(B) PPT. Kotler Keller STP

MARKETING MANAGEMENT12th edition

8 Identifying Market

Segments and Targets

Kotler Keller

CHP: 8&10-2

Effective Targeting Requires…

• Identify and profile distinct groups of buyers who differ in their needs and preferences.

• Select one or more market segments to enter.

• Establish and communicate the distinctive benefits of the market offering.

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Ford’s Model T Followed a Mass Market Approach

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Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profiles

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profiles

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

CHP: 8&10-5

Four levels of Micromarketing

Segments

Local areas Individuals

Niches

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Segment Marketing

Targeting a group of customerswho share a similar set of

needs and wants.

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Figure 8.1 Basic Market Preference Patterns

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Niche marketingAn attractive niche market characterised as follows:

THE CUSTOMERS IN THE NICHE MARKET HAVE A

DISTINCT SET OF NEEDS;

THEY WILL PAY A PREMIUM TO THE FIRM THAT BEST

SATISFIES THEIR NEEDS;

THE NICHE IS NOT LIKELY TO ATTRACT OTHER COMPETITORS;

THE NICHE GAINS CERTAIN ECONOMIES THROUGH SPECIALISATION; & THE NICHE HAS SIZE, PROFIT, & GROWTH

PIOTENTIAL.

WHEREAS SEGMENTS ARE FAIRLY LARGE & NORMALLY

ATTRACT SEVERAL COMPETITORS, NICHE ARE FAIRLY SMALL

& NORMALLY ATTRACT ONLY ONE OR TWO.

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Local marketingReflects a growing trend called grassroots marketing:• Marketing activities concentrate on getting as close & personally

relevant to individual customers as possible: e.g. - Nike’s initial foray

• A large part of this is experiential marketing, “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life”

• Pine & Gilmore argue that we are on the threshold of the “Experience Economy,” a new economic era in which businesses must orchestrate memorable events for their customers

• Those who favour localised marketing see national advertising as a waste. Counterpoint is brands overall image gets diluted if product & messages differ across localities

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Customerization

Combines operationally drivenmass customization with customizedmarketing in a way that empowers

consumers to design theproduct and service offering

of their choice.

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Figure 8.2 Examples of Market Customization

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Segmenting Consumer Markets

GeographicGeographic

DemographicDemographic

PsychographicPsychographic

BehavioralBehavioral

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Demographic Segmentation

Age and Life CycleAge and Life Cycle

Life StageLife Stage

GenderGender

IncomeIncome

GenerationGeneration

Social ClassSocial Class

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Figure 8.4 The VALS Segmentation System

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Actualisers:• Enjoy finer things• Receptive to new products, technology, distribution• Skeptical of advertising• Frequent readers of a wide variety of publications; light TV

viewersPrinciple oriented:• Little interest in image or prestige• Above-average consumer for home products• Like educational & public affairs programming; read widely & oftenStatus oriented:• Attached to premium products• Prime target for a variety of products• Average TV watchers, read business, news, & self-help

publicationsAction oriented:• Follow fashion & fads• Spend much of the disposable income in socialising• Buy on impulse; attend to advertising; listen to rock music

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Believers:• Buy American• Slow to change habits, look for bargains• Watch TV more than average; read retirement, home & garden, &

general interest magazinesStrivers:• Image conscious• Limited discretionary incomes but carry credit balances• Spend on clothing & personal care products; prefer TV to readingMakers:• Shop for comfort, durability, value• Unimpressed by luxuries• Buy the basics, listen to radio;• Read auto, home mechanics, fishing, outdoor magazinesStrugglers:• Brand loyal• Use coupons & watch for sales• Trust advertising; watch TV often; read tabloids & women’s

magazines

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Behavioral Segmentation

Decision Roles

• Initiator

• Influencer

• Decider

• Buyer

• User

Behavioral Variables

• Occasions

• Benefits

• User Status

• Usage Rate

• Buyer-Readiness

• Loyalty Status

• Attitude

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Figure 8.5 Behavioral Segmentation Breakdown

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Segmenting for Business Markets

DemographicDemographic

Operating VariableOperating Variable

Purchasing ApproachesPurchasing Approaches

Situational FactorsSituational Factors

PersonalCharacteristics

PersonalCharacteristics

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

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & programs.• Effective programs can be designed to attract and serve the segments.

Effective Segmentation Criteria

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Market TargetingEvaluating 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.

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Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Market TargetingMarket Coverage Strategies

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Figure 8.6 Patterns of Target Market Selection

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Figure 8.6 Patterns of Target Market Selection

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Figure 8.6 Patterns of Target Market Selection

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Marketing Strategy

SegmentationSegmentation

TargetingTargeting

PositioningPositioning

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Positioning

Act of designing the company’soffering and image to occupy

a distinctive place in the mind ofthe target market.

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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

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Defining Associations

Points-of-difference (PODs)

• Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand

Points-of-parity

(POPs)• Associations that are

not necessarily unique to the brand but may be shared with other brands

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Consumer Desirability Criteria for PODs

RelevanceRelevance

DistinctivenessDistinctiveness

BelievabilityBelievability

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Deliverability Criteria for PODs

FeasibilityFeasibility

CommunicabilityCommunicability

SustainabilitySustainability

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Examples of Negatively Correlated Attributes and Benefits

• Low-price vs. High quality

• Taste vs. Low calories

• Nutritious vs. Good tasting

• Efficacious vs. Mild

• Powerful vs. Safe

• Strong vs. Refined

• Ubiquitous vs. Exclusive

• Varied vs. Simple

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• Positioning: How many ideas to promote?

• Unique selling proposition

– Four major positioning errors1. Underpositioning

2. Overpositioning

3. Confused positioning

4. Doubtful positioning

Developing and Communicating a Positioning Strategy

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Differentiation Strategies

Product

Channel Image

Personnel

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Product Differentiation

• Product form• Features• Performance• Conformance• Durability• Reliability• Reparability

• Style• Design• Ordering ease• Delivery• Installation• Customer training• Customer consulting• Maintenance

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Identity and Image

Identity:

The way a

company aims to

identify or

position itself

Image:

The way the

public perceives

the company or its

products