UNIVERSITY OF GUYANA MARKETING 1101…..SEGMENTATION

MODULE 5

ERIC M. PHILLIPS (MBA,

CTP, BSc. Eng.)

SEPT-DECEMBER 2013

MKT 1101….MARKETING MANAGEMENT

MARKETING MANAGEMENT 1101 OVERVIEW

COURSE OUTLINE AND APPROACH

ABSTRACT THINKING, THE PHILLIPS VISION MAP AND THE MARKETING ALPHABET

MARKETING AND MARKETS

CONSUMER BEHAVIOR

MARKETING MIX (4 Ps / 7 Ps)

MARKETING MANAGEMENT (5 APPROACHES)

MARKETING RESEARCH

SWOT/PEST / 5 FORCES ANALYSES

SEGMENTATION, TARGETING, POSITIONING

PRODUCT, BRAND,PRODUCT LIFE CYCLE, PRODUCT MANAGEMENT

PRICING

PROMOTIONS (ADVERTISING)

PLACE (DISTRIBUTION CHANNELS)

BOSTON CONSULTING GROUP MATRIX, PRODUCT PORTFOLIO

PORTER’S 3 GENERIC STRATEGIES AND STRATEGIC MARKET PLANNING

ANSOFF MATRIX

INTERNATIONAL MARKETING MANAGEMENT

I AM THE PERFECT PRODUCT (INDIVIDUAL ASSIGNMENT…MARKETING PRINCIPLES)

GROUP PROJECT (A MARKETING PLAN FROM A COMPANY)

THE GARDEN OF EDEN?

EDUCATION?

SRI SATHYA SAI BABA

“ The end of education is character”.

MARKETING & YOU

Marketing is an exciting subject.

A Way of Life.

We humans are walking, talking Marketers.

SUBLIMINAL MARKETING?

WE HAVE FOUND THE FOUNTAIN OF YOUTH

GLOBAL WARFARE

PERCEPTION VERSUS REALITY

THE CUSTOMER IS ALWAYS RIGHT

WHICH COLOUR ARE YOU?

ADVERTISING……THE SEVEN DEADLY SINS

LUST- Excessive sexual desire

GLUTTONY- over consumption of anything

GREED- Excess acquisition of wealth

SLOTH- Sadness

WRATH- uncontrolled feelings of hatred and anger

PRIDE- excessive love of self

ENVY- Resentful

CANCER IS SUCH A SWEET SORROW

OVERARCHING DEFINITION

PHILIP KOTLER and GARY ARMSTRONG……………..PRINCIPLES OF MARKETING (14TH EDITION)

MARKETING IS

“CREATING AND CAPTURING CUSTOMER VALUE”

“MANAGING PROFITABLE CUSTOMER

RELATIONSHIPS”

THE MARKETING PROCESS

TYPES OF MARKETING?

You see a gorgeous girl at a party. You go up to her and say: "I am very rich.

Marry me! " - That’s DIRECT MARKETING“

You’re at a party with a bunch of friends and see a gorgeous girl. One of your

friends goes up to her and pointing at you says: " He’s very rich. "Marry him." -

That’s ADVERTISING“

You see a gorgeous girl at a party. You go up to her and get her telephone

number. The next day, you call and say: " Hi, I’m very rich. "Marry me - That’s

TELEMARKETING"

7

We are going global

Political/legal forces

Economic forces

1

2

Environmental uncontrollables country market A

Environmental uncontrollables country market B

Environmental uncontrollables country market C

Competitive structure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of

distribution

Geography and

Infrastructure

Foreign environment (uncontrollable)

Structure of distribution

Economic climate

Cultural forces

3

4 5

6

7 Political/

legal forces

Domestic environment (uncontrollable)

(controllable)

BRAZIL

CHINA….1.334 B AND COUNTING

LIFE LESSON ?

GOD, GRANT ME THE SERENITY TO ACCEPT

THE PEOPLE I CANNOT

CHANGE;

THE COURAGE TO CHANGE THE ONE I CAN;

AND THE WISDOM TO

KNOW THAT PERSON IS ME.

