1. Focusing Marketing Strategy with Segmentation and Positioning
Chapter 4
Focusing Marketing Strategy with Segmentation and Positioning
CHAPTER FOUR
Lecture Notes for
Essentials of Marketing 14e
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2014 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

2. At the end of this presentation, you should be able to:
This slide refers to material on p. 92.
define and describe generic markets and product-markets.
know what market segmentation is and how to segment product-markets into submarkets.
know three approaches to market-oriented strategy planning.
know dimensions that may be useful for segmenting markets.
At the end of this presentation, you should be able to:
1. define and describe generic markets and product-markets.
2. know what market segmentation is and how to segment product-markets into submarkets.
3. know three approaches to market-oriented strategy planning.
4. know dimensions that may be useful for segmenting markets.

3. At the end of this presentation, you should be able to:
This slide refers to material on p. 92.
recognize how some computer-aided methods are used in segmenting
know what positioning is and why it is useful.
understand important new terms.
At the end of this presentation, you should be able to:
5. recognize how some computer-aided methods are used in segmenting.
6. know what positioning is and why it is useful.
7. understand important new terms.

4. Focusing Marketing Strategy with Segmentation and Positioning (Exhibit 4-1)
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Segmentation
Defining markets
Dimensions to use
Identifying segments
Identifying segments to target
Segmentation approaches
Positioning
Understanding customer’s view
Positioning techniques
Evaluating segment preferences
Differentiating the marketing mix
Relationship between
positioning & targeting
Summary Overview
This chapter brings focus to the search for market opportunities. In the beginning, it covers the topics of segmentation and targeting in great detail. Later, it examines differentiation and positioning.

5. Search for Opportunities can Begin by Understanding Markets
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What is a company’s market?
Don’t just focus on the product
Summary Overview
Strategy planning is a narrowing-down process.
Key Issues
 What is a company’s market?
A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services—that is, ways of satisfying those needs.
 Don’t just focus on the product
The product oriented approach ignores customers.
Customers make a market!
 Generic markets to product-markets
A generic market is a market with broadly similar needs—and sellers offering various, often diverse, ways of satisfying those needs.
A product-market is a market with very similar needs and sellers offering various close substitute ways of satisfying those needs.
 Broaden market definitions to find opportunities
Broader market definitions—including both generic market definitions and product-market definitions—can help firms find opportunities.
Too broad a definition makes the company’s efforts and resources seem insignificant.
Generic markets to product- markets
Broaden market definitions to find opportunities

6. Different Cameras for Different Customer Needs
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Summary Overview
Sometimes it is difficult to understand and define generic markets because quite different product types may compete with each other.
Key Issues
Camera makers try to stand out in a competitive product marketplace where each addresses customers’ needs to capture and record memories.
GoPro’s Hero2 cameras attach to helmets, skis, and bikes to take photos while users are engaged in action Sports.
Fujifilm offers a waterproof model.
Lytro allows customers to focus different parts of the picture after the photo is taken.
Discussion Question: If customers see all these products as substitutes—as competitors in the same generic market —then how do marketers deal with this complication?

7. Relationship Between Generic and Product- Market Definitions (Exhibit 4-2 )
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Customer (user)
needs
Generic
market
definition
Customer types
Summary Overview
Product-market and generic market definitions include the components illustrated above.
Key Issues
Managers need to think about more than the product they already produce and sell. This can be done by naming product markets with a four-part description.
Customer needs - refers to the needs of the customer (user) that are being met by the product.
Customer types - identify who specifically is using the product.
Geographic area - identifies where the market is located.
Product type - the type of good and/or service offered. It should meet customer needs.
Discussion Question: What are the components of the product-market definition for Skippy peanut butter?
 In defining generic markets, there is no product type; the definition consists of the customer needs, customer type, and geographic area.
Product-
market
definition
Geographic area
Product type
(good and/or service)

8. Interactive Exercise: Product-Market Definition
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The purpose of this exercise is to help students recognize the product-market definitions behind products that are advertised. Two print ads for different products are presented; students are challenged to identify the correct components of the product-market definition for each one.
For complete information and suggestions on using this Interactive Exercise, please refer to the “Notes on the Interactive Exercise” section for this chapter in the Multimedia Lecture Support Package to Accompany Essentials of Marketing. That same information is available as a Word document in the assets folder for the PowerPoint file.

