Marketing Winter 2000 1

SEGMENTATION, TARGETING AND POSITIONING

Session 4

Wednesday, April 5 2000

Marketing Winter 2000 2

SESSION OUTLINE

• Definition and usefulness of segmentation

• A priori vs. a posteriori segmentation

• Case: Sally Goodman Visits Hydro-Québec

• Segmentation variables

• Targeting strategies

• Positioning strategies

Marketing Winter 2000 3

SEGMENTATION

• A segment is a homogeneous group of buyers who react in a similar fashion to marketing stimuli

• Adapting the marketing mix (programme) to suit the specific characteristics of the segment

• The targeted segment must be large enough to justify a segmented approach

Marketing Winter 2000 4

TYPE OF SEGMENTATION

• A priori segmentation:– use a known segmentation variable, such as

socio-demographic, geographic, …– compare buying patterns

• A posteriori segmentation:– compare buying patterns– identify useful segmentation variables

Marketing Winter 2000 5

Business Demographics orMacro-segmentation

• Industry

• Company size

• Location

• Operating Variables

• Technology

• Customer capabilities

Marketing Winter 2000 6

Purchasing Approaches

• Organization of purchasing function

• Power structure

• Nature of existing relationships

• General purchase policies

• Purchasing criteria

Marketing Winter 2000 7

Personal Characteristics

• Buyer-seller similarity• Attitudes toward risk• Loyalty

Marketing Winter 2000 8

A good segmentation pattern should ...

• Be performed on a market which is segmented

• identify measurable and quantifiable segments

• segments which can be reached, is stable over time, and is profitable

Marketing Winter 2000 9

Company marketing mix Market

A. Undifferentiated marketingA. Undifferentiated marketing

Company marketing mix 1

Company marketing mix 2

Company marketing mix 3

Segment 1

Segment 3

Segment 2

B. Differentiated marketingB. Differentiated marketing

Segment 1

Segment 3

Segment 2Company marketing mix

C. Concentrated marketingC. Concentrated marketing

Marketing Winter 2000 10

Undifferentiated or Mass Marketing

• Mass producing, mass distributing and mass promoting the same product in the same way to all consumers– Largest potential market helps lower costs– Difficult to access fragmented markets– Problems in selecting from multiple ad media

and distribution channels

Marketing Winter 2000 11

Differentiated or Segmented Marketing

• Marketing recognizes buyers differ in needs, perceptions and buying behaviours– Isolate broad segments comprising a market– Adapt offers to best match segment needs– Gain efficiency through strategic fit– More focus and less competition

Marketing Winter 2000 12

Concentrated orNiche Marketing

• Marketing that focuses on subgroups within large identifiable groups in a market– Dividing a segment into subsegments– Defining group with special traits– Seeking unique combination of benefits– Few or no significant competitors– Improves focus of limited resources

Marketing Winter 2000 13

Micromarketing

• Tailoring products and marketing programs to suit the specific tastes of specific individuals or locations– Local marketing– Local tailoring of brands and promotions– Overcomes regional differences– Dilutes brand image and operation efficiency

Marketing Winter 2000 14

POSITIONING

• Give a distinct image to the product

• Relative to competitors

• In the minds of prospects (actual or potential customers)

Marketing Winter 2000 15

Positioning Competitively

• Defined by customers on important attributes

• Place in mind relative to competing products

• Simplify evaluation• Position happens -

planned or not

Marketing Winter 2000 16

Positioning Strategies

• Product attributes• Benefits offered• Usage occasions• Classes of users• Directly on competitor• Around competitor• Against product class

Marketing Winter 2000 17

Choosing and Implementing

Communicate anddeliver chosen position

Communicate anddeliver chosen position

Select the rightcompetitive advantage

Select the rightcompetitive advantage

Identify possiblecompetitive advantage

Identify possiblecompetitive advantage

Marketing Winter 2000 18

Steps in Market Segmentation, Targeting, and Positioning

Market segmentation1. Identify bases for

segmenting the market

2. Develop profiles ofresulting segments

Market targeting3. Develop measures of

segment attractiveness

4. Select the target segment(s)

Market positioning

6. Develop marketing mixfor each target segment

5. Develop positioningfor each target segment

Marketing Winter 2000 19

NEXT SESSION

• Friday, April 7 2000

• The Marketing Plan

• Chapter 16 and readings

• Submit Essay I