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CHAPTER SEVEN

Market Segmentation, Targeting and


Positioning for Competitive Advantage
But why would companies introduce so many different
categories of brands of the same type of product in the
same area?
THE ANSWER?...
Different people want different benefits from the
products they buy.
Everyone wants some of every one of these benefits
but we have different priorities of each benefit
MARKETING SEGMENTATION
Dividing a market into smaller groups of buyers with
distinct needs, characteristics, or behaviors who might
require separate products or marketing mixes.
MARKET TARGETING
The process of evaluating each market segments
attractiveness and selecting one or more segments to
enter.
MARKETING POSITIONING
Arranging for a product to occupy a clear, distinctive,
and desirable place relative to competing products in
the minds of target consumers.
MARKET SEGMENTATION
Markets have buyers and they are different in more than one
thing.
They may differ in wants, resources, location, buying
attitudes and buying practices.
Companies can divide large, heterogeneous markets into
smaller segments that can be reached more efficiently and
effectively with products and services that match their
unique needs.
LEVELS OF MARKET SEGMENTATION
MASS MARKETING
this was used by many companies in the past. Its the belief
that one-fits-all.
However, this is no longer acceptable in this age.
It is highly impossible to provide one product that fits the
market.
Many companies are retreating from this part of marketing.
LEVELS OF MARKET SEGMENTATION
SEGMENT MARKETING
Isolating broad segments that make up a market and
adapting the marketing offer to match the needs of one or
more segments.
LEVELS OF MARKET SEGMENTATION
NICHE MARKETING
focusing on subsegments or niches with distinct traits that
may seek a special combination of benefits.
it is a more narrow approach from segment marketing and
dividing the already divided segment into subsegment
LEVELS OF MARKET SEGMENTATION
MICROMARKETING
the practice of tailoring products and marketing programs
to the needs and wants of specific individuals and local
customer groups.
MICROMARKETING
Local Marketing tailoring brands and products based on
areas
MICROMARKETING
Individual Marketing tailoring products and marketing
programs to the needs and preferences of individual
customers.
SEGMENTING CUSTOMER MARKETS
SEGMENTING CUSTOMER MARKETS
Geographic Segmentation dividing the
market into different geographical units such
as nations, states, regions, countries, cities or
neighborhood
Region (world/country)
Country
City
Density
Climate
SEGMENTING CUSTOMER MARKETS
Demographic Segmentation dividing the
marketing into demographic variables like age,
gender, family size, income, occupation,
education, religion, race and nationality.
Age and Life Cycle Segmentation
Income Segmentation
Gender Segmentation
SEGMENTING CUSTOMER MARKETS
Psychographic Segmentation dividing the
market into different groups based on social
class, lifestyle or personality characteristics.
Social Class
Lifestyle
Personality
SEGMENTING CUSTOMER MARKETS
Behavioral Segmentation dividing a market
into groups based on consumer knowledge,
attitude, use or response to the product.
Occasions
Benefits
User status
User rates
Loyalty status
Readiness Stage
Attitude at product
SEGMENTING CUSTOMER MARKETS
International Segmentation forming
segments of consumers who have similar
needs and buying behavior even though they
are located in another country
Geographic Location
Economic Factors
Political/Legal Factors
Cultural Factors
REQUIREMENTS FOR
EFFECTIVE SEGMENTATION

Measurable
Accessible
Substantial
Differentiable
Actionable
MARKET TARGETING
When you have your segment it will reveal what
opportunities that can be seen in that segment.
The firm will have to evaluate the various segments and
decide how many and which ones to target.
We look at how companies evaluate and select target
segments.
EVALUATING TARGET SEGMENTS
1. Must look first at three factors:
1. Segment size and growth,
2. Segment structural
attractiveness
3. Company objectives and
resources
2. Must collect and analyze data on
current segments sales, growth
rates and expected profitability
for various segments.
EVALUATING TARGET SEGMENTS
3. Must also examine the companies major structural
factors that affect long term segment attractiveness.
Competitors
Substitutes
Power of Buyers
Power of Suppliers
SELECTING TARGET MARKETS
Once there is a segment, the problem would
be how many segments to serve.