9. What is Product-Market?
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This ad demonstrates the benefits of an iDVD from Apple. From what you see in the ad, try to define the product-market for this product, in terms of:
product type (video editor, DVD recorder);
customer need (recording, archiving, and distributing video);
customer type (young adults);
geographic area (in the world).
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10. Segmentation Is a Two-Step Process
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Naming broad product-markets
and
Summary Overview
Market segmentation is a two-step process. This process fails too often because beginners start with the whole mass market and try to find one or two demographic characteristics to divide (segment) this market.
Key Issues
The steps in market segmentation are:
Naming broad product-markets, or disaggregating. Marketers must break apart all possible needs into some generic markets and broad product-markets in which the firm may be able to profitably operate.
 Segmenting. This is an aggregating process—clustering people with similar needs into a market segment.
Market segment: a relatively homogeneous group of consumers who will respond to a marketing mix in a similar way.
Segmenting markets to selecting target markets and develop marketing mixes

11. Marketers Need Information about Competitors (Exhibit 4-3)
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All customer needs
Narrowing down to specific product-market
Some generic market
Summary Overview
Market segmentation is a two-step process. This process fails too often because marketers do not realize the complexities of consumer behavior and they attempt to categorize a market around too few consumer-related variables of distinction.
Key Issues
All customer needs: marketers should break apart or disaggregate all customer needs.
 Generic market: a market with broadly similar needs and sellers offering various ways of satisfying those needs.
 Defining the market broadly can help the marketer to uncover some potential new opportunities. The marketer can then narrow down to specific product-markets.
 Product-market: a market with very similar needs and sellers offering various close substitute ways of satisfying those needs.
Segmenting: the next step is an aggregating process—the marketer groups together people with similar needs into a market segment. Here we look for similarities.
Discussion Question: Using Exhibit 4-3 as a guide, think of the generic market for transportation and the broad product-market of customers for motorcycles. Can you segment the broad product market into several submarkets?
 After defining the market, marketers can select a particular target market approach.
One broad product-market
Segmenting into possible target markets
Homogeneous (narrow) product-markets
Selecting target marketing approach
Single target market
Multiple target markets
Combined target markets

12. Market Segmentation Defines Possible Target Markets (Exhibit 4-4)
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Broad product-market (or generic market) name goes here (The bicycle-riders product-market)
Summary Overview
Market segmentation groups customers with similar needs.
The first step in effective market segmentation involves naming a broad product market of interest to the firm.
Market grid is a visual aid to market segmentation.
Segmenting is an aggregating process.
Key Issues
Here we can see five different submarkets for the broad product-market of bicycle riders.
Discussion Question: What are the primary needs for each of these submarkets for bicycles?
Submarket 1
(Exercisers)
Submarket 3
(Transportation riders)
Submarket 4
(Socializers)
Submarket 2
(Off-road
adventurers)
Submarket 5
(Environmentalists)

13. How Far Should the Aggregating Go? (Exhibit 4-5A and 4-5B)
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A. Product-market showing
three segments
B. Product-market showing
six segments
Summary Overview
As shown in this exhibit, one can segment a market into any number of segments, (three segments = exhibit 4-5A and six segments = exhibit 4-5B), but  how far should a marketer go in aggregating similar consumers into target markets?
Key Issues
Criteria for segmenting:
Homogeneous (similar)—the customers in a market segment should be as similar as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions.
Heterogeneous (different)—the customers in different segments should be as different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions.
Substantial—the segment must be big enough to be profitable.
Discussion Question: Some firms, like Dell Computer, are able to market directly to individuals and to customize products and services to their unique needs. What advancements make this mass customization possible?
Operational—the segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables.
Status dimension
Status dimension
Dependability dimension
Dependability dimension

