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Focusing Marketing Strategy with Segmentation Targeting and Positioning.Chapter 08

Focusing Marketing Strategy with Segmentation Targeting and Positioning.Chapter 08

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A Market is...

(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group of people that lacks any one of these characteristics is not a market.

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Definition

Market Segmentation: Dividing a market into distinct

groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

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FUNCTIONAL & NON-FUNCTIONAL MOTIVES

BANDWAGON EFFECT.The consumer have the desire to purchase those goods,to consume or to follow such pattern of life which their relatives and friends are following.People have craze to follow stylish way of life.In this situation whosoever is in the influence the consumer behavior is given the name of BANDWAGON EFFECTS.

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FUNCTIONAL & NON-FUNCTIONAL MOTIVES

SNOB EFFECTS.The consumer have the demand that they should not use those goods which are used by ordinary persons so that they could differentiate themselves from others,or they could pass a distinctive standard of living.Such effects are called SNOB EFFECTS.

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FUNCTIONAL & NON-FUNCTIONAL MOTIVES

VEBLEN EFFECTS.This situation is con cerned with conspicuous and different consumption.So many consumer purchase a good just because its price is high.In other words,who are prestige minded and purchase those goods which have the effect of increasing their dignity.In such situation whosoever are the influences are called veblen effects.

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Bases for Segmentation

Usage RateUsage Rate

Benefits SoughtBenefits Sought

PsychographicsPsychographics

DemographicsDemographics

GeographyGeography

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Market Segmentation

MarketMarket

MarketSegmentMarket

Segment

MarketSegmentation

MarketSegmentation

People or organizations with needs or wants and the ability and

willingness to buy

People or organizations with needs or wants and the ability and

willingness to buy

A subgroup of people or organizations sharing one or more characteristics that cause them to

have similar product needs.

A subgroup of people or organizations sharing one or more characteristics that cause them to

have similar product needs.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

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The Importance of Market Segmentation

Markets have a variety of product needs and preferences.

Marketers can better define customer needs.

Decision makers can define objectives and allocate resources more accurately

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IMPORTANCE OF MARKET SEGMENTATION Leads to identification of marketing

opportunities. Competition can be better assessed in a

segment. Provides guidelines for the development of

separate marketing strategies-finer adjustments.

Allocate budget on a more rational basis. Greater consumer satisfaction can be

attained Can argue that it is expensive,limited market

coverage and may lead to cannibalization.

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Criteria for Segmentation

SubstantialitySubstantialitySubstantialitySubstantiality

IdentifiabilityIdentifiabilityMeasurabilityMeasurabilityIdentifiabilityIdentifiabilityMeasurabilityMeasurability

AccessibilityAccessibilityAccessibilityAccessibility

ResponsivenessResponsivenessResponsivenessResponsiveness

Segment must be large enough to warrant a special

marketing mix.

Segment must be large enough to warrant a special

marketing mix.

Segments must be identifiable and their size measurable.

Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with

marketing mix.

Members of targeted segments must be reachable with

marketing mix.Unless segment responds to a marketing mix differently, no separate treatment is needed.

Unless segment responds to a marketing mix differently, no separate treatment is needed.

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Business Marketing Segmentation

Four segments of business markets:

1.Producers / manufacturers.2.Resellers.3.Governments.4.Institutions.

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Business Marketing Segmentation

CompanyCharacteristics

CompanyCharacteristics

BuyingProcesses

BuyingProcesses

CustomerRelationshipCustomer

Relationship

Segmentation Bases

Segmentation Bases

Satisfiers

Optimizers

Location

Type

Size

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Steps in Segmenting a Business Market

Select a

market for

study

Choose bases

for segme

nt-tation

Select descrip-tors

Profile and

analyze segment

s

Select target market

s

Design, imple-ment,

maintain mkting

mix

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The 80/20 Principle

A principle holding that

20 percent of all customers

generate 80 percent

of the demand.

Target Target customerscustomers

20%20%Share ofShare ofcustomerscustomers

Target Target customerscustomers

80%80%

Share ofShare ofsalessales

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What Dimensions Are Used to Segment Markets?

