1. Strategic Marketing 1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control

2. Strategic Market Segmentation
Chapter 3
Strategic
Market
Segmentation

3. Strategic market segmentation (1)
Levels and types of market segmentation

4. Levels and types of market segmentation
Vision
Strategic intent
Product benefits
Strategic
Segmentation
Resource allocation
Alignment
Planning
Managerial
Segmentation
Marketing programs
- Advertising
- Sales
- Distribution
Operational
Segmentation

5. Best Buy segmentation strategy
Jill’s - “soccer moms”
Barry’s - wealthy professionals
Buzz’s - “tech enthusiasts”
Ray’s - the family man
Mr Storefront - the small business customer
Carrie’s - young, single females
Helen and Charlie’s - older couples whose children have left home

6. From Mass Markets to Micro Markets
OLD NEW
CONSUMERS Passively receive Empowered media users
whatever TV control and shape content
networks thanks to TiVo, iPod and
broadcast Internet
ASPIRATIONS To keep up with To standout from the
the crowd crowd
TV CHOICE Three networks Hundreds of channels
plus maybe a plus video on demand
PBS station
MAGAZINES Age of the big Age of the special interest
glossies: Time, magazine for every age
Life, Newsweek and affinity group
ADS Everyone hums Talking to a group of
the Alka-Seltzer one, ads go ever
jingle narrower
BRANDS Rise of the big, Niche brands, product
ubiquitous brands extensions and mass
from Coca-Cola customization mean many
to Tide product variations
Source: Anthony Bianco, “The Vanishing Mass Market”, Business Week, July , 58-62

7. Strategic market segmentation (2)
Market-driven strategy and segmentation
Market segmentation, value opportunities and new market space
Market targeting and strategic positioning

8. Segmentation and Market-Driven Strategy
SEGMENTS
VALUE
OPPORTUNITIES
CAPABILITIES/
SEGMENT
MATCH
TARGET(S)
POSITIONING
STRATEGY

9. Strategic market segmentation (3)
Market-driven strategy and segmentation
Market segmentation, value opportunities and new market space
Market targeting and strategic positioning
Activities and decisions in market segmentation

10. Market Segmentation Activities and Decisions
Market to be
Segmented
Strategic
Analysis
of Segments
Decide How
to Segment
Finer
Segmentation
Strategies
Form
Segments

11. Strategic market segmentation (4)
Market-driven strategy and segmentation
Market segmentation, value opportunities and new market space
Market targeting and strategic positioning
Activities and decisions in market segmentation
Defining the market to be segmented

12. Product Variant Segmentation
Product Type Segmentation
Generic Segmentation

13. Strategic market segmentation (5)
Identifying market segments
Segmentation variables
Characteristics of people and organizations
Consumer markets
Organizational markets
Product use situation segmentation
Buyers’ needs and preferences
Consumer needs
Attitudes
Perceptions
Purchase behavior

14. Segmentation Variables
Purchase
Behavior
Characteristics
of People/
Organizations
Buyers’ Needs/
Preferences
Use
Situation

15. Illustrative Segmentation Variables
Consumer
Markets
Industrial/
Organizational Markets
Characteristics
of people/
organizations
Age, gender, income,
family size, lifecycle stage, geographic
location,
lifestyle
Type of industry, size, geographic location, corporate culture, stage of
development, producer/
intermediary
Use situation
Occasion, importance of
purchase, prior experience with product, user status
Application, purchasing
Procedure (new task, modified rebuy, straight
rebuy
Buyers’ needs/
preferences
Brand loyalty status, brand
preference, benefits sought,
quality, proneness to make a deal
Performance requirements, brand preferences, desired
features, service
requirements
Purchase
behavior
Size of purchase,
frequency of purchase
Volume, frequency
of purchase

16. Strategic market segmentation (6)
Forming market segments
Requirements for segmentation
Response differences
Identifiable segments
Actionable segments
Cost/benefits
Stability
Approaches to segment identification
Customer group identification
Forming groups based on response differences

17. Miller Brewing’s beer brand targets
Miller genuine draft - “mainstream sophisticates”
Milwaukee’s Best Light - “hardworking men”
Pilsner Urquell - “beer afficionados”
Miller Icehouse - for “drinking buddies”

18. Requirements for Segmentation
Identifiable
segments
Response
differences
Actionable
segments
Segmentation
Requirements
Stability
over time
Favorable
cost/benefit

19. Approaches to Segment Identification
CUSTOMER
RESPONSE
PROFILE
IDENTIFIERS
OF CUSTOMER
GROUPS
Use Situation
Buyers Needs
and Preferences
Purchase
Behavior and
Loyalty
Characteristics
of People and
Organizations

20. Segment Dimensions for Hotel Lodging Services

21. Illustrative Example: Gasoline Buyers
Higher-income, middle-aged men, drive miles a year… buy premium with a credit card … purchase sandwiches and drinks from the convenience store… will sometimes use carwash
Road
Warriors
16% of
buyers
Men and women with moderate to
high incomes, loyal to a brand and
sometimes a particular station …
frequently buy premium, pay in cash
True
Blues
16% of
buyers
Upwardly mobile men and women -
half under 25 years of age -
constantly on the go … drive a lot
snack heavily from the convenience store
Generation
F3 (Fuel,
Food & Fast)
27% of
buyers
Usually housewives who shuttle
children around during the day and
use whatever gas station is based on
town or on route of travel
Homebodies
21% of
buyers
Not loyal to brand or station and
rarely buy premium … frequently on
tight budgets.
Price
Shoppers
20% of
buyers

22. Illustrative Consumer Perception Map
Expensive
GROUP II
Brand A
Brand E
Brand B
GROUP V
Low
Quality
High
Quality
GROUP I
GROUP
III
Brand C
Brand D
GROUP IV
Inexpensive

23. Strategic market segmentation (7)
Finer segmentation strategies
Logic
Customized offerings
Diverse customer base
Close customer relationships
Micro-segmentation
Mass customization
Variety-seeking strategy

24. Strategic market segmentation (8)
Selecting the segmentation strategy
Deciding how to segment
Strategic analysis of market segments
Customer analysis
Competitor analysis
Positioning analysis
Estimating segment attractiveness
Segmentation “fit” and implementation

25. Strategic Analysis of Market Segments
Customer
Analysis
Financial and
Market
Attractiveness
Competitor
Analysis
Positioning
Analysis

26. Segmentation “Fit” for Implementation
Segment Attractiveness
and Internal Compatibility
Internal Compatibility
High
Low
Attractive segments
that match with
company
capabilities
Attractive segments
but with poor match
with company
capabilities
High
Market Segment
Attractiveness
Unattractive segments
but with match to
company
capabilities
Unattractive segments
that do not match with
company capabilities
Low