TARGET MARKET
A set of buyers sharing
common needs or
characteristics that the
company decides to serve.
MARKET COVERAGE STRATEGIES
UNDIFFERENTIATED MARKETING A strategy
where a firm decides to ignore the market
segment differences and go after the whole
market.
MARKET COVERAGE STRATEGIES
DIFFERENTIATED MARKETING A strategy
where a firm decides to target several
segments/niches and designs different and
separate offers for each (e.g. Avon)
MARKET COVERAGE STRATEGIES
CONCENTRATED MARKETING A strategy
where a firm goes after a large share of one or
a few submarkets.
CHOOSING A MARKET COVERAGE STRATEGY

1. Company Resources
2. Product Variability
3. Products Life Cycle
4. Market Variability
5. Competitors strategy
SOCIALLY RESPONSIBLE TARGET MARKETING
SOCIALLY RESPONSIBLE TARGET MARKETING
SOCIALLY RESPONSIBLE TARGET MARKETING
SOCIALLY RESPONSIBLE TARGET MARKETING

In market targeting it is not the who you


are targeting but the how and for
what
POSITIONING FOR COMPETITIVE ADVANTAGE
PRODUCT POSITION the way the product is defined by
the consumers on important attributes the place the
product occupies in the consumers minds relative to
competing products.
Consumers are overloaded with information
They cant reevaluate products every time they make a
buying decision.
To simplify the buying process consumers organize
them into categories in their minds position the
products, services and companies in their heads.
CHOOSING A POSITION STRATEGY
To some firms it is easy to choose their positioning
strategy.
But in many cases two or more companies will position
in their products in the same position.
Each brand must differentiate each other when to go
the same position to set them apart.
CHOOSING A POSITION STRATEGY

1. Identify possible competitive Advantage


2. Choose the right competitive advantage
3. Select overall positioning strategy
COMPETITVE ADVANTAGE
An advantage over competitors gained by
offering consumers greater value, either by
lowering prices or providing many benefits that
justify the high price.
DIFFERENTIATION STRATEGY
Product Differentiation some products may
have little variation than others but can still be
differentiated.
You can differentiate the product through
consistency, durability, reliability or
reparability
DIFFERENTIATION STRATEGY
Service Differentiation speed, convenient
and careful delivery; installation and repair
companies; customer training services and
consulting services
DIFFERENTIATION STRATEGY
Channel Differentiation channels coverage,
expertise and performance.
DIFFERENTIATION STRATEGY
People Differentiation hiring and training
people better than competitors
DIFFERENTIATION STRATEGY
Image Differentiation the brand and image
should convey to the products benefits and
positioning.
You cannot differentiate your company
through just a few advertisements.
CHOOSING THE RIGHT COMPETITIVE
ADVANTAGE
HOW MANY DIFFERENCES TO PROMOTE?
USP Unique Selling Proposition
Each brand should pick an attribute and tout
itself as number one
Buyers tend to remember number one better.
Some marketers are claiming more than one
differentiated factor especially when there are
more companies claiming to be number one.
3 POSITIONING ERRORS TO AVOID
Underpositioning failing to position the
company at all.
Overpositioning giving the buyers too
narrow picture of the company.
Confused positioning leaving buyers
confused on the brand or image.
CHOOSING THE RIGHT COMPETITIVE
ADVANTAGE
WHICH DIFFERENCES TO PROMOTE?
Not all brand differences are meaningful and
worthwhile and not all difference makes a
good differentiator.
Each difference can give benefits to the
consumer but can incur cost for the company.
So it is very important to be very careful to
choose which differentiating factor that can
separate you from your competitors
CRITERIA FOR DIFFERENTIATING FACTOR
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitability
SELECTING AN OVERALL POSITIONING
STRATEGY
VALUE PROPOSITION
the full positioning of the brand the full mix of benefits
upon which it is positioned.
MORE FOR MORE
MORE FOR THE SAME
MORE FOR LESS
THE SAME FOR LESS
LESS FOR LESS
COMMUNICATING AND DELIVERING
PERFORMANCE
Once there is a position, the company must take steps
to deliver and communicate the desired position to
target market