MARKET RESEARCH VERSUS MARKETING RESEARCH

THE MARKETING RESEARCH PROCESS

THE BOSTON MATRIX

Problem Children Stars

Dogs Cash Cows

Market Growth

Market Share

High

Low High

PRODUCT PORTFOLIO MATRIX

PRODUCT LIFE CYCLES AND THE

BOSTON MATRIX Sales/Profits

Time

PLC and Profits

PLC

Losses

Break Even

Profits

Developing Growth Strategies

Existing New

products products

Existing

markets

New

markets

Market

Penetration

Market

Development Diversification

Product

Development

KNOWLEDGE IS POWER……KNOW THYSELF

MARKET RESEARCH WHO AM I?......WHAT AM I?

5 THINGS PEOPLE REGRET THE MOST NEAR DEATH

I WISH I’D HAD THE COURAGE TO LIVE A LIFE TRUE TO MYSELF, NOT THE LIFE OTHERS EXPECTED

OF ME.

I WISH I HADN’T WORKED SO HARD.

I WISH I’D HAD THE COURAGE TO EXPRESS MY FEELINGS

I WISH I HAD STAYED IN TOUCH WITH MY FRIENDS.

I WISH THAT I HAD LET MYSELF BE HAPPIER.

MODULE OUTLINE

Market Segmentation

Market Targeting

Differentiation and Positioning

GOALS OF THE MODULE

1. LEARN THE 3 STEPS OF TARGET MARKETING; MARKET SEGMENTATION; TARGET MARKETING AND MARKET POSITIONING

2. UNDERSTAND THE MAJOR BASES FOR SEGMENTING

3. KNOW HOW COMPANIES IDENTIFY ATTRACTIVE MARKET SEGMENTS AND CHOOSE TARGET MARKETING STRATEGY

4. REALIZE HOW COMPANIES POSITION THEIR PRODUCTS FOR MAXIMUM COMPETITIVE ADVANTAGE IN THE MARKETPLACE

WHAT IS MARKETING?

OUR ABSTRACT VIEW OF A MARKET MASLOW’S HIERARCHY

THE 3 STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING

1. Identify

segmentation

variables and

segment the

market

2. Develop

profiles of

resulting

segments

Market Segmentation

3. Evaluate

attractiveness

of each

segment

4. Select the

target

segment(s)

Market Targeting

5. Identify possible

positioning concepts for each target

segment

6. Select, develop, and communicate

the chosen positioning

concept

Market Positioning

SEGMENTATION, TARGETING AND POSITIONING

38

STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING

1.Identify bases for segmenting

the market

2. Develop profiles of

resulting segments

3. Develop measures of

Segment attractiveness

4. Select the target

segments

5. Develop positioning for each

Target segment

6. Develop marketing mix

for each target segment

Market Segmentation

Market Targeting

Market Positioning

MARKET SEGMENTATION

MARKET SEGMENTATION IS THE PROCESS

THAT COMPANIES USE TO DIVIDE LARGE,

HETEROGENEOUS MARKETS INTO SMALL

MARKETS THAT CAN BE REACHED MORE

EFFICIENTLY AND EFFECTIVELY WITH

PRODUCTS AND SERVICES THAT MATCH

THEIR UNIQUE NEEDS

MARKET SEGMENTATION

1. THE ANALYTICAL DIVISION OF THE MARKET INTO DISCRETE GROUPS

OF CUSTOMERS THAT SHARE COMMON ATTRIBUTES.

2. THE IDENTIFICATION OF SUBSETS OF BUYERS WITHIN A MARKET WHO

SHARE SIMILARITIES, NEEDS AND WHO HAVE SIMILAR BUYING

PROCESSES.

MARKET SEGMENT

1. A subgroup within the market who share certain relevant characteristics

2. A group of customers with certain characteristics in common & whose needs

can be met with a distinct marketing mix

3. Three basic questions

• Who is buying?

• What do they buy?

• When do they buy?

• Sells multiple brands within the

same product category for a

variety of products

• Brands feature a different mix of

benefits and appeal to different

segments

• Has also identified different niches within certain segments

• Product modifications are useful:

Tide offers seven different product formulations to serve different niches’ needs

WHY MARKET SEGMENTATION?

Procter & Gamble

FIRMS ENGAGE IN SEGMENTATION TO….

