Chapter 4 Marketing Segmentation, Target Marketing & Positioning

Chapter 4Marketing Segmentation, Target Marketing & Positioning

Market Strategy

Primary role of placing the firm in an optimal position with respect to customer needs.

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Market Segmentation

Decisions related to targeting the entire market for a product or one or more segments of the total marketThis information to make these decisions should come from the “situation analysis” specifically the analysis of the customer environment!


Market Segmentation

Traditional approaches to market segmentation include: – mass marketing – differentiated marketing– niche marketing


What are some of the key benefits of market segmentation?


Mass Marketing...Aimed at the total market for a particular product– undifferentiated marketing– assumes all customers have similar needs– single marketing mix

• 1 product @ 1 price• 1 promotional program• 1 distribution system


What products are mass marketed?

For example...


Differentiated Marketing

Dividing the total market into groups common needs & attempting to develop a marketing mix that appeals to 1 or more of these groupsMay be necessary when needs are similar within a group, but differ across groupsInvolves two options:– multisegment approach– market concentration approach


What products are mass marketed?

...


Niche Marketing...

Narrow the market concentration approach even more– focus on a small market– segment has a unique, specific set of needs



Individualized Approaches to Market Segmentation

Resulting from advances in technology (communications & the Internet)Occur as companies are able to track customersAllow firms to combine demographic data with information on past & current purchasing behavior (marketing mix variables can match customer’s needs, wants & preferences)


One-to-One Marketing

Involves the creation of an entirely unique marketing mix for each customer in the target segmentMore common in business than consumer marketingHowever, a fast growing approach in luxury & custom-made products

as well as services


Mass Customization

Provides unique products & solutions to individual customers on a mass scaleIs more cost effective and practical because of advances in supply chain management, just-in-time inventory control & electronic data exhangeOften is used in business marketing


Permission Marketing

A one-to-one technique whereby customers give companies permission to specifically target them in their marketing effortsIs commonly executed through opt-in e-mail lists, where a customer gives permission to send e-mails regarding products & servicesCustomers who opt-in are already interested in the goods & services


Consumer Needs vs. Wants...

What is the difference between needs & wants?Are most products & services marketed to consumers based on needs or wants?


Three general categories that can be used to divide markets-

state of being segmentation– using demographic factors (age, gender, income &

education)

state of mind segmentation– deals with how consumers think & feel

benefits sought– wants


The Role of Differentiation & Positioning

Involves the development & maintenance of a relative perception for a product in customers’ minds– the goal is to create a favorable image versus all

competing products

Perceptions are fundamentally based on brand image & experienceRequires attention to product descriptions, customer support services & image


Product Features Advantages Benefits

Dell Inspiron 5000e laptop computer

850-MHz Pentium III Blazingly fast Applications run faster

Weighs 6.75 lb Lightweight Greater mobility

Pontiac Gran Prix GTP automobile

240-HP engine Speed and Power Better self-image

WideTrack design Excellent handling Safety

Fun to drive

Crest MultiCare Advanced Cleaning Toothpaste

Dissolving micro-cleansing crystals

Teeth stay cleaner longer

Fresher breath

Bounty Extra Paper Towels

20% larger sheets Superior absorbency Handles bigger messes

More sheets per roll Won’t run out as often Fewer buying trips

USING PRODUCT DESCRIPTORS TO DIFFERENTIATE AND POSITION A PRODUCT


Considerations in Business Marketing

Requires an understanding of:– the role of the buying center– the nature of hard & soft costs– reciprocity– mutual dependence

Must build client relationshipsRequires a firm to closely align their buying & selling operations to identify & remove an inefficiencies in the process

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Chapter 4 Marketing Segmentation, Target Marketing & Positioning