14. Checking Your Knowledge
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A neighborhood restaurant in a diverse market area sought to appeal to a wide range of consumers by offering a menu with a few choices from each of several different styles of cuisine—American, Italian, Chinese, German, Thai, and Indian. Recently, the restaurant has lost sales to newer restaurants that offer many choices from a single style of cuisine. This example illustrates the danger of adopting a _______________ approach.
A. single target market
B. multiple target market
C. combined target market
D. structured target market
E. mixed-mode market
Checking Your Knowledge
Answer: C
Feedback: The neighborhood restaurant has combined two or more submarkets (American, Italian, Chinese, German, Thai, and Indian) into one larger target market as a basis for one strategy. This is the definition of the combined target market approach. Selection ‘C’ is the best option.

15. Segmenters and Combiners Aim at Specific Target Markets (Exhibit 4-6)
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Single target
market approach
A segmenter develops a different marketing mix for each segment.
The Strategy
Strategy two
Summary Overview
Market-oriented strategies refine the segmentation process into actionable submarkets.
Key Issues
Single target market approach—the marketer segments the market and picks one of the homogeneous segments as the firm’s target market.
Multiple target market approach—the marketer segments the market, chooses two or more segments, and then treats each segment as a separate target market needing a different marketing mix.
Discussion Question: Suppose you are an entrepreneur who is preparing to start a small business. Would you be more likely to select a single or multiple target market approach? Why?
 Combined target market approach—the marketer combines two or more submarkets into one larger target market as a basis for one strategy.
Seeks economies of scale by having one effort serve more than one market.
Segmenters aim at one or more homogeneous segments and try to develop a different marketing mix for each segment.
Marketers hope to increase sales by getting a much larger share of the business in the markets they target.
Multiple target
market approach
Strategy one
Strategy three
The
strategy
A combiner aims at two or more submarkets with the same marketing mix.

16. Segmenting vs. Combining
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Too Much Combining Is Risky
Combiners Try to Satisfy “Pretty Well”
Segmenters Try to Satisfy “Very Well”
Key Issues
Summary Overview
There are many factors that affect the choice between being a “segmenter” or a “combiner.”
Key Issues
 Combiners try to increase the size of their target markets by combining two or more segments.
Too much combining is risky, because an innovative segmenter may only “chip away” at the various segments of the combined target market.
Discussion Question: What companies that you are familiar with have suffered because segmenters have “chipped away” pieces of their target markets?
 Segmenters aim at one or more homogeneous segments and try to develop a different marketing mix for each segment.
 Segmenters try to satisfy customers “very well.”
Segmenting may produce bigger sales, if the segmenter can capture a large share of a smaller market segment.
Many consumers are willing to pay more in order to satisfy their needs more precisely.
 Segment or combine? Depends on:
firm’s resources;
competition in the various segments;
similarity of customer needs, attitudes, and buying behavior.
 Profit is often the balancing point, because profit potential dictates how specialized a marketing mix can be.
Profit Is the Balancing Point
Segmenting May Produce Bigger Sales
Segment or Combine?

17. Potential Target Market Dimensions Effects on Strategy Decision Areas
Relation of Potential Target Market Dimensions to Marketing Strategy Decision Areas (Exhibit 4–7)
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Potential Target Market Dimensions
Effects on Strategy Decision Areas
Behavioral needs, attitudes, and how present and potential goods and services fit into customers’ consumption patterns.
Affects Product and Promotion
Summary Overview
Market segmentation forces a marketing manager to decide which product-market dimensions might be useful for planning marketing strategies. The dimensions should help guide marketing mix planning.
Key Issues
This exhibit shows the basic kinds of dimensions and their probable effects on the four Ps.
Behavioral needs and attitudes can influence Product decisions (features, packaging, product line assortment, and branding) as well as Promotion decisions (what do potential customers need to know about a firm and its product, and what appeals should be used).
On the other hand, the urgency to get a need satisfied and the willingness to shop influences decisions about Place – like where products are distributed – and Price – for example, how much of a premium will customers pay to address the need for urgency.
Geographic location and other demographic characteristics can affect the size of Target markets (by suggesting the economic potential), Place (where should products be made available), and Promotion (where and to whom will promotion efforts be addressed).
Urgency to get need satisfied and desire and willingness to seek information, compare, and shop.
Affects Place and Price
Geographic location and other demographic characteristics of potential customers.
Affects size of Target Markets, Place, and Promotion

