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Market Segmentation,
Targeting, and Positioning for
Competitive Advantage
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Steps in Market Segmentation, Targeting, and Positioning
Market Segmentation
1. Identify bases for segmenting the market2. Develop segment profiles
Market Targeting3. Develop measure of segment attractiveness4. Select target segments
Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment
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Step 1. Market SegmentationLevels of Market SegmentationThrough 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
Same product to all consumers (no segmentation, i.e Tomato Seller)
Segment MarketingDifferent products to one or more segments
(some segmentation, i.e. Marriot)
Marketing Debate
Is mass marketing dead?
Take a position:1. Mass marketing is dead.
or
2. Mass marketing is still a viable way to build a profitable brand.
Ford’s Model T Followed a Mass Market Approach
Pepsi India
Toyota Scion Targets Gen Y Consumers
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FERRARI
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Generation X
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Niche MarketingDifferent products to subgroups within segments
(more segmentation, i.e. Standard or Luxury Cars)
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation,boutiques)
Step 1. Market SegmentationLevels of Market Segmentation
Local Marketing
Tailoring brands/ promotions to local customer groups, i.e
KFC
Individual Marketing
Tailoring products and programs to the needs of
individual customers, i.e. Dell
Limousine
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Density or Climate
City or Metro Size
World Region or Country
Step 1. Market SegmentationGeographic Segmentation
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Step 1. Market SegmentationDemographic 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
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Baby Boomers: A profitable Market
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Step 1. Market SegmentationPsychographic Segmentation
Divides Buyers Into Different Groups Based on:
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Step 1. Market SegmentationBehavioral Segmentation
Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward
product
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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.
Step 1. Market SegmentationRequirements for Effective Segmentation
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Step 2. 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
Step 2. Market TargetingMarket Coverage Strategies
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Company ResourcesCompany Resources
Product VariabilityProduct Variability
Product’s Stage in the Life CycleProduct’s Stage in the Life Cycle
Market VariabilityMarket Variability
Competitor’s Marketing StrategiesCompetitor’s Marketing Strategies
Step 2. Market TargetingChoosing a Market-Coverage Strategy
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Socially Responsible Target Marketing
Smart targeting helps companies and consumers alike.Target marketing sometimes generates controversy and concern. Disadvantaged and vulnerable can be
targeted. Cigarette, beer, and fast-food marketers
have received criticism in the past. Internet has come under attack because of
the loose boundaries and lack of control in marketing practices.
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Step 3. Choosing a Positioning Strategy
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: Plan positions to give their products the
greatest advantage in selected target markets,
Design marketing mixes to create these planned positions.
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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
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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,
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ServicesDifferentiationi.e. Delivery, Installation,
Repair Services, Customer
Training Services
Product Differentiationi.e. Features,
Performance, Style & Design, or Attributes
ImageDifferentiationi.e. Symbols, Atmospheres,
Events
Personnel Differentiation
i.e. Hiring, Training Better People Than
Competitors Do
Identifying Possible Competitive Advantages
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CriteriaFor Determining
Which DifferencesTo Promote
AffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
CommunicableCommunicable
Choosing the Right CompetitiveAdvantages
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Selecting an Overall Positioning Strategy
Price
More The same Less
More
The Same
Less
Ben
efi
ts
MoreforMore e.g: mont blanc, mercedes
Morefor theSame e.g: lexus
MORE FOR LESS e.g: zong,
maggi vsknorr
The same for less e.g: dell, wal mart, imtiaz store
Less for much less e.g:
marriot vs. resturants, emirates vs.
PIA
Selecting an Overall Positioning Strategy
The five green cells represent winning value propositions-differentiation and positioning that gives the company competitive advantages.The red cells represents losing value propositions. The center yellow cell represents at best a marginal proposition.
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Communicating and Delivering the Chosen Position
Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.All the company’s marketing mix must support the positioning strategy.Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies.
Positioning statement vs tagline
they are two branding components.The positioning statement is usually longer and more detailed than a tagline. It will quite often borrow from the mission statement, the value statement, the vision statement
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It is an integral part of the brand platform, and drives the direction of the creative process when developing brand elements – name, tagline, logo, graphic standards, trade dress, brand messaging and packaging. It is possible for some positioning statements to be voiced as a tagline as well, but this will be a rare occurrence. the positioning statement precedes the development of brand elements It is usually a paragraph in length rather than a short phrase. The tagline crystallizes and is usually connected to the name and logo as part of the company/product identification.
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Positioning statement vs tagline
Marketing Discussion
Think of various product categories. How would you classify yourself
in terms of the various segmentationschemes?
How would marketing be more or lesseffective for you depending upon the
segment involved?
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