Transcript Market Segmentation, Targeting, and Positioning for

Market Segmentation, Targeting, and Positioning for
Competitive Advantage
Deciding Who We Want to Mean
What to
Marketing Focuses on Customers

Target Market
 A specific group of customers on whom an
organization focuses its marketing efforts




Large or small customer groups
Single or multiple product markets
Single or multiple products
Local to global markets
Components
of Strategic
Marketing
FIGURE 1.1
Marketing Deals with Products,
Distribution, Promotion, and Price

The Marketing Mix
 Four marketing activities—product,
distribution, promotion, and pricing—that a
firm can control to meet the needs of
customers within its target market
Product
Distribution
Promotion
Pricing
Target
Market
Marketing Mix Variables
The “4 P’s”
Product
Distribution
Goods, services, or ideas that satisfy
customer needs
The ready, convenient, and timely
availability of products
Promotion
Activities that inform customers about
the organization and its products
Pricing
Decisions and actions that establish
pricing objectives and policies and set
product prices
Some Definitions


Market Segmentation – is the process of dividing a
total market into groups, or segments, consisting of
people or organizations with relatively similar
product needs.
– The purpose is to enable a marketer to design a
marketing mix (mm) that more precisely matches
the needs of customers in the selected market
segments.
A Market Segment - consists of individuals, groups,
or organizations with one or more similar
characteristics that cause them to have relatively
similar product needs.
Target Market Selection Process
FIGURE 7.1
Market Segmentation
Levels of Market Segmentation
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 marketing mix (mm) directed at all consumers
(no segmentation, i.e.,Ford Model T )
Segment Marketing
Different marketing mix (mm) to one or more segments
(some segmentation, i.e. GM)
Today, Mass Marketers Rarely
Practice Mass Marketing




In other words Mass Marketers do target
almost everyone, but they do not do it with
one marketing strategy
They develop unique marketing strategies for
each major target market
Product strategy does not equal marketing mix
strategy
As we will see you can target the same
product to different segments using different
promotion, pricing, or distribution strategies
Mass Marketing
One mm for all
Segment Marketing
One or more mm targeted to
one or more segments
Niche Marketing
One or more mm targeted to
one or more sub-segments
Micro Marketing (1-1)
One or more mm targeted to
specific individuals or communities
The Classic Segmentation Variables for
Consumer Markets
FIGURE 7.3
Demographic Variables
 Perhaps
the most widely used and
most widely available
 “Objective”
 Often a proxy for harder to obtain
Psychographics
– College student and interest in
education
– 50 year old and interest in retirement
funds
Psychographics Variables
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Personality characteristics
 Marketers appeal to positive/favorable personal
characteristics to influence the purchase decision.
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Motives
 Marketers use individuals’ differing purchase
motives to segment a product market.

Lifestyles
 Marketers segment markets according to how
individuals choose to spend their time in various
activities, their income, their interest and
opinions, and their education.
Behaviorist
 Behaviorist
often called “usage”
 Very straightforward - target your
users
 May be hard to get (surprisingly)
 80/20 rule (80% sales are to 20% of
your customers
 Ethical?
– Vodka targeting alcoholics?
Geographic
 If
you are a regional firm then Geo
targeting is also self evident
 Some firms have regional product
mix (grocery stores and “ethnic”
foods.
 Even national firms may target
regionally.
– Product may mean different things in
different parts of the country
– Coke or Pop or Soda and is it a
breakfast drink?
We Slice and Dice Segments
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
Typically using more then one variable or type
of segmentation variable
– Use multiple Demographic Variables such as
age, gender, income &
– Use various Demographic, Psychographic,
Geographic, and Behaviorist Variables
Art as much as science
– So can come up with different segments
using different variables and different
analytical/statistical techniques
Geodemographic Segmentation
 Marketing
segmentation that clusters
people in pim code areas and smaller
neighborhood units based on lifestyle
(psychographic) and demographic
information
– (Combines Geographic and
Demographic info)
 Example
are PRIZM and MicroVision
Psychographics and
Demographics Variables
 VALS
& VALS 2
 Based on values, lifestyles, and
demographic
 Therefore, combines Psychographic
and Demographic variables
VALS 2
Percentage
of Adults,
Classified by
VALS 2 Type,
Who
Participated
in Selected
Sports in
1996
FIGURE 7.6
Once We Have Our Segments
We Need to Target Them With a
Marketing Mix
 Three
options:
– Undifferentiated
– Differentiated
– Concentrated
Targeting Strategies
•
•
•
•
The classic mass marketing, all things to all people approach
Ignore segments
One mm
Rarely used today – Name an undifferentiated product?
FIGURE 7.2
FIGURE 7.2
Differentiated Strategy (cont.)
• The firm decides to target several separate segments and designs
separate marketing strategies for each
• GM’s “a car for every purpose, purse, and personality” vs. Fords one
car for every purpose for every purse for every personality”
• Typically, for most firms, this means you go for a small share of the
larger, total aggregate market (one or two mm for one or two
segments (out of maybe six or seven)
Concentrated Marketing
• The firm goes for a large share of a single (or very few) segments.
• Scorpio vs. Scoda
• Can be niched or larger
FIGURE 7.2
IT IS CRITICAL TO UNDERSTAND
THAT
 Mass
marketers do not often
practice mass marketing today
 They practice differentiated
marketing
 They likely do not change the
product to appeal to different
segments
 They change price, place, and
promotion
Stereotyping vs. Marketing
Does marketing “discriminate?”
Target Market Selection Process
Focus of Sept. 27
Focus for today
FIGURE 7.1
Recall: Market Segmentation
Levels of Market Segmentation
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 marketing mix (mm) directed at all consumers
(no segmentation, i.e.,Ford Model T )
Segment Marketing
Different marketing mix (mm) to one or more segments
(some segmentation, i.e. GM)
And That Today, Mass
Marketers Rarely Practice Mass
Marketing