Develop different strategies for different parts of the market

Increase sales & profit from each segment

Identify marketing opportunities

Dominate certain niche segments

Reflect differences in customer tastes

Prioritize on those segments most likely to provide a higher

return

EVALUATION OF SEGMENTS

EVALUATING MARKET SEGMENTS

segment size & growth

segment’s structural analysis

competition within the segment

existing or potential substitute products

relative power of buyers / suppliers

company’s objectives & resources

environment, social responsibility, if it is core business,

can employ skills & resources superior to those of

competition

THERE ARE DIFFERENT TYPES OF MARKETS

TO SEGMENT

SEGMENTING CONSUMER MARKETS

SEGMENTING BUSINESS MARKETS

SEGMENTING INTERNATIONAL MARKETS

MARKET SEGMENTATION

Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation

Segmenting Consumer Markets

BASES FOR SEGMENTING CONSUMER MARKETS

Occasions, Benefits, Uses, or Attitudes

Behavioral

Geographic

Region, City or Metro Size, Density, Climate,

Nations, counties, villages

Demographic

Age, Gender, Family size , Life cycle, Race, Occupation, Income , Religion, Education, Nationality.

Lifestyle or Personality

Psychographic

MARKET SEGMENTATION

Demographic segmentation divides

the market into groups based on

variables such as age, gender,

family size, family life cycle,

income, occupation, education,

religion, race, generation, and

nationality

Segmenting Consumer Markets

GEOGRAPHIC SEGMENTATION?

IS GEOGRAPHICAL CLIMATE A

LEGITIMATE MEANS OF

SEGMENTATION FOR MANY

PRODUCTS OR SERVICES?

NAME SEVERAL EXAMPLES OF

PRODUCTS FOR WHICH NEED (AND

DEMAND) WOULD VARY ON A

GEOGRAPHICAL BASIS.

Age and life-cycle stage segmentation is the process of offering different products

or using different marketing approaches for different age and life-cycle groups.

Gender segmentation divides the market based on sex (male or female)

CONSUMER MARKET SEGMENTATION

Income segmentation divides the market into affluent or low-income consumers

Psychographic segmentation divides buyers into different groups based on

social class, lifestyle, or personality traits

CONSUMER MARKET SEGMENTATION

CONSUMER MARKET SEGMENTATION

Behavioral segmentation divides buyers into groups based on their

knowledge, attitudes, uses, or responses to a product

Occasions

Benefits sought

User status

Usage rate

Loyalty status

SOPHISTICATED CONSUMER MARKET SEGMENTATION

Multiple segmentation is used to identify smaller, better-

defined target groups.

Geo-demographic segmentation is an example of

multivariable segmentation that divides groups into

consumer lifestyle patterns

MARKET SEGMENTATION

PRIZM NE classifies every American household

into 66 unique segments organized into 14

different social groups.

These groups segment people and locations into

marketable groups of like-minded consumers that

exhibit unique characteristics and buying behavior

based on a host of demographic factors

Using Multiple Segmentation Bases

MARKET SEGMENTATION

Geographic location

Economic factors

Political-legal factors

Cultural factors

Segmenting International markets

Market Segmentation

Inter-market segmentation divides consumers into

groups with similar needs and buying behaviors

even though they are located in different countries

Segmenting Business Markets

MARKET SEGMENTATION

To be useful, market segments must be:

Requirements for Effective Segmentation

Measurable Accessible

Substantial Differentiable

Actionable

Measurable

Accessible

Substantial

Differential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

Actionable

• Size, purchasing power, profiles of segments can be measured.

• Segments must respond differently to different

marketing mix elements & actions.

• Must be able to attract and serve the segments.

Effective Segmentation

HEAVY AND LIGHT USERS OF COMMON CONSUMER PRODUCTS

HEAVY HALF LIGHT HALF PRODUCT (% USERS)

75%

71%

Soups and detergents (94%) 25%

29%

79% 21%

Toilet tissue (95%)

Shampoo (94%)

75% 25%

17%

17%

Paper towels (90%)

Cake mix (74%)

Cola (67%)

83%

83%

13%

5%

87%

19%

Beer (41%)

Dog food (30%)

Bourbon (20%)

81%

95%

TARGET MARKETING

STEP # 2

Selecting Target Market Segments

Target market consists of a set of buyers who

share common needs or characteristics

that the company decides to serve.

