Chapter 7: Segmentation, Targeting, and Pos...

How to Use the Vocabulary Understand that a market, a market segment, and a target market are all variations of the same concept - a group of people Think of the pie No such thing as a product that is for "everyone" Segmentation leads to stereotypes

Market Segmentation Review the bases of segmentation: Geographic Demographic Psychographic Behavioural

Not every product uses all of the variables in its segmentation Segmenting Business Variables Major criteria for segmenting business markets are: Operating characteristics of the company Purchasing approaches Situational factors Customer size Geographic location Segmenting International Markets Geographic locations

Economic factors Political and legal factors Cultural factors (language) Evaluating Segments Marketers must evaluate the effectiveness of those segments Criteria: Measurability Accessibility Substantiality Differentiability Actionability Review Mass marketing Differentiated marketing Concentrated (niche) marketing Micromarketing Market Positioning Designing the company's offering and image for a distinctive place in the mind of the target market Successful Positioning Product Position How a product is viewed by consumers relative to competing products Three Positioning Steps Identify competitive advantages on which to build a differentiated position Choose the right competitive differentiation Select an overall positioning strategy Four Principles of Positioning Strategy Must establish position for rm or product in minds of customers Position should be distinctive, providing one simple, consistent message Position must set rm/product apart from competitors A company cannot be all things to all people; it must focus its efforts Developing a Market Positioning Strategy

Using Positioning Maps to Plot Competitive Strategy Useful way to represent consumer perceptions (visual) Typically conned to two attributes Information about a product can be obtained from market data If consumer perceptions of service characteristics differ sharply from "reality", then marketing efforts may be needed to change these perceptions Also known as perceptual maps Positioning of Hotels: Price vs. Service

Positioning of Hotels: Location vs. Physical Luxury

Positioning Errors Under-positioning Failing to really position the company at all Over-positioning Giving buyers too narrow a picture of the company

Confused positioning Leaving buyers with a confused image of a company Identifying Competitive Advantages

Successful Differentiation Important - of value to consumers Distinctive - obvious and clear Superior - better value than competitors Communicable - explainable Pre-emptive - defendable and unique Affordable - delivers value for cost Protable - company can make money Basic Focus Strategies for Services

Importance of Determinant Attributes Consumers choose between alternative service offerings Determinant attributes determine buyers' choices between competing alternatives Establishing Service Levels and Tiers Need to make decisions on service levels - level of performance rm plans to offer on each attribute Segment customers according to willingness to trade off price versus service level Service tiering: positioning strategy based on offering several pricebased classes of service concept