1. Formulating Strategic Marketing Programs Market Segmentation and Positioning

2. What is Market Segmentation? n Process of dividing a potential market into distinct subsets of consumers with common needs or characteristics. n Separating a heterogeneous market into smaller homogeneous units.

3. Important Elements of Market Segmentation n Each market segment has unique needs and wants and will have a unique demand curve. n Each market segment requires its own marketing strategy and marketing plan. n Market segmentation produces increased costs to the firm in the short run. n Increased costs are generally offset by increasing sales in the long run.

4. Market Positioning n Match offerings of firm to the needs and wants of market segments. n Effective positioning involves understanding customers’ perceptions about both the psychological and physical characteristics of offerings.

5. The Segmentation--Positioning Process Needs-Based Segmentation

6. Primary needs Articulated needs Exciting needs

7. The Segmentation Process Needs-Based Segmentation Segment Identification

8. Segmentation Bases n Geographic –Country –Region –County size –SMSA population –Density n Demographic –Age –Sex –Education –Occupation –Race –Family life cycle

9. Segmentation Bases n Psychographic –Social class –Personality –Lifestyle –Activities, interests, & opinions (AIO’s) n Behavioralistic –Decision unit –Usage rate –Readiness –Benefits sought –Occasion –Brand loyalty

10. The Segmentation Process Needs-Based Segmentation Segment Identification Segment Attractiveness

12. The Segmentation Process Needs-Based Segmentation Segment Identification Segment Attractiveness Segment Positioning Strategy

13. Positioning Strategy n Create positioning statement based on unique customer needs. n Differentiating your product from the competitions’ in the minds of the target customers

14. Positioning Statement n To communicate positioning, a marketing plan should include a positioning statement following the form: “To (target group and need) our (brand) is (concept) that (point of difference).”

15. Points to Remember About Positioning: n Based on consumer perceptions of tangible and intangible characteristics of offering. n The intensity of the brand will affect positioning.

16. The Segmentation Process Needs-Based Segmentation Segment Identification Segment Attractiveness Segment Positioning Strategy Positioning “Acid” Test

17. Testing the Positioning Statement n Test the positioning statement with target consumers--what do they think, how do they react to the statement? n Assess need level: the stronger the need, the higher the expected customer interest. –“Do you see this product as solving a problem or filling a need for you?”

18. Testing, continued... n Communicability and believability: if the scores on these dimensions are low, the positioning must be refined or revised. –“Are the benefits clear to you and believable?”

19. Testing, continued... n Perceived value: The higher the perceived vale, the higher the expected consumer interest. –“Is the price reasonable in relation to the value?”

20. Testing, continued... n Gap level between the new product and existing products: The greater the gap, the higher the expected consumer interest. –“Do other products currently meet this need and satisfy you?”

21. The Segmentation Process Needs-Based Segmentation Segment Identification Segment Attractiveness Segment Positioning Strategy Positioning “Acid” Test Strategy Implementation

22. Segmentation Strategies Mass Marketing Mass Customization

23. Multisegment Strategy n Pursue two or more segments that are attractive and profitable, but not the whole market.

24. Sequential Segment Strategy n Multisegment approach, but rather than pursuing all the attractive segments simultaneously, pursue the most attractive first; when cash flow from that segment is positive, then pursue the next most attractive segment, and so on.

25. Single-Segment Strategy n Focus on just one attractive segment.

26. Niche Segment Strategy n Focus on a smaller group within a segment. n Requires a further customization of marketing strategy.

27. Mass Customization Strategy n Focus on all niches within a segment by customizing strategies to each subsegment.