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Market Segmentation, Targeting, and Positioning for Competitive Advantage

STP Strategy

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1. Market Segmentation

2. Market Targeting

3. Market Positioning

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Market Segmentation
Dividing a Market into distinct groups of buyers on the basis of needs, characteristics or behavior who might require separate products or marketing mixes.

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Market Segmentation

A Market Segment is a group of customers who respond in a similar way to a given set of marketing efforts.

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments 1. Identify Bases for Segmenting the Market

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Market Positioning

Market Targeting

Market Segmentation

Step 1. Market Segmentation

Levels of Market Segmentation
Mass Marketing
Same product to all consumers (no segmentation)

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Segment Marketing
Different products to one or more segments (some segmentation)

Niche Marketing
Different products to subgroups within segments ( more segmentation)

Micromarketing
Products to suit the tastes of individuals or locations (complete segmentation)

Step 1. Market Segmentation

Bases for Segmenting Consumer Markets
Geographic
Nations, states, regions or cities

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Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Using Multiple Segmentation Bases: Geodemographics

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Step 1. Market Segmentation

Bases for Segmenting Business Markets

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Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets Purchasing Approaches

Operating Characteristics

Step 1. Market Segmentation

Bases for Segmenting International Markets

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Industrial Markets

Geographic

Economic

Political/ Legal

Cultural

Intermarket

Step 1. Market Segmentation

Requirements for Effective Segmentation
Measurable Accessible Substantial Differential Actionable

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Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served.

Segments must be large or profitable enough to serve.

Segments must respond differently to different marketing mix elements & actions.

Must be able to attract and serve the segments.

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Market Targeting
Market Targeting:

The process of evaluating each market segments attractiveness and selecting one or more segment to enter.

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Market Targeting
A target market is a set of buyers sharing common needs or characteristics that the company decides to serve.

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Market Targeting
Evaluating and Selecting the Market Segments:
Companys Objectives And Resources Attractiveness of the Market

Size Growth Profitability Scale Economies Competition Risks Synergy

Step 2. Market Targeting

Evaluating Market Segments Segment Size and Growth
Analyze sales, growth rates and expected profitability.

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Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Step 2. Market Targeting

Market Coverage Strategies
Company Marketing Mix
A. Undifferentiated Marketing

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Market

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

B. Differentiated Marketing

Segment 1 Segment 2 Segment 3

Company Marketing Mix

Segment 1 Segment 2 Segment 3

C. Concentrated Marketing

Step 2. Market Targeting

Choosing a Market-Coverage Strategy
Company Resources

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Product Variability
Products Stage in the Product Life Cycle Market Variability Competitors Marketing Strategies

Step 3. Positioning for Competitive Advantage

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Products Position the way the product is defined by consumers on important attributes- the place the product occupies in consumers minds relative to competing products; i.e. Volvo positions on safety. Marketers must:
Plan positions to give products the greatest advantage Develop marketing mixes to create planned positions

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Positioning Maps
Firms use perceptual or positioning maps to help them develop a market positioning strategy for their product or service. As the maps are based on the perception of the buyer they are sometimes called perceptual maps. Positioning maps show where existing products and services are positioned in the market so that the firm can decide where they would like to place (position) their product. Firms have two options they can either position their product so that it fills a gap in the market or if they would like to compete against their competitors they can position it where existing products have placed their product.

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Positioning Maps

Step 3. Positioning for Competitive Advantage: Strategies

Product Class Away from Competitors Product Attributes Benefits Offered
C

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G H

Against a Competitor

D E B F

Usage Occasions

Users

Steps to Choosing and Implementing a Positioning Strategy

Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation. Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP). Step 3. Communicating and Delivering the Chosen Position.

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Step 4. Support the positioning strategy with a unique marketing mix

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Competitive advantage
An advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.

Positioning begins with actually differentiating the companys marketing offer so that it will give consumer superior value.
Developing Competitive Differentiation

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Product

Services

Areas for Competitive Differentiation

Personnel Channels

Image

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Selecting the Right Competitive Advantage

1. How many differences to promote? 2. Which differences to promote? Important

Profitable

Affordable

Criteria for Determining Which Differences to Promote

Distinctive

Superior

Preemptive

Communicable

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Selecting an Overall Positioning Strategy

Value Proposition: the full positioning of a brand the full mix of benefits upon which it is positioned.

Winning value Proposition Losing value proposition Marginal proposition

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Positioning Statement

A statement that summarizes company or brand positioning it takes this form: To (target segment and need) our (brand) is (concept) that (point of difference)