This chapter define the three steps of target marketing: market segmentation, market targeting, and market positioning; list and discuss the major bases for segmenting consumer and business markets; explain how companies identify attractive market segments and choose a target marketing strategy; discuss how companies position their products for maximum competitive advantage in the marketplace.
Chapter Six Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers Roadmap: Previewing the Concepts Define the three steps of target marketing: market segmentation, market targeting, and market positioning List and discuss the major bases for segmenting consumer and business markets Explain how companies identify attractive market segments and choose a target marketing strategy Discuss how companies position their products for maximum competitive advantage in the marketplace Copyright 2007, Prentice Hall, Inc 6-2 Case Study P & G – Segments the Market Strategy The Payoff Sells multiple brands within the same product category for detergents, soaps, and other goods Each brand features a different mix of benefits and appeals to a different segment Product modifications appeal to different niches within certain segments P&G generates revenues in excessive of $4 billion in U.S laundry detergent market alone Tide has 34% share of powder and 24% share of liquid market segments Combined, all P&G brands account for 75% share of powder and 55% share of liquid detergent markets Steps in Target Marketing Market segmentation – Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors requiring separate products or marketing mixes Target marketing – Evaluating each segment’s attractiveness and selecting one or more to enter Market positioning – Setting the competitive positioning for the product and creating a detailed marketing mix Market Segmentation Key variables: – Geographic – Demographic – Psychographic – Behavioral No single way to segment a market May combine more than one variable to better define segments Market Segmentation Geographic: – World region or country – Region of country – City or metro size – Density or climate Market Segmentation Demographic: – Age, gender, family size, family life cycle, income, occupation, education, race, religion, etc – The most popular bases for segmenting customer groups – Easier to measure than most other types of variables Market Segmentation Age and Life-Cycle Stage: – Example: P&G has different toothpastes for different age groups – Avoid stereotypes in promotions – Promote positive messages Market Segmentation Income: – Identifies and targets the affluent for luxury goods – People with low annual incomes can be a lucrative market – Some manufacturers have different grades of products for different markets Market Segmentation Psychographic: – Social class – Lifestyle – Personality Requirements for Effective Segmentation Measurable Accessible Substantial Differentiable Actionable Evaluating Market Segments Segment Size and Growth – Analyze current segment sales, growth rates, and expected profitability Segment Structural Attractiveness – Consider competition, existence of substitute products, and the power of buyers and suppliers Company Objectives and Resources – Examine company skills & resources needed to succeed in that segment – Offer superior value and gain advantages over competitors Target Marketing Strategies Undifferentiated (mass) marketing – Ignores segmentation opportunities Differentiated (segmented) marketing – Targets several segments and designs separate offers for each Concentrated (niche) marketing – Targets one or a couple small segments Micromarketing (local or individual marketing) Micromarketing Tailoring products and marketing programs to suit the tastes of specific individuals and locations – Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, specific stores – Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers Choosing a Market Coverage Strategy Factors to consider: – Company resources – Product variability – Product’s life-cycle stage – Market variability – Competitors’ marketing strategies Socially Responsible Targeting Smart targeting helps both companies and consumers Target marketing sometimes generates controversy and concern – Vulnerable and disadvantaged can be targeted – Cereal, cigarette, beer, and fast-food marketers have received criticism – Internet has raised fresh concerns about potential targeting abuses Positioning for Competitive Advantage Product’s position is the way the product is defined by consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products – Perceptual position maps can help define a brand’s position relative to competitors Choosing a Positioning Strategy Identify a set of possible competitive advantages on which to build a position Choose the right competitive advantages Select an overall positioning strategy Identifying Possible Competitive Advantages Key to winning target customers is to understand their needs better than competitors and to deliver more value Competitive advantage – extent to which a company can position itself as providing superior value – Achieved via differentiation Identifying Possible Competitive Advantages Product differentiation Services differentiation Image differentiation People differentiation Positioning Errors Underpositioning: – Failing to really position the company at all Overpositioning: – Giving buyers too narrow a picture of the company Confused Positioning: – Leaving buyers with a confused image of a company Choosing Right Competitive Advantages Important Distinctive Superior Communicable Preemptive Affordable Profitable Overall Positioning Strategy Full positioning of the brand is called the brand’s value proposition Potential value propositions include: – More for More – More for the Same – The Same for Less – Less for Much Less – More for Less Communicating and Delivering the Chosen Position Company must take strong steps to deliver and communicate the desired position to target consumers The marketing mix efforts must support the positioning strategy Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies Rest Stop: Reviewing the Concepts Define the three steps of target marketing: market segmentation, market targeting, and market positioning List and discuss the major bases for segmenting consumer and business markets Explain how companies identify attractive market segments and choose a target marketing strategy Discuss how companies position their products for maximum competitive advantage in the marketplace Copyright 2007, Prentice Hall, Inc 6-32 ... Concepts Define the three steps of target marketing: market segmentation, market targeting, and market positioning List and discuss the major bases for segmenting consumer and business markets Explain... excessive of $4 billion in U.S laundry detergent market alone Tide has 34% share of powder and 24% share of liquid market segments Combined, all P&G brands account for 75% share of powder and 55%... (niche) marketing – Targets one or a couple small segments Micromarketing (local or individual marketing) Micromarketing Tailoring products and marketing programs to suit the tastes of specific