TARGET MARKETING Valuating Market Segments

SEGMENT SIZE AND GROWTH

SEGMENT STRUCTURAL ATTRACTIVENESS

COMPANY OBJECTIVES AND RESOURCES

MARKET TARGETING

Target Marketing Strategies

TARGET MARKETING

STRATEGIES STRATEGY # 1 DIFFERENTIATED MARKETING

Differentiated marketing targets several different market

segments and designs separate offers for each

Goal is to achieve higher sales and stronger position

More expensive than undifferentiated marketing

DIFFERENTIATION STRATEGY

Multi segment approach

Separate mix for each segment

Expensive In terms of product & marketing

cost

Only possible for large firms

STRATEGY # 2 CONCENTRATED MARKETING

Concentrated marketing targets a small share of a

large market

Limited company resources

Knowledge of the market

More effective and efficient

CONCENTRATED MARKETING

Marketing effort directed at a single highly

defined segment

Niche marketing – Rolex watches

Used when one group is especially attractive for the organization to

target

A useful strategy for smaller firms – avoids a head on collision with

major players

Provides scope for competitive advantage in a small niche in the market

STRATEGY # 3 MICRO-MARKETING

Micromarketing is the practice of tailoring products and marketing

programs to suit the tastes of specific individuals and locations

Local marketing

Individual marketing

STRATEGY # 4 LOCAL MARKETING

Local marketing involves tailoring brands and promotion to the needs

and wants of local customer groups

CITIES

NEIGHBORHOODS

STORES

STRATEGY # 5 INDIVIDUAL MARKETING

Individual marketing involves tailoring products and marketing

programs to the needs and preferences of individual customers

Also known as:

– One-to-one marketing

– Mass customization

– Markets-of-one marketing

Identifying possible

competitive advantages

Choosing the right

competitive advantage

Choosing a positioning

strategy

Differentiation can be based on

– Products

– Services

– Channels

– People

– Image

CHOOSING A POSITIONING STRATEGY

MARKET SEGMENTATION

• How many differences to promote?

– Unique selling proposition

– Several benefits

• Which differences to promote?

Criteria include:

– Important

– Distinctive

– Superior

– Communicable

– Preemptive

– Affordable

– Profitable

Identifying possible competitive

advantages

Choosing the right competitive

advantage

Choosing a positioning strategy

MARKET SEGMENTATION

• Value propositions represent the full

positioning of the brand

• Possible value propositions:

– More for More

– More for the Same

– More for Less

– The Same for Less

– Less for Much Less

Identifying possible competitive

advantages

Choosing the right competitive

advantage

Choosing a positioning strategy

7 - 74

Porsche is positioned on the basis of

performance and freedom.

