Chapter 7

Market Segmentation, Targeting, and Positioning for Competitive Advantage

Steps in Market Segmentation, Targeting, and Positioning

(Figure 7.1, pp. 244-245)
1. Identify bases for segmenting the market 2. Develop segment profiles

Market Segmentation

pp. 244-245 Divide total market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes.

Market Targeting

3. Develop measures of segment attractiveness 4. Select target segments

Positioning

5. Develop positioning for target segments 6. Develop a marketing mix for each segment

Step 1. Market Segmentation

Levels of Market Segmentation
(Figure 7.2, pp. 244-249)
Dividing large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products & marketing mixes that match their unique needs/wants.

Trend = less mass marketing, more specific segmenting (rifle approach versus shotgun approach)

Mass Marketing
Same product & marketing mix to all consumers
(no segmentation, e.g., early Coca-Cola, Ford Model T)

Different products and/or marketing mixes to one or more segments

(some segmentation, e.g., Mecca Cola)
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Segment Marketing

Step 1. Market Segmentation

Levels of Market Segmentation
(Figure 7.2, pp. 246-249, continued)
Different products and/or marketing mixes to one or more subgroups within a segment
(more segmentation & smaller segments, e.g., luxury SUVs)

Niche Marketing

Micromarketing
Customizing for individuals and locations
(complete segmentation)

Local Marketing
Tailoring brands / promotions to local customer groups (e.g, many retailers)

Individual Marketing
Tailoring products and programs to needs of individual customers (e.g., Dell, Gateway)
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Step 1. Market Segmentation

(Table 7.1, pp. 249-259) Demographic most popular (easiest & often meaningful differences)
Dividing the market into groups based on population characteristics such as: Geographic Age group Country or region Gender City or metro size Multiple Family size or Population density (e.g., Bases life-cycle stage urban, suburban, rural) Climate Income Occupation Education Psychographic beyond demographics Religion Life style (e.g., PRIZM, pp. 260-261) (VALS, Chapter 5) Race Personality Nationality Social class 5

Step 1. Market Segmentation

(Table 7.1, pp. 249-259 continued) Behavioral may be best starting point
Dividing the market into groups based on knowledge, attitudes, uses, or responses to a product very direct & specific

Occasions purchase or usage occasion Benefits sought (Table 7.2) User status nonusers, potential users, first-time
users, regular users, ex-users

Usage rate heavy, medium, light users Loyalty status

Multiple Bases

Step 1. Market Segmentation

(pp. 263-264) Measurable Accessible Substantial Differentiable Actionable

Requirements for Effective Segmentation

Can size, purchasing power,

and segment profiles be measured?

Can segments can be

effectively reached and served?

Are segments large or profitable

enough to serve?

Do segments respond

differently to different marketing mix elements and programs?

Can effective programs can be

designed to attract and serve the segments?

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Step 2. Market Targeting

(pp. 264-265)

Evaluating Market Segments

Segment Size and Growth

Right size & growth characteristics ? Competitors, availability of substitute products, power of buyers, power of suppliers ?

Segment Structural Attractiveness

Company Objectives and Resources

Skills & resources needed to succeed in the segment(s) ? Competitive advantages ?

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Step 2. Market Targeting

Choosing Market Coverage
(Figure 7.3, pp. 265-268)
Undifferentiated Marketing
Marketing Mix Market

Differentiated Marketing
Marketing Mix 1 Marketing Mix 2 Marketing Mix 3 Segment 1 Segment 2 Segment 3
Segment 1

Concentrated Marketing
Marketing Mix

Segment 2
Segment 3

Consider:
(p. 268)

company resources product variability market variability

competitors strategies product life-cycle stage

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Step 3. Positioning for Competitive Advantage

(pp. 269-270)

Products Position

the way the product is defined by consumers the place the product occupies in customers minds, relative to competing products ( based on perceptions )

IMPORTANT: Consumers live in an over-communicated world want to simplify positioning occurs with or without the help of marketers

Marketers must:
Plan positions to give their products the greatest competitive advantage in selected target markets Design marketing mixes to create these planned positions (not empty promises) Implant the brands unique benefits and differentiation in customers minds 10

Step 3. Positioning for Competitive Advantage

(pp. 270-278)
1. Identifying Possible Competitive Advantages

Allen Solly

Positioning Strategy

2. Selecting the Right Competitive Advantage Points of differentiation: Product characteristics Service Unique selling proposition Channel Own a word or phrase People The marketing mix Image Avoid: Under-positioning Over-positioning ( Years to build, Confused positioning Can be quickly lost ) * Value proposition *
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3. Delivering and Communicating the Chosen Position

Step 3. Positioning for Competitive Advantage

(pp. 273-278)
Examples of possible value propositions upon which to position: Based on benefits and price combination (Figure 7-4, p. 274)

Price Benefit
More Same Less More More for more Same More for the same Less More for less The same for less Less for much less ( Empty boxes represent losing combinations )

Product attributes Usage occasion Against a competitor Away from a competitor Benefits offered Users Against an indirect 12 competitor

Step 3: Positioning for Competitive Advantage

(p. 273)
Important

Profitable

Affordable

Criteria for determining which differences to promote

Distinctive

Superior

Preemptive

Communicable
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Review of Concept Connections

Define the three steps of target marketing: market segmentation, market targeting, and positioning. List and discuss the major levels of market segmentation, and the major bases for segmenting consumer markets. Explain how companies choose which market segments to target, and how they choose a market-coverage strategy. Discuss how companies can position their products for maximum competitive advantage in the marketplace.
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