18. Behavioral Dimensions for Segmenting Consumer Markets (Exhibit 4-8)
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Needs/Occupation/Education
Information Required
Benefits Sought
Type of Problem-solving
Behavioral
Segmenting
Dimensions
Thoughts/ Ethnicity/Social Class
Summary Overview
Segmenting dimensions guide marketing mix planning. Market segmentation forces marketing managers to decide which product-market dimensions might be useful for planning marketing strategies. A product-market may be described by behavioral segmentation dimensions.
Key Issues
Needs—for example, customer needs could be economic, functional, or psychological.
Occupation—for example, professional and technical; managers, officials, and proprietors.
Education—for example, grade school or less; some high school; high school graduate; some college.
 Benefits sought tend to be situation specific—for example a car buyer could be looking for good gas mileage or the ability to seat seven people.
Thoughts—buyers may be grouped by whether they have favorable or unfavorable attitudes or beliefs about the brand or product category.
 Ethnicity—for example, Asian, Black, Hispanic.
Social class—for example, lower-lower, upper-lower, lower-middle, upper-middle, lower-upper, upper-upper.
 Rate of use—some customers may be heavy, medium, light or even non-users.
Purchase relationship—customers could be segmented by whether they have an ongoing relationship, intermittent use, or a bad relationship.
 Brand familiarity—might vary from insisting on a brand to nonrecognition or rejection.
 Kind of shopping—refers to whether buyers do comparison shopping or perhaps buy on a convenience basis.
Buyers might use different problem solving approaches—and could be grouped in this way.
 Or buyers may have different information needs—some customers want a lot of information while others need little.
Discussion Question: What benefits do consumers seek in purchasing and using toothpaste? How do these benefits affect segmentation among consumers of toothpaste?
Kind of Shopping
Rate of Use
Brand Familiarity
Purchase Relationship

19. Geographic Dimensions for Segmenting Consumer Markets (Exhibit 4-8)
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Region of world, country
Region in a country
Geographic
Segmentation
Dimensions
Summary Overview
Geographic dimensions are often used for segmentation. There may be different languages or laws in different countries—or a business may only be located in a certain geography.
Key Issues
Region of the world or country—for example, North America versus Europe, or New Zealand versus Japan.
 Region in a country—for example in the United States, the Rocky Mountain Region, Southeast, or Northeast may provide a basis for segmentation.
 The size of a city may also be useful for segmentation.
Size of city

20. Demographic Dimensions for Segmenting Consumer Markets
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Income
Sex
Demographic Segmentation Dimensions
Summary Overview
In addition to behavioral and geographic dimensions, there are also demographic segmentation dimensions.
Key Issues
 Income provides one basis—a marketing mix may appeal most to families with a particular income.
 Sex and age provide another demographic base of segmentation.
Family size or family life cycle stage. Family life cycle stages include young singles, young married with no children, families with young children, divorced, empty nesters, or seniors.
Discussion Question: Considering the demographic variables of age and education levels, can you provide examples of products or services that are targeted to college students?
Age
Family size
Family life cycle

21. Segmenting Business Markets (Exhibit 4-9)
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Kind of relationship
Type of customer
Segmenting Dimensions for Business Markets
Summary Overview
There are many possible segmentation dimensions in the business or organizational market.
Key Issues
Among these dimensions are:
 Kind of relationship between buyer and seller—relationships might range from weak loyalty to strong loyalty.
 Type of customer—customers may be segmented by whether they are service producers, a government agency, or a manufacturer.
 Demographics variables--which include geographic locations, size of the company, or industry.
 How the customer will use the product—will the product be used in an installation, as a component or as a raw material?
 Type of buying situation—some characteristics of the buying situation might include the number of people involved in the purchase or whether the buying process is centralized or decentralized.
 Purchasing methods--refers to factors like whether the buyer uses bids, vendor analysis, e-commerce websites, or other methods of buying.
Demographics
Purchasing methods
Type of buying situation
How customers will use the product

