Module 7 - Rome Business Scho and Positioning. ... Primary segmentation variables for business markets. ... • Services differentiation –Delivery –Installation

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  • Lecture 7- slide 1

    Master in Marketing and Communication

    Module 7

    Segmentation, Targeting,

    Differentiation and Positioning.

  • Lecture 7- slide 2

    Customer-Driven Marketing Strategy:Creating Value for Target Customers

    Market Segmentation

    Market Targeting

    Differentiation and Positioning

    Topic Outline

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    Creating Value for Targeted Customers

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    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 needs

    Market Segmentation

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    Segmenting consumer markets

    Segmenting business markets

    Segmenting international markets

    Requirements for effective segmentation

    Market Segmentation

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    Segmenting consumer markets





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    Market Segmentation

    Geographic segmentation divides the

    market into different geographical units

    such as nations, regions, states, counties,

    or cities

    Segmenting Consumer Markets

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    Geographic segmentationConsumer Markets

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    Geographic segmentationConsumer Markets

    Tesco Metro

    Tesco Express

    One Stop

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    Market Segmentation

    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 nationality

    Segmenting Consumer Markets

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    Market Segmentation

    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)

    Income segmentation divides the market into

    affluent or low-income consumers

    Demographic segmentation

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    Demographic Segmentation

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    Market Segmentation

    Psychographic segmentation

    divides buyers into different

    groups based on social class,

    lifestyle, or personality traits

    Segmenting Consumer Markets

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    Market Segmentation

    Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product


    Benefits sought

    User status

    Usage rate

    Loyalty status

    Segmenting Consumer Markets

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    Occasion Segmentation

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    Psycographic and Behavioural segmentation

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    Market Segmentation

    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

    Using Multiple Segmentation Bases

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    Market Segmentation

    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

    Using Multiple Segmentation Bases

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    Calvin Klein uses several layers of segmentation

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    Primary segmentation variables for business markets

    Demographics: industry, company, location.

    Operating variables: technology, user/non user status.

    Purchasing approaches: purchasing function organisation, power structure, nature of existing relationships, general purchase policies, purchasing criteria.

    Situational factors: urgency, specific application, size of order.

    Personal characteristics: buyer-seller similarity, attitudes towards risk, loyalty.

  • Lecture 7- slide 21

    Source: Adapted from Thomas V. Bonoma and Benson P. Shapiro, Segmenting the Industrial Market(Lexington, MA: Lexington Books, 1983); see also John Berrigan and Carl Finkbeiner, Segmentation Marketing: New methods for capturing business (New York: Harper Business, 1992).

    Primary segmentation variables for business markets

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    Source: Adapted from Thomas V. Bonoma and Benson P. Shapiro, Segmenting the Industrial Market(Lexington, MA: Lexington Books, 1983); see also John Berrigan and Carl Finkbeiner, Segmentation Marketing: New methods for capturing business (New York: Harper Business, 1992).

    Primary segmentation variables for business markets

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    Market Segmentation

    Geographic location

    Economic factors

    Political-legal factors

    Cultural factors

    Segmenting International markets

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    Market Segmentation

    Intermarket segmentation divides

    consumers into groups with similar needs

    and buying behaviors even though they are

    located in different countries

    Segmenting Business Markets

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    Developing market segments

    Research based exercise that incorporates several stages:

    Qualitative research: Exploratory techniques to determine motivations and attitudes.

    Quantitative research: Structured questionnaire to gain information.

    Analysis: Factor and cluster analysis. Automatic Interaction Detection and conjoint analysis.

    Validation: Statistical validation.

    Profiling: Distinguishing attitudes and behaviours.

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    Market Segmentation

    To be useful, market segments must be:

    Requirements for Effective Segmentation

    Measurable Accessible

    Substantial Differentiable


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    Requirements for effective segmentation


    Degree to which size, purchasing power and profits of a market segment can be measured.


    Degree to which a market segment can be reached and served.


    Degree to which a market segment is sufficiently large or profitable.


    Degree to which effective programmes can be designed for attracting and serving the given market segment.

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    What is market targeting?

    Market targeting involves evaluating

    the various segments identified

    during the segmentation process

    and deciding how many and which

    segments it can serve best.

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    Market Targeting

    Target market consists of a set of buyers

    who share common needs or characteristics

    that the company decides to serve

    Selecting Target Market Segments

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    Market TargetingEvaluating Market Segments

    Segment Size and Growth Analyze sales, growth rates and expected profitability.

    Segment Structural Attractiveness Consider effects of: Competitors, Availability of

    Substitute Products and the Power of Buyers & Suppliers.

    Company Objectives and Resources Company skills & resources relative to the segment(s). Look for Competitive Advantages.

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    Undifferentiated (or Mass) marketing

    Differentiated (or Segment) marketing

    Concentrated (or Niche) marketing


    Target marketing strategies

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    Target marketing strategies

    Undifferentiated (or Mass) marketing: Assumes market is homogenous and uses the same product, promotion and distribution to all consumers.

    Differentiated (or Segment) marketing: Adapting a companys offerings so they more closely match the needs of one or more segments.

    Concentrated (or Niche) marketing: Adapting a companys offerings to match the needs of one or more sub-segments more closely where there is little competition.

    Micromarketing: Marketing programmes tailored to narrowly defined geographic, demographic, psychographic behavioural segments.

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    Micro marketing

    Local Marketing

    Tailoring brands and promotions to the needs and wants of local customer groups.

    Individual marketing

    Tailoring products and marketing programmes to the needs and preferences of individual customers.

    Mass customisation

    Preparing individually designed products and communication on a large scale.

