2011.07 Marketing

Chapter 7- slide 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Customer-Driven Marketing Strategy:Creating Value for Target Customers

• Market Segmentation• Market Targeting• Differentiation and Positioning

• Topic Outline


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 needs


Market Segmentation


Market Segmentation

• Segmenting consumer markets• Segmenting business markets• Segmenting international markets• Requirements for effective segmentation


Market Segmentation

Geographic segmentati

on

Demographic

segmentation

Psychographic

segmentation

Behavioral segmentati

on

Segmenting Consumer Markets


Market Segmentation• Geographic segmentation divides the market into

different geographical units such as nations, regions, states, counties, or cities



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



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)

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Market Segmentation

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

Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits



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



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


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


Which of the following is not a way to segment consumer markets?1. Geographic 2. Psychographic 3. Demographic 4. Derived demand


Which of the following is not a way to segment consumer markets?1. Geographic 2. Psychographic 3. Demographic 4. Derived demand


Dividing a market based on consumer attitude, use, or response to a product is called ________ segmentation.1. occasion2. psychographic3. behavioral4. market


Dividing a market based on consumer attitude, use, or response to a product is called ________ segmentation.1. occasion2. psychographic3. behavioral4. market


A marketer selling different offerings in different communities would be using ________ segmentation.1. geographic 2. psychographic 3. demographic 4. behavioral


A marketer selling different offerings in different communities would be using ________ segmentation.1. geographic 2. psychographic 3. demographic 4. behavioral


Marketers selling luxury cars often use income as a segmenting variable. Income is one component of ________ segmentation. 1. geographic 2. psychographic 3. demographic 4. behavioral


Marketers selling luxury cars often use income as a segmenting variable. Income is one component of ________ segmentation. 1. geographic 2. psychographic 3. demographic 4. behavioral


Many marketers believe that ________ variables are the best starting point for building market segments. 1. geographic 2. psychographic 3. demographic 4. behavioral


Many marketers believe that ________ variables are the best starting point for building market segments. 1. geographic 2. psychographic 3. demographic 4. behavioral


Market Segmentation

Geographic location

Economic factors

Political-legal

factors

Cultural factors

Segmenting International markets


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


Mercedes Benz targets the world’s well-to-do and IKEA targets the aspiring global middle class. These companies are involved with ________ segmentation.1. positioning2. differentiation3. intermarket4. lifecycle


Mercedes Benz targets the world’s well-to-do and IKEA targets the aspiring global middle class. These companies are involved with ________ segmentation.1. positioning2. differentiation3. intermarket4. lifecycle


Market Segmentation• To be useful, market segments must be:Requirements for Effective Segmentation

Measurable Accessible

Substantial Differentiable

Actionable


The singl

e targe

t mark

et approach

• segmenting the market and picking one of the homogeneous segments as the .rm’s target market.

The multiple

target

market

approach

• segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix.

The combined targe

t mark

et approach

• combining two or more submarket into one larger target market as a basis for one strategy.


In order to be useful, market segments need to be which of the following? 1. Differentiable2. Accessible3. Substantial4. All of the above


In order to be useful, market segments need to be which of the following? 1. Differentiable2. Accessible3. Substantial4. All of the above


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


Market Targeting• Segment size and growth• Segment structural attractiveness• Company objectives and resources

Evaluating Market Segments

.


Which of the following structural factors is not related to a segment’s attractiveness? 1. The presence of strong competitors in the segment.2. The existence of potential substitute products.3. The lack of raw materials.4. A number of powerful suppliers.


Which of the following structural factors is not related to a segment’s attractiveness? 1. The presence of strong competitors in the segment.2. The existence of potential substitute products.3. The lack of raw materials.4. A number of powerful suppliers.


Internet Exercise• Go to the Timex website

(www.timex.com) and use the

• drop-down list or site map to go to the “Latest Products” section. Based on

• the needs that a product is designed to meet, can you identify the characteristics

• of the product’s target market?

35


Market TargetingTarget Marketing Strategies


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


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


When using a(n) ________ marketing (mass-marketing) strategy, a firm decides to ignore market segment differences and target the whole market with one offer.1. differentiated2. undifferentiated 3. positioning4. segmentation


When using a(n) _____ marketing (mass-marketing) strategy, a firm decides to ignore market segment differences and target the whole market with one offer.1. differentiated2. undifferentiated 3. positioning4. segmentation


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


Question

What is the difference between

target Marketing and

mass Marketing?


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



Market Targeting

Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups

• Cities• Neighborhoods• Stores



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



This type of micromarketing is also known as one-to-one marketing or mass customization.1. Local marketing2. Tailored marketing3. Niche marketing4. Individual marketing


This type of micromarketing is also known as one-to-one marketing or mass customization.1. Local marketing2. Tailored marketing3. Niche marketing4. Individual marketing


Market TargetingDepends on:• Company resources• Product variability• Product life-cycle stage• Market variability• Competitor’s marketing strategies

Choosing a Target Market


Market Targeting

• Benefits customers with specific needs

• Concern for vulnerable segments

• Children• Alcohol• Cigarettes• Internet abuses

Socially Responsible Target Marketing


If a beer manufacturer were to place a commercial on a TV show that was predominantly viewed by children, it could be considered using ________. 1. socially irresponsible targeting2. socially responsible targeting3. adult targeting4. niche targeting


If a beer manufacturer were to place a commercial on a TV show that was predominantly viewed by children, it could be considered using ________ .1. socially irresponsible targeting2. socially responsible targeting3. adult targeting4. niche targeting


Differentiation and Positioning

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



Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions



• 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


A product’s ________ is the way the product is defined by consumers on important attributes relative to the competition.1. image2. equity3. position4. value


A product’s ________ is the way the product is defined by consumers on important attributes relative to the competition.1. image2. equity3. position4. value



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 Advantage



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

Choosing a Differentiation and Positioning Strategy

Product differentiation

Service differentiation

Channel differentiation

People differentiation

Image differentiation


A firm that practices ________ differentiation gains competitive advantage by the way it designs its channel coverage.1. services2. product3. people4. channel


A firm that practices ________ differentiation gains competitive advantage by the way it designs its channel coverage.1. services2. product3. people4. channel



Difference to promote should be:

Choosing the Right Competitive Advantage

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

http://www.youtube.com/watch?v=HOYnOeo42ko



Value proposition is the full mix of benefits upon which a brand is positioned

Selecting an Overall Positioning Strategy



• To (target segment and need) our (brand) is (concept) that (point of difference)

Developing a Positioning Statement

Web link

http://www.youtube.com/watch?v=YOiKG7hb8Pg


Communication and Delivering the Chosen Position

Choosing the positioning is often easier than implementing the position.


What is the first step in target marketing?1. Market positioning2. Market segmentation3. Target marketing 4. None of the above


What is the first step in target marketing?1. Market positioning2. Market segmentation3. Target marketing 4. None of the above


Which of the following steps of target marketing takes into account competitors’ offerings to the market?1. Market positioning2. Market segmentation3. Market targeting4. All of the above