Ch.

3 Learning Objectives

 Development of marketing strategy

 Steps in designing target marketing strategy

CHAPTER 3  Market segmentation

 Market targeting
 Differentiation and Positioning

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Marketing Strategy Designing a Customer-Driven Marketing Strategy

 Marketing strategy
TARGET MARKETING
 The marketing logic by which the company hopes to create customer value and
achieve profitable customer relationships. Select customers to serve Decide on a value
proposition
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Segmentation Differentiation
Divide the total market into Differentiate product to
smaller segments Create value create superior cus. value
Mass Product-variety Target
for targeted
marketing marketing marketing Targeting customers Positioning
Select the segment or Position the product in the
segments to enter minds of target cus.
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 Market Segmentation Segmentation Variables/Bases

 Market segmentation
 Dividing a large, heterogeneous market into smaller segments with distinct Major segmentation variables/bases
needs, characteristics, or behavior that might require separate marketing
strategies or mixes.

 Market segment Geographic Demographic Psychographic Behavioral

 A group of customers that have distinct needs, characteristics, or behavior; and
have relatively similar responses toward a particular marketing stimuli of
company.

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Segmentation Variables/Bases Segmentation Variables/Bases

 Geographic segmentation  Behavioral segmentation

 Dividing a market into different geographical units, such as nations, states,  Dividing a market into segments based on consumer knowledge, attitudes, uses,
regions, counties, cities, or even neighborhoods. or responses to a product.
 Demographic segmentation  Eg.:
 Dividing the market into segments based on variables such as: Age, Gender,  Occasions
Family life cycle, Income, Ocupation, Education, Race, Generation, Nationality  Benefits sought

 Psychographic Segmentation  User status, Usage rate

 Loyalty status
 Dividing a market into different segments based on social class, lifestyle, or
personality characteristics.  Readiness stage
 Attitude toward product

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 Combined Segmentation
 Using multiple segmentation bases
Geographic Demographic Psychographic
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Business Market Segmentation
 Consumer market segmentation bases
 Geographic
 Demographic (industry, company size)
 Benefits sought,
 User status, usage rate, loyalty status.
 Additional variables
 Customer operating characteristics
 Purchasing approaches
 Situational factors
 Personal characteristics.
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Combined Segmentation
 The PRIZM system by Nielsen: Classifies every
U.S. households into 66 segments, organized
into 14 different social groups based on a host
Demographic
of:
Geographic  Demographic factors (age, educational level, income,
Behavioral occupation, family composition, ethnicity, and
Psychographic housing)
Behavioral  Behavioral and lifestyle factors (purchases, free-time
activities, and media preferences)
Detail:
http://www.claritas.com/MyBestSegments/Default.jsp?ID=30&menuOption=se
gmentexplorer&pageName=Segment%2BExplorer
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International Market Segmentation
 Segmentation bases
 Geographic (region)
 Economic (income levels, level of economic development)
 Political and legal (type and stability of government, receptivity to foreign firms,
monetary regulations, amount of bureaucracy)
 Cultural (languages, religions, values and attitudes, customs, behavioral
patterns).
 Intermarket segmentation (Cross-market segmentation)
 Forming segments of consumers who have similar needs and buying behavior
even though they are located in different countries.
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 Requirements for Effective Segmentation Market Targeting

 Measurable:  Market targeting

 Size, purchasing power, and profiles of the segments can be measured.
 The process of evaluating each market segment’s attractiveness and selecting
 Accessible:
one or more segments to enter.
 The market segments can be effectively reached and served
 Substantial:
 The market segments are large or profitable enough to serve.  Task
 Differentiable: 1. Evaluating market segments
 The segments are conceptually distinguishable and respond differently to different marketing mix
elements and programs. 2. Selecting target market segments (decide how many and which segments it can
 Actionable: serve best)
 Effective programs can be designed for attracting and serving the segments (compatible with
company’s resources).

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Evaluating Market Segments Selecting Target Market Segments

 Target market
 A set of buyers sharing common needs or characteristics that the company
decides to serve.
Segment Company
Segment size and
structural objectives and
growth  Selecting Target Market Segments
attractiveness resources
 Decide WHICH segments it will target.
 Decide HOW MANY segments it will target.

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 Selecting Target Market Segments Undifferentiated (Mass) Marketing

 Market Targeting Strategies  Undifferentiated (Mass) Marketing

 A market-coverage strategy in which a firm decides to ignore market segment
differences and go after the whole market with one offer.

