1. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Chapter 8 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

2. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-2 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace

3. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-3 Targeting critical segments is critical for the AGO to survive. The 30 to 40-year old urban professionals may be one of the few segments with enough money to support cultural institutions. However, this Me Generation is unphilantropic relative to their wealth. They want cars, houses, big jewellery. Potential donors in this cohort have a desire for interaction, involvement, and meaningful comment on art as well on the AGO’s tactics. Create a distinct position to attract these younger donors. New program: “New Founders initiative” In return for their support, donors would be invited to small dinner parties and exclusive tours of exhibitions. The program has been a resounding success. Case Study Art Gallery of Ontario - AGO

4. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-4 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace

5. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-5 Segmentation, Targeting, and Positioning Market segmentation: dividing market into distinct groups with distinct needs, characteristics, or behaviours, who might require separate products or marketing mixes Target marketing: choosing which group(s) to appeal to Market positioning: creating a clear, distinctive, and desirable position in the target consumer’s mind, relative to competition

6. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-6 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace

7. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-7 Segmenting Consumer Markets Geographical segmentation Demographic segmentation –Most popular bases for segmenting consumer markets Psychographic segmentation –Lifestyle, social class, and personality-based segmentation Behavioural segmentation –Occasions, benefits sought, user status, usage rate, loyalty status. Using multiple segmentation bases

8. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-8 Geographic Segmentation Variables World region or country U.S. region State City Neighborhood City or metro size Density Climate

9. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-9 Demographic Segmentation Variables Age Gender Family size Family life cycle Income Occupation Education Religion Race Generation Nationality

10. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-10 Behavioural Segmentation Variables Occasions Benefits User status User rates Loyalty status Readiness stage Attitude toward the product

11. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-11 Discussion Question Based on the car examples on the following slide, how do car manufacturers use the following segments when marketing products? –Geographic –Demographic –Psychographic –behavioural??

12. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-12 Segmenting Business Markets Geographic segmentation Demographic segmentation –Industry, company size, location Operating characteristics –Technology, usage status, customer capabilities Purchasing approaches Situational factors –Urgency, specific application, size of order Personal characteristics –Buyer-seller similarity, attitudes toward risk, loyalty

13. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-13 Segmenting International Markets Geographic segmentation –Location or region Economic factors –Population income or level of economic development Political and legal factors –Type/stability of government, monetary regulations, amount of bureaucracy, etc. Cultural factors –Language, religion, values, attitudes, customs, behavioural patterns

14. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-14 Segmenting International Markets Intermarket segmentation –Forming segments of consumers who have similar needs, even though they live in different countries

15. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-15 Segmenting Markets Effectively Measurable –Size, purchasing power, and profile of segment Accessible –Can be reached and served Substantial –Large and profitable enough to serve Differentiable –Respond differently Actionable –Effective programs can be developed

16. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-16 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace

17. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-17 Target Marketing Target Market –Consists of a set of buyers who share common needs or characteristics that the company decides to serve

18. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-18 Target Marketing Evaluating Market Segments –Segment size and growth –Segment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliers –Company objectives and resources

19. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-19 Target Marketing Strategies Undifferentiated (mass) marketing: –Market coverage strategy that ignores market segment differences and targets the whole market with one offer Differentiated (segmented) marketing: –Market coverage strategy that targets several market segments and designs separate offers for each Concentrated (niche) marketing: –Market coverage strategy in which a company pursues a large share of one or a few submarkets Micromarketing: –The practice of tailoring products and marketing programs to the needs/wants of specific individuals and local customer groups –Includes: local marketing and individual marketing

20. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-20 Considerations include: –Company resources –The degree of product variability –Product’s life-cycle stage –Market variability –Competitors’ marketing strategies Choosing a Target Marketing Strategy

21. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-21 Target Marketing Socially Responsible Targeting –Some segments, especially children, are at special risk –Spillover from adult to children markets –Many potential abuses on the Internet, including fraud Internet shoppers –Products of questionable benefit –Controversy occurs when the methods used are questionable

22. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-22 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace

23. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-23 Positioning T he way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products relative to competing products Involves implanting the brand’s unique benefits and differentiation in the customer mind Perceptual positioning maps show perceptions of brands on important buying dimensions

24. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-24 Choosing a Positioning Strategy Identifying Possible Competitive Advantages Choosing the right competitive advantage Selecting an Overall Positioning Strategy Differentiation can be based on: –Products –Services –Channels –People –Image

25. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-25 Choosing a Positioning Strategy Identifying Possible Competitive Advantages Choosing the right competitive advantages Selecting an Overall Positioning Strategy How many differences to promote? –Unique selling proposition –Several benefits Which differences to promote? Criteria include: –Important –Distinctive –Superior –Communicable –Preemptive –Affordable –Profitable

26. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-26 Choosing a Positioning Strategy Identifying Possible Competitive Advantages Choosing the right competitive advantages Selecting an Overall Positioning Strategy Value propositions represent the full positioning of the brand Possible value propositions: –More for more –More for the same –More for less –The same for less –Less for much less

27. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-27 WestJet’s Value Proposition: “Less for Much Less” Founded in 1996 to provide low-fare air travel across western Canada Specializes in serving the VFR market (people visiting friends and relatives). Main competitor: the family car People would choose to fly rather than drive if offered low fares One type of plane, offers basic in-flight service (no meals, no movies), single class service, no baggage transfer services with other airlines, etc. However: “less service for less money” is defined as fewer amenities for a lower fare, not less customer service. Generates $1 billion in revenues

28. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-28 A positioning statement summarizes the company or brand positioning EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of- difference) Developing a Positioning Statement

29. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-29 Communicating and Delivering the Chosen Position Companies must take strong steps to deliver and communicate the desired position to target consumers The marketing mix efforts must support the positioning strategy Positions must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies

30. Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 8-30 Learning Goals 1.Define the three steps of target marketing: market segmentation, target marketing, and market positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a target marketing strategy 4.Discuss how companies position their products for maximum competitive advantage in the marketplace