Armstrong Ch07 Express

8/22/2019 Armstrong Ch07 Express

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Copyright 2007 Pearson Education Canada7-1

Marketing: An IntroductionSecond Canadian Edition

Armstrong, Kotler, Cunningham, Mitchell and Buchwitz

Chapter Seven

Segmentation, Targeting and

Positioning: Building the RightRelationships with the Right

Customers


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Looking Ahead

Define the three steps of target marketing: market

segmentation, market targeting and market

positioning.

List and discuss the major bases for segmentingconsumer and business markets.

Explain how companies identify attractive market

segments and choose a target marketing

strategy.

Discuss how companies position their products

for maximum competitive advantage in the

marketplace.


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Segmentation/Positioning

Segment markets.

Identify bases for segmentation.

Develop segmentation profiles.

Target segment(s).

Measure of segment attractiveness.

Select the target segment(s).

Position for target segment(s). Develop positioning for each segment.

Develop appropriate marketing mix.


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Segmentation Variables

Geographic.

Area, population density, climate etc.

Demographic.Age, sex, lifecycle, income, job, etc

Psychographic.

Lifestyle, personality.

Behavioural.

Benefits sought, status, usage rate,loyalty, attitudes, etc.


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Geographic Segmentation

World region or country.

Region of country.

City or metro size. Density or climate.


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Demographic Segmentation

Age, gender, family size, income,

occupation, etc.

The most popular bases for segmentingcustomer groups.

Easier to measure than most other types

of variables.


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Gender. Women make 90% of home improvement decisions.

Women influence 80% of all household consumerpurchases.

Income. Identifies and targets the affluent for luxury goods.

People with low annual incomes can be a lucrativemarket.

Some manufacturers have different grades of

products for different markets.




Age and life-cycle.

Do not necessarily match.

Middle aged people starting new families. Seniors going back to university or college .

Products targeted at age or life-cycle stages.

P&G has different toothpastes for different age

groups.

Avoid stereotypes in promotions.

Promote positive messages.



Psychographic Segmentation

Dividing a market into different groups

based on:

Social class. Lifestyle.

Personality characteristics.

Targeting whitening toothpaste atpsychographic segment who are active

and concerned about sexual

attractiveness.



Behavioural Segmentation

Occasions.

Special promotions for holidays. (e.g., Hershey Kisses).

Special products for special occasions. (e.g., Kodak disposable cameras).

Benefits sought.

Different segments desire different benefitsfrom products.

e.g., P&Gs multiple brands of laundry detergentsto satisfy different needs in the product category.



Behavioural Segmentation

User status. Nonusers, ex-users.

Potential users. First-time users.

Regular users.

Usage rate. Light.

Medium.

Heavy.

Loyalty status. Brands.

Stores. Companies.



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.



Segmenting Business Markets Consumer and business markets use

many of the same variables for

segmentation. Business marketers can also use:

Operating characteristics.

Purchasing approaches. Situational factors.

Personal characteristics.



Segmenting International Markets

Factors for segmenting foreign markets. Geographic location.

Economic situation.

Culture.

Political and legal situation and issues.

Intermarket segmentation.

When there is little difference acrossinternational markets.

Teenagers all over the world tend to be thesame.



Evaluating Market Segments

Segment size and growth. Analyze current segment sales, growth rates and

expected profitability.

Segment structural attractiveness. Consider effects of: competitors, existence of

substitute products, the power of buyers/suppliers.

Company objectives and resources. Examine company skills and resources needed to

succeed in that segment.

Offer superior value/gain competitive advantage.



Segment Success Criteria

Measurable -Ability to measurenumerically.

Accessible -Ability to reach segment.

SubstantialAbility to support thebusiness.

DifferentiableAbility to find unique

position in segment. ActionableAbility to pursue and

capture the segment.



Levels of Segmentation

Mass marketing. No segments and single marketing mix.

Differentiated marketing. Large segments with specific marketing mixes.

Niche marketing. Small segments with specialized marketing

mixes.

Micro-marketing. Customized marketing to individuals.



Undifferentiated Marketing Focus is on common (not different)

needs of consumers.

Product and marketing program aregeared to the largest number of buyers.

Uses mass advertising and distribution.

Henry Fords Model T excellent exampleof undifferentiated or mass marketing.


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Differentiated Marketing

Firm targets several market segmentsand designs separate offers for each.

The goal is to have higher sales and astronger position with each marketsegment.

This approach increases the costs of

doing business. General Motors claims to make a car for

every segment.


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Niche Marketing

The focus is acquiring a large share of

one or a few segments of niches.

Generally, there are fewer competitors. The Internet is ideal for targeting small

niche markets.

There is some risk in focusing on onlyone market.


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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, neighbourhoods, specific stores.

Individual Marketing: Tailoring products andmarketing programs to the needs and preferences

of individual customers.


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Mass Customization

The process of creating customer-

unique value by designing products and

services tailor-made to individual needs,on a large scale.

Having your next car or sneakers built to

order?


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Market Coverage Strategy

Company resources.

Degree of product variability.

Product life cycle stage. Market viability.

Competitors marketing strategies.


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Socially Responsible

Target Marketing Smart targeting helps both companies

and consumers.

Target marketing sometimes generates

controversy and concern. Vulnerable and disadvantaged can be targeted.

Cereal, cigarette, beer and fast-food marketers

have received criticism.

Internet has raised fresh concerns about potential

targeting abuses.


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Successful Positioning

Product position.

How a product is viewed by consumers

relative to competing products.

Three positioning steps.

Identify competitive advantages on which to

build a differentiated position.

Choose the right competitive differentiation.

Select an overall positioning strategy.


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Gaining Competitive Advantage

Key to winning target customers is to

understand their needs better than

competitors do and to deliver morevalue.

Competitive advantage extent to

which a company can position itself asproviding superior value.


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Identifying Competitive

Advantage Product differentiation.

Consistency, durability, reliability, reparability.

Services differentiation. Speed, convenience, careful delivery.

Image differentiation. Convey benefits and positioning.

People differentiation. Hiring, training better people than competition


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Successful Differentiation

Important of value to consumers.

Distinctive obvious and clear.

Superior better value than

competitors. Communicable explainable.

Pre-emptive defendable and unique.

Affordable delivers value for cost. Profitable company can make

money.


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Positioning Errors

Under-positioning.

Failing to really position the company at

all.

Over-positioning.

Giving buyers too narrow a picture of the

company.

Confused positioning.

Leaving buyers with a confused image of a

company.


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Value Propositions

More

formore

More

for thesame

More

forless

The same

for

less

Less for

much

less

More LessThe same

More

The same

Less

Price

Benef i ts


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Looking Back Define the three steps of target marketing:

market segmentation, market targeting and

market positioning.

List and discuss the major bases for segmentingconsumer and business markets.

Explain how companies identify attractive market

segments and choose a target marketing

strategy.

Discuss how companies position their products

for maximum competitive advantage in the

marketplace.

Documents

Armstrong Ch07 Express