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 marke

t down

2.Group into

segments

TARGET MARKET

3.Choos

etarget marke

t

Steps in Segmentation & Targeting

Segmentation works because,….

Not all buyers are alikeSubgroups may be identifiedSubgroups are smaller and more

homogeneousEasier to satisfy smaller groupswww.fordvehicles.com

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. http://www.tide.com/en_CA/index.jsp

4. 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 ExamsTerm Projects!

From Jill Day,  http://www.youtube.com/watch?v=3iuG1OpnHP8Brendan O’Donovan, http://www.youtube.com/watch?v=l7NgLArJidY

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)