You are on page 1of 35

Market Segmentation, Targeting, and Positioning for Competitive Advantage

Deciding Who We Want to Mean What to

4/10/2012

Marketing Focuses on Customers

Target Market A specific group of customers on whom an organization focuses its marketing efforts
Large or small customer groups Single or multiple product markets Local to global markets

4/10/2012

Components of Strategic Marketing

FIGURE 1.1

4/10/2012

Marketing Deals with Products, Distribution, Promotion, and Price

The Marketing Mix Four marketing activitiesproduct, distribution, promotion, and pricingthat a firm can control to meet the needs of customers within its target market
Product

Distribution
Promotion Pricing
4/10/2012

Target Market

Marketing Mix Variables The 4 Ps


Product
Goods, services, or ideas that satisfy customer needs

Distribution

The ready, convenient, and timely availability of products

Promotion

Activities that inform customers about the organization and its products
Decisions and actions that establish pricing objectives and policies and set product prices
5

Pricing
4/10/2012

Some Definitions
Market Segmentation is the process of dividing a total market into groups, or segments, consisting of people or organizations with relatively similar product needs. The purpose is to enable a marketer to design a marketing mix (mm) that more precisely matches the needs of customers in the selected market segments.

A Market Segment - consists of individuals, groups, or organizations with one or more similar characteristics that cause them to have relatively similar product needs.
4/10/2012 6

The requirements for successful segmentation are:


Homogeneity

within the segment

Heterogeneity between segments

Segments are measurable and identifiable


Segments are accessible and actionable

Segment is large enough to be profitable.....

4/10/2012

Today, Mass Marketers Rarely Practice Mass Marketing


In other words Mass Marketers do target almost everyone, but they do not do it with one marketing strategy They develop unique marketing strategies for each major target market

4/10/2012

Today, Mass Marketers Rarely Practice Mass Marketing


Product strategy does not equal marketing mix strategy As we will see you can target the same product to different segments using different promotion, pricing, or distribution strategies
4/10/2012 9

Mass Marketing
One mm for all

Segment Marketing
One or more mm targeted to one or more segments

Niche Marketing
One or more mm targeted to one or more sub-segments

Local & Micro Marketing


One or more mm targeted to specific individuals or communities
4/10/2012 10

The Classic Segmentation Variables for Consumer Markets

4/10/2012

11 FIGURE 7.3

Psychographic Segmentation
Lifestyle culture oriented sports oriented outdoor oriented
Personality compulsive , gregarious authoritarian , ambitious
4/10/2012 12

Behavioral Segmentation
Occasions Benefits User Status Regular Quality Non User Special Service Ex- User Economy Potential user Speed First time user Regula r user

Usage Rate
Loyalty Status Attitude towards product Readiness stage
4/10/2012

Light
None

Medium
Medium

Heavy
Strong Indifferent Absolute Negative Hostile

Enthusiasti positive c Unaware Aware

Informed

Interested

Desiro us
13

Demographic Variables
Perhaps the most widely used and most widely available Objective Often a proxy for harder to obtain Psychographics
College student and interest in education 50 year old and interest in retirement funds
4/10/2012 14

Psychographics Variables

Personality characteristics
Marketers appeal to positive/favorable personal characteristics to influence the purchase decision.

Motives
Marketers use individuals differing purchase motives to segment a product market.

Lifestyles
Marketers segment markets according to how individuals choose to spend their time in various activities, their income, their interest and opinions, and their education.
4/10/2012 15

Behaviorist
Behaviorist often called usage Very straightforward - target your users May be hard to get (surprisingly) 80/20 rule (80% sales are to 20% of your customers Ethical?
Vodka targeting alcoholics?
4/10/2012 16

Geographic
If you are a regional firm then Geo targeting is also self evident Some firms have regional product mix (grocery stores and ethnic foods. Even national firms may target regionally.
Product may mean different things in different parts of the country
4/10/2012 17

Segmenting Business Markets


Demographic Industry Company Size User Status Power structure Location

Operating Variables Purchasing Approaches Situational Factors Personal Characteristics


4/10/2012

Technology

Customer service level requirements Relationship levels Purchasin g criterion

Centralization level Urgency

Specific Size of order Application s Attitude towards risk Loyalty


18

Similar values

Segmenting Business Markets


Price Oriented Customers
Solution Oriented Customers Strategic Value Customers Co Investing by seller

4/10/2012

19

We Slice and Dice Segments


Typically using more then one variable or type of segmentation variable Use multiple Demographic Variables such as age, gender, income Use various Demographic, Psychographic, Geographic, and Behaviorist Variables Art as much as science So can come up with different segments using different variables and different analytical/statistical techniques 4/10/2012

20

Geodemographic Segmentation
Marketing segmentation that clusters people in pin code areas and smaller neighborhood units based on lifestyle (psychographic) and demographic information
(Combines Geographic and Demographic info)

4/10/2012

21

Psychographics and Demographics Variables


VALS Based on values, lifestyles, and demographic Therefore, combines Psychographic and Demographic variables
4/10/2012 22

VALS
Percentage of Adults, Classified by VALS Type, Who Participated in Selected Sports in 1996

4/10/2012

23 FIGURE 7.6

Once We Have Our Segments We Need to Target Them With a Marketing Mix
Three options:
Undifferentiated Differentiated Concentrated

4/10/2012

24

Targeting Strategies

The classic mass marketing, all things to all people approach Ignore segments One mm Rarely used today Name an undifferentiated product?
4/10/2012 25 FIGURE 7.2

FIGURE 7.2

4/10/2012

26

Differentiated Strategy (cont.)

The firm decides to target several separate segments and designs separate marketing strategies for each GMs a car for every purpose, purse, and personality vs. Fords one car for every purpose for every purse for every personality Typically, for most firms, this means you go for a small share of the larger, total aggregate market (one or two mm for one or two 4/10/2012 27 segments (out of maybe six or seven)

Concentrated Marketing

The firm goes for a large share of a single (or very few) segments.

Can be niched or larger

4/10/2012

28 FIGURE 7.2

IT IS CRITICAL TO UNDERSTAND THAT


Mass marketers do not often practice mass marketing today They practice differentiated marketing They likely do not change the product to appeal to different segments They change price, place, and promotion
4/10/2012 29

Target Market Selection Process

Focus for today


4/10/2012

FIGURE 7.1
30

Finally We Position
Market Segmentation (ID) 2. Determine which segmentation variables to use 3. Develop market segment profiles Market Targeting (Evaluate) 4. Evaluate relevant market segments 5. Select target markets Market Positioning (Enter) Develop positioning for target segments Develop a marketing mix for each segment
31

Having Finished the Target Market Selection Process We Act!


4/10/2012

Positioning
The Place a product occupies in consumers mind relative to competing products
Volvo positions on safety BMW on driving pleasure Dell on superior direct channels Mc Donald on service quality and price Tata on durability reliability quality
32

4/10/2012

Overall Positioning Strategy


Price
More Same Yes Maybe No Less Yes Yes Yes
33

Benefits

More Same Less

Yes No No

4/10/2012

Perceptual Maps

4/10/2012

34

Thank you

4/10/2012

35

You might also like