1. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 3: Focusing Marketing Strategy with Segmentation and Positioning

2. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill When you finish this chapter, you should 3-2 Chapter 3 Objectives 1. Understand why marketing strategy planning involves a process of narrowing down from broad opportunities to a specific target market and marketing mix. 2. Know about the different kinds of marketing opportunities. 3. Understand why opportunities in international markets should be considered. 4. Know about defining generic markets and product-markets. 5. Know what marketing segmentation is and how to segment product-markets into submarkets. 6. Know three approaches to market-oriented strategy planning. 7. Know dimensions that may be useful for segmenting markets. 8. Know what positioning is— and why it is useful. 10. Understand the important new terms.

3. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Exhibit 3-1 3-3 Marketing Strategy Planning Process Customers Company Competitors S. W. O. T. Segmentation & Targeting Differentiation & Positioning ProductPlace PromoPrice Narrowing down to focused strategy with screening criteria External Market Environment Target Market

4. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Market Penetration Market Development Product Development Diversification Present ProductsNew Products Four Basic Types of Opportunities Present Markets New Markets Exhibit 3-2 3-4 Types of Opportunities

5. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Better Trends? Smaller World Competitive Advantage Early Start 3-5 Considering International Opportunities

6. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Exhibit 3-3 Combined target market approach Single target market approach Multiple target market approach All customer needs Some generic needs One broad product market Homogeneous (narrow) product markets Narrowing down to specific product-market Segmenting into possible target markets Selecting target marketing approach 3-6 Narrowing Target Markets

7. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Exhibit 3-4 3-7 Generic and Product-Market Definitions Generic Market Definitions Generic Market Definitions Product- Market Definitions Product- Market Definitions Customer (user) needs Customer (user) needs Customer types Customer types Geographic area Geographic area Product type (good and/or service) Product type (good and/or service) +++

8. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Submarket 1 (Exercisers) Submarket 2 (Off-road adventurers) Submarket 3 (Transportation riders) Submarket 4 (Socializers) Submarket 5 (Environmentalists) Broad product-market (or generic market) name goes here (The bicycle-riders product-market) Exhibit 3-5 3-8 Market Segmentation

9. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Market Segmentation Exhibit 3-6 3-9

10. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Using single target market approach— can aim at one submarket with one marketing mix The Strategy A segmenter Exhibit 3-7 3-10 Market-Oriented Approaches

11. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Using multiple target market approach— can aim at two or more submarkets with different marketing mixes Strategy Three Strategy Two Strategy One A segmenter Market-Oriented Approaches Exhibit 3-7 3-11

12. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Strateg y Using combined target market approach—can aim at two or more submarkets with the same marketing mix A combiner Exhibit 3-7 3-12 Market-Oriented Approaches

13. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill All Potential Dimensions Qualifying Dimensions Determining Dimensions (Product Type) Determining Dimensions (Product Type) Determining Dimensions (Brand Specific) Determining Dimensions (Brand Specific) Relevant Purchase Behavior Relevant Customer Type Specific Purchase Influence Attraction to Brand Focus: Exhibit 3-12 3-13 Segmentation Dimensions

14. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill “Product Space” Representing Consumers’ Perception for Different Brands of Bar Soap NondeodorantDeodorant High moisturizing Low moisturizing 1 2 4 5 7 8 6 3 Zest Lever 2000 Safeguard Dial Lifebuoy Lava Lux Dove Tone Positioning of Different Bar Soaps Exhibit 3-13 3-14

15. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Segmenting Market Segment Single Target Approach Multiple Target Approach Combined Target Approach Combiners Segmenters Qualifying Dimensions Determining Dimensions Clustering Techniques Positioning Breakthrough Opportunities Competitive Advantage Differentiation S.W.O.T. Analysis Market Penetration Market Development Product Development Diversification Market Generic Market Product-Market Market Segmentation Key Terms 3-15