments’ – each has special features, attributes and buying characteristics.  Think of an orange as the total market. Peel off the skin and there are segments, break the segments and there are small pieces of orange inside. 4

5. 5 Mass Marketing Same product to all consumers (no segmentation) Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation)Segment Marketing Different products to one or more segments (some segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation) Niche Marketing Different products to subgroups within segments ( more segmentation) Niche Marketing Different products to subgroups within segments ( more segmentation)

6. 6 Geographic Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioural Occasions, benefits, uses, or responses Nations, provinces, regions or cities

7.  World region or country  China region  Province or State  City  Neighbourhood  City or metro size  Density  Climate 7 Geographic Segmentation Variables

8.  Age  Gender  Family size  Family life cycle  Income  Occupation  Education  Religion  Race  Generation  Nationality 8 Demographic Segmentation Variables

9.  Where groups are divided based on their social class, lifestyle or personality characteristics.  People in the same geo-demographic groups often have different psychographic profiles  Socioeconomic  Status  Values  Attitudes  Lifestyle groupings  Personality 9

10.  Occasions  Benefits  User Status  Attitude Toward the Product  User Rates  Loyalty Status  Readiness Stage 10 Behavioral Variables Behavioral Segmentation Variables

11. 11 Bases for Segmenting Business Markets Bases for Segmenting Business Markets Demographics Personal Characteristics Situational Factors Operating Characteristics Purchasing Approaches

12. 12 Political/ Legal Political/ Legal Cultural Intermarket Economic Geographic International Markets

13. 13 Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served. Segments must be large or profitable enough to serve. Measurable Accessible Substantial Differential Actionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

14.  Target Market Definition ◦ Consists of a set of buyers who share common needs or characteristics that the company decides to serve  Segment Size and Growth ◦ Analyse sales, growth rates and expected profitability.  Segment Structural Attractiveness ◦ Consider effects of:  Competitors,  Availability of Substitute Products and,  the Power of Buyers & Suppliers.  Company Objectives and Resources ◦ Company skills & resources relative to the segment (s). ◦ Look for Competitive Advantages. 14

15.  Selecting Target Market Segments ◦ Undifferentiated (mass) marketing ◦ Differentiated (segmented) marketing ◦ Concentrated (niche) marketing ◦ Micromarketing (local or individual) 15

16. 16 Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Company Marketing Mix Company Marketing Mix Company Marketing Mix Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 2 Company Marketing Mix 3 Company Marketing Mix 3 Market A. Undifferentiated Marketing B. Differentiated Marketing C. Concentrated Marketing

17. 17 Company Resources Product Variability Product’s Stage in the Product Life Cycle Market Variability Competitors’ Marketing Strategies

18.  Positioning Definition: ◦ The place the product occupies in consumers’ minds relative to competing products. ◦ Typically defined by consumers on the basis of important attributes. ◦ Involves implanting the brand’s unique benefits and differentiation in the customer’s mind. ◦ Positioning maps that plot perceptions of brands are commonly used. 18

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23.  Product’s Position  Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i.e. Volvo positions on “safety”.  Marketers must: ◦ Plan positions to give products the greatest advantage ◦ Develop marketing mixes to create planned positions 23

24. 24 Against a Competitor Against a Competitor Usage Occasions Usage Occasions Away from Competitors Away from Competitors Product Attributes Product Attributes Product Class Product Class Benefits Offered Benefits Offered Users B B A A E E D D C C H H G G F F

25.  Step 1. Identifying a set of possible competitive advantages: Competitive Differentiation.  Step 2. Selecting the right competitive advantage.  Step 3. Effectively communicating and delivering the chosen position to the market. 25

26. 26 Criteria for Determining Which Differences to Promote Affordable Superior Profitable Preemptive Distinctive Important Communicable

27. 27 Product Service Personnel Image Areas for Competitive Differentiation Areas for Competitive Differentiation

28.  Companies must be certain to DELIVER their value propositions.  Companies must communicate to their customers the value they are presenting.  This can be done through the marketing mix: ◦ Product ◦ Price ◦ Place ◦ Promotion  Positions must be monitored and adapted over time. 28