Transcript Slide 1

Chapter 8
Segmentation,
Targeting, and
Positioning:
Building the Right
Relationships
with the Right
Customers
Copyright © 2008 Pearson Education Canada
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
8-2
Principles of Marketing, Seventh Canadian Edition
Case Study
Art Gallery of Ontario - AGO
• Targeting critical segments is
critical for the AGO to
survive.
• The 30 to 40-year old urban
professionals may be one of
the few segments with
enough money to support
cultural institutions.
• However, this Me
Generation is unphilantropic
relative to their wealth.
• They want cars, houses, big
jewellery.
Copyright © 2008 Pearson Education Canada
• Potential donors in this cohort
have a desire for interaction,
involvement, and meaningful
comment on art as well on the
AGO’s tactics.
• Create a distinct position to
attract these younger donors.
• New program: “New
Founders initiative”
• In return for their support,
donors would be invited to
small dinner parties and
exclusive tours of exhibitions.
• The program has been a
resounding success.
8-3
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
8-4
Principles of Marketing, Seventh Canadian Edition
Segmentation, Targeting, and
Positioning
• Market segmentation: dividing market into
distinct groups with distinct needs,
characteristics, or behaviours, who might require
separate products or marketing mixes
• Target marketing: choosing which group(s) to
appeal to
• Market positioning: creating a clear, distinctive,
and desirable position in the target consumer’s
mind, relative to competition
Copyright © 2008 Pearson Education Canada
8-5
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
8-6
Principles of Marketing, Seventh Canadian Edition
Segmenting Consumer Markets
• Geographical segmentation
• Demographic segmentation
– Most popular bases for segmenting consumer
markets
• Psychographic segmentation
– Lifestyle, social class, and personality-based
segmentation
• Behavioural segmentation
– Occasions, benefits sought, user status, usage rate,
loyalty status.
• Using multiple segmentation bases
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Geographic Segmentation Variables
• World region
or country
• U.S. region
• State
• City
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• Neighborhood
• City or
metro size
• Density
• Climate
8-8
Principles of Marketing, Seventh Canadian Edition
Demographic
Segmentation Variables
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Age
Gender
Family size
Family life cycle
Income
Copyright © 2008 Pearson Education Canada
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Occupation
Education
Religion
Race
Generation
Nationality
Principles of Marketing, Seventh Canadian Edition
Behavioural Segmentation
Variables
• Occasions
• Benefits
• User status
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User rates
Loyalty status
Readiness stage
Attitude toward the
product
Principles of Marketing, Seventh Canadian Edition
Discussion Question
• Based on the car
examples on the
following slide, how
do car manufacturers
use the following
segments when
marketing products?
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Geographic
Demographic
Psychographic
behavioural
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8-11
Principles of Marketing, Seventh Canadian Edition
Segmenting Business Markets
• Geographic segmentation
• Demographic segmentation
– Industry, company size, location
• Operating characteristics
– Technology, usage status, customer capabilities
• Purchasing approaches
• Situational factors
– Urgency, specific application, size of order
• Personal characteristics
– Buyer-seller similarity, attitudes toward risk, loyalty
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Principles of Marketing, Seventh Canadian Edition
Segmenting
International Markets
• Geographic segmentation
– Location or region
• Economic factors
– Population income or level of economic development
• Political and legal factors
– Type/stability of government, monetary regulations,
amount of bureaucracy, etc.
