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Lesson 15
15
Market Segmentation,
Targeting, and Positioning
Lesson
Lesson Objectives
Objectives
When you have completed this lesson you will be able
to;
Summarise the relationship between market segmentation,
targeting and positioning
Identify and describe the major variables for consumer
segmentation
Outline how companies select target markets and implement
segmentation strategies
Show how market segmentation and the marketing mix are
interlinked in the positioning strategy
The
The STP
STP Process
Process
Target
Target Market
Market
Advantages
Advantages of
of Segmentation
Segmentation (pp
(pp 164
164 -- 165)
165)
1. The process of breaking up a homogeneous market
into heterogeneous segments forces the marketer to
analyse and consider both the needs of the market
and the companys ability to competently serve those
needs thereby making the company better informed
about its customers
2. Competitor offerings and marketing positioning must
also be analysed in this context so the company must
consider what its competitive advantages and
disadvantages are, helping it to clarify its own
positioning strategy
3. Limited resources are used to best advantage,
targeted at those segments that offer the best
potential
Requirements
Requirements for
for Effective
Effective Segmentation
Segmentation
Measurable
Measurable
Accessible
Accessible
Substantial
Substantial
Differential
Differential
Actionable
Actionable
Steps
Steps in
in Segmentation,
Segmentation, Targeting,
Targeting, and
and
Positioning
Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
3. Develop Selection Criteria
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market
Market
Positioning
Market
Targeting
Market Segmentation
Step
Step 1.
1. Market
Market Segmentation
Segmentation
Levels
Levels of
of Market
Market Segmentation
Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)
Segment
Segment Marketing
Marketing
Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)
Niche
Niche Marketing
Marketing
Different
Different products
products to
to subgroups
subgroups within
within segments
segments
(more
(more segmentation)
segmentation)
Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals and
and locations
locations
(complete
(complete segmentation)
segmentation)
Local Marketing
Individual Marketing
Step
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting Consumer
Consumer
Markets
Markets
Geographic
Nations, states,
regions or cities
Demographic
Age, gender, family size
and life cycle,
or income
Psychographic
Social class, lifestyle,
or personality
Behavioural
Occasions, benefits
sought, user status,
usage rate, loyalty
Step
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting Business
Business Markets
Markets
Personal
Characteristics
Situational
Factors
Demographics
Bases
Bases
for
for Segmenting
Segmenting
Business
Business
Markets
Markets
Purchasing
Approaches
Operating
Characteristics
Segmenting
Segmenting Business
Business
Markets
Markets
Segmentation by customer size or geographic location
Four segments of business customers
Programmed buyers
Relationship buyers
Transaction buyers
Bargain hunters
Step
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting International
International Markets
Markets
Industrial
IndustrialMarkets
Markets
Geographic
Geographic
Economic
Economic
Cultural
Cultural
Political/
Political/
Legal
Legal
Intermarket
Intermarket
Linking
Linking the
the Concepts
Concepts
Using the segmentation bases youve just
heard about, segment the Irish clothing
market.
>Describe each of the major segments and
subsegments.
Step
Step 2.
2. Market
Market Targeting
Targeting
Evaluating
Evaluating Market
Market Segments
Segments (developing
(developing
selection
selection criteria)
criteria)
Segment Size and Growth
Analyze sales, growth rates and expected profitability for
various segments.
Step
Step 2.
2. Market
Market Targeting
Targeting
Market
Market Coverage
Coverage Strategies
Strategies
Company
Company
Marketing
Marketing
Mix
Mix
Market
Market
A. Undifferentiated Marketing
Company
Company
Marketing
MarketingMix
Mix11
Company
Company
Marketing
MarketingMix
Mix22
Company
Company
Marketing
MarketingMix
Mix33
Segment
Segment11
Segment
Segment22
Segment
Segment33
B. Differentiated Marketing
Company
Company
Marketing
Marketing
Mix
Mix
Segment
Segment11
Segment
Segment22
Segment
Segment33
C. Concentrated Marketing
Step
Step 2.
2. Market
Market Targeting
Targeting
Choosing
Choosing aa Market-Coverage
Market-Coverage Strategy
Strategy
Company
Resources
Product
Variability
Products Life-Cycle
Stage
Market
Variability
Competitors
Marketing Strategies
Linking
Linking the
the Concepts
Concepts
At the last linking the concepts, you segmented
the Irish clothing market.
> Now, pick two companies that serve this market and
describe their segmentation and targeting strategies.
> Can you come up with one that targets many different
segments versus another that focuses on only one or
a few segments?
Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage
Advantage
Products Position - the way the product is
defined by consumers on important
attributes - the place the product occupies
in consumers minds relative to competing
products.
Marketers must:
Plan positions to give their products the
greatest advantage in selected target markets,
Design marketing mixes to create these
planned positions.
Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage:
Advantage: Strategies
Strategies
Product
Product
Class
Class
Away
Away from
from
Competitors
Competitors
Product
Product
Attributes
Attributes
HH
Benefits
Benefits
Offered
Offered
GG
CC
AA
Against
Against aa
Competitor
Competitor
EE
DD
BB
User
User Class
Class
FF
Usage
Usage
Occasions
Occasions
Steps
Steps to
to Choosing
Choosing and
and Implementing
Implementing
aa Positioning
Positioning Strategy
Strategy
Step 1. Identifying Possible Competitive
Advantages: Competitive Differentiation.
Step 2. Selecting the Right Competitive Advantage:
Unique Selling Proposition (USP).
Step 3. Communicating and Delivering the Chosen
Position.
Step 4. Support the positioning strategy with a
unique marketing mix
Developing
Developing Competitive
Competitive
Differentiation
Differentiation
Product
Product
Service
Service
Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation
Image
Image
People
People
Selecting
Selecting the
the Right
Right Competitive
Competitive
Advantages
Advantages
Important
Important
Profitable
Profitable
Affordable
Affordable
Preemptive
Preemptive
Criteria
Criteria
for
for
Determining
Determining
Which
Which
Differences
Differences
to
to
Promote
Promote
Distinctive
Distinctive
Superior
Superior
Communicable
Communicable
Step
Step 44 Supporting
Supporting the
the
positioning
positioning strategy
strategy
At this stage the company has decided on its
positioning strategy and must now design a marketing
mix to support this strategy. The next part of the
course looks at Developing the Marketing Mix
Reviewing
Reviewing the
the Concepts
Concepts
Define the three steps of target marketing: market
segmentation, market targeting, and market
positioning.
List and discuss the major levels of market
segmentation and bases for segmenting consumer
and business markets.
Explain how companies identify attractive market
segments and choose a market coverage strategy.
Discuss how companies position their products
for maximum competitive advantage in the
marketplace.