6-1

6-2

Market Segmentation, Targeting, and

Positioning

Chapter 6Chapter 6Chapter 6Chapter 6

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

6-3

Chapter GoalsChapter GoalsChapter GoalsChapter Goals

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

• Related concepts: market segmentation, target marketing, and positioning

• Process of market segmentation, its benefits and conditions for use

• Target-market strategies

• Steps in developing a positioning strategy

• Methods of forecasting demand of market segments

6-4

MarketsMarkets

MARKET SEGMENTSGroups of customers with different wants,

buying preferences or product-use behavior

MARKET SEGMENTSGroups of customers with different wants,

buying preferences or product-use behavior

TARGET MARKETA market segment for which

the seller designs a marketing mix

TARGET MARKETA market segment for which

the seller designs a marketing mix

MARKET SEGMENTATIONThe process of identifying and describing

potential target markets

MARKET SEGMENTATIONThe process of identifying and describing

potential target markets

6-5

Market SegmentationMarket Segmentation

Process of dividing the total marketProcess of dividing the total marketfor a good or service into several smaller,for a good or service into several smaller,

internally homogeneous groupsinternally homogeneous groups

Process of dividing the total marketProcess of dividing the total marketfor a good or service into several smaller,for a good or service into several smaller,

internally homogeneous groupsinternally homogeneous groups

Members of each group areMembers of each group are similar with respect to the factorssimilar with respect to the factors

that influence demandthat influence demand

Members of each group areMembers of each group are similar with respect to the factorssimilar with respect to the factors

that influence demandthat influence demand

6-6

Process of Market SegmentationProcess of Market Segmentation

Determine size and satisfactionDetermine size and satisfactionDetermine size and satisfactionDetermine size and satisfaction

Identify wants within a marketIdentify wants within a marketIdentify wants within a marketIdentify wants within a market

Identify characteristicsIdentify characteristicsIdentify characteristicsIdentify characteristics

6-7

Market Segmentation ConditionsMarket Segmentation Conditions

MICROMARKETINGMICROMARKETINGTreat each single customerTreat each single customer

as a separate segmentas a separate segment

MICROMARKETINGMICROMARKETINGTreat each single customerTreat each single customer

as a separate segmentas a separate segment

MeasurableMeasurableand and

Obtainable DataObtainable Data

MeasurableMeasurableand and

Obtainable DataObtainable Data

Large enoughLarge enoughto be to be

ProfitableProfitable

Large enoughLarge enoughto be to be

ProfitableProfitable

Segment isSegment isAccessibleAccessible

Segment isSegment isAccessibleAccessible

6-8

Market Segmentation - First CutMarket Segmentation - First Cut

Customer’s reason for buyingCustomer’s reason for buyingCustomer’s reason for buyingCustomer’s reason for buying

CONSUMERCONSUMER Purchase for personal usePurchase for personal use

CONSUMERCONSUMER Purchase for personal usePurchase for personal use

BUSINESSBUSINESS Purchase to use in organizations, Purchase to use in organizations, to resell, or to make other productsto resell, or to make other products

BUSINESSBUSINESS Purchase to use in organizations, Purchase to use in organizations, to resell, or to make other productsto resell, or to make other products

6-9

Segmentation BasesSegmentation Bases for Consumer Markets for Consumer Markets

6-10

Segmenting Business MarketsSegmenting Business Markets

6-11

Target-Market StrategyTarget-Market Strategy

Single MarketingStrategy“shotgun”

Single MarketingStrategy“shotgun”

Market-aggregationStrategy

“mass-market”“undifferentiated-market”

Market-aggregationStrategy

“mass-market”“undifferentiated-market”

andand

Product differentiationStrategy

Product differentiationStrategy

6-12

Target-Market StrategyTarget-Market Strategy

Single-SegmentStrategy

“concentration ”

Single-SegmentStrategy

“concentration ”

NICHEMARKETERS

NICHEMARKETERS

One Marketing

Mix

One Marketing

Mix

6-13

Target-Market StrategyTarget-Market Strategy

Multiple Marketing

Mixes

Multiple-SegmentStrategy

6-14

Selecting a Target Market Selecting a Target Market GuidelinesGuidelines

Compatible with company’s goals

Compatible with company’s goals

Match market opportunity

with resources

Match market opportunity

with resources

Profit that justifies investment

Profit that justifies investment

Competitors are few and/or weak

Competitors are few and/or weak

6-15

PositioningPositioning

Firm creating and maintainingin the minds of a target market a particular

image relative to competing products

Firm creating and maintainingin the minds of a target market a particular

image relative to competing products

Coordinate the marketing mixCoordinate the marketing mix to convey positionto convey position

Select position conceptSelect position concept

THREE STEPSTHREE STEPS

Design the feature thatDesign the feature that conveys positionconveys position

6-16

Perceptual MapPerceptual Map

6-17

Forecasting Market DemandForecasting Market Demand

MARKET SHAREMARKET SHAREProportion of total sales of a productProportion of total sales of a product

during a stated periodduring a stated periodin a specific market in a specific market

that is captured by a single firmthat is captured by a single firm

MARKET FACTORMARKET FACTOR1) exists in the market1) exists in the market2)is measurable2)is measurable3)is related to the demand 3)is related to the demand for a product in a known wayfor a product in a known way

brand x brand your company brand z

6-18

Forecasting Market DemandForecasting Market Demand

Total product salesof a product

during a period in a market

under ideal conditions

Total product salesof a product

during a period in a market

under ideal conditions

MARKET POTENTIALMARKET POTENTIAL

6-19

Forecasting Market DemandForecasting Market Demand

Portion of market potential that a specific company

could expect under ideal conditions

Portion of market potential that a specific company

could expect under ideal conditions

SALES POTENTIALSALES POTENTIAL

6-20

Forecasting Market DemandForecasting Market Demand

Estimate of sales For one companya stated period during a period

in a specific market assuming

a defined marketing plan

Estimate of sales For one companya stated period during a period

in a specific market assuming

a defined marketing plan

SALES FORECASTSALES FORECAST

6-21

Methods of Sales ForecastingMethods of Sales Forecasting

Market-Factor Analysis

Market-Factor Analysis

Survey of Buyer Intentions

Survey of Buyer Intentions

Sales-Force Composite

Sales-Force Composite

Executive Judgment

Executive Judgment

Test Marketing

Test Marketing

Past Salesand

Trend Analysis

Past Salesand

Trend Analysis

6-22

Key Terms and ConceptsKey Terms and ConceptsKey Terms and ConceptsKey Terms and Concepts

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

• Market segments

• Target market

• Market segmentation

• Micromarketing

• Geographic segmentation

• Demographic segmentation

• Psychographic segmentation

• Personality

• Lifestyle

• Values

• Behavioral segmentation

• Market-aggregation strategy

• Product differentiation

• Single-segment strategy

• Niche marketers

• Niche markets

6-23

Key Terms and ConceptsKey Terms and ConceptsKey Terms and ConceptsKey Terms and Concepts

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

• Multiple-segment strategy

• Position

• Positioning

• Repositioning

• Demand forecasting

• Market share

• Market factor

• Market potential

• Sales potential

• Sales forecast

• Market-factor analysis

• Direct-derivation method

• Correlation analysis

• Multiple correlation

• Survey of buyer intentions

• Test marketing

• Past sales analysis

• Trend analysis

6-24

Key Terms and ConceptsKey Terms and ConceptsKey Terms and ConceptsKey Terms and Concepts

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

• Sales-force composite

• Executive judgment

• Delphi method