Transcript Why Market Segmentation?

Segmentation, Targeting and Positioning:
Copyright © 2005 Pearson Education Canada Inc.
Building the Right Relationships with the Right Customers
•Chapter 9
•Powerpoint slides
•Extendit! version
•Instructor name
•Course name
•School name
•Date
Principles of Marketing: 6th Canadian Edition
Copyright © 2005 Pearson Education Canada Inc.
Opening Vignette: Proctor & Gamble
9.2
• Began operations in Canada in 1915, now employs 650 people at its
Canadian headquarters, and regional offices
• Operate two manufacturing and one distribution facility in Canada
• Parent company sells more than 250 products in 130 countries
• Key success factors in P&G growth:
– Innovation
– Innovative marketing campaigns
– Externally competitive while internally
collaborative
– Encourages personal growth and
development of employees
– Reputation for integrity
• Experts in segmentation and branding
strategy
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9.3
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Why Market Segmentation?
• At one time, most companies practiced mass marketing
• Economically, mass marketing makes the most sense; lower costs
due to achieving economies of scale, low prices increase demand
• Today’s buyers are too numerous, too widely scattered, and too
varied in their needs and buying practices
• Companies vary in their
resources and ability to serve
different markets
• Proliferation of distribution
channels and media
alternatives force segmenting
markets
• Consumers want it their way!
Principles of Marketing: 6th Canadian Edition
Steps in Market Segmentation,
Targeting, and Positioning
9.4
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• 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
Figure 9.1
Principles of Marketing: 6th Canadian Edition
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9.5
Principles of Marketing: 6th Canadian Edition
9.6
Segmenting Consumer Markets
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• Geographic segmentation: dividing a market into different
geographical units, such as regions, provinces, counties, or cities
– Political boundaries make this easy to do
• Demographic segmentation: dividing a market into groups
based on demographic variables such as: age, gender, family size or
life cycle, income, occupation, education, religion, race, and
nationality
– The most popular bases for segmenting consumer markets
because behaviour will vary according to these dimensions
Figure 9.1
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9.7
Segmenting Consumer Markets (continued)
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• Psychographic segmentation: dividing a market based on
lifestyle or personality characteristics
– More difficult to implement but can be very effective for specialty
products
• Behavioural segmentation: dividing a market based on
consumer knowledge, attitude, use, or response to a product
– Includes: occasions, benefits sought, user status and/or rate, loyalty
status, buyer readiness state, or attitude toward product
Figure 9.1
Principles of Marketing: 6th Canadian Edition
Business Markets Segmentation (Table 9.2)
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• Demographic:
– Industry
– Company size
– Location
• Operating variables:
– Technology
– User/non-user status
– Customer capabilities
• Situational factors:
– Urgency
– Specific application
– Size of order
9.8
• Purchasing approaches:
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–
–
–
–
Purchasing organization
Power structure
Existing relationships
General policies
Purchasing criteria
• Personal characteristics:
– Buyer-seller similarity
– Attitude towards risk
– Loyalty
Principles of Marketing: 6th Canadian Edition
Segmenting International Markets
9.9
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• International markets can be segmented by:
–
–
–
–
Geographic location
Economic factors
Political and legal factors
Cultural factors
• Intermarket segmentation:
– Forming segments of consumers
who have similar needs, even
though they live in different
countries
Principles of Marketing: 6th Canadian Edition
Copyright © 2005 Pearson Education Canada Inc.
Requirements for Effective Segmentation
9.10
• To be useful, market segments must be:
– Measurable:
• Size, purchasing power, and profiles can be measured
– Accessible:
• Segments can be effectively
reached and served
– Substantial:
• Large enough or profitable
enough to serve
– Actionable:
• Programs can be developed
to attract and serve the
segments
Principles of Marketing: 6th Canadian Edition
9.11
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Target Marketing Strategies
• Three factors used to evaluate segments:
– Segment size and growth:
• Largest or fastest growing segment may not be the most
attractive for a particular company
– Structural attractiveness:
• Competition, substitute products, power of buyers/suppliers
– Company objectives and resources:
• Required strengths, skills, and resources
Figure 9.2
Principles of Marketing: 6th Canadian Edition
9.12
Target Marketing Strategies (continued)
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• Target market:
– A set of buyers sharing common needs or characteristics that the
company decides to serve
• Undifferentiated (mass) marketing:
– Market coverage strategy that ignores market segment differences
and targets the whole market with one offer (Coca Cola)
• Differentiated (segmented) marketing:
– Market coverage strategy that targets several market segments and
designs separate offers for each (Car industry)
Figure 9.2
Principles of Marketing: 6th Canadian Edition
9.13
Target Marketing Strategies (continued)
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• Concentrated (niche) marketing:
– Market coverage strategy in which a company pursues a large
share of one or a few submarkets (Specialty grocery stores)
• 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 (depanneur,
tailor)
Figure 9.2
Principles of Marketing: 6th Canadian Edition
Choosing a Target Marketing Strategy
9.14
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• Factors to be considered when choosing a strategy:
– Company resources
– Product variability (specific fruit, cameras)
– Product’s life-cycle stage (introduction,
maturity)
– Market variability(people with identical
tastes or not)
– Competitor’s marketing strategies
(differentiated or undifferentiated)
• Socially responsible target
marketing:
– Marketing towards children, vulnerable,
or disadvantaged consumers (cereals)
– Products of questionable benefit
– The main issue is not who but how and
for what
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Positioning for Competitive Advantage
9.15
• Product position: the way the product is defined by consumers
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on important attributes, relative to competing products
• Competitive advantage: an
advantage gained over competitors by
offering (and delivering) greater value;
either through lower prices or more
benefits that justify higher prices
• Sources of differentiation:
(provide examples)
– Product (attributes)
– Service (hours opened)
– Marketing channels (delivery of
product or service)
– People (hotel)
– Image (brand, color)
Principles of Marketing: 6th Canadian Edition
Which Differences to Promote?
9.16
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• Unique selling proposition (USP): aggressively promoting
one benefit to the target audience; prevents confusing the customer
with too many ideas (Crest, Volvo, Michelin)
– Some marketers believe that
using more than one factor is
necessary to offer the multiple
benefits that consumers want (in
case competition also proposes
some similar benefits)
• Three major positioning
errors:
– Under-positioning (no specific
positioning)
– Over-positioning (too specific)
– Confused positioning (too many
images changing – indicates too
many changes of positioning
strategies)
• Differences should be:
–
–
–
–
–
–
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Important (important)
Distinctive
Superior
Communicable
Pre-emptive
Affordable (important)
Profitable
Principles of Marketing: 6th Canadian Edition
Possible Value Propositions
9.17
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• Value proposition:
– Full positioning of a brand
• The full mix of benefits used for positioning
• Positioning statement:
Figure 9.3
– A statement that summarizes
company or brand
positioning
– To (target segment and need)
our (brand) is (concept) that
(point of difference)
– “For those cola drinkers
who really need a lift, Bam!
Cola offers all of the sugar
and twice the caffeine!”
Principles of Marketing: 6th Canadian Edition