1. Chapter Six Segmentation, Targeting, and Positioning:

2. Copyright 2007, Prentice Hall, Inc. 2 So Far, we have learned… What is marketing? Customers’ needs and wants Customer relationship Marketing management philosophies The five-steps of marketing process Marketing environment factors Marketing research process Consumer behavior Now, we are ready to do marketing

3. Copyright 2007, Prentice Hall, Inc. 3 3 Segmentation Target Product PricePromotion Distribution

4. 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.

5. Copyright 2007, Prentice Hall, Inc. 5 Market Segmentation Key variables:  Geographic  Demographic  Psychographic  Behavioral No single way to segment a market. May combine more than one variable to better define segments.

6. Copyright 2007, Prentice Hall, Inc. 6 Market Segmentation Geographic:  World region or country  Region of country  City or metro size  Density or climate

7. 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.

8. 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.

9. Copyright 2007, Prentice Hall, Inc. 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.

10. Copyright 2007, Prentice Hall, Inc. 10 Market Segmentation Psychographic:  Social class (lower class, working class, middle class, & upper class) or (values, interests, and behaviors)  Lifestyle (adventurous, fishing, hunting)  Personality (sophisticated, confidence, competence/intelligent, imaginative)

11. Copyright 2007, Prentice Hall, Inc. 11 Market Segmentation Behavioral:  Occasion segmentation: buyers can be grouped according to occasions Special promotions and labels for holidays.  (e.g., Hershey Kisses) Special products for special occasions.  (e.g., Kodak disposable cameras)

12. Copyright 2007, Prentice Hall, Inc. 12 Market Segmentation Behavioral:  Benefits Sought: group buyers according to the different benefits Different segments desire different benefits from products.  P&G’s multiple brands of laundry detergents to satisfy different needs in the product category  Nokia provides different features to satisfy different needs

13. 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

14. 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.

15. Copyright 2007, Prentice Hall, Inc. 15 Criteria for Targeting 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.

16. Copyright 2007, Prentice Hall, Inc. 16 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)

17. Copyright 2007, Prentice Hall, Inc. 17 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.

18. Copyright 2007, Prentice Hall, Inc. 18 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.

19. Copyright 2007, Prentice Hall, Inc. 19 Choosing a Positioning Strategy Identify a set of possible competitive advantages on which to build a position.  Competitive advantage – extent to which a company can position itself as providing superior value, achieved via differentiation. Choose the right competitive advantages. Select an overall positioning strategy.

20. Copyright 2007, Prentice Hall, Inc. 20 Identifying Possible Competitive Advantages Product differentiation (features, style, or design) Services differentiation (speedy, convenient, or delivery) Image differentiation (quality, logo, or color) People differentiation (trained people, friendly)

21. Copyright 2007, Prentice Hall, Inc. 21 Positioning Errors Underpositioning:  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.

22. Copyright 2007, Prentice Hall, Inc. 22 Tips: 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.