ch 07 segmentation

7/31/2019 Ch 07 Segmentation

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Segmentation, Targeting andPositioning

Building The Right Relationships WithThe Right Customers


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Kotler on Marketing

Segment the market but foucs more ontargeting and positioning


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Segment the market but aggregate on yourmarketing effort. And that will give you a

better toehold.


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What have we learned and Whats New?

What marketing is Strategic planning and marketing process

Digitization Customer connection

Complex environments in which marketing operates

Whats New (Key marketing strategy decisions) How to divide up markets into meaningful customer

groups (market segmentation)

Select which customer groups (one or more) to

serve (target marketing) Create marketing offers that best serve targeted

customers (positioning)


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Mass marketing or Market segmentation?

Mass production, mass distribution, mass promotionabout the same product in about the same way to allconsumers. Coca Cola

Why? Lowest cost, highest margin

Market segmentation - distinct needs, characteristics,or behavior who might require separate products ormarketing mixes. P&G laundry detergent, Sunsilkshampoo, Toyota


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Steps in market segmentation, targetingand positioning

Three major steps:

Market segmentation

1. Identify bases

for segmenting

the market

2. Develop

segment profiles

Target marketing

3. Develop measure of

segment

attractiveness

4. Select target segments

Market Positioning

5. Develop positioning for

target segments

6. Develop a marketing

mix for each

segment


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Variables for Segmenting Consumer Market Geographic segmentation: nations, states, regions, cities.

Largest display store in Dhaka, Medium in Chittagong, Sylhet,Small in Rajshahi. Starbucks: more coffee and dessert for theSouthern states customers.

Demographic segmentation: age, gender, family size, familylife cycle, income, occupation, education, religion, race,

generation, and nationality. Most popular and widely usedbases.

Age and life-cycle stage: baby gap, gap kids, gap maternity

Gender: clothing, cosmetics, toiletries, magazines. Facialcleansing, eye brow, mascara

Income:automobiles, clothing, cosmetics, and travel. Targetaffluent customers or low income consumers. Grameen users

Psychographic segmentation: social class, lifestyles orpersonality characteristics. Mercedes. K2 cigarette


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Variables for Segmenting Business Market

Demographical segmentation: dividing groups on thebasis of industry, company size. Swiss color (leatherindustry, garments industry, painting industry)

Operating Variables: many services, fewer services,heavy users or non users

Purchasing Approaches: Engineer dominated,financially dominated, marketing dominated

Situational factors: urgency (quick or suddendelivery)

Personal Characteristics: High loyalty, Buyer-seller similarity.


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Requirements for Effective Segmentation

To be useful market segments must be:

Measurable: size, purchasing power, and profiles can bemeasured. Scattered customers difficult to measure (lefthanded people)

Accessible: effectively reached and served.

Substantial: large or profitable enough to serve.

Differentiable: conceptually distinguishable and responddifferently to different marketing mix elements and programs.

Actionable: Sufficient resources, marketing capabilities I.eeffective marketing programs can be designed forattracting and serving the segments. Staff limitation


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Target Marketing: evaluate and select

The process of evaluating each market segmentsattractiveness and selecting one or more segments toenter.

Evaluating market segments

Three factors:

Segment size and growth: right size and growth.relative

Segment structural attractiveness: strongcompetitors, substitute products, power of buyers,powerful suppliers

Company objectives and resources: make sensefor long run objectives and have requiredresources.


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Selecting target market segmentsTarget marketing strategies: Target broadly (undifferentiated / mass marketing):

ignore market segments, go after the whole market withone offer. Coca-cola, keep down cost

Differentiated marketing: target several market segmentsand designs separate offers for each. GM (cars for everypurse, purpose, personality); P&G more total marketshare. Increase cost

Concentrated (niche) marketing: large share of one or afew segments or niches, ignored by larger competitors.limited resources, gain operating economies throughspecialization. Porsche sports car market, Volkswagensmall car market.


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Selecting target market segmentsTarget marketing strategies (continued):

Micromarketing: tailor products and

marketing programs to the needs and wantsof specific individuals and local customergroups.

Local Marketing:local customer groups cities,

neighborhoods, Retailers. Customize each storesmerchandise and promotions.

Individual Marketing:individual customers. Dellcomputer.


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Choosing a Target Marketing Strategy Depends on:

Company resources: limited resources concentratedmarketing.

Product variability: Uniform products, undifferentiatedmarketing. Steel.Variety products, differentiation or

concentration.Automobiles. Products life-cycle stage: new product, one version,

undifferentiated or concentrated marketing. Mature stage,Differentiated.

Market variability: same tastes, buy same amounts, reactsame way to marketing offers, undifferentiated.

Competitors marketing strategies: competitors usedifferentiated or concentrated, then undifferentiated issuicidal. Competitors use undifferentiated, thendifferentiated gain advantage.


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Positioning for Competitive AdvantageArranging for a product to occupy a clear, distinctive, and

desirable place relative to competing products in the minds oftarget consumers. Bata durable, Tide powerful, Toyotaeconomy, Cadillac/Mercedes luxury, Dettol soap health andhygiene.

Choosing a Positioning Strategy

The positioning task consists of three steps:

Identifying possible competitive advantages: offer consumersgreater value, either through lower prices or by providing morebenefits that justify higher prices. Offer and deliver.

In what specific ways company can differentiate its offer?

Market offer can be differentiated along the lines of product,services, channels, people, or image.


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Positioning for Competitive Advantage Product differentiation: little variation (chicken, steel); highly

differentiated (automobiles, clothing, furniture). Form size, shape (aspirin color, coating, shape)

FeaturesOral B (added blue dye in the center bristles that fades)

Durability vehicles, kitchen appliances, must not be subject to rapidtechnological obsolescence (PC, Video cameras)

Reliability which company, which manufacturer? (real estate) Reparability(auto mobiles)

Services differentiation: speedy, convenient, careful delivery.

Personnel differentiation: better trained personnel. (courteous,professional, smiley)

Channel differentiation: channels coverage, expertise, andperformance. Caterpillar, Dell

Image differentiation: company or brand image Sony

Symbols: McDonalds golden arches, apple for Apple computer.


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Positioning for Competitive Advantage

Choosing the right competitive advantages: Howmany differences to promote and which ones.

How many differences to promote: only one benefit(crest anticavity protection), more than one benefit(Lever 2000 three-in-one bar soap I.e. offeringcleansing, moisturizing and deodorizing benefits).

Must avoid three major positioning errors.Underpositioning, overpositioning, confused positioning

- Which differences to promote: important, distinctive,superior, communicable, preemptive, affordable,profitable (Pepsi crystal Pepsi)


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Selecting an overall positioning strategy: valueproposition the full positioning of brand.

Five winning value propositions upon which companiescan position their products:

More for more: upscale product at higher price(Mercedes-Benz automobiles; Haagen-Dazs ice cream)

More for the same: Xs teaching

The same for less: Best Buy, Circuit City

Less for much less: Costco, AUB, Travelers More for less: winning value proposition. P&G laundry

detergent, Dell.


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Communicating and Delivering the Chosen PositionOffer and Deliver.

More for more: produce high quality products, chargea high price, distribute through high quality dealers,

advertise in high-quality media, hire and train moreservice people.


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Questions or Comments

Thank You

ch 07 segmentation

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