Market Segmentation, Targeting, and Positioning for Competitive Advantage
Chapter 7
Steps in Market Segmentation, Targeting, and Positioning (Fig. 7.1)
Market Segmentation
1. Identify bases for segmenting the market
2. Develop segment profiles
Market Targeting
3. Develop measure of segment attractiveness
4. Select target segments
Market Positioning
5. Develop positioning for target segments
6. Develop a marketing mix for each segment
Step 1. Market Segmentation - Levels of Market Segmentation
Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs.
Mass Marketing –
Segment Marketing –
Micro -
local -
individual -
Geographic Segmentation
World Region or Country
City or Metro Size
Density or Climate
Demographic Segmentation
Dividing the market into groups based on variables such as:
Age
Gender
Family size or life cycle
Income
Occupation
Education
Religion
Race
Generation
Nationality
Psychographic Segmentation
Divides Buyers Into Different Groups Based on:
Behavioral Segmentation
Dividing the market into groups based on variables such as:
Occasions
Benefits
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
How could you segment the following markets?
Segmentation Profile - Good segmentation analysis develops profile of consumer group which considers all relevant segmentation variables.
Requirements for Effective Segmentation
______- Size, purchasing power, profiles of segments can be measured.
______- Segments can be effectively reached and served.
______-
Segments are large or profitable enough to serve.
______- Segments must respond differently to different marketing mix elements & programs.
______- Effective programs can be designed to attract and serve the segments.
Step 2. Market Targeting - Evaluating Market Segments
Segment Size and Growth - Analyze current sales, growth rates and expected profitability for various segments.
Segment Structural Attractiveness - Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.
Company Objectives and Resources - Company skills & resources needed to succeed in that segment(s). Look for Competitive Advantages.
Market Coverage Strategies
Choosing a Market-Coverage Strategy
Company Resources
Product Variability
Product’s Stage in the Life Cycle
Market Variability
Competitor’s Marketing Strategies
80 - 20 Rule
Positioning
Perceptual vs. Physical
Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.
Marketers must:
Step 3: Choosing a Positioning Strategy
Step 1. Identifying Possible Competitive Advantages
Step 2. Selecting the Right Competitive Advantage
Step 3. Communicating and Delivering the Chosen Position
Identifying Possible Competitive Advantages
Key to winning and keeping customers is to understand their needs and buying processes better than competitors do and deliver more value.
Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage,
Product Differentiation -
Services Differentiation –
Image Differentiation –
Personnel Differentiation –
Choosing the Right Competitive Advantages