7-1

7-1

PRINCIPLES OF MARKETING

Chapter
Chapter 77
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage

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 Measures
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market

7-2
7-2

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 or
or locations
locations
(complete
(complete segmentation)
segmentation)

7-3
7-3

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

Behavioral
Occasions, benefits,
uses, or responses

7-4
7-4

Using
Using Multiple
Multiple Segmentation
Segmentation
Bases:
Bases: Geodemographics
Geodemographics

7-5
7-5

Step
Step 1.
1. Market
Market Segmentation
Segmentation

7-6
7-6

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

Step
Step 1.
1. Market
Market Segmentation
Segmentation

7-7
7-7

Bases
Bases for
for Segmenting
Segmenting International
International
Markets
Markets

Industrial
Industrial Markets
Markets

Geographic
Geographic

Cultural
Cultural

Economic
Economic

Political/
Political/
Legal
Legal

Intermarket
Intermarket

Step
Step 1.
1. Market
Market Segmentation
Segmentation

7-8
7-8

Requirements
Requirements for
for Effective
Effective Segmentation
Segmentation
Measurable
Measurable
Accessible
Accessible

Size, purchasing power, profiles

of segments can be measured.
Segments must be effectively
reached and served.

Substantial
Substantial

Segments must be large or

profitable enough to serve.

Differential
Differential

Segments must respond

differently to different marketing
mix elements & actions.

Actionable
Actionable

Must be able to attract and serve

the segments.

Step
Step 2.
2. Market
Market Targeting
Targeting
Evaluating
Evaluating Market
Market Segments
Segments
Segment Size and Growth
Analyze sales, growth rates and expected profitability.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s).
Look for Competitive Advantages.

7-9
7-9

Step
Step 2.
2. Market
Market Targeting
Targeting

7-10
7-10

Market
Market Coverage
Coverage Strategies
Strategies
Company
Company
Marketing
Marketing
Mix
Mix

Market
Market

A. Undifferentiated Marketing

Company
Company
Marketing
Marketing Mix
Mix11
Company
Company
Marketing
Marketing Mix
Mix22
Company
Company
Marketing
Marketing Mix
Mix33

Segment
Segment 11
Segment
Segment 22
Segment
Segment 33

B. Differentiated Marketing

Company
Company
Marketing
Marketing
Mix
Mix

Segment
Segment 11
Segment
Segment 22
Segment
Segment 33

C. Concentrated Marketing

Step
Step 2.
2. Market
Market Targeting
Targeting

7-11
7-11

Choosing
Choosing aa Market-Coverage
Market-Coverage Strategy
Strategy
Company
Resources
Product
Variability
Products Stage
in the Product Life Cycle
Market
Variability
Competitors
Marketing Strategies

Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage
Advantage

7-12
7-12

Products Position - the place the product

occupies in consumers minds relative to
competing products; i.e. Volvo positions
on safety.
Marketers must:
Plan positions to give products the greatest advantage
Develop marketing mixes to create 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

DD

EE

BB

Users
Users

FF

Usage
Usage
Occasions
Occasions

7-13
7-13

Steps
Steps to
to Choosing
Choosing and
and Implementing
Implementing
aa Positioning
Positioning Strategy
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.

7-14
7-14

Developing
Developing Competitive
Competitive
Differentiation
Differentiation
Product
Product

7-15
7-15

Service
Service

Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation

Personnel
Personnel

Image
Image

Selecting
Selecting the
the Right
Right Competitive
Competitive
Advantages
Advantages

7-16
7-16

Important
Important

Profitable
Profitable

Affordable
Affordable

Preemptive
Preemptive

Criteria
for
Determining
Which
Differences
to
Promote

Distinctive
Distinctive

Superior
Superior

Communicable
Communicable