chapter 08 market segmentation, targeting, and positioning for competitive advantage

Market Segmentation, Targeting, and Positioningfor Competitive Advantage

Steps in Segmentation, Targeting, and PositioningSteps in Segmentation, Targeting, and Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

Step 1. Market SegmentationLevels of Market SegmentationStep 1. Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Copyright 1999 Prentice Hall

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P&G - Laundry DetergentP&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 marketing-Isolating broad segments that make up a market and adapting

the marketing offer to match the needs of one or more segments


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8 P&G detergent brands for different segments8 P&G detergent brands for different segments

Tide All purpose detergent, tough on grease stains.

Cheer Color expert, guards against fading, color transfer

Bold Built in fabric softener

Gain Enzyme detergent, very clean

Era Built in stain removers

Dreft Paediatrician recommended, tough baby stains

Febreze Removes odours

Ivory Snow Pure, cleans fine washables, baby clothes


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Narrow niches for brand ‘Tide’Narrow niches for brand ‘Tide’Tide with Bleach “keeps your whites white and your colors

bright”

Tide Clean rinse “goes beyond stain removal to prevent dingy buildup on clothes”

Tide Mountain spring “fresh clean scent of great outdoors”

Tide High efficiency “formulated for high efficiency and top loading machines”

Tide Free “stain removal benefits without dyes and perfumes”

Tide Wear Care “prevents damage to cotton clothes, so they last longer”

Tide Rapid Action Tablets

Portable and powerful

Niche marketing-Focussing on subsegments or niches with

distinctive traits that may seek a special combination of benefits


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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-to-one marketing. Mass customization is the process through which the firms interact one-to-one with masses of customers to create customer unique value.

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

DemographicAge, gender, family size and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

Using Multiple SegmentationBases: Geo demographicsUsing Multiple SegmentationBases: Geo demographics

Step 1. Market SegmentationBases for Segmenting Business Markets

Step 1. Market SegmentationBases for Segmenting Business Markets

Basesfor Segmenting

BusinessMarkets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches

Step 1. Market SegmentationBases for Segmenting International Markets

Step 1. Market SegmentationBases for Segmenting International Markets

Political/Legal

Political/Legal

Cultural Cultural Inter marketEg. Mercedes and Mtv

Inter marketEg. Mercedes and Mtv

Economic EconomicGeographicGeographic

Industrial MarketsIndustrial Markets

Step 1. Market SegmentationRequirements for Effective Segmentation

Step 1. Market SegmentationRequirements for Effective Segmentation

• 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.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• 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 SegmentsStep 2. Market Targeting- Evaluating Market Segments

• Segment Size and GrowthSegment Size and Growth

– Analyze sales, growth rates and expected profitability.

• Segment Structural AttractivenessSegment 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 ResourcesCompany Objectives and Resources

– Company skills & resources relative to the segment (s).

– Look for Competitive Advantages.

Step 2. Market TargetingMarket Coverage Strategies

Step 2. Market TargetingMarket Coverage Strategies

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1






MarketMarket

A. Undifferentiated Marketing or mass marketing strategy

B. Differentiated Marketing or segmented marketing strategy

C. Concentrated Marketing or niche marketing strategy

Step 2. Market TargetingChoosing a Market-Coverage Strategy

Step 2. Market TargetingChoosing a Market-Coverage Strategy

Company Resources

ProductVariability

Product’s Stagein the Product Life Cycle

Market Variability

Competitors’Marketing Strategies

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

PositioningPositioning• 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

More

for

more

More

For the

same

More

for

less

The same

For

less

Less for

Much

less

MORE THE SAME LESS

MORE

SAME

LESS

POSSIBLE VALUE PROPOSITIONS

Step 3. Positioning for Competitive Advantage: StrategiesStep 3. Positioning for Competitive Advantage: Strategies

Against aCompetitor

Against aCompetitor

UsageOccasions

UsageOccasions

Away fromCompetitors

Away fromCompetitors

ProductAttributes

ProductAttributes

ProductClass

ProductClass

BenefitsOffered

BenefitsOffered

UsersUsers

BB

AA

EEDD

CCHHGG

FF

Steps to Choosing and Implementing a Positioning Strategy

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 DifferentiationDeveloping Competitive Differentiation

ProductProduct ServiceService

PersonnelPersonnel ImageImage

Areas for CompetitiveDifferentiation

Areas for CompetitiveDifferentiation

Selecting the Right CompetitiveAdvantagesSelecting the Right CompetitiveAdvantages

Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable

chapter 08 market segmentation, targeting, and positioning for competitive advantage

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