1. Chapter 4 Marketing Segmentation, Target Marketing & Positioning

2. Market Strategy Primary role of placing the firm in an optimal position with respect to customer needs.

3. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Market Segmentation Decisions related to targeting the entire market for a product or one or more segments of the total market This information to make these decisions should come from the “situation analysis” specifically the analysis of the customer environment!

4. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Market Segmentation Traditional approaches to market segmentation include: –mass marketing –differentiated marketing –niche marketing

5. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What are some of the key benefits of market segmentation?

6. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Mass Marketing... Aimed at the total market for a particular product – undifferentiated marketing – assumes all customers have similar needs – single marketing mix 1 product @ 1 price 1 promotional program 1 distribution system

7. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What products are mass marketed? For example...

8. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Differentiated Marketing Dividing the total market into groups common needs & attempting to develop a marketing mix that appeals to 1 or more of these groups May be necessary when needs are similar within a group, but differ across groups Involves two options: –multisegment approach –market concentration approach

9. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. What products are mass marketed?...

10. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Niche Marketing... Narrow the market concentration approach even more –focus on a small market –segment has a unique, specific set of needs

11. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved.

12. Individualized Approaches to Market Segmentation Resulting from advances in technology (communications & the Internet) Occur as companies are able to track customers Allow firms to combine demographic data with information on past & current purchasing behavior (marketing mix variables can match customer’s needs, wants & preferences)

13. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. One-to-One Marketing Involves the creation of an entirely unique marketing mix for each customer in the target segment More common in business than consumer marketing However, a fast growing approach in luxury & custom-made products as well as services

14. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Mass Customization Provides unique products & solutions to individual customers on a mass scale Is more cost effective and practical because of advances in supply chain management, just-in-time inventory control & electronic data exhange Often is used in business marketing

15. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Permission Marketing A one-to-one technique whereby customers give companies permission to specifically target them in their marketing efforts Is commonly executed through opt-in e-mail lists, where a customer gives permission to send e- mails regarding products & services Customers who opt-in are already interested in the goods & services

16. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Consumer Needs vs. Wants... What is the difference between needs & wants? Are most products & services marketed to consumers based on needs or wants?

17. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Three general categories that can be used to divide markets- state of being segmentation –using demographic factors (age, gender, income & education) state of mind segmentation –deals with how consumers think & feel benefits sought –wants

18. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. The Role of Differentiation & Positioning Involves the development & maintenance of a relative perception for a product in customers’ minds –the goal is to create a favorable image versus all competing products Perceptions are fundamentally based on brand image & experience Requires attention to product descriptions, customer support services & image

19. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. USING PRODUCT DESCRIPTORS TO DIFFERENTIATE AND POSITION A PRODUCT ProductFeaturesAdvantagesBenefits Dell Inspiron 5000e laptop computer 850-MHz Pentium IIIBlazingly fastApplications run faster Weighs 6.75 lbLightweightGreater mobility Pontiac Gran Prix GTP automobile 240-HP engineSpeed and PowerBetter self-image WideTrack designExcellent handlingSafety Fun to drive Crest MultiCare Advanced Cleaning Toothpaste Dissolving micro- cleansing crystals Teeth stay cleaner longer Fresher breath Bounty Extra Paper Towels 20% larger sheetsSuperior absorbencyHandles bigger messes More sheets per rollWon’t run out as oftenFewer buying trips USING PRODUCT DESCRIPTORS TO DIFFERENTIATE AND POSITION A PRODUCT

20. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Considerations in Business Marketing Requires an understanding of: –the role of the buying center –the nature of hard & soft costs –reciprocity –mutual dependence Must build client relationships Requires a firm to closely align their buying & selling operations to identify & remove an inefficiencies in the process