GLOBAL MARKETING Marketing Segmentation Market Attractiveness Positioning

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-BasedSegmentation



SegmentIdentification

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




SegmentAttractiveness

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 400Economic/technolgy 20 9 180competition 20 9 180Environment 10 10 100Total 100 36 860

Attractiveness rating = 860/10 = 86

Business StrengthsFactor Group Weight Rating* Total

Market position 20 9 180Economic/technology 20 8 160Capabilities 50 9 450Interaction with other segments 10 10 100Total 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

MarketAttractiveness

Competitive Position





Segment PositioningStrategy

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.


Needs-Based Segmentation




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 SegmentationProcess





Positioning“Acid” Test

StrategyImplementation

Segmentation Strategies

Mass Marketing

MassCustomization

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

GLOBAL MARKETING Marketing Segmentation Market Attractiveness Positioning