OR

QualifyingDimensionsQualifying

Dimensions

• Relevant to including a customer type in a product market

• Help identify “core features”

DeterminingDimensionsDeterminingDimensions

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

• Can be further segmented

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Target MarketA group of people or

organizations for which an

organization designs,

implements, and maintains a

marketing mix intended to

meet the needs of that group,

resulting in mutually satisfying

exchanges.

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Target Marketing Evaluating Market Segments

Segment size and growth. Segment structural attractiveness.

1. Level of competition.2. Substitute products.3. Power of buyers.4. Powerful suppliers.

Company objectives and resources.

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Strategies for SelectingTarget Markets

ConcentratedStrategy

UndifferentiatedStrategy

MultisegmentStrategy

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Undifferentiated Targeting Strategy

Marketing approach that views

the market as one big market

with no individual segments

and thus requires a single

marketing mix.

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Undifferentiated Targeting Strategy

AdvantagesAdvantages: Potential savings on

production and marketing costs

DisadvantagesDisadvantages: Unimaginative product

offerings Company more

susceptible to competition

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Concentrated Targeting Strategy

A strategy used to select one

segment of a market (a niche)

for targeting marketing efforts.

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Concentrated Targeting Strategy

AdvantagesAdvantages: Concentration of resources. Meets narrowly defined

segment. Small firms can compete. Strong positioning.

DisadvantagesDisadvantages: Segments too small, or

changing. Large competitors may

market to niche segment.

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Multisegment Targeting Strategy

A strategy that chooses

two or more well-defined market

segments and develops a distinct marketing

mix for each.

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AdvantagesAdvantages: Greater financial

success Economies of scale

DisadvantagesDisadvantages: High costs Cannibalization

Multisegment Targeting Strategy

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MULTI-SEGMENT TARGETING

BENEFITS.1.Potentially greater sales

volumes.2.Higher profits.3.Larger market share.4.Economies of scale.

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MULTI-SEGMENT TARGETING COSTS.1. Production design costs.2. Production costs.3. Promotion costs.4. Inventory costs.5. Market research costs.6. Management costs.7. Cannibalization.

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Target Marketers Aim at Specific Targets

In a product-market area

A segmenter

Using single target market approach – can aim at one submarket with one marketing mix

Using multiple target market approach – can aim at two or more submarkets with different marketing mixes

A combiner

Using combined target market approach – can aim at two or more submarkets with the same marketing mix

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Target Marketing Target Marketing Strategies

1.Undifferentiated (mass) marketing

2.Differentiated (segmented) marketing

3.Concentrated (niche) marketing4.Micro marketing (local or

individual) marketing

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Target Marketing Choosing a Target-Marketing

Strategy Requires Consideration of:1.Company resources.2.The degree of product

variability.3.Product’s life-cycle stage.4.Market variability.5.Competitors’ marketing

strategies.

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CannibalizationSituation that occurs when sales of a new

product cut into sales of a

firm’s existing products.

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Position

The place a product, brand, or group of

products occupies in consumers’ minds

relative to competing

offerings.

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Positioning Positioning:

The place the product occupies in consumers’ minds relative to competing products.

Typically defined by consumers on the basis of important attributes.

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Positioning BasesAttributeAttribute

Price and QualityPrice and Quality

Use or ApplicationUse or Application

Product UserProduct User

Product ClassProduct Class

CompetitorCompetitor

Positioning Positioning BasesBases

Positioning Positioning BasesBases

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Positioning Choosing a Positioning Strategy:

Selecting an overall positioning strategy1.More for More Value Proposition2.More for the Same Value

Proposition3.The Same for Less Value

Proposition4.Less for Much Less Value

Proposition5.More for Less Value Proposition

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Repositioning

Changing consumers’ perceptions of a brand

in relation to

competing brands.

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Customer Needs

Customer Needs

Customer TypeCustomer Type

Product TypeProduct Type

Product-MarketDefinition

Product-MarketDefinition

Product TypeProduct Type Customer Needs

Customer Needs

Customer Type

Customer Type

Naming Product Markets and Generic Markets

Geographic Area

Geographic Area

No Product Type in Generic Market DefinitionNo Product Type in Generic Market Definition