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c.Segmentation, Targeting and Positioning:

Building the Right Relationships with the Right Customers

•Chapter 9

•PowerPoint slides

•Express version

•Instructor name

•Course name

•School name

•Date

Principles of Marketing, Sixth Canadian Edition

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Learning Objectives

• After studying this chapter, you should be able to:– Define the three steps of target marketing: market

segmentation, target marketing, and market positioning

– List and discuss the bases for segmenting consumer and business markets

– Explain how companies identify attractive market segments and choose a market coverage strategy

– Discuss how companies position their products for maximum competitive advantage in the marketplace

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Steps in Market Segmentation, Targeting, and Positioning

• Market segmentation: dividing market into distinct groups which will require separate marketing mixes

• Target marketing: choosing which group(s) to appeal to

• Market positioning: creating a clear, distinctive position in the consumer’s mind relative to competition

Figure 9.1

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Consumer Market Segmentation (Table 9.1)

• Geographic:– Regions

– Size/density

– Climate

• Demographic:– Age/generation

– Gender

– Family size/life-cycle

– Income

– Occupation

– Religion

– Ethnic origin

• Psychographic:– Social class

– Lifestyle

– Personality

• Behavioral:– Occasions

– Benefits

– User status

– Usage rate

– Loyalty status

– Readiness state

– Attitude toward product

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Business Markets Segmentation (Table 9.2)

• Demographic:– Industry

– Company size

– Location

• Operating variables:– Technology

– User/non-user status

– Customer capabilities

• Situational factors:– Urgency

– Specific application

– Size of order

• Purchasing approaches:– Purchasing organization

– Power structure

– Existing relationships

– General policies

– Purchasing criteria

• Personal characteristics:– Buyer-seller similarity

– Attitude towards risk

– Loyalty

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Segmenting International Markets

• International markets can be segmented by:– Geographic location

– Economic factors

– Political and legal factors– Cultural factors

• Intermarket segmentation:– Forming segments of consumers

who have similar needs, even though they live in different countries

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Requirements for Effective Segmentation

• To be useful, market segments must be:

– Measurable:• Size, purchasing power, and profiles can be measured

– Accessible:• Segments can be reached

– Substantial:• Large enough to be profitable

– Actionable:• Programs can be developed to

attract and serve the segments

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Target Marketing Strategies

• Three factors used to evaluate segments:

– Segment size and growth

– Structural attractiveness• Competition, substitute products, power of buyers/suppliers

– Company objectives and resources

Figure 9.2

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Choosing a Target Marketing Strategy

• Factors to be considered:

– Company resources

– Product variability– Product’s life-cycle stage

– Market variability

– Competitor’s marketing strategies

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Positioning for Competitive Advantage

• Product position: the way the product is defined by consumers on important attributes, relative to competing products

• Competitive advantage: an advantage gained over competitors by offering (and delivering) greater value

• Sources of differentiation:– Product

– Service

– Marketing channels

– People

– Image

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Which Differences to Promote?

• Unique selling proposition (USP): aggressively promoting one benefit to the target audience

• Three major positioning errors:– Under-positioning

– Over-positioning

– Confused positioning

• Differences should be:– Important

– Distinctive

– Superior

– Communicable

– Pre-emptive

– Affordable

– Profitable

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Possible Value Propositions

• Value proposition:– Full positioning of a

brand

– Mix of benefits used for positioning

Figure 9.3

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In Conclusion…

• The learning objectives for this chapter were:– Define the three steps of target marketing: market

segmentation, target marketing, and market positioning

– List and discuss the bases for segmenting consumer and business markets

– Explain how companies identify attractive market segments and choose a market coverage strategy

– Discuss how companies position their products for maximum competitive advantage in the marketplace