Market Segmentation, Targeting, and Positioning for Competitive Advantage

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments 1. Identify Bases for Segmenting the Market

Market Positioning Market Targeting

Market Segmentation

Step 1. Market Segmentation

Levels of Market Segmentation
Mass Marketing
Same product to all consumers (no segmentation)

Segment Marketing
Different products to one or more segments (some segmentation)

Niche Marketing
Different products to subgroups within segments ( more segmentation)

Micromarketing
Products to suit the tastes of individuals or locations (complete segmentation)

7-4

P&G - Laundry Detergent

What do I want from my Detergent? Economy Bleaching Power Perfumed Softener Stain remover Strength or mildness

I may have particular expectations from a product may have different priorities for the benefits May want a different combination of these benefits

Segment marketingIsolating broad segments that make up a market and adapting the marketing offer to match the needs of one or more segments Copyright 1999 Prentice Hall

7-5

8 P&G detergent brands for different segments

Tide Cheer Bold Gain Era Dreft All purpose detergent, tough on grease stains. Color expert, guards against fading, color transfer Built in fabric softener Enzyme detergent, very clean Built in stain removers Paediatrician recommended, tough baby stains Removes odours Pure, cleans fine washables, baby clothes

Febreze
Ivory Snow

Copyright 1999 Prentice Hall

Narrow niches for brand Tide

Tide with Bleach Tide Clean rinse Tide Mountain spring keeps your whites white and your colors bright goes beyond stain removal to prevent dingy buildup on clothes fresh clean scent of great outdoors

7-6

Tide High efficiency

Tide Free Tide Wear Care Tide Rapid Action Tablets

formulated for high efficiency and top loading machines

stain removal benefits without dyes and perfumes prevents damage to cotton clothes, so they last longer Portable and powerful

Niche marketingFocussing on subsegments or niches with distinctive traits that may seek a special combination of benefits Copyright 1999 Prentice Hall

7-7

MICRO MARKETING: practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. LOCAL MARKETING: tailoring brands and promotion to the needs and wants of local consumer groups-cities, specific stores etc. INDIVIDUAL MARKETING: often termed as one-toone marketing. Mass customization is the process through which the firms interact one-to-one with masses of customers to create customer unique value.

Copyright 1999 Prentice Hall

Step 1. Market Segmentation

Bases for Segmenting Consumer Markets
Geographic
Nations, states, regions or cities

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Using Multiple Segmentation Bases: Geo demographics

Step 1. Market Segmentation

Bases for Segmenting Business Markets

Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets

Operating Characteristics

Purchasing Approaches

Step 1. Market Segmentation

Bases for Segmenting International Markets

Industrial Markets

Geographic

Economic

Political/ Legal

Cultural

Inter market Eg. Mercedes and Mtv

Step 1. Market Segmentation

Requirements for Effective Segmentation
Measurable Accessible Substantial Differential Actionable
Size, purchasing power, profiles of segments can be measured.

Segments must be effectively reached and served.

Segments must be large or profitable enough to serve.

Segments must respond differently to different marketing mix elements & actions.
Must be able to attract and serve the segments.

Step 2. Market Targeting- Evaluating Market Segments

Segment Size and Growth Analyze sales, growth rates and expected profitability.
Segment Structural Attractiveness Consider effects of: Competitors-segment less attractive if has aggressive competitors. Availability of actual and potential Substitute Products. The Power of Buyers-buyers with strong bargaining power relative to sellers forces to bring the prices down. Suppliers-segment less attractive if it has powerful suppliers who can control prices and quantity. Company Objectives and Resources Company skills & resources relative to the segment (s). Look for Competitive Advantages.

Step 2. Market Targeting

Market Coverage Strategies
Company Marketing Mix

Market

A. Undifferentiated Marketing or mass marketing strategy

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

Segment 1 Segment 2 Segment 3

B. Differentiated Marketing or segmented marketing strategy

Company Marketing Mix

Segment 1 Segment 2 Segment 3

C. Concentrated Marketing or niche marketing strategy

Step 2. Market Targeting

Choosing a Market-Coverage Strategy
Company Resources

Product Variability
Products Stage in the Product Life Cycle Market Variability Competitors Marketing Strategies

Step 3. Positioning for Competitive Advantage

Positioning
how your target market defines you in relation to your competitors. the place the product occupies in consumers minds relative to competing products; i.e. Volvo positions on safety. technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market.

Positioning concepts
More generally, there are three types of positioning concepts: Functional positions Solve problems Provide benefits to customers Get favorable perception by investors and lenders Symbolic positions Self-image enhancement Ego identification Belongingness and social meaningfulness Affective fulfillment Experiential positions Provide sensory stimulation Provide cognitive stimulation

POSSIBLE VALUE PROPOSITIONS

MORE THE SAME LESS

MORE

More for more

More For the same

More for less The same For less Less for Much less

SAME

LESS

Step 3. Positioning for Competitive Advantage: Strategies

Product Class Away from Competitors Product Attributes Benefits Offered
C

G H

Against a Competitor

D E B F

Usage Occasions

Users

Steps to Choosing and Implementing a Positioning Strategy

Step 1. Identifying a set of possible competitive advantages: Competitive Differentiation.

Step 2. Selecting the right competitive advantage. Step 3. Effectively communicating and delivering the chosen position to the market.

Developing Competitive Differentiation

Product

Service

Areas for Competitive Differentiation

Personnel

Image

Selecting the Right Competitive Advantages

Important

Profitable

Affordable

Criteria for Determining Which Differences to Promote

Distinctive

Superior

Preemptive

Communicable