22. Checking Your Knowledge
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The pastor of a new church decides to start prospecting for new members. He focuses first on people who live within a mile radius of the church, and contacts them via mail and by visiting them door-to-door. He then moves on to people who live from one to two miles away from the church, then two to three miles away, and so on, up to a limit of ten miles away. The pastor appears to be focusing on a __________ segmenting dimension.
A. behavioral
B. demographic
C. benefit
D. geographic
E. relationship
Checking Your Knowledge
Answer: D
Feedback: The pastor is segmenting potential church members based on physical location in proximity to the church. This proximity to the church is a geographic segmenting dimension; therefore, selection ‘D’ is the best option.

23. Finding the Relevant Segmenting Dimensions (Exhibit 4-10)
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Segmenting dimensions become more specific to reasons why the target segment chooses to buy a particular brand of the product
Summary Overview
Several factors affect the specificity and use of determining and qualifying dimensions in segmenting markets.
Key Issues
 Determining dimensions may be very specific, depending on whether the marketer is concerned with a general product type or a specific brand.
Determining dimensions may change over time, because needs may change or because competitors enter the market.
Qualifying dimensions are important, too, because they help identify the “core” features that must be offered to everyone in a product-market.
Within a broad product-market, there may also be different dimensions for different submarkets.
Discussion Question: Think about the various submarkets of bicycle riders—exercisers, off-road adventurers, environmentalists, etc. Can you describe how the determining and qualifying dimensions differ from submarket to submarket?
All potential dimensions
Qualifying dimensions
Determining dimensions
(product type)
Determining dimensions
(brand specific)

24. Very Specific Segmentation
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Summary Overview
This ad from Sun Pharmaceuticals incorporates segmenting dimensions in marketing tactics.
Key Issue
This ad is an example of targeting a particular type of customer—parents buying sunblock specifically for their children’s use.

25. Checking Your Knowledge
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A father taking his family of four on vacation was trying to make hotel reservations for a trip to Disney World. He first eliminated all hotels that were in excess of two miles from the main gate to Disney World. Then he focused exclusively on hotels offering suites so that his family would have more space. He eventually selected the Excelsior Hotel because he knew the hotel offered suites and a complimentary breakfast. For him, the available of the complimentary breakfast was a ______________ segmenting dimension.
A. qualifying
B. determining
C. differentiated
D. geographic
E. demographic
Checking Your Knowledge
Answer: B
Feedback: Qualifying dimensions are those relevant to including a customer type in a product-market. In the above question, after the father narrowed his search to within two miles from Disney World, the qualifying dimension was a hotel offering suites. After he selected hotels offering suites, he made his decision based on the availability of the complementary breakfast. The breakfast offering is a determining dimension. It was the one that actually affected the customer’s purchase (reservation) of a specific product (hotel) in a product-market. Therefore, selection ‘B’ is the best option.

26. Qualifying and Determining Dimensions
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Qualifying
Dimensions
Relevant to including a customer type in a product- market
Help identify “core benefits”
Determining
Dimensions
Affect the customer’s purchase of a product or brand
Can be further segmented
and
Summary Overview
To select the important segmenting dimensions, think about two different types of dimensions: qualifying and determining.
Key Issues
Qualifying dimensions are those relevant to including a customer type in a product-market.
Help identify the “core features” that must be offered to everyone in a product-market.
 Determining dimensions are those that actually affect the customer’s purchase of a specific product or brand in a product-market.
Can be further segmented into groups.
Discussion Question: Can you describe a qualifying dimension and a determining dimension that help to define a product-market?

27. Ethical Issues in Selecting Segmenting Dimensions
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Ethical Issues
International Issues
Exploitation
Creates Unnecessary Wants
Does Harm
Summary Overview
Along with the segmenting dimensions, there are other considerations for marketers in market segmentation.
Key Issues
Ethical issues: some critics argue that target marketing:
exploits consumers;
makes them want things they don’t need;
may even cause physical, emotional, or financial harm.
Discussion Question: What types of companies are criticized the most for exploiting particular target markets?
Success in international marketing requires even more segmenting, because there are so many countries, languages, and unique cultures.
Segmenting international markets adds just one step to the whole process of segmentation. Marketers must first segment by country or region, and then proceed with the same basic segmentation approaches already discussed.

