Lecture Principles of Marketing - Chapter 6: Segmentation, targeting, and positioning

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