Marketing: An Introduction Armstrong, Kotler

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Marketing An Introduction Armstrong, Kotler

• Chapter Six
• Segmentation, Targeting and Positioning Building
  the Right Relationships with the Right Customers

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Looking Ahead

• Define the three steps of target marketing
  market segmentation, market targeting, and market
  positioning.
• List and discuss the major levels of market
  segmentation and bases for segmenting consumer
  and business markets.
• Explain how companies identify attractive market
  segments and choose a market coverage strategy.
• Discuss how companies can position their products
  for maximum competitive advantage in the
  marketplace.

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Steps in Market Segmentation, Targeting, and
Positioning

• This chapter looks further into key marketing
  strategy decisions how to divide up markets
  into meaning customer groups ( market
  segmentation), choose which customer to serve (
  target marketing), and create value proposition
  that best serves targeted customers (
  positioning).

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Steps in Market Segmentation, Targeting, and
Positioning
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Market segmentation

• Dividing a market into distinct groups with
  distinct needs, characteristics, or behaviors who
  might require separate products or marketing
  mixes.
• 1- Geographic segmentation
• 2- Demographic segmentation
• 3- psychographic
• 4- Behavioral variables

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Geographic segmentation

• Dividing a market into different geographic
  units, such as
• World region or country.
• Region of country.
• City or metro size.
• Some companies are found only in specific
  cities, selling different items based on demand.
  Some other companies cover all the nation with
  scandalized products.

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Demographic segmentation

• Dividing the market into groups based on
  demographic variables such as age, gender, family
  size, family lifestyle, income, occupation,
  education, religion, race, generation, and
  nationality.
• - Age Kids ( Toys R us) company target the
  kids and children. GAP company target the teen
  age between 12-20 years old. Insurance policies
  customized based on age.

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• Gender target women or men or both
• Income High income, middle, low.
• Occupation type of jobs.
• Education College, University, Doctors
• Religion Moslems, Christians, Jews
• Race Spanish, black, white,
• Nationality native country

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Psychographic Segmentation

• Dividing a market into groups based on social
  class, lifestyle, or personality characteristics.
  
• - Social class refers to the hierarchical
  distinctions between individuals or groups in
  societies or cultures.
• - Life-style old jeans.
• - personality Honda scooters target hip
  trendy 22 years old.

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Behavioral SegmentationDividing the
market into groups based on variables such as

• 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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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
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Market SegmentationRequirements for Effective
Segmentation

• Measurable size, purchasing power, and profiles
  of segments can be measured.
• Accessible segments can be effectively
• reached and served.
• Substantial segments are large or profitable
  enough to serve.

• Differential segments are conceptually
  distinguishable and respond differently to
  different marketing mix elements and programs.
• Actionable effective programs can be designed
  for attracting and serving the segments.

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Levels of Segmentation

• 1- Undifferentiated ( Mass marketing)
• 2- Differentiated ( segmented marketing)
• 3- Concentrated ( niche marketing)
• 4- Micromarketing (Customized marketing to
  individuals). Figure 1

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Figure 1
Mass Marketing Same product to all consumers (no
segmentation, i.e Coca-Cola at one time)
Segment Marketing Different products to one or
more segments (some segmentation, i.e. Marriott)
Niche Marketing Different products to subgroups
within segments (more segmentation, i.e. Standard
or Luxury SUVs)
Micromarketing Customize each location to meet
local interest (Customized products,
Ritz-Carlton, Sears)
Dividing Markets into Smaller Segments that Can
be Reached More Efficiently And Effectively With
Products and Services That Match Their Unique
Needs.
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Target Marketing

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

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Choosing a Target Marketing Strategy
Company Resources
Product Variability
Products Life-Cycle Stage
Market Variability
Competitors Marketing Strategies
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Socially Responsible Target Marketing

• Smart targeting helps companies and consumers
  alike.
• Target marketing sometimes generates controversy
  and concern.
• Cereal, cigarette, beer, and fast-food marketers
  have received criticism in the past.
• Internet has raised fresh concerns about
  potential targeting abuses.

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Positioning for Competitive Advantage

• Products Position - the way the product is
  defined by consumers on important attributes.
  Toyota Echo positioned as economy. Eat fresh at
  Olive Garden. Mercedes Luxury, Volvo Safety
  , BMW as Performance. Product is compared with
  competing products.
• Marketers must
• Plan positions to give their products the
  greatest advantage in selected target markets,
• Design marketing mixes to create these planned
  positions.

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Choosing a Positioning Strategy
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Identifying Possible Competitive Advantages
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Choosing the Right CompetitiveAdvantages
Important
Profitable
Distinctive
Criteria For Determining Which Differences To
Promote
Superior
Affordable
Communicable
Preemptive
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Selecting an Overall Positioning Strategy
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• More for more High quality-high price
• More for the same compatible quality lower Price
• More for less High quality less price
• The same for less same performance but less
  price. Bet Buy stores.
• Less for much less lower performance, for lower
  price, lower the people dont need.

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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.
• All the companys marketing mix must support the
  positioning strategy.
• Positioning strategy must be monitored and
  adapted over time to match changes in consumer
  needs and competitors strategies.