PORSHE VERSUS LEXUS

CONTINUUM OF TARGETING STRATEGIES

Customized Different mix for each customer

Niche Targets a single small segment

Concentrated Targets single large segment

Differentiated Different mix for each segment

Undifferentiated Single marketing mix for all customers

MARKET TARGETING

Company resources

Product variability

Product life-cycle stage

Market variability

Competitor’s marketing strategies

Choosing a Targeting Strategy depends on

MARKET TARGETING

Benefits customers with specific need

Concern for vulnerable segments

Children

– Alcohol

– Cigarettes

– Internet abuses

Socially Responsible Target Marketing

78

MARKET SEGMENTATION

Levels Of Marketing Segmentation

Segment

marketing Niche Marketing Micro-marketing Mass Marketing

No Segmentation Complete

segmentation

FIVE PATTERNS OF TARGET MARKET SELECTION

Single-segment concentration

Product specialization

M1 M2 M3

P1

P2

P3

Selective specialization M1 M2 M3

P1

P2

P3

M1 M2 M3

Full market coverage

P1

P2

P3

Market specialization

M1 M2 M3

P1

P2

P3

P1

P2

P3

M1 M2 M3

P = Product M = Market

SEGMENT-BY-SEGMENT INVASION PLAN

CUSTOMER GROUPS

Truckers Railroads Airlines

Large computers

Pro

du

ct V

arie

ties

Personal computers

Mid-size computers

Company B Company C Company A

POSITIONING

Position in the market

• The location of a product or service alongside key competitors in the

mind of consumers

• Refers to the place the product occupies in the consumer’s perceptual map

of the market

POSITION AND POSITIONING

•A product’s position ultimately depends on the attitudes of people

in the target market

• Firms will seek to position their products to increase

sales

• Either marketers accept the customer attitudes as they & tailor the

product to fit those attitudes or seek to change those attitudes

• Positioning indicates how a company wishes to compete in the

market place

POSITIONING

Positioning

Arranging for a brand or product to occupy a clear

and distinctive place in the minds of the target

customers relative to competing products and brands

THE ROLE OF POSITIONING

The role of positioning…

• To strengthen the power of messages directed at consumers

• To target a particular segment

• To ensure that the product is differentiated in the minds of the

consumer

• To decide on the ground on which to compete

• To analyze re-positioning possibilities

THE ROLE OF POSITIONING

The role of positioning…

To strengthen the power of messages directed at consumers

To target a particular segment

To ensure that the product is differentiated in the minds of the

consumer

To decide on the ground on which to compete

To analyze re-positioning possibilities

PORTER’S GENERIC STRATEGIES

Porter’s generic strategies

• Cost leader: Compete by being the lowest cost producer

• Differentiation: Compete by offering something different & superior

• Focus: Become a niche player concentrating on small part of the

market

WHAT TYPE OF PRODUCT AM I?

DIFFERENTIATION

The basic principle is that you must either:

- Differentiate your product

- Be a provider of generic products to be sold at the

lowest prices

DIFFERENTIATION AND POSITIONING

Product position is the way the product

is defined by consumers on important

attributes—the place the product occupies

in consumers’ minds relative to

competing products

– Perceptions

– Impressions

– Feelings

DIFFERENTIATION AND POSITIONING

Competitive advantage is an advantage over

competitors gained by offering consumers greater

value, either through lower prices or by providing

more benefits that justify higher prices

Identifying Possible Value Differences and

Competitive Advantages

DIFFERENTIATION AND POSITIONING

Identifying a set of possible competitive

advantages to build a position by

providing superior value from:

Choosing a Differentiation and Positioning Strategy

Product differentiation

Service differentiation

Channel differentiation

People differentiation

Image differentiation

DIFFERENTIATION AND POSITIONING

Difference to promote should be:

Choosing the Right Competitive Advantage

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

DIFFERENTIATION AND POSITIONING

Value proposition

is the full mix of

benefits upon

which a brand is

positioned

Selecting an Overall Positioning Strategy

PERCEPTUAL MAP

• The visual representation of a brand within a specific

market place showing its position relative to

competitors

• Shows which and how products compete in

consumers mind and suggests how an product can be

positioned to maximize sales

A PERCEPTUAL MAP FOR SUPERMARKETS

Full range

Low price High price

Limited range

96

FORMULATING THE CORRECT POSITIONING

DIFFERENTIATION AND POSITIONING

Positioning maps

show consumer

perceptions of

their brands

versus competing

products on

important buying

dimensions

WHAT TYPE OF PRODUCT AM I?

WHAT TYPE OF PRODUCT AM I?

•Customer service

•Trained Tour Guide

•Professionalism

•Family circle

•corporate network

• volunteer organisation

•humanaterian,

•skilled professional,

•degree in tourism

•Self Motivated

•Passionate

•very expensive and of high value based on knowledge, skills and experience

Price Product

Promotion Place

COMMUNICATION AND DELIVERING THE

CHOSEN POSITION

Choosing the

positioning

is often easier than

implementing the

position.

MARKETING 1101 PRODUCT TEAMS

DIGICEL VERSUS GT&T

BLACKBERRY VERSUS SAMSUNG

COKE VERSUS PEPSI

BANKS VERSUS CARIB

MONACO VERSUS MOJO

PRINCESS VERSUS PEGASUS

REPUBLIC VERSUS BANK OF NOVA SCOTIA

COURTS VERSUS SINGERS

NIGELS VERSUS BOUNTY