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7/30/2019 #4 Segmentation Ch.8
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Segmentation
Chapter 8
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Strategy
Sells multiple brands withinthe same product category fordetergents, soaps, and other
goods. Each brand features a
different mix of benefits andappeals to a differentsegment.
Product modifications appeal
to different niches withincertain segments.
P & G Segments the Market
Case Study
The Payoff
P&G generates revenues inexcessive of $4 billion in U.S.laundry detergent market
alone. Tide has 34% share of powder
and 24% share of liquid marketsegments.
Combined, all P&G brandsaccount for 75% share of
powder and 55% share ofliquid detergent markets.
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Target Consumers:
Market Segmentation
Group ofconsumers
With a similarresponse
To a given set of
marketing stimuli
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Requirements for Effective Segmentation. p.297
Measurability Accessibility
Substantiality Actionability
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Segmentationp.297
Accessible = can we reach these people?
Actionable = do we have the resources to serve these
people? (ie staff & $)
Measurable = is there data available to use?Substantial = are there enough of these people to
justify effort?
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Target Consumers
MarketPositioning
MarketSegmentation
Market Targeting
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The Marketing Process
Market segmentation:
Building up a market into groups with distinct needs Who might require (respond to) different marketing mix
Target marketing:
Evaluating the attractiveness of
each market segment Deciding which segment(s) to enter
Most profitably serve
Market positioning:
Occupying a clear, distinctive, anddesirable place
Relative to competing products
In the minds of target customers
Figure 2.4
http://www.lexus.com/7/30/2019 #4 Segmentation Ch.8
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Market Targeting:
Evaluating Market Segments
Segment size andgrowth
Segment structuralattractiveness
Company objectives
and resources
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Target Consumers:
Market Targeting
Evaluating eachsegments
attractiveness
Selecting one ormore segments to
enter Single or multiple
segment strategy
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Selecting Market Segments
Company marketing mix Market
A. Undifferentiated marketing (mass / combiners)
Company marketing mix 1
Company marketing mix 2
Company marketing mix 3
Segment 1
Segment 3
Segment 2
B. Differentiated marketing (segmenters)
Segment 1
Segment 3
Segment 2Company marketing mix
C. Concentrated marketing
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Steps in Market Segmentation, Targeting,
and Positioning
Market segmentation1. Identify bases for
segmenting the market
2. Develop profiles ofresulting segments
Market targeting3. Develop measures of
segment attractiveness
4. Select the targetsegment(s)
Market positioning
6. Develop marketing mixfor each target segment
5. Develop positioningfor each target segment
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Levels of Market Segmentation:
Mass Marketing Mass producing, mass distributing and mass
promoting the same product in the same way to allconsumers
Largest potential market helps lower costs equalinglower prices or higher margins
Difficult to access fragmented markets
Problems in selecting from multiple ad media and
distribution channels
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Levels of Market Segmentation:
Segmented Marketing Marketing recognizes buyers differ in needs,
perceptions, and buying behaviours
Isolate broad segments comprising a market
Adapt offers to best match segment needs
Market more efficiently and effectively
More focus and less competition
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Levels of Market Segmentation:Niche Marketing
Marketing that focuses on subgroups within largeidentifiable groups in a market
Dividing a segment into sub-segments
Defining group with distinctive set of traits seeking
special combination of benefits Price premium
Few or no significant competitors
Improves focus of limited resources
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Levels of Market Segmentation:
Micromarketing Tailoring products and marketing programs to suit the tastes
of specific individuals or locations
Local marketing
Local tailoring of brands and promotions
Overcomes regional differences
First-line customers
Dilutes brand image and operation efficiency Logistical problems
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Levels of Market Segmentation:Micromarketing
Individual marketing
Tailoring products and marketing programs
to the needs and preferences of individualcustomers
Mass customization
Custom-made products Self-marketing
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Market Coverage Strategies
Product / Market concentration (concentrated market) One product for one group or segment (Topol toothpaste; Ferrari; NyQuil; Efferdent;
Depends; Rolex; Viagra).
Product specialization (differentiated market) One product for everyone (baking soda; Freedent gum; Crest toothpaste; jeans;
chocolate; Tylenol)
Market specialization (differentiated market) Many products for one specific market (Coleman camping supplies; Dorel furniture;
Hasbro; Boeing / Martin Marietta; Weider)
Selective specialization (differentiated market) Many products to several unrelated markets (Bombardier; Seagrams)
Full coverage (Mass or undifferentiated market) Many products to everyone (Coke; Proctor & Gamble)
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Market Selection Strategies Influenced by:
Competitors strategy
Stage in PLC (later stages more coverage) Corporate resources (financial, labour, management,
patents)
NatureofTM (affordability / attractiveness to product. Ifbuyers have the same tastes, use undifferentiated.)
