1. Chapter 4: Planning Segmentation, Targeting, and Positioning The Marketing Plan Handbook Fourth Edition Marian Burk Wood 4-1

2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Fragmentation and Intense Competition Customers exhibiting a wider variety of:  Needs  Attitudes  Behaviors Companies must differentiate themselves more distinctly in the markets where they compete. 4-2

3. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall The Need for Segmentation, Targeting, and Positioning A move away from mass marketing. A move towards segment marketing. Allows marketers to focus their resources on the most promising opportunities. Improves marketing efficiency and effectiveness. 4-3

4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Definition: the process of grouping customers within a market according to similar needs, habits or attitudes that can be addressed through marketing. Even within a large segment, marketers often can identify niches. 4-4

5. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Steps in the Segmentation Process 1.Select the general market: Eliminate markets that have no need for the product or are inappropriate for other reasons. 2.Apply segmentation variables. 3.Assess and select segments for targeting. 4-5

6. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Consumer Segmentation Variables Type of VariableExamples Behavioral and Attitudinal Benefits sought, rate of usage, attitude toward product and usage, price sensitivity. DemographicAge, gender, family status, household size, income, occupation, education. GeographicLocation, distance, climate. PsychographicLifestyle, activities, interests. 4-6

7. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Consumers: Segmenting by Behaviors and Attitudes In many ways, the best way to segment: Help marketers analyze the specific value that a particular group expects from the offering. Include variables like: Benefits required or expected. Usage occasion and status. Loyalty status. Technological orientation. Attitudes toward products or usage. 4-7

8. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Consumers: Segmenting by Demographics Popular because they are common and easily identified. Often point to meaningful differences in:  Consumer needs and wants.  Product consumption.  Media usage. 4-8

9. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Consumers: Segmenting by Geography By certain areas or climates. Targeting promising new markets. Reluctance to sell in certain areas due to environmental threats or unfavorable climate. 4-9

10. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Consumers: Segmenting by Psychographics Lifestyles, activities, interests and attitudes. Provides a deeper understanding of what and why consumers buy. When consumer activities or interests cross demographic and/or geographic lines. 4-10

11. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Business Segmentation Variables Type of Variable Examples Behavioral and Attitudinal Purchasing patterns and process, user status, benefits expected, order size/frequency, buyer/influencer/user attitudes. DemographicIndustry, business size, business age, ownership structure. GeographicLocation, distance, climate. 4-11

12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Businesses: Segmenting by Behaviors and Attitudes Purchasing patterns. User status. Attitude toward technology. Loyalty status. Price sensitivity. Order size/frequency. Attitudes. Benefits expected. 4-12

13. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Businesses: Segmenting by Demographics Common business demographic variables used: Industry Business size Business age Ownership structure 4-13

14. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Businesses: Segmenting by Geography Utilizes such variables as nation, region, state, city, and climate. Allows for the grouping of potential customers according to:  Concentration of outlets.  Location of headquarters.  Geography-related needs or responses. 4-14

15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Assessing Potential Target Markets Target Market: The segment of the overall market that a company chooses to pursue. Each potential segment must be evaluated based upon fit with the firm’s:  Resources.  Core competencies.  Goals and objectives.  Offerings. 4-15

16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Assessing Segment Attractiveness Fit with company resources and competencies Identify most promising segments and order of entry. Market Factors Economic and Technological Factors Competitive FactorsBusiness Environment Factors 4-16

17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Coverage Strategies Concentrated Marketing Undifferentiated Marketing Differentiated Marketing 4-17

18. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Personas Detailed but fictitious profiles representing how individual customers in their targeted segments behave, live, and buy. Give marketers a deeper understanding of what shapes each segment’s needs, preferences, buying behavior and consumption patterns. 4-18

19. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Positioning Differentiation on the basis of attributes that customers find meaningful. Conveys the value that the brand provides and sets the brand apart. Sets the tone for the marketing plan. Should be re-evaluated periodically. 4-19

20. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Meaningful Differentiation Some sources of meaningful differentiation:  Product features  Service attributes  Channel attributes  Pricing attributes  Other attributes Consideration is also given to positions being staked out by the competition. 4-20

21. 4-21 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall