Chapter tt07.ppt

Principles of MarketingCustomer-Driven Marketing Strategy: Creating Value for Target Customers7

Learning ObjectivesAfter studying this chapter, you should be able to:Define the three steps of target marketing: market segmentation, target marketing, and market positioningList and discuss the major bases for segmenting consumer and business marketsExplain how companies identify attractive consumer and business marketsDiscuss how companies position their products for maximum competitive advantage in the marketplace7-2

Chapter Concepts:

Market SegmentationMarketing TargetDifferentiation and Positioning Positioning for Competitive Advantage7-3

Market Segmentation

Discuss the need to understand competitors as well as customers through competitor analysisExplain the fundamentals of competitive marketing strategies based on creating value for customersDemonstrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization5-4

Market Segmentation

Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs7-5

Market Segmentation

Segmenting consumer marketsSegmenting business marketsSegmenting international marketsRequirements for effective segmentation

7-6

Market SegmentationSegmenting Consumer Markets

GeographicDemographicPsychographicBehavioral7-7


Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities7-8


Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality7-9


Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables7-10


Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups

Gender segmentation divides the market based on sex (male or female)7-11

Market Segmentation

Income segmentation divides the market into affluent or low-income consumers

7-12Segmenting Consumer Markets

Market SegmentationPsychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits7-13Segmenting Consumer Markets


Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a productOccasionBenefits soughtUser statusUsage rateLoyalty status7-14


Occasion segmentation divides buyers into groups according to occasions when they get the idea to buy, actually make purchases, or respond to a product

Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit7-15


User status divides buyers into ex-users, potential users, first-time users, and regular users of a product

Usage rate divides buyers into light, medium, and heavy product users

Loyalty status divides buyers into groups according to their degree of loyalty7-16

Market SegmentationLoyalty status divides buyers into groups according to their degree of loyalty7-17Segmenting Consumer Markets

Market SegmentationUsing Multiple Segmentation Bases

Multiple segmentation is used to identify smaller, better-defined target groups

Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns

7-18

Market SegmentationUsing Multiple Segmentation Bases

PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups. These groups segment people and locations into marketable groups of like-minded consumers that exhibit unique characteristics and buying behavior based on a host of demographic factors.

7-19

Market Segmentation

AgeEducational levelIncomeOccupationFamily composition

EthnicityHousingBehavioral and lifestyle factorsPurchasesFree-time activitiesMedia preferences7-20Using Multiple Segmentation BasesPrizm classifications include

Market SegmentationSegmenting Business Markets

In addition to the same segmentation variables as consumers, business can also be segmented by:Customer-operating characteristicsPurchasing approachesSituational factorsPersonal characteristics7-21

Market SegmentationSegmenting Business Markets

Segmenting international marketsGeographic locationEconomic factorsPolitical and legal factorsCultural factors7-22

Market SegmentationIntermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries7-23Segmenting Business Markets

Market SegmentationRequirements for Effective Segmentation

To be useful, a market segment must be:MeasurableAccessibleSubstantialDifferentiableActionable7-24


Measurable examples include the size, purchasing power, and profiles of the segments

Accessible refers to the fact that the market can be effectively reached and served7-25


Substantial refers to the fact that the markets are large and profitable enough to serve

Differentiable refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs7-26


Actionable refers to the fact that effective programs can be designed for attracting and serving the segments7-27

Market TargetingEvaluating Market Segments

Segment size and growthSegment structural attractivenessCompany objectives and resources

7-28


Segment size and growth Smaller versus larger segmentsGrowth potential

7-29


Segment structural attractivenessCompetitionSubstitute productsPower of buyersPower of suppliers

7-30


Company objectives and resourcesCompetitive advantageAvailability of resourcesConsistent with company objectives

7-31

Market TargetingSelecting Target Market Segments

Undifferentiated marketingDifferentiated marketingConcentrated marketingMicromarketing

7-32

Market TargetingTarget Marketing Strategies

Undifferentiated marketing targets the whole market with one offerMass marketingFocuses on common needs rather than whats different

7-33


Differentiated marketing targets several different market segments and designs separate offers for eachGoal is to achieve higher sales and stronger positionMore expensive than undifferentiated marketing7-34

Market Targeting Selecting Target Market Segments

Concentrated marketing targets a small share of a large marketLimited company resourcesKnowledge of the marketMore effective and efficient7-35


Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locationsLocal marketingIndividual marketing7-36


Local marketing involves tailoring brands and promotion to the needs and wants of local customer groupsCitiesNeighborhoodsStores7-37


Local MarketingBenefits:Increased marketing effectiveness in competitive marketsMore customer-specific offerings7-38


Local marketingChallenges:Increased manufacturing and marketing costsLess economy of scaleLogistics Dilution of company image7-39

Marketing Targeting

Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customersAlso known as:One-to-one marketingMass customizationMarkets-of-one marketing7-40Selecting Target Market Segments


Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs. Has made relationships with customers important in the new economy.Provides a way to distinguish the company against competitors7-41

Market TargetingChoosing a Targeting Strategy Depends on:Company resourcesProduct variabilityProduct life-cycle stageMarket variabilityCompetitors marketing strategies

7-42

Market TargetingSocially Responsible Target Marketing

Benefits customers with specific needsConcern for vulnerable segmentsChildrenAlcoholCigarettes7-43

Differentiation and Positioning

Product position is the way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing productsPerceptionsImpressionsFeelings7-44

Differentiation and Positioning

Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensionsPrice and orientation7-45

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages to build a positionChoosing the right competitive advantagesSelecting an overall positioning strategy

7-46

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages to build a position by providing superior value from:Product differentiationService differentiationChannelsPeopleImage

7-47

Differentiation and Positioning Identifying Possible Value Differences and Competitive Advantage

Competitive Advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices

7-48

Differentiation and Positioning Choosing the Right Competitive Advantages

A difference is worth establishing to the extent that it satisfies the following criteria:ImportantDistinctiveSuperiorCommunicablePreemptiveAffordable

7-49

Differentiation and Positioning Selecting an Overall Strategy

Value proposition is the full mix of benefits upon which a brand is positionedMore for moreMore for the sameSame for lessLess for much lessMore for less

7-50

Positioning for Competitive AdvantageDeveloping a Positioning Statement

Positioning statement states the products membership in a category and then shows its point-of-difference from other members of the category.7-51

Documents

Chapter tt07.ppt