Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

1
Segmentation, Targeting, and Positioning
Building the Right Relationships with the Right
Customers

• Chapter 8

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Road Map 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.

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Market Segmentation

• Geographic
• World region or country
• Region of country
• City or metro size
• Density or climate

4
Market Segmentation

• Demographic
• Age, gender, family size, income, occupation,
  etc.
• The most popular bases for segmenting customer
  groups.
• Easier to measure than most other types of
  variables.

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Market Segmentation

• Age and Life-Cycle Stage
• Example PG has different toothpastes for
  different age groups.
• Avoid stereotypes in promotions
• Promote positive messages

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Market Segmentation

• Gender
• Women make 90 of home improvement decisions.
• Women influence 80 of all household consumer
  purchases.

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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.

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Market Segmentation

• Psychographic
• Social class
• Lifestyle
• Personality

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Market Segmentation

• Behavioral
• Occasions
• Special promotions and labels for holidays.
• (e.g., Hershey Kisses)
• Special products for special occasions.
• (e.g., Kodak disposable cameras)

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Market Segmentation

• Behavioral
• Benefits Sought
• Different segments desire different benefits from
  products.
• (e.g., PGs multiple brands of laundry
  detergents to satisfy different needs in the
  product category)

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Market Segmentation

• Behavioral
• User Status Nonusers, ex-users, potential users,
  first-time users, regular users
• Usage Rate Light, medium, heavy
• Loyalty Status Brands, stores, companies

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Market Segmentation

• Best to use multiple approaches in order to
  identify smaller, better-defined target groups.
• Start with a single base and then expand to other
  bases.

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Market Segmentation

• Geodemographic
• Claritas, Inc.
• Potential Rating Index for Zip Markets (PRIZM)
• Based on U.S. Census data
• Profiles on 260,000 U.S. neighborhoods
• 62 clusters or types

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Segmenting Business Markets

• Consumer and business markets use many of the
  same variables for segmentation.
• Business marketers can also use
• Operating Characteristics
• Purchasing Approaches
• Situational Factors
• Personal Characteristics

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Segmenting International Markets

• Factors Used
• Geographic location
• Economic factors
• Political and legal factors
• Cultural factors
• Intermarket Segmentation

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Requirements for Effective Segmentation

• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable

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Evaluating Market Segments

• Segment Size and Growth
• Analyze current segment sales, growth rates, and
  expected profitability.
• Segment Structural Attractiveness
• Consider effects of competitors, existence of
  substitute products, and the power of buyers
  suppliers.
• Company Objectives and Resources
• Examine company skills resources needed to
  succeed in that segment.
• Offer superior value gain advantages over
  competitors.

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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
  groupscities, neighborhoods, specific stores.
• Individual Marketing Tailoring products and
  marketing programs to the needs and preferences
  of individual customers.

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Choosing a Market Coverage Strategy

• Factors to Consider
• Company resources
• Product variability
• Products life-cycle stage
• Market variability
• Competitors marketing strategies

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Socially Responsible Marketing

• 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.

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Positioning for Competitive Advantage

• Products 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.

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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.

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Identifying Possible Competitive Advantages

• Key to winning target customers is to understand
  their needs better than competitors do and to
  deliver more value.
• Competitive advantage extent to which a company
  can position itself as providing superior value.

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Identifying Possible Competitive Advantages

• Product differentiation
• Services differentiation
• Image differentiation
• People differentiation

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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.

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Choosing Right Competitive Advantages

• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable

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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.

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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.