Undifferentiated Differentiated Concentrated Micromarketing

(mass) (segmented) (niche) (local or individual
marketing marketing marketing marketing)
Whole
Marketing mix
market
Targeting Targeting
broadly narrowly

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Differentiated (Segmented) Marketing Differentiated (Segmented) Marketing

 Differentiated (segmented) marketing

 A market-coverage strategy in which a firm decides to target several market
M1 M2 M3 M1 M2 M3 M1 M2 M3
segments and designs separate offers for each.
P1 P1 P1

Marketing mix 1 Segment 1 P2 P2 P2

Marketing mix 2 Segment 2 P3 P3 P3

Marketing mix 3 Segment 3 Product Market Selective

specialisation specialisation specialisation

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 Concentrated (Niche) Marketing Micromarketing

 Concentrated (niche) marketing  Micromarketing

 A market-coverage strategy in which a firm goes after a large share of one or a  The practice of tailoring products and marketing programs to the needs and
few segments or niches. wants of specific individuals and local customer segments
 Includes:
 Local marketing: The practice of tailoring brands and promotions to the needs and wants of
Phối thức marketing 1 Segment 1 local customer segments (cities, neighborhoods, and even specific stores).
 Individual marketing (One-to-one marketing; Customized marketing; Markets-of-one
Segment 2 marketing): The practice of tailoring products and marketing programs to the needs and
Marketing mix
(Target market) preferences of individual customers

Phối thức marketing 3 Segment 3

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Choosing a Targeting Strategy Socially Responsible Target Marketing

Concentra- Undifferent- Different-  Calls for segmentation and targeting that serve not just the interests of
ted mar. iated mar. iated mar. the company but also the interests of those targeted.
Company resources Finite
Vast
 The issue is not really who is targeted but rather how and for what.
Product variability Limited  Some issues of target marketing:
High
 Unfairly targeting vulnerable segments (children, minorities, disadvantaged,
Product life cycle stage Introduction vulnerable audience)
Maturity
 Targeting them with questionable products or tactics
Market variability Low
High
Competitors’ marketing strategies Undifferentiated
Differentiated

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 Differentiation and Positioning Positioning Approaches

 Differentiation
 Differentiating the market offering to create superior customer value User classes
Product attributes
 Positioning
(price, performance, style,
 Arranging for a market offering to occupy a clear, distinctive, and desirable place design,…)
relative to competing products in the minds of target consumers. Product classes
 Product position
 The way the product is defined by consumers on important attributes Needs/Benefits Against competitors
 The place the product occupies in consumers’ minds relative to competing
products.
 The complex set of perceptions, impressions, and feelings that consumers have Usage occasions Away from competitors
for the product compared with competing products
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Perceptual Positioning Maps Positioning Strategy

 A map that shows consumer P1 P2 P3

 Positioning strategy
perceptions of their brands P4 P4 P5  Planning positions that will give the products the greatest advantage in selected
versus competing products on 85 target markets
important buying dimensions  Designing marketing mixes to create these planned positions.
75
 Often used in planning
PRICE (‘000$)

 Positioning steps
positioning strategies in order to 65
identify the current product
55 Identifying a set of
position and position direction. Choosing the right Selecting an Communicate and
differentiating
competitive overall positioning deliver the chosen
45 competitive
Luxury Performance advantages strategy position
advantages
ORIENTATION

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 Identifying Competitive Advantages Identifying Competitive Advantages

 Competitive advantage  Ways of differentiation

 An advantage over competitors gained by offering greater customer value, either
by having lower prices or providing more benefits that justify higher prices.
 Identifying Competitive Advantages = To find points of differentiation
 Product differentiation: features, performance, style, design
 Services differentiation: speedy, convenient, careful delivery
 Channel differentiation: channel’s coverage, expertise, performance.
 People differentiation: hiring and training better people than competitors do.
 Image differentiation: brand identity, brand personality, brand endorsement,…

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Choosing the Right Competitive Advantages Choosing the Right Competitive Advantages

 How many differences to promote?  Which differences to promote? Criteria

1. Important: The difference delivers a highly valued benefit to target buyers.
2. Distinctive: Competitors do not offer the difference, or the company can offer it in a
Promote 1 differentiator Promote >1 differentiator more distinctive way.
Each brand should pick an attribute and Brand should be positioned on more 3. Superior: The difference is superior to other ways that customers might obtain the
tout itself as “number one” on that than 1 differentiator. same benefit.
attribute (develop a unique selling
proposition - USP) (+) Buyers want multiple benefits 4. Communicable: The difference is communicable and visible to buyers.
(+) Broaden positioning strategies to 5. Preemptive: Competitors cannot easily copy the difference.
(+) Better remember appeal to more segments
6. Affordable: Buyers can afford to pay for the difference.
(-) 2 or more firms are claiming to be (-) Disbelief
best on the same attribute (-) Loss of clear positioning 7. Profitable: The company can introduce the difference profitably.

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 Selecting an Overall Positioning Strategy Communicating and Delivering the Chosen Position

 Value proposition  Positioning statement

 = The full positioning of a brand  A statement that summarizes company or brand positioning.
 The full mix of benefits on which a  A typical form of positioning statement:
brand is differentiated and
positioned.
To [TARGET SEGMENT and NEED], our [BRAND] is [CONCEPT]
 The set of benefits or values it that [POINT OF DIFFERENCE].
promises to deliver to consumers to
satisfy their needs.
To busy, mobile professionals who need to always be in the loop,
 Answer to “Why should I buy your the BlackBerry is a wireless connectivity solution that gives you
brand?” an easier, more reliable way to stay connected to data, people,
and resources while on the go.
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Communicating and Delivering the Chosen Position

 All the company’s marketing mix efforts MARKETING MIX

must support the positioning strategy Product
 Price
 Place
 Designing the marketing mix involves  Product
working out the tactical details of the  Promotion
positioning strategy. Service
 Process
 Physical Evidence
 People

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