Lecture Principles of Marketing - Chapter 6: Segmentation, targeting, and positioning

This chapter define the three steps of target marketing: market segmentation, market targeting, and market positioning; list and discuss the major bases for segmenting consumer and business markets; explain how companies identify attractive market segments and choose a target marketing strategy; discuss how companies position their products for maximum competitive advantage in the marketplace.
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Lecture Principles of Marketing - Chapter 6: Segmentation, targeting, and positioning Chapter Six Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers Roadmap: Previewing the Concepts 1. Define the three steps of target marketing: market segmentation, market targeting, 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 2007, Prentice Hall, Inc. 6-2 Case Study P & G – Segments the Market Strategy The Payoff  Sells multiple brands  P&G generates revenues within the same product in excessive of $4 billion in category for detergents, U.S. laundry detergent soaps, and other goods. market alone.  Each brand features a  Tide has 34% share of different mix of benefits powder and 24% share of and appeals to a different liquid market segments. segment.  Combined, all P&G brands  Product modifications account for 75% share of appeal to different niches powder and 55% share of within certain segments. liquid detergent markets. Steps in Target Marketing  Market segmentation – Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors requiring separate products or marketing mixes.  Target marketing – Evaluating each segment’s attractiveness and selecting one or more to enter.  Market positioning – Setting the competitive positioning for the product and creating a detailed marketing mix. Market Segmentation  Key variables: – Geographic – Demographic – Psychographic – Behavioral  No single way to segment a market.  May combine more than one variable to better define segments. Market Segmentation  Geographic: – World region or country – Region of country – City or metro size – Density or climate Market Segmentation  Demographic: – Age, gender, family size, family life cycle, income, occupation, education, race, religion, etc. – The most popular bases for segmenting customer groups. – Easier to measure than most other types of variables. Market Segmentation  Age and Life-Cycle Stage: – Example: P&G has different toothpastes for different age groups. – Avoid stereotypes in promotions. – Promote positive messages. Market Segmentation  Income: – Identifies and targets the affluent for luxury goods. – People with low annual incomes can be a lucrative market. – Some manufacturers have different grades of products for different markets. Market Segmentation  Psychographic: – Social class – Lifestyle – Personality Market Segmentation  Behavioral: – Occasion segmentation • Special promotions and labels for holidays. – (e.g., Hershey Kisses) • Special products for special occasions. – (e.g., Kodak disposable cameras) Market Segmentation  Behavioral: – Benefits Sought • Different segments desire different benefits from products. – (e.g., P&G’s multiple brands of laundry detergents to satisfy different needs in the product category) Market Segmentation  Behavioral: – User Status • Nonusers, ex-users, potential users, first-time users, regular users – Usage Rate • Light, medium, heavy – Loyalty Status • Brands, stores, companies Market Segmentation  Best to use multiple approaches in order to identify smaller, better-defined target groups. – Start with a single base and then expand to other bases. – Geodemographic segmentation is becoming more common. Market Segmentation  Geodemographic: – Claritas, Inc. – Potential Rating Index for Zip Markets (PRIZM) – Based on U.S. Census data – Profiles on 260,000 U.S. neighborhoods – 62 clusters or types Segmenting Business Markets  Consumer and business markets use many of the same variables for segmentation.  Business marketers can also use: – Operating Characteristics – Purchasing Approaches – Situational Factors – Personal Characteristics Segmenting International Markets  Factors used: – Geographic location – Economic factors – Political and legal factors – Cultural factors  Intermarket segmentation: – Segments of consumers who have similar needs and buying behavior even though they are located in different countries. Requirements for Effective Segmentation  Measurable  Accessible  Substantial  Differentiable  Actionable Evaluating Market Segments  Segment Size and Growth – Analyze current segment sales, growth rates, and expected profitability.  Segment Structural Attractiveness – Consider competition, existence of substitute products, and the power of buyers and suppliers.  Company Objectives and Resources – Examine company skills & resources needed to succeed in that segment. – Offer superior value and gain advantages over competitors. Target Marketing Strategies  Undifferentiated (mass) marketing – Ignores segmentation opportunities  Differentiated (segmented) marketing – Targets several segments and designs separate offers for each  Concentrated (niche) marketing – Targets one or a couple small segments  Micromarketing (local or individual marketing) ...