1. Chapter Six
Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

2. 4/17/2017
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.
Copyright 2005 Brainy Betty, Inc.

3. P & G – Segments the Market
Case Study
P & G – Segments the Market
Strategy
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.
The Payoff
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.
Copyright 2007, Prentice Hall, Inc.

4. 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.
Copyright 2007, Prentice Hall, Inc.

5. Market Segmentation Key variables: No single way to segment a market.
Geographic
Demographic
Psychographic
Behavioral
No single way to segment a market.
May combine more than one variable to better define segments.
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6. Market Segmentation Geographic: World region or country
Region of country
City or metro size
Density or climate
Copyright 2007, Prentice Hall, Inc.

7. 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.
Copyright 2007, Prentice Hall, Inc.

8. Market Segmentation Age and Life-Cycle Stage:
Example: P&G has different toothpastes for different age groups.
Avoid stereotypes in promotions.
Promote positive messages.
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9. 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.
Copyright 2007, Prentice Hall, Inc.

10. Market Segmentation Psychographic: Social class Lifestyle Personality
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11. Market Segmentation Behavioral: Occasion segmentation
Special promotions and labels for holidays.
(e.g., Hershey Kisses)
Special products for special occasions.
(e.g., Kodak disposable cameras)
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12. Market Segmentation Behavioral: Benefits Sought
Different segments desire different benefits from products.
(e.g., P&G’s multiple brands of laundry detergents to satisfy different needs in the product category)
Copyright 2007, Prentice Hall, Inc.

13. 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
Copyright 2007, Prentice Hall, Inc.

14. 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.
Geodemographic segmentation is becoming more common.
Copyright 2007, Prentice Hall, Inc.

15. 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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16. 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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17. Segmenting International Markets
Factors used:
Geographic location
Economic factors
Political and legal factors
Cultural factors
Intermarket segmentation:
Segments of consumers who have similar needs and buying behavior even though they are located in different countries.
Copyright 2007, Prentice Hall, Inc.

18. Requirements for Effective Segmentation
Measurable
Accessible
Substantial
Differentiable
Actionable
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19. 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.
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20. 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)
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21. 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.
Copyright 2007, Prentice Hall, Inc.

22. Choosing a Market Coverage Strategy
Factors to consider:
Company resources
Product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
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23. 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.
Copyright 2007, Prentice Hall, Inc.

24. 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.
Copyright 2007, Prentice Hall, Inc.

25. 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.
Copyright 2007, Prentice Hall, Inc.

26. 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.
Achieved via differentiation.
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27. Identifying Possible Competitive Advantages
Product differentiation
Services differentiation
Image differentiation
People differentiation
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28. Positioning Errors Underpositioning: Overpositioning:
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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29. Choosing Right Competitive Advantages
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
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30. 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
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31. 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.
Copyright 2007, Prentice Hall, Inc.

32. 4/17/2017
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.
Copyright 2005 Brainy Betty, Inc.