28. More Sophisticated Techniques May Help in Segmenting
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Clustering
Summary Overview
Computer-aided methods afford marketers additional help in segmenting markets. The ability of the computer to record, sort, recombine, and analyze a great many variables relating to consumer behavior at the same time allows marketers to develop much more sophisticated market segments.
Key Issues
Among the techniques are as follows:
Clustering techniques: try to find similar patterns within sets of data.
Customer relationship management (CRM):
Sophisticated modeling techniques can predict the types of products or services an individual customer might want, based on the information stored in the database.
Anticipation of emerging needs helps a marketer maintain long-term relationships with customers.
Customer Relationship Management (CRM)

29. Differentiation and Positioning Take the Customer Point of View
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Customer Point of View
Summary Overview
Marketers can differentiate the marketing mix in order to meet customer needs better than competitors and therefore build a competitive advantage.
Key Issues
Differentiation:
How the marketer tries to distinguish her or his offering in the marketplace—how it is set apart from the competition.
What really matters is that the consumer perceives the marketer’s product to be different.
Positioning:
How customers think about proposed and/or present brands in a market.
Marketing research techniques are designed to collect information about consumer perceptions and determine differences among competing products in the mind of the consumer.
Firms often use promotion to help “position” how a marketing mix meets target customers’ specific needs.
Differentiation
Positioning

30. “Product Space” Representation of Positioning (Exhibit 4-11)
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High moisturizing
low moisturizing 2 1 4 5 7 3 8 6
Zest
Lever 2000
Safeguard
Dial
Lifebuoy
Tone
Dove
Lux
Coast
Lava
Sensitive
Summary Overview
This diagram shows the output of a computer program that does positioning analysis.
Key Issues
Two attributes of soap that account for the greatest difference in consumer perceptions:
 degree to which the soap is a deodorant soap.
 degree to which the soap is a moisturizing soap.
 The closer that any two dots are to each other, the more similar those brands are in the minds of consumers.
Each segment may have its own preferences.
(The circles refer to the size of market attracted to a combination of attributes.)
Discussion Question: What is the largest segment in the diagram? What brands serve that segment best?
Positioning may also lead to combining instead of segmenting, if a firm can successfully appeal to several segments with the same product.
Therefore, positioning studies can be part of a broader analysis because they:
identify important attributes of the product offerings in a market;
identify what offerings are likely to appeal to segments;
provide a basis for changing the marketing mix, should a marketer decide to reposition a product.
Nondeodorant
Deodorant

31. Positioning Statement Provides Direction for Marketing Strategy
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For (our target market), (our brand) of all (product type) delivers (key benefits or point of differentiation) because (our brand) is (reasons to believe).
Summary Overview
The positioning statement provides marketing managers with a strategic direction. Here is a template and example application.
Key Issues
Marketing managers often develop a positioning statement to concisely identify the firm’s target market, product type, points of differentiation, and the main reasons a customer should buy a product.

32. Positioning Statement Provides Direction for Marketing Strategy
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For 16–24-year-old males, who embrace excitement, adventure, and fun, Mountain Dew of all carbonated soft drinks, delivers great taste that exhilarates like no other because Mountain Dew is energizing, thirst-quenching, and has a one-of-a-kind citrus flavor.
Summary Overview
The positioning statement provides marketing managers with a strategic direction. Here is a template and example application.
Key Issues
Let’s look at an example for Mountain Dew.
The brand’s target market is young adults males who identify with “excitement, adventure, and fun.”
This might differ from a market segment that is older, and more health-conscious.
Branding and marketing would almost certainly avoid serious or conservative themes.
Product logos, ad typeface choices, and sponsorships would reflect the same “excitement, adventure, and fun” theme.
Discussion question: How did marketing managers for Mountain Dew decide on this positioning statement? [probably through market research with the target market]
Discussion question: Given this positioning statement, how could Mountain Dew promote its drinks? [perhaps with ads showing their target demographic engaging in “extreme sports,” or sponsoring events such as the X Games.]