• Cultural factors
– Language, religion, values, attitudes, customs,
behavioural patterns
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Principles of Marketing, Seventh Canadian Edition
Segmenting
International Markets
• Intermarket segmentation
– Forming segments of consumers who have
similar needs, even though they live in
different countries
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Principles of Marketing, Seventh Canadian Edition
Segmenting Markets Effectively
• Measurable
– Size, purchasing power, and profile of segment
• Accessible
– Can be reached and served
• Substantial
– Large and profitable enough to serve
• Differentiable
– Respond differently
• Actionable
– Effective programs can be developed
Copyright © 2008 Pearson Education Canada
8-15
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Target Marketing
• Target Market
– Consists of a set of buyers who share common
needs or characteristics that the company
decides to serve
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Principles of Marketing, Seventh Canadian Edition
Target Marketing
• Evaluating Market Segments
– Segment size and growth
– Segment structural attractiveness
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Level of competition
Substitute products
Power of buyers
Powerful suppliers
– Company objectives and resources
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Principles of Marketing, Seventh Canadian Edition
Target Marketing Strategies
• Undifferentiated (mass) marketing:
– Market coverage strategy that ignores market segment differences and
targets the whole market with one offer
• Differentiated (segmented) marketing:
– Market coverage strategy that targets several market segments and
designs separate offers for each
• Concentrated (niche) marketing:
– Market coverage strategy in which a company pursues a large share of
one or a few submarkets
• Micromarketing:
– The practice of tailoring products and marketing programs to the
needs/wants of specific individuals and local customer groups
– Includes: local marketing and individual marketing
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Principles of Marketing, Seventh Canadian Edition
Choosing a
Target Marketing Strategy
• Considerations include:
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Company resources
The degree of product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
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8-20
Principles of Marketing, Seventh Canadian Edition
Target Marketing
• Socially Responsible Targeting
– Some segments, especially children, are at
special risk
– Spillover from adult to children markets
– Many potential abuses on the Internet,
including fraud Internet shoppers
– Products of questionable benefit
– Controversy occurs when the methods used
are questionable
Copyright © 2008 Pearson Education Canada
8-21
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
8-22
Principles of Marketing, Seventh Canadian Edition
Positioning
• The way the product is defined by consumers on
important attributes - the place the product
occupies in consumers’ minds relative to
competing products relative to competing
products
• Involves implanting the brand’s unique benefits
and differentiation in the customer mind
• Perceptual positioning maps show perceptions
of brands on important buying dimensions
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Principles of Marketing, Seventh Canadian Edition
Choosing a Positioning Strategy
• Identifying Possible
Competitive
Advantages
• Choosing the right
competitive advantage
• Selecting an Overall
Positioning Strategy
Copyright © 2008 Pearson Education Canada
• Differentiation can be
based on:
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Products
Services
Channels
People
Image
Principles of Marketing, Seventh Canadian Edition
Choosing a Positioning Strategy
• How many differences to
promote?
• Identifying Possible
Competitive Advantages
• Choosing the right
competitive advantages
• Selecting an Overall
Positioning Strategy
Copyright © 2008 Pearson Education Canada
– Unique selling proposition
– Several benefits
• Which differences to
promote? Criteria
include:
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Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Principles of Marketing, Seventh Canadian Edition
Choosing a Positioning Strategy
• Value propositions
represent the full
positioning of the
brand
• Possible value
propositions:
• Identifying Possible
Competitive
Advantages
• Choosing the right
competitive advantages
• Selecting an Overall
Positioning Strategy
Copyright © 2008 Pearson Education Canada
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More for more
More for the same
More for less
The same for less
Less for much less
Principles of Marketing, Seventh Canadian Edition
WestJet’s Value Proposition:
“Less for Much Less”
• Founded in 1996 to provide low-fare air travel across
western Canada
• Specializes in serving the VFR market (people visiting
friends and relatives).
• Main competitor: the family car
• People would choose to fly rather than drive if offered
low fares
• One type of plane, offers basic in-flight service (no
meals, no movies), single class service, no baggage
transfer services with other airlines, etc.
• However: “less service for less money” is defined as
fewer amenities for a lower fare, not less customer
service.
• Generates $1 billion in revenues
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Principles of Marketing, Seventh Canadian Edition
Developing a
Positioning Statement
• A positioning statement summarizes the
company or brand positioning
• EXAMPLE: To (target segment and need) our
(brand) is (concept) that (point-of-difference)
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Communicating and Delivering the
Chosen Position
• Companies must take strong steps to
deliver and communicate the desired
position to target consumers
• The marketing mix efforts must support
the positioning strategy
• Positions must be monitored and adapted
over time to match changes in consumer
needs and competitor’s strategies
Copyright © 2008 Pearson Education Canada
8-29
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada
8-30
Principles of Marketing, Seventh Canadian Edition