Nature of product (is it unique or basic?)Chiquita Bananas are the sexiest brand
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Summary of Strategies
Combiners strategy: undifferentiated market focuses on similarities and satisfies pretty
well the needs of their TM. They have large groups, but may be chipped away easily by
specialists. Hence planning and aggressive market is required. Example: Coke vs. Jolt Cola.
Segmenters strategy: differentiated market focuses on differences and satisfies very
well the needs of their TM.
Both of the above can take an innovative or imitative approach. Example: IBM vs. clones; Levis vs. others.
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Segmenting Dimensions(see Table 8.1 p. 283)
Customer related
Geographic:CMA, region, city, population
Demographic:age, sex, income, language
Situation related
Psychographic: class, lifestyle, person
Behaviouristic: benefits, usage, loyaltyExample:Coke in the morning
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Segmenting Consumer Markets:Geographic Segmentation
Divide market intoseparate geographic
units Nations, regions
provinces, cities,
etc. Develop regional
marketing programs
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Segmenting Consumer Markets:
Demographic Segmentation Most popular
method
Consumer patterns
often follow theirdemographics
Easier to measure
than mostsegmentationvariables
Needed for market
size and access
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Segmenting Consumer Markets:Demographic Segmentation
Age and life-cycle stage
Wants and needs vary with stage Guard against stereotypes
Gender
Buying patterns frequently follow gender Income
Affluent to restricted incomes
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Segmenting Consumer Markets:
Psychographic Segmentation
Lifestyle
Reflected in purchases Personality
Express who they are
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Segmenting Consumer Markets:Behavioral Segmentation
Divide market into groups based on consumerknowledge, attitude, use, or response to a product
Occasions By occasions when buyers get the idea to buy,
actually make the purchase, or use the item
Benefits sought
Major benefits, people seeking, brands deliver
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Segmenting Consumer Markets:Behavioural Segmentation
User status
Non-, ex-, potential, first-time, regular
Usage rate Light - medium - heavy
Heavy users may dominate total market
Loyalty status
Toward brand, store, and/or company Frequent buyers may not be loyal
habit, indifference, low price, productunavailability
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VALS
VALS - (Values - Lifestyles). The population can be classified by nine (8 or 10 depending on
whether we are describing USA or Canada or the world)
Psychographic Lifestyles.
Most of us are either: Outer Directed or InnerDriven.
see various overheads
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Prizm CE (p.293)
Geodemography
Birds of a feather flock together. ie where you live ishow you will behave.
66 Canadian Lifestyles.
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Positioning Competitively:Product Positioning
Defined by consumers onimportant attributes
Place product occupies in mind
relative to competing products
Information overload
Simplify evaluation
Position happens - planned ornot
use beer example ie smooth-bitter; dark-blond.
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Positioning Competitively:
Positioning Strategies
Product attributes
Benefits offered
Usage occasions
Classes of users
Directly against or
away from competitor Different product
class
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Positioning Strategy:Choosing and Implementing
Communicate and
deliver chosen position
Select the right
competitive advantage
Identify possible
competitive advantage
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Positioning Strategy:Possible Competitive Advantages
Product differentiation
Service differentiation Personnel differentiation
Image differentation
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Positioning Strategy:Selecting Competitive Advantage
How many differences to promote? Overpositioning, underpositioning, confused positioning
Which differences to promote? Important, distinctive, superior, communicable, pre-emptive, affordable,
profitable
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Communicating and Delivering theChosen Position
Concrete action
Easier to develop
than implement Positions can be
quickly lost
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Repositioning
Repositioning involves changing the place an offering occupies in
a consumers mind relative to competitive offerings. ie Cadillac
or Lays potato chips has no trans-fat label.
Beware of Green washing vrs true greening of the environment.
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GMs Strategy to Reposition ItsMajor Car Brands
A. Consumer perceptions
in 1982 [o] and GM goals
for 1990 []
B. Potential change in goals
from 1990 [] to 2002
High Price
Low Price
Family/
Conservative
Personal/
Expressive
Cadillac o
Buick o
Chevrolet o
o Pontiac
Saturn(1990)
Oldsmobile
o
High Price
Low Price
Family/
ConservativePersonal/
Expressive
Cadillac
Buick
Oldsmobile
??
?
??Chevrolet
Saturn
Pontiac