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    Marketing Differenziato Colgate identifica diversi segmenti-

    target offrendo loro diversi tipi di dentifricio

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    Marketing Concentrato (o di Nicchia)

    Morgan Cars serve una nicchia di mercato, producendo macchine

    sportive tradizionali fatte a mano per baby boomers

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    Marketing individuale

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    Market Targeting

    Undifferentiated marketing targets the

    whole market with one offer

    Mass marketing

    Focuses on common needs rather than whats


    Target Marketing Strategies

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    Market Targeting

    Differentiated marketing targets several

    different market segments and designs

    separate offers for each

    Goal is to achieve higher sales and stronger


    More expensive than undifferentiated


    Target Marketing Strategies

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    Market Targeting

    Concentrated marketing

    targets a small share of a

    large market

    Limited company resources

    Knowledge of the market

    More effective and efficient

    Target Market Strategies

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    Marketing Targeting

    Micromarketing is the practice of tailoring

    products and marketing programs to suit

    the tastes of specific individuals and


    Local marketing

    Individual marketing

    Target Market Strategies

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    Market Targeting

    Local marketing involves tailoring brands and

    promotion to the needs and wants of local

    customer groups




    Target Market Strategies

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    Market Targeting

    Individual marketing involves

    tailoring products and

    marketing programs to the

    needs and preferences of

    individual customers

    Also known as:

    One-to-one marketing

    Mass customization

    Markets-of-one marketing

    Target Market Strategies

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    Market Targeting

    Depends on:

    Company resources

    Product variability

    Product life-cycle stage

    Market variability

    Competitors marketing strategies

    Choosing a Target Market

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    Market Targeting

    Benefits customers with

    specific needs

    Concern for vulnerable





    Internet abuses

    Socially Responsible Target Marketing

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    The company must also decide how it will serve

    targeted customers - how it will differentiate itself

    in the marketplace.

    The company must decide on a value

    proposition, the set of benefits or values it

    promises to deliver to consumers to satisfy their


    Value propositions differentiate one brand from

    another and answer the question, Why should I

    buy your brand rather than a competitors?

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    Differentiation and Positioning

    Value proposition

    is the full mix of

    benefits upon

    which a brand is


    Selecting an Overall Positioning Strategy

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    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 products




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    Differentiation and Positioning

    Positioning means arranging for a product to

    occupy a clear, distinctive and desirable

    place in customers minds, relative to


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    Differentiation and Positioning

    Identifying a set of possible competitive

    advantages to build a position

    Choosing the right competitive advantages

    Selecting an overall positioning strategy

    Developing a positioning statement

    Choosing a Differentiation and Positioning


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    Differentiation and Positioning

    Competitive advantage is an advantage over

    competitors gained by offering consumers

    greater value, either through lower prices

    or by providing more benefits that justify

    higher prices

    Identifying Possible Value Differences and

    Competitive Advantages

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    Sources of differentiation






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    Differentiating markets (1)

    Product differentiation

    Features and benefits






    Style and design



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    Differentiating markets (2)

    Services differentiation



    Repair services

    Customer training services

    Consulting services

    Speed of service

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    Differentiating markets (3)

    People differentiation



    Customer focused

    Image differentiation

    Images that reflect the soul or ethos of the


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    Positioning strategies (1)

    Product attributes Nokias 6600 Zoom in.

    Technical items BMW breathable fresh air filters.

    Benefits offered Crest toothpaste reduces cavities.

    Usage occasions Kit Kat, have a break.

    Users Johnson & Johnson changing focus to incorporate adults as

    frequent users of their gentle Baby Shampoo.

    Activities Omega, the first and only watch on the moon.

    Personalities Tiger Woods for Nike

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    Positioning strategies (2)

    Cult positioning

    Harry Potter books.


    Perrier bottled at source.

    Positioned with synergistic products and brands

    Bentley and Breitling.

    Positioned against competitors

    Dell and Compaq versus IBM

    Positioned away from competitors

    7-Up the number 1 Un-cola.

    Product class membership

    I cant believe its not butter, the vegetable fat spread, is clearly positioned against butter.

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    Differentiation and Positioning

    Difference to promote should be:

    Choosing the Right Competitive Advantage

    Important Distinctive Superior

    Communicable Preemptive Affordable


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    Criteria for choosing which differences to promote

    Features and benefits must be important to the consumer.

    Must be distinctive from the competition.

    Must deliver superior quality or service.

    Difference must be communicable and visible to buyers.

    Pre-emptive and competitors unable to replicate.

    Affordable: buyers can afford to pay for the difference.

    Profitable: the company can introduce the difference profitably.

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    Choosing and implementing a positioning strategy

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    Choosing and implementing a positioning strategy

    Ad man Rosser Reeves states that every company

    should have a unique selling proposition (USP).

    The USP is the unique product benefit that a firm

    aggressively promotes in a consistent manner to its target

    market. The benefit usually reflects functional superiority:

    best quality, best services, lowest price, most advanced


    Difficulty of maintaining functional superiority forces

    firms to attempt a more emotional influence by

    developing an emotional selling proposition (ESP).

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    Factual approach

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    Emotional approach

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    Positioning Map

    Positioning maps

    show consumer

    perceptions of

    their brands

    versus competing

    products on

    important buying


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    Positioning map Chocolate Market in the UK

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    Positioning map - car brands

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    Positioning Statement

    To (target segment and need) our (brand) is

    (concept) that (point of difference)

    Web link

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    Mountain Dews positioning statement

    To young, active soft-drink

    consumers who have little

    time to sleep, Mountain

    Dew is the soft drink that

    gives you more energy than

    any other brand because it

    has the highest level of


  • Lecture 7- slide 68

    Communication and Delivering the Chosen Position

    Choosing the

    positioning is

    often easier than

    implementing the



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