In other words Mass Marketers do target almost
everyone, but they do not do it with one marketing
strategy
They develop unique marketing strategies for each
major target market
Product strategy does not equal marketing mix
strategy
As we will see you can target the same product to
different segments using different promotion,
pricing, or distribution strategies
Mass Marketing
One mm for all
Segment Marketing
One or more mm targeted to
one or more segments
Niche Marketing
One or more mm targeted to
one or more sub-segments
Micro Marketing (1-1)
One or more mm targeted to
specific individuals or communities
The Classic Segmentation
Variables for Consumer Markets
FIGURE 7.3
Some Definitions
Market Segmentation – dividing a market into
smaller groups of buyers with distinct needs,
characteristics, or behaviors who might require
separate products OR marketing mixes (mm).
 Market Targeting – evaluating each segments
attractiveness and selecting one or more to enter.
 Market Positioning – setting the competitive
positioning for the product and creating a detailed
mm.
- Terms often used often interchangeably, esp.
targeting and positioning

Step 1: Identify The Appropriate
Targeting Strategy
Three Basic Targeting Strategies:
– Undifferentiated
– Differentiated
– Concentrated
Targeting Strategies




Classic mass marketing, all things to all people
approach
Ignore segments
One mm for all customers
Rarely used today – Name an undifferentiated
product?
Differentiated Strategy (cont.)

The firm targets
several separate
segments and designs
separate marketing
strategies for each
– GM’s “a car for every
purpose, purse, and
personality”
– vs. Fords one car for every
purpose for every purse for
every personality”
For most firms, this means they go for a small
share of the larger, total aggregate market (one
or two mm for one or two segments (out of
maybe six or seven)
Concentrated Marketing

The firm goes for a large share of a single
(or very few) segments
– Jeep vs. GM

Can be niched or larger
IT IS CRITICAL TO UNDERSTAND
THAT
 Mass
marketers do not often practice
mass marketing today
 They practice differentiated marketing
 Often they do not change the product
to appeal to different segments
 They change price, place, and
promotion
Having ID’ed the Targeting
Strategy and Determined
Segmentation Variables



We develop different segment profiles
Evaluate these for profitability
And select the target markets we want to enter
Finally We Position
Market Segmentation (ID)
2. Determine which
segmentation variables to use
3. Develop market segment profiles
Market Targeting (Evaluate)
4. Evaluate relevant market segments
5. Select target markets
Having Finished the
Target Market Selection
Process We Act!
Market Positioning (Enter)
• Develop positioning
for target segments
• Develop a marketing
mix for each segment
How Does McDonald’s Practice
Market Positioning?
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Product essentially same (no Indian Big Mac)
Promotion (specific promotion campaigns
aimed at the Indian market
Place (urban stores, suburban stores, express
stores, etc.)
Price (junior discounts)