7-1

7-1

PRINCIPLES OF MARKETING

Chapter
Chapter
77
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
Steps
Steps in
in Segmentation,
Segmentation,
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7-2

Targeting,
Targeting, and
and Positioning
Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s)
Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
1. Identify Bases Market Segmentation
for Segmenting the Market
Step
Step 1.
1. Market
Market Segmentation
Segmentation
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7-3

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

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

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

Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals or
or locations
locations
(complete
(complete segmentation)
segmentation)
Step
Step 1.
1. Market
Market Segmentation
Segmentation
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7-4

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

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

Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses
Using
Using Multiple
Multiple Segmentation
Segmentation
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7-5

Bases:
Bases: Geodemographics
Geodemographics
Step
Step 1.
1. Market
Market Segmentation
Segmentation
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7-6

Bases
Bases for
for Segmenting
Segmenting Business
Business
Markets
Markets
Personal Demographics
Characteristics

Bases
Bases
for
for Segmenting
Segmenting
Situational Business
Business Operating
Factors Markets
Markets Characteristics

Purchasing
Approaches
Step
Step 1.
1. Market
Market Segmentation
Segmentation
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7-7

Bases
Bases for
for Segmenting
Segmenting International
International
Markets
Markets

Industrial
Industrial Markets
Markets

Political/
Political/
Geographic
Geographic Economic
Economic Legal
Legal

Cultural
Cultural Intermarket
Intermarket
Step
Step 1.
1. Market
Market Segmentation
Segmentation
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7-8

Requirements
Requirements for
for Effective
Effective Segmentation
Segmentation

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.

Accessible
Accessible • Segments must be effectively
reached and served.

Substantial
Substantial • Segments must be large or
profitable enough to serve.

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

Actionable
Actionable • Must be able to attract and serve
the segments.
Step
Step 2.
2. Market
Market Targeting
Targeting
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7-9

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

• 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
Step 2.
2. Market
Market Targeting
Targeting
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7-10

Market
Market Coverage
Coverage Strategies
Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix

A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment 11
Marketing Mix
Mix11
Company
Company Segment
Segment 22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment 33
Marketing
Marketing Mix
Mix33
B. Differentiated Marketing

Segment
Segment 11
Company
Company
Marketing
Marketing Segment
Mix Segment 22
Mix
Segment
Segment 33
C. Concentrated Marketing
Step
Step 2.
2. Market
Market Targeting
Targeting
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7-11

Choosing
Choosing aa Market-Coverage
Market-Coverage
Strategy
Strategy
Company
Resources

Product
Variability

Product’s Stage
in the Product Life Cycle

Market
Variability

Competitors’
Marketing Strategies
Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
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7-12

Advantage
Advantage

• Product’s Position - 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
 7-13
Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
7-13

Advantage:
Advantage: Strategies
Strategies

Product
Product Product
Product
Class
Class Attributes
Attributes

Away
Away from
from Benefits
Benefits
Competitors
Competitors HH
GG
Offered
Offered
CC

A
A
DD
Against
Against aa E
E
B
Usage
Usage
B
Competitor
Competitor
FF
Occasions
Occasions

Users
Users
Steps
Steps to
to Choosing
Choosing and
and Implementing
Implementing
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7-14

aa Positioning
Positioning Strategy
Strategy

• Step 1. Identifying a set of possible

competitive advantages: Competitive
Differentiation.

• Step 2. Selecting the right competitive

advantage.

• Step 3. Effectively communicating and

delivering the chosen position to the market.
Developing
Developing Competitive
Competitive
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7-15

Differentiation
Differentiation
Product
Product Service
Service

Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation

Personnel
Personnel Image
Image
Selecting
Selecting the
the Right
Right Competitive
Competitive
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7-16

Advantages
Advantages

Important
Important

Profitable
Profitable Criteria Distinctive
Distinctive
for
Determining
Which
Differences
Affordable
Affordable to Superior
Superior
Promote

Preemptive
Preemptive Communicable
Communicable