33. Positioning and Advertising
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Using the classic Three Bears fairy tale, HUMMER is conveying the new H3's place in the Hummer family. The H3 is positioned as an alternative in the midsize segment, vs the H1 and the H2.
Video Operation:
Use the onscreen player controls to operate the video.
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34. Checking Your Knowledge
This slide relates to material on p
The “product space” graph (perceptual map) resulting from a positioning study for shampoo shows a substantial target market that is currently served by only one product—“Exotic Balsam.” Which of the following is a reasonable course of action for a competing manufacturer?
A. Develop a new product to compete with Exotic Balsam.
B. Look for an area on the map where there is a smaller target market that is not served by any current products.
C. Attempt to reposition a current product as an alternative to Exotic Balsam.
D. Do a broader analysis that includes an examination of customer needs and attitudes.
E. Any of the above might be reasonable, depending on the circumstances.
Checking Your Knowledge
Answer: E
Feedback: Perceptual mapping graphically displays consumer views on competing products based on two product features. It is a tool that can help managers understand how customers see their market (p. 110). Positioning analysis of this sort focuses on specific products and features. Thus a manager might need to cast a wider net and evaluate customer-related dimensions before moving forward. In the above question, selection ‘E’ is the best option because all of the scenarios presented could be reasonable courses of action--all resulting with a perceptual map such as the one described in the question.

35. At the end of this presentation, you should be able to:
This slide refers to material on p. 92.
define and describe generic markets and product-markets.
know what market segmentation is and how to segment product-markets into submarkets.
know three approaches to market-oriented strategy planning.
know dimensions that may be useful for segmenting markets.
At the end of this presentation, you should be able to:
1. define and describe generic markets and product-markets.
2. know what market segmentation is and how to segment product-markets into submarkets.
3. know three approaches to market-oriented strategy planning.
4. know dimensions that may be useful for segmenting markets.

36. At the end of this presentation, you should be able to:
This slide refers to material on p. 92.
recognize how some computer-aided methods are used in segmenting.
know what positioning is and why it is useful.
understand important new terms.
At the end of this presentation, you should be able to:
5. recognize how some computer-aided methods are used in segmenting.
6. know what positioning is and why it is useful.
7. understand important new terms.

37. Key Terms market combiners generic market segmenters product-market
This slide refers to boldfaced terms appearing in Chapter 4.
market
generic market
product-market
market segmentation
segmenting
market segment
single target market approach
multiple target market approach
combined target market approach
combiners
segmenters
qualifying dimensions
determining dimensions
clustering techniques
customer relationship management (CRM)
positioning
Summary Overview
These are key terms you should be familiar with based upon the material in this presentation.
Key Issues
Market: a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services—that is, ways of satisfying those needs.
Generic market: a market with broadly similar needs—and sellers offering various and often diverse ways of satisfying those needs.
Product-market: a market with very similar needs—and sellers offering various close substitute ways of satisfying those needs.
Market segmentation: a two-step process of: (1) naming broad product-markets and (2) segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes.
Segmenting: an aggregating process that clusters people with similar needs into a market segment.
Market segment: a relatively homogeneous group of customers who will respond to a marketing mix in a similar way.
Single target market approach: segmenting the market and picking one of the homogeneous segments as the firm's target market.
Multiple target market approach: segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix.
Combined target market approach: combining two or more submarkets into one larger target market as a basis for one strategy.
Combiners: firms that try to increase the size of their target markets by combining two or more segments.
Segmenters: aim at one or more homogeneous segments and try to develop a different marketing mix for each segment.
Qualifying dimensions: the dimensions that are relevant to including a customer-type in a product-market.
Determining dimensions: the dimensions that actually affect the customer's purchase of a specific product or brand in a product-market.
Clustering techniques: approaches used to try to find similar patterns within sets of data.
Customer relationship management (CRM): an approach in which a seller fine-tunes the marketing effort with information from a customer database.
Positioning: an approach that refers to how customers think about proposed and/or present brands in a market.
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