Transcript MBA 860 - Adv. Mkt. Strategy

6
Market Segmentation,
Positioning, and
Demand Projection
McGraw-Hill/Irwin
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Agenda
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General Market Segmentation Strategy
Business Marketing Segmentation Versus
Consumer Marketing Segmentation
Approaches to Business Market
Segmentation
Common Business Segmentation
Variables
Evaluating Potential Market Segments
Product Positioning Strategy
Business Demand Projection
6-2
Why Segment Markets?
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To group customers with similar needs so
one marketing mix can be used to meet
the group’s needs without having a
separate marketing mix for each customer
(and still create a differential advantage).
Given limited resources, to strategically
target which groups to serve.
As in all marketing activity, to better serve
customer needs.
6-3
General Market Segmentation
Strategy
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Analyze buyer behavior of each
segment…
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Analyze buyer decision process of each
segment…
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Analyze the characteristics of each
segment…
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Pick targets, forecast sales, calculate pro
forma profitability, and design a marketing
mix for each segment based on above…
6-4
General Market Segmentation
Strategy
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A Good Market Segment Is
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Measurable
Differentiable
Substantial
Actionable
Accessible
6-5
General Market Segmentation
Strategy
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Undifferentiated Marketing Strategy
• Total market is treated as one homogeneous market
segment
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Differentiated Marketing Strategy
• Developing a different marketing mix for many different
market segments
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Concentrated Marketing Strategy
• Selects one or a relatively few segments to pursue
6-6
Segmentation for
Small Precision Servomotors
Exhibit 6-2
The entire market needs to be
represented, not just present
customers, and not just
attractive segments. Why?
Aerospace
Computers
Automotive
Robotics
Appliances
Toys
Misc.
6-7
Answer…
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You would not be segmenting the
market, only part of it.
If the segment isn’t represented,
you will never even consider it.
6-8
Business Marketing Segmentation Vs.
Consumer Marketing Segmentation
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Business market segmentation can help
in:
• Market analysis
• Market selection
• Marketing management
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Segment business markets even if we
are selling consumer products
• B2C marketers must market to distributors
or retail chains
6-9
Approaches to Business Market
Segmentation
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Macro/Micro Segmentation
• Macro segmentation
 dividing the market into subgroups based on
overall characteristics of the prospect
organization, e.g., usage rates, NAICS
category
• Micro segmentation
 Dividing the market into subgroups based on
specific characteristics of the decision-making
process and buying structure of the prospect
organization, e.g., buying-center authority,
attitudes toward vendors.
6-10
Approaches to Business Market
Segmentation
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Nested Approach
• Stresses segmentation according to the amount
of investigation required to identify and evaluate
different criteria.
 Layers of the nest begins with organization
demographics
 More specific customer characteristics are
nested inside the broader organizational
basis.
6-11
6-5
6-12
Common Business Segmentation
Variables
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Industry/Type of Economic Activity
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Size of Organization
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Geographic Location
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Product Usage
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Structure of the Procurement Function
6-13
6-6
6-14
Evaluating Potential Market Segments
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Market Profitability Analysis
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Market Competitive Analysis
6-15
Product Positioning Strategy
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Introduction
• Product Positioning
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The way a product is defined by
customers
• Product Differentiation
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Involves meaningful differences in the
product, services offered, personnel, etc.
6-16
Why Strategically Position
Products and Services?
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So they are perceived as different from
competitors’ in ways that represent value to
customer segments
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As a tool to help marketers visualize the
customer’s perceptions of the competitive
offerings available according to various variables
(axes) of importance
6-17
How Can Product Positioning Be Misused?
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One common error is to create a map of
where you would like your products to be
positioned or where they are positioned in
your perception of the market, then treat the
resulting map strategically
as if it is a map of the actual perceptions of
the customers in the market.
6-18
Positioning Strategy – Perceptual Mapping
6-19
Product Positioning Strategy
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Approaches to Positioning
• Technology
• Quality
• Price
• Distribution
• Image
• Service
6-20
Product Positioning Strategy
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Successful Positioning
• Consider what position the firm presently owns.
• Decide what position the firm wants to own.
• Decide who the firm must outflank to gain that
position.
• Consider if the firm has the necessary resources.
• Consider if the firm is committed to achieving the
objective.
• Determine if the firm can create a marketing mix to
achieve the desired position.
6-21
Business Demand Projection
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Strategic Importance of Forecasting in
Decision Making
• Companies must plan in order to have
materials/resources on hand to meet customer
needs.
• It is required by top management, just as
engineers must design and accountants must
add numbers.
• It is a basic marketing function.
• Other functional areas use demand forecasts to
make their own forecasts and budgets, make
purchases, set goals, etc.
6-22
Business Demand Projection
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Common Forecasting Problems
• Mystique (to those who are not trained)
• Accuracy (marketers tend to be can-do, optimistic
types)
• Inconsistency (continual subjective modifications)
• Accountability (developing forecast versus achieving
forecast)
• Implementation (mixing forecasts, goals, quotas)
6-23
Selecting Forecasting Methods
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The importance and nature of forecast impacts
method chosen.
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Different methods are appropriate for long-term vs.
medium-term vs. short-term forecasts.
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Different methods are appropriate for different types
of data (e.g., amount of cycle, trend, noise).
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The right method for the right type situation and the
right type data improves accuracy.
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Forecasting is not guessing.
6-24
Selecting Forecasting Methods
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Forecasting requires a pattern or relationship
that is present in past data and will repeat.
Forecasting is a lot more than averaging. It’s
an academic area with its own theory,
textbooks, and journals.
Companies routinely hire expert consultants
to improve their forecasting accuracy by a
percentage point or two and save them
millions of dollars.
6-25
Selecting Forecasting Methods
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General Approaches to Forecasting
• Top-down method – management develops
an aggregate measure of sales potential then
sales quotas are developed and a sales
forecast is constructed
• Bottom-up method (Build-up) – sales
force develops estimates of sales by product
lines, geographic area, or customer group and
management adds these estimates together to
get sales forecast
6-26
Selecting Forecasting Methods
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Qualitative Approaches
• Jury of Executive Opinion (“executive panels”)
• Sales Force Composite (“sales force
estimates”)
• Survey of Buyer Intentions (“market survey of
user expectations”)
• The Delphi Method
6-27
Selecting Forecasting Methods
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Quantitative Approaches
• Time-Series Techniques
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Trend Fitting
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Moving Average
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Exponential Smoothing
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Adaptive Control
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Box-Jenkins
6-30
Selecting Forecasting Methods
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Quantitative Approaches
• Causal Techniques
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Regression
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Econometrics
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Leading Indicators
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Diffusion Index
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Input-Output Analysis
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Life-Cycle Analysis
6-36