Focusing Marketing Strategy with Segmentation and Positioning

1. Know about defining generic markets and product-markets.

2. Know what market segmentation is and how to segment product-markets into submarkets.

3. Know three approaches to market-oriented strategy planning.

4. Know dimensions that may be useful for segmenting markets.

5. Know a seven-step approach to market segmentation that you can do yourself.

6. Know what positioning is and why it is useful.

At the end of this presentation, you should be able to:

Focusing Marketing Strategy with Segmentation and Positioning (Exhibit 4-1)

Segmentation• Defining markets• Dimensions to use• Identifying segments• Identifying segments to target• Segmentation approaches

Positioning• Understanding customer’s view• Positioning techniques• Evaluating segment preferences• Differentiating the marketing mix• Relationship between positioning & targeting

Focusing Marketing Strategy with Segmentation and Positioning

Taking Advantage of Opportunities

Product-Market Definition

Product-Market Definition

Naming Product Markets and Generic Markets

Customer Needs

Customer Needs

Customer Type

Customer Type

Geographic Area

Geographic Area

ProductType

ProductType

No Product Type in Generic Market Definition

What Is the Product-Market?

and

2. Segmenting markets and

selecting targets

2. Segmenting markets and

selecting targets

1. Naming broad product-markets1. Naming broad product-markets

Segmentation is a Two-Step Process

The Process of Narrowing Down to Target Markets

All customer needs

Some generic market

Homogeneous (narrow) product-

markets

Single target market

Multiple target

markets

Combined target

markets

Narrowing down to specific product-market

Segmenting into possible target markets

Selecting target marketing approach

One broad product-market

Broad product-market (or generic market) name goes here (The bicycle-riders product-market)

Submarket 1(Exercisers)

Submarket 2(Off-road

adventurers)

Submarket 3(Transportation riders)

Submarket 4(Socializers)

Submarket 5(Environmentalists)

Market Segmentation Defines Possible Target Markets

A. Product-market showingthree segments

Dependability dimension

Sta

tus

dim

ensi

onB. Product-market showing

six segments

How Far Should the Aggregating Go?

Segmenters and Combiners Aim at Specific Target Markets

The strategy

A combiner aims at two or more submarkets with the same marketing mix.

The Strategy

A segmenter develops a different marketing mix for each segment.

Strategy one

Strategy two

Strategy three

Single targetmarket approach

Multiple targetmarket approach

Segmenting vs. Combining

Combiners Try to Satisfy “Pretty Well”

Too Much Combining Is

Risky Segmenters Try to Satisfy “Very Well”

Segmenting May Produce Bigger Sales

Key IssuesKey Issues

Segment or Combine?

Profit Is the Balancing

Point

Benefits Sought

Benefits Sought

ThoughtsThoughts

NeedsNeeds

Rate of useRate of use

Purchase relationshipPurchase

relationshipBrand

familiarityBrand

familiarity

Kind of shoppingKind of

shopping

Type of problem-solving

Type of problem-solving

Information required

Information required

Behavioral dimensions for segmenting consumer markets

BehavioralSegmentingDimensions

BehavioralSegmentingDimensions

Ball Park franks appeal to this segment with older, attractive models and products addressing concerns about health and fat.

Haagen Dazs projects an elegant, indulgent, and special personality in this ad.

Region in a country

Region in a country

Region of world or country

Region of world or country

Size of citySize of city

Geographic Segmentation

Dimensions

Geographic Segmentation

Dimensions

Geographic dimensions for segmenting consumer markets

Demographic Segmentation Dimensions

Demographic Segmentation Dimensions

IncomeIncome

Gender or ageGender or age

Family size or family life cycle stage

Family size or family life cycle stage

Occupation or education

Occupation or education

Ethnicity or social class

Ethnicity or social class

Demographic dimensions for segmenting consumer markets

Income

Soft & Beautiful, a hair care products company, recognizes the many roles of women in its ads.

Tyson chicken developed “Tyson Time-Trimmers,” pre-cut, frozen chicken strips, to appeal to busy women and mothers.

Computer manufacturers have created computers to appeal to girls and boys.

Crayola introduced a new crayon which is washable and can be removed from a variety of surfaces.

Purchasing methods

Purchasing methods

Kind of relationship

Kind of relationship

Type of customer

Type of customer

Segmenting Dimensions

for Business Markets

Segmenting Dimensions

for Business Markets

DemographicsDemographics

Type of buying situation

Type of buying situation

Segmenting business markets

How customers will use the

product

How customers will use the

product

Business-to-Business Segmentation

OR

QualifyingDimensionsQualifying

Dimensions

• Relevant to including a customer type in a product-market

• Help identify “core benefits”

DeterminingDimensionsDeterminingDimensions

• Affect the customer’s purchase of a product or brand

• Can be further segmented

What Dimensions are used to Segment Markets?

Key IssuesKey Issues

Determining vs. Qualifying Dimensions

Different Dimensions For

Different Submarkets

Different Dimensions For

Different Submarkets

Determining Dimensions May Be Very Specific

Determining Dimensions May Be Very Specific

Determining Dimensions May

Change

Determining Dimensions May

Change

Qualifying Dimensions Are Important Too

Qualifying Dimensions Are Important Too

EthicalIssuesEthicalIssues ExploitationExploitation

Creates Unnecessary

Wants

Creates Unnecessary

Wants

Does HarmDoes Harm

Ethical Issues in Segmenting Markets

InternationalIssues

InternationalIssues

What Are the Relevant Segmenting Dimensions?

Psychographic Segmentation

2. Identify potentialcustomer needs

2. Identify potentialcustomer needs

7. Estimate size of eachproduct-market segments7. Estimate size of each

product-market segments

1. Select (name) the broad product-market

1. Select (name) the broad product-market

3. Form initial homogeneoussubmarkets

3. Form initial homogeneoussubmarkets

4. Identify determining dimensions

4. Identify determining dimensions

5. Name possibleproduct-markets

5. Name possibleproduct-markets

6. Evaluate product-marketsegments

6. Evaluate product-marketsegments

BestPracticeApproachforSegmentingProduct-Markets

BestPracticeApproachforSegmentingProduct-Markets

Segmenting Product Markets

ClusteringClustering

Customer DatabaseCustomer Database

Customer Relationship Management (CRM)

Customer Relationship Management (CRM)

More Sophisticated Techniques May Help in Segmenting

Cluster Analysis

Positioning

Sticks like quattro.

Sticks like quattro.

High moisturizing

low moisturizing

Nondeodorant Deodorant

ZestLever 2000

Safeguard

DialLifebuoy

Tone

Dove

LuxCoast

Lava

2

1

4

5

7

38

6

“Product Space” Representation of Positioning

Positioning and Advertising

1. Know about defining generic markets and product-markets.

2. Know what market segmentation is and how to segment product-markets into submarkets.

3. Know three approaches to market-oriented strategy planning.

4. Know dimensions that may be useful for segmenting markets.

5. Know a seven-step approach to market segmentation that you can do yourself.

6. Know what positioning is and why it is useful.

You should now be able to:

• Market• Generic market• Product market• Market

segmentation• Segmenting• Market segment• Single target market

approach• Multiple target

market approach• Combined target

market approach

• Combiners• Segmenters• Qualifying dimensions• Determining dimensions• Clustering techniques• Customer relationship

management (CRM)• Positioning

Key Terms