Download pdf - Module 7 - Rome Business Schoolromebusinessschool.it/wp-content/uploads/2013/06/07.pdf · · 2017-07-24Differentiation and Positioning. ... Primary segmentation variables for business

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

Geographic

Demographic

Psychographic

Behavioral

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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


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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

http://www.gurl.com/

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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


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Market Segmentation

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

• Occasions

• Benefits sought

• User status

• Usage rate

• Loyalty status


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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.

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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).


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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).


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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

Actionable

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Requirements for effective segmentation

• Measurability

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

• Accessibility

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

• Substantiality

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

• Actionability

– 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

Micromarketing

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 company’s offerings so they more closely match the needs of one or more segments.

• Concentrated (or Niche) marketing: Adapting a company’s 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 what’s

different

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

position

• More expensive than undifferentiated

marketing

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

locations

– Local marketing

– Individual marketing


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Market Targeting

Local marketing involves tailoring brands and

promotion to the needs and wants of local

customer groups

• Cities

• Neighborhoods

• Stores


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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


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Market Targeting

Depends on:

• Company resources

• Product variability

• Product life-cycle stage

• Market variability

• Competitor’s marketing strategies

Choosing a Target Market

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Market Targeting

• Benefits customers with

specific needs

• Concern for vulnerable

segments

• Children

– Alcohol

– Cigarettes

– Internet abuses

Socially Responsible Target Marketing

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Differentiation

• 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

needs.

• Value propositions differentiate one brand from

another and answer the question, “Why should I

buy your brand rather than a competitor’s?”

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Differentiation and Positioning

Value proposition

is the full mix of

benefits upon

which a brand is

positioned

Selecting an Overall Positioning Strategy

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Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products

– Perceptions

– Impressions

– Feelings

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• Positioning means arranging for a product to

occupy a clear, distinctive and desirable

place in customers’ minds, relative to

competition.

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• 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

Strategy

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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

Product

Services

Channels

People

Image

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Differentiating markets (1)

• Product differentiation

– Features and benefits

– Quality

– Performance

– Innovation

– Consistency

– Reliability

– Style and design

– Durability

– Repairability

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• Services differentiation

– Delivery

– Installation

– Repair services

– Customer training services

– Consulting services

– Speed of service

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• People differentiation

– Hiring

– Training

– Customer focused

• Image differentiation

– Images that reflect the ‘soul’ or ethos of the

company

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Positioning strategies (1)

• Product attributes– Nokia’s 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.

• Origin

– 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 can’t believe it’s not butter’, the vegetable fat spread, is clearly positioned against butter.

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Difference to promote should be:

Choosing the Right Competitive Advantage

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

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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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USP

ESP

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

technology.

• 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

dimensions

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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 Dew’s 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

caffeine.

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Communication and Delivering the Chosen Position

Choosing the

positioning is

often easier than

implementing the

position.