1. Segmentation, Targeting, Positioning

2. 1.Identify segmentation variables and segment the market 2.Develop profiles of resulting SegmentsMarket Segmentatio n 3. Evaluate attractiveness of each segment 4. Select the target segment(s)MarketTargeting 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning conceptMarketPositioning

3. Levels of Market Segmentation  Mass – Marketing  Segment Marketing  Niche Marketing  Local Marketing  Individual Customer Marketing

4. Levels of Market Segmentation (cont.) Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs. Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation)

5. Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Levels of Market Segmentation (cont.) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products and programs to the needs of individual customers

6. Levels of Market Segmentation (cont.)  Niche Marketing  Niches can be identified by dividing a segment into subsegments or by defining a group seeking a distinctive mix of benefits  Niches are fairly small and attract one or a few competitors  Niche marketers understand their niches’ needs so well that their customers willingly pay a price premium  Both small and large companies can practice niche marketing

7. Levels of Market Segmentation (cont.)  Characteristics of an attractive niche:  The customers in the niche have a distinct set of needs  They will pay a premium to the firm best satisfying their needs  The nicher has the required skills to serve the niche in a superior fashion  The nicher gains certain economies through specialization  The niche has sufficient size, profit and growth potential

8. Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Levels of Market Segmentation (cont.) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products and programs to the needs of individual customers

9. Levels of Market Segmentation (cont.)  Local Marketing  Local marketing leads to  marketing programs tailored to the needs and wants of local customer groups  Those in favor of localizing a company’s marketing  see national advertising as wasteful since it fails to address local target groups  Those against local marketing  argue that it drives up manufacturing and marketing costs by reducing economies of scale

10. Levels of Market Segmentation (cont.)  Individual Marketing  The ultimate level of segmentation leads to  “customized” or “one-to-one marketing”  Technological developments  permit companies to return to customized marketing  Mass customization  the ability to produce on a mass basis individually designed products to meet each customer’s requirements

11. Bases for Segmenting Consumer Markets  Geographical segmentation  Region, City or Metro Size, Density, Climate  Demographic segmentation  Age, Gender, Family size and Family life cycle, Occupation, Income...  Most popular segmentation  Psychographic segmentation  Lifestyle, Social class, and Personality  Behavioral segmentation  Occasions, Benefits, Uses, Attitudes,...

12. Major Segmentation Variables for Consumer Markets Geographic RegionWest North Central, West South Central, East North Central, East South Central,.... City or metro sizeUnder 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000; 100,000-250,000; 250,000- 500,000; 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 or over DensityUrban, suburban, rural ClimateNorthern southern Demographic AgeUnder 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+ Family size Family life cycle Gender 1-2, 3-4, 5+ Young, single; young, married, no children;.... Male, female

13. Step 1. Market Segmentation Geographic Segmentation  World region or country  Region  State  City  Neighborhood  City  Density  Climate Goal 2: List and discuss major bases for segmentation

14. Step 1. Market Segmentation Demographic Segmentation  Age  Gender  Family size or life cycle  Income  Occupation  Education  Religion  Race  Generation  Nationality

15. Step 1. Market Segmentation Psychographic Segmentation  Social Class  Lifestyle  Personality  “ Brand personality”

16. Step 1. Market Segmentation Behavioral Segmentation  Occasions  Benefits User status  Usage rate  Loyalty status  Readiness stage  Attitude toward product

17. Behavioral Segmentation Breakdown

18. Demographics Operating Variables Purchasing Approaches Situational Factors Personal Characteristics Segmenting Business Markets Business Marketers Use Many of the Same Consumer Variables, Plus:

19. Major Segmentation Variables for Business Markets Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services? Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on

20. Measurable Accessible Substantial Differentia b l e Segments must be large or profitable enough to serve. Segments can be effectively reached and served. Actionable Size, purchasing power, profiles of segments can be measured. Segments must respond differently to different marketing mix elements Must be able to attract and serve the segments. Effective Segmentation

21. Step 2. Market Targeting Evaluating Market Segments  Segment Size and Growth  Analyze current sales, growth rates and expected profitability for various segments.  Segment Structural Attractiveness  Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.  Company Objectives and Resources  Company skills & resources needed to succeed in that segment(s).  Look for Competitive Advantages.

22. Patterns of Target Market SelectionSingle-segmentconcentration Productspecialization M1 M2 M3 P1 P2 P3 Selectivespecialization M1 M2 M3 P1 P2 P3 M1 M2 M3 Full market coverage P1 P2 P3 Marketspecialization M1 M2 M3 P1 P2 P3 P1 P2 P3 M1 M2 M3 P = Product M= Market

23. Choosing a Target Marketing Strategy  Considerations include:  Company resources  The degree of product variability  Product’s stage in the life-cycle  Market variability  Competitors’ marketing strategies

24. Step 3. Choosing a Positioning Strategy  Positioning  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  the act of designing the company’s offering and image, to occupy a distinctive place in the target market’s mind

25. Step 3. Choosing a Positioning Strategy (cont.)  Definition by Ries and Trout:  “Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person. Perhaps yourself. But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect. ”

26.  Positioning according to Ries and Trout:  Strengthen the current position  Grab an unoccupied position  De-position  Re-position Step 3. Choosing a Positioning Strategy (cont.)

27. Step 1. Identifying Possible Competitive Advantages Step 2. Selecting the Right Competitive Advantage Step 3. Communicating and Delivering the Chosen Position

28. Identifying Possible Competitive Advantages  Key to winning and keeping customers is  to understand their needs and buying processes better than competitors do, and deliver more value.  Competitive advantage  an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits.  Differentiation can be based on : Products, Services, Channels, People, Image,...

29. Identifying Possible Competitive Advantages Differentiation Variables ProductServicesPersonneChannelImage FormOrdering ease CompetenceCoverageSymbols FeaturesDeliveryCourtesyExpertiseMedia PerformanceInstallationCredibilityPerformanceAtmosphere ConformanceCustomer training ReliabilityEvents DurabilityCustomer consulting Responsive- ness

30.  Positioning  successful creation of a “market-focused value proposition” :  A simple statement of why the target market should buy the product.  How many ideas to promote?  One benefit – “Unique selling proposition” (USP)  Double-benefit positioning  Number-one on an attribute Selecting the Right Competitive Advantage

31. Differences Worth Establishing Affordable Superior Profitable Preemptive Distinctive Important Selecting the Right Competitive Advantage

32. Developing a Positioning Statement  Positioning statements summarize the company or brand positioning  Example: “to (target segment and need) our (brand) is (concept) that (point-of- difference)” Goal 4: Discuss how companies position their products

33. Choosing an Overall Positioning Strategy Price MoreThe sameLess Benefits More for More for the same More for less Same The same for Less Less for much less

34. Positioning Strategies  Attribute positioning  Benefit positioning  Use or application positioning  User positioning  Competitor positioning  Product category positioning  Quality or price positioning

35. Communicating and Delivering the Chosen Position  Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.  All the company’s marketing mix must support the positioning strategy.  Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies.

36.  Underpositioning  Overpositioning  Confused positioning  Doubtful positioning Major Positioning Mistakes