Cimbamktsegmentationstudent

GLOBAL MARKETING

Marketing Segmentation

Market Attractiveness

Positioning

What is Market Segmentation?

• Process of dividing a potential market into

distinct subsets of consumers with

common needs or characteristics.

• Separating a heterogeneous market into

smaller homogeneous units.

Important Elements of Market

Segmentation

• Each market segment has unique needs

and wants and will have a unique demand

curve.

• Each market segment requires its own

marketing strategy and marketing plan.

• Market segmentation produces increased

costs to the firm in the short run.

• Increased costs are generally offset by

increasing sales in the long run.

The Segmentation Process

Needs-Based

Segmentation


Needs-Based

Segmentation

Segment

Identification

Segmentation Bases

• Geographic

– Country

– Region

– County size

– SMSA population

– Density

• Demographic

– Age

– Sex

– Education

– Occupation

– Race

– Family life cycle

Segmentation Bases

• Psychographic

– Social class

– Personality

– Lifestyle

– Activities, interests, &

opinions (AIO’s)

• Behavioralistic

– Decision unit

– Usage rate

– Readiness

– Benefits sought

– Occasion

– Brand loyalty


Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Market Attractiveness

• Market attractiveness represents the

degree of market opportunity offered by a

market segment and the ability of the firm

to meet the segment’s needs within a

competitive setting.

• Determining market attractiveness is a

four-step process.

Determining Market

Attractiveness...• First, pre-select criteria that will be used to

evaluate market attractiveness and

competitive position.

Market Attractiveness Factors

• Market/customer

– Size ($’s, units)

– Market potential

– Market growth rate

– Product life cycle stage

– Differentiation potential

– Customer loyalty

– Price elasticity

• Economic/technological

– Investment intensity

– Industry capacity

– Level & maturity of

technology utilization

– Ability to pass through

inflation effects

– Barriers to entry/exit

– Access to raw materials

Market Attractiveness Factors

• Competitive

– Industry structure

– Competitive groupings

– Substitution threats

– Perceived differentiation

among competitors

– Individual competitors’

strengths

• Environmental

– Regulatory climate

– Degree of social

acceptance

Competitive Position Factors

• Market Position

– Relative market share

– Rate of change in share

– Perceived actual or

potential differentiation

– Breadth of current or

planned product line

– Company image

• Economic/technological

– Relative cost position

– Capacity utilization

– Technological position

– Patented technology

Competitive Position Factors

• Capabilities

– Management strength &

depth

– Financial

– R&D/product

development

– Manufacturing

– Marketing

– Salesforce

• Capabilities, con’t

– Distribution system

– Labor relations

– Relations with

regulators

• Interactions with other

segments

– Market synergies

– Operating synergies

Determining Market

Attractiveness (continued)...

• Second, weight the market attractiveness

and competitive position factors.

– What is the relative importance of each factor

to your firm?

• Third, rate each segment on attractiveness

and competitive position.

Example of Weighting and

Rating Attractiveness

Factor Group Weight Rating* Total

Market 50 8 400

Economic/technolgy 20 9 180

competition 20 9 180

Environment 10 10 100

Total 100 36 860

Attractiveness rating = 860/10 = 86

Business Strengths

Factor Group Weight Rating* Total

Market position 20 9 180

Economic/technology 20 8 160

Capabilities 50 9 450

Interaction with other segments 10 10 100

Total 100 36 890

Business strength rating = 890/10 = 89

*Rating scale = 0-10.

Determining Market

Attractiveness (continued)...

• Fourth, evaluate the implications of

alternative positions within the market

attractiveness/competitive position matrix

for target market selection, strategic

objectives, and resource allocation.

– Select segment(s) that offer best opportunity

for profits.

Strong Medium Weak

High Desirable Protect position: - Invest to grow - Concentrate on

maintaining strength

Desirable Invest to build: - Challenge for

leadership - Build on

strengths - Reinforce

vulnerable areas

Build selectively: - Specialize

around limited strengths

- Overcome weaknesses

- Withdraw if sustainable growth is not possible

Medium Desirable Build selectively: - Emphasize

profitability by increasing productivity

- Build up ability to counter competition

Manage for earnings: - Protect existing

strengths - Invest to improve

position only in areas where risk is low

Limited expansion or harvest: - Look for ways to

expand without high risk

- Minimize investment and focus operations

Low Protect & refocus: -Defend strengths -Seek ways to increase earnings without speeding market’s decline

Manage for earnings: - Protect position - Minimize

investment

Divest: - Sell when

possible to maximize cash value

Market

Attractiveness

Competitive Position


Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

Positioning

• Match offerings of firm to the needs and wants of market segments.

• Effective positioning involves understanding customers’ perceptions about both the psychological and physical characteristics of offerings.

• Positioning starts with a product. But positioning is not what you do to a product—it’s what you do to the mind of the customer. That is, you position the product in the mind of the customer.

Positioning Strategy

• Learn the customer’s viewpoint. Create

positioning statement based on unique

customer needs.Primary Needs

Articulated Needs

Exciting Needs

Positioning Statements

• To communicate positioning, a marketing

plan should include a positioning

statement following the form:

“To (target group and need) our (brand)

is (concept) that (point of difference).”

Example:

“To young, active soft-drink consumers

who have little time for sleep, Mountain

Dew is the soft drink that gives you more

energy than any other brand because it

has the highest level of caffeine. With

Mountain Dew, you can stay alert and

keep going even when you haven’t been

able to get a good night’s sleep.”

Points to Remember About

Positioning:• Based on consumer perceptions of

tangible and intangible characteristics of

offering.

• The intensity of the brand will affect

positioning.

The Segmentation

ProcessNeeds-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

Positioning

“Acid” Test

Testing the Positioning

Statement• Test the positioning statement with target

consumers--what do they think, how do

they react to the statement?

• Assess need level: the stronger the need,

the higher the expected customer interest.

– “Do you see this product as solving a problem

or filling a need for you?”

Testing, continued...

• Communicability and believability: if the

scores on these dimensions are low, the

positioning must be refined or revised.

– “Are the benefits clear to you and believable?”


• Perceived value: The higher the

perceived vale, the higher the expected

consumer interest.

– “Is the price reasonable in relation to the

value?”


• Gap level between the new product and

existing products: The greater the gap,

the higher the expected consumer interest.

– “Do other products currently meet this need

and satisfy you?”

The Segmentation

Process

Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

Positioning

“Acid” Test

Strategy

Implementation

Segmentation Strategies

Mass

Marketing

Mass

Customization

Multisegment Strategy

• Pursue two or more segments that are

attractive and profitable, but not the whole

market.

Sequential Segment Strategy

• Multisegment approach, but rather than

pursuing all the attractive segments

simultaneously, pursue the most

attractive first; when cash flow from that

segment is positive, then pursue the next

most attractive segment, and so on.

Single-Segment Strategy

• Focus on just one attractive segment.

Niche Segment Strategy

• Focus on a smaller group within a

segment.

• Requires a further customization of

marketing strategy.

Mass Customization Strategy

• Focus on all niches within a segment by

customizing strategies to each

subsegment.

Documents

Cimbamktsegmentationstudent