Marketing Management 2nd Edition

© 2000 South-Western College Publishing Slide #1

Marketing ManagementMarketing Management2nd Edition2nd Edition

Chapter 7:Chapter 7:

Market Segmentation, Market Segmentation, Positioning, and Positioning, and BrandingBranding

Michael R. Czinkota and Masaaki Kotabe


Chapter OutlineChapter Outline

What is a Market?What is a Market? Market BoundariesMarket Boundaries Market Share and the Pareto EffectMarket Share and the Pareto Effect Market SegmentationMarket Segmentation Types of SegmentationTypes of Segmentation Segment ViabilitySegment Viability PositioningPositioning Approaches to SegmentationApproaches to Segmentation Product DifferentiationProduct Differentiation Branding PoliciesBranding Policies


What is a Market?What is a Market?

All the potential customers sharing All the potential customers sharing particular needs and wants who might be particular needs and wants who might be willing to engage in exchange to satisfy willing to engage in exchange to satisfy

their needs or wants.their needs or wants.


Market BoundariesMarket Boundaries

Product orservice category

Product orservice category

GeographyGeography

Physical customergroupings

Physical customergroupings

Examples:Examples:

People who buyPeople who buyluxury carsluxury cars

IntangiblesIntangibles

Westerners preferWesterners preferdark roasted coffeedark roasted coffee

Hospitals have differentHospitals have differentneeds than corporateneeds than corporatehealth centershealth centers

Low-end versus Low-end versus high-end markethigh-end market


Market Boundaries (cont.)Market Boundaries (cont.)

CustomersCustomers

UsersUsers

ProspectsProspects

Who are your ownWho are your owncustomers?customers?

Who uses the categoryWho uses the categoryof products?of products?

Individuals in the marketIndividuals in the marketwho are not yourwho are not yourcustomers.customers.


Market Share and the Pareto EffectMarket Share and the Pareto Effect

20%

80%

20%

80%

30%

20%

50%

30%

20%

50%

Market Share:Market Share: Pareto Effect:Pareto Effect:

Percentage of salesPercentage of salesthat a firm’s productthat a firm’s producthas in a particularhas in a particularmarket.market.

A small number ofA small number ofcustomers (20%)customers (20%)may represent amay represent alarge percentage oflarge percentage ofsales (80%).sales (80%).


Market Segmentation:Market Segmentation:Mobil’s Gas SegmentsMobil’s Gas Segments

Road Warriors11%

True Blues17%

Generation F329%

Homebodies22%

Price Shoppers21%


Market Segmentation:Market Segmentation:BBy Consumer Behaviory Consumer Behavior

Consumer Consumer characteristics:characteristics:

GeographicGeographic DemographicDemographic Socio-economicSocio-economic LifestylesLifestyles


Market Segmentation:Market Segmentation:By Consumer Behavior (cont.)By Consumer Behavior (cont.)

Consumer responses:Consumer responses: OccasionsOccasions BenefitsBenefits Usage frequencyUsage frequency AttitudesAttitudes


Market Segmentation:Market Segmentation:Other Types of SegmentationOther Types of Segmentation

Benefit Benefit segmentationsegmentation

Segmentation by Segmentation by consumption profileconsumption profile

Segmentation by Segmentation by national boundariesnational boundaries


Segment ViabilitySegment Viability

Characteristics of segment viability:Characteristics of segment viability: Size:Size: Must be large enough to generate Must be large enough to generate

volume for adequate profit.volume for adequate profit. Identity:Identity: Should have unique Should have unique

characteristics that can be identified.characteristics that can be identified. Relevance:Relevance: Must be relevant to the Must be relevant to the

important characteristics of the product.important characteristics of the product. Access:Access: Must be able to be reached. Must be able to be reached.


PositioningPositioning

Segmentation:Segmentation:grouping of peoplegrouping of peopleby needs or wants.by needs or wants.

Positioning:Positioning:how a product ishow a product isgeared to attractgeared to attractthis market segment.this market segment.


Approaches to SegmentationApproaches to Segmentation

Single Segment: Single Segment: Focus on a single Focus on a single market segment.market segment. E.g., MercedesE.g., Mercedes

Multiple Segments: Multiple Segments: Target two or more Target two or more segments with one segments with one brand.brand. E.g., The GapE.g., The Gap



Cross segments: Cross segments: Offer same product Offer same product across different across different segments.segments. E.g., Dupont’s TeflonE.g., Dupont’s Teflon

Full coverage: Full coverage: Offer Offer product to entire product to entire market.market. E.g., Coca-ColaE.g., Coca-Cola



Counter Counter segmentation: segmentation: Consolidate several Consolidate several segments and segments and launch or reposition launch or reposition a product to cover all a product to cover all segments.segments. E.g., Nissan and E.g., Nissan and

ToyotaToyota


Product DifferentiationProduct Differentiation

Used to give products unique identities to Used to give products unique identities to distinguish them from their competitors.distinguish them from their competitors.

Example: BrandingExample: Branding

Windex

Glass Glass cleanerscleaners


Branding PoliciesBranding Policiesfor New Productsfor New Products

Company nameCompany name E.g., IBME.g., IBM

Family brandingFamily branding E.g., Mercedes, Black & DeckerE.g., Mercedes, Black & Decker

Individual brandingIndividual branding McDonald’s, Seven-UpMcDonald’s, Seven-Up


Branding Policies Branding Policies for Existing Productsfor Existing Products

Brandextension

Brandextension

MultibrandsMultibrands

Use existing brand name forUse existing brand name fornew or modified products.new or modified products.E.g., Diet Coke, Cherry CokeE.g., Diet Coke, Cherry Coke

Offer several different brands inOffer several different brands incompetition with each other.competition with each other.E.g., Tide, Fab & CheerE.g., Tide, Fab & Cheer


Branding Policies Branding Policies for Existing Productsfor Existing Products

Co-brandingCo-branding

Private andgeneric brands

Private andgeneric brands

Two different brand team upTwo different brand team upto create a new product.to create a new product.E.g., General Foods & Hershey’sE.g., General Foods & Hershey’screated “Reese’s Peanut Buttercreated “Reese’s Peanut ButterPuffs” cerealPuffs” cereal

Private brand: retailer’s ownPrivate brand: retailer’s ownbranded product.branded product.E.g., Sears uses KenmoreE.g., Sears uses KenmoreGeneric brand: no brand name.Generic brand: no brand name.E.g., Potato chipsE.g., Potato chips

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Marketing Management 2nd Edition