CHAPTER 8 Market Segmentation and Positioning

Market Segmentation Dividing the total heterogeneous market for a good or product into smaller groups which are more homogeneous.

1. Break market down 2. Group into segments TARGET MARKET 3. Choose target market Steps in Segmentation & Targeting

Segmentation works because,…. Not all buyers are alike Subgroups may be identified Subgroups are smaller and more homogeneous Easier to satisfy smaller groups

Effective Segmentation To be useful, market segments must be:  Measurable: size, purchasing power, and profile  Accessible: can be reached and served/responsive  Substantial: large enough to profitably serve  Differentiable: respond differently to a marketing mix  Actionable: effective programs can be designed Segments should be evaluated for:  Size  Growth characteristics  Structural attractiveness  Compatibility with company objectives and resources

Discussion Questions Put yourselves into small groups and answer the following assigned questions on page 218: Question 2 and all parts of 4

Market Segmentation Variables Geographic: dividing a market into different geographical units, such as nations, states, regions, counties, cities, or neighbourhoods Demographic: dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, religion, race, and nationality Socioeconomic: identifying differences in income, education, occupation and social class Psychographic: dividing a market into different groups based on activities, interests, lifestyle, opinions, values or personality characteristics Behavioural: dividing a market into groups based on consumer loyalty (to brand or store), usage, benefits sought/ expected, response to a product and price

Identifying Market Differences 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.

Four strategies for target marketing 1. Undifferentiated Marketing:  When everyone is a customer. Firm decides to ignore market segment differences and go after the whole market with one offer. 2. Concentrated Marketing:  Zeroing in on a single target. A firm goes after a large share of one market. 3. Differentiated Marketing:  Different Buyers, Different Strategies. A firm decides to target several market segments and designs separate offers for each Custom/Individual Marketing:  Tailoring marketing offers to the needs and preferences of individual customers

Choosing a Market Coverage Strategy Depends on: Company resources Degree of product variability Product life cycle stage Market viability Competitors’ marketing strategies

What’s Happening? Mid-term Exams Term Projects! From Jill Day, Brendan O’Donovan,

Market Positioning Market positioning:  Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Product position: the way the product is defined by consumers on important attributes, relative to competing products  The “quicker-picker- upper?”  The “uncola?”  “Great taste, less filling?”

Positioning Maps for Tea (Exhibit 8-12, PAGE 215)