Lesson 15
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Lesson 15. Market Segmentation, Targeting, and Positioning. When you have completed this lesson you will be able to; Summarise the relationship between market segmentation, targeting and positioning Identify and describe the major variables for consumer segmentation

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Lesson 15

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Lesson 15

Lesson 15

Market Segmentation, Targeting, and Positioning


Lesson objectives

When you have completed this lesson you will be able to;

Summarise the relationship between market segmentation, targeting and positioning

Identify and describe the major variables for consumer segmentation

Outline how companies select target markets and implement segmentation strategies

Show how market segmentation and the marketing mix are interlinked in the positioning strategy

Lesson Objectives


The stp process

Segmentation is the process of classifying customers into groups which share some common characteristic

Targeting involves the process of evaluating each segments attractiveness and selecting one or more segments to enter

Positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of the consumer

The STP Process


Target market

A market is a set of all actual and potential buyers

A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences.

Any marketing strategy must include a detailed (specific) description of this.

Target Market


Advantages of segmentation pp 164 165

The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s ability to competently serve those needs – thereby making the company better informed about its customers

Competitor offerings and marketing positioning must also be analysed in this context so the company must consider what its competitive advantages and disadvantages are, helping it to clarify its own positioning strategy

Limited resources are used to best advantage, targeted at those segments that offer the best potential

Advantages of Segmentation (pp 164 - 165)


Requirements for effective segmentation

Measurable

Requirements for Effective Segmentation

Accessible

Substantial

  • Size, purchasing power, profiles

  • of segments can be measured.

  • Segments can be effectively

  • reached and served.

Differential

  • Segments are large or profitable enough to serve.

Actionable

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

  • Effective programs can be designed to attract and serve the segments.


Steps in segmentation targeting and positioning

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing

Mix for Each Target Segment

Market

Positioning

5. Develop Positioning

for Each Target Segment

4. Select Target

Segment(s)

Market

Targeting

3. Develop Selection Criteria

2. Develop Profiles

of Resulting Segments

Market Segmentation

1. Identify Bases

for Segmenting the Market


Step 1 market segmentation levels of market segmentation

Mass Marketing

Same product to all consumers

(no segmentation)

Segment Marketing

Different products to one or more segments

(some segmentation)

Niche Marketing

Different products to subgroups within segments

(more segmentation)

Step 1. Market SegmentationLevels of Market Segmentation

Micromarketing

Products to suit the tastes of individuals and locations

(complete segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products/ programs to individual customers


Step 1 market segmentation bases for segmenting consumer markets

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

Nations, states,

regions or cities

Demographic

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

Psychographic

Social class, lifestyle, or personality

Behavioural

Occasions, benefits sought, user status, usage rate, loyalty


Step 1 market segmentation bases for segmenting business markets

Step 1. Market SegmentationBases for Segmenting Business Markets

Personal

Characteristics

Demographics

Bases

for Segmenting

Business

Markets

Situational

Factors

Operating

Characteristics

Purchasing

Approaches


Segmenting business markets

Segmentation by customer size or geographic location

Four segments of business customers

Programmed buyers

Relationship buyers

Transaction buyers

Bargain hunters

Segmenting Business Markets


Step 1 market segmentation bases for segmenting international markets

Step 1. Market SegmentationBases for Segmenting International Markets

Industrial Markets

Political/

Legal

Geographic

Economic

Cultural

Intermarket


Lesson 15

Linking the Concepts

  • Using the segmentation bases you’ve just heard about, segment the Irish clothing market.

    • Describe each of the major segments and subsegments.


Step 2 market targeting evaluating market segments developing selection criteria

Segment Size and Growth

Analyze 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 relative to the segment(s).

Look for Competitive Advantages.

Step 2. Market TargetingEvaluating Market Segments (developing selection criteria)


Step 2 market targeting market coverage strategies

Step 2. Market TargetingMarket Coverage Strategies

Market

Company

Marketing

Mix

Company

Marketing Mix 1

Segment 1

Company

Marketing Mix 2

Segment 2

A. Undifferentiated Marketing

Segment 3

Company

Marketing Mix 3

Segment 1

Company

Marketing

Mix

Segment 2

B. Differentiated Marketing

Segment 3

C. Concentrated Marketing


Step 2 market targeting choosing a market coverage strategy

Step 2. Market TargetingChoosing a Market-Coverage Strategy

Company

Resources

Product

Variability

Product’s Life-Cycle

Stage

Market

Variability

Competitors’

Marketing Strategies


Lesson 15

Linking the Concepts

  • At the last ‘linking the concepts’, you segmented the Irish clothing market.

    • Now, pick two companies that serve this market and describe their segmentation and targeting strategies.

    • Can you come up with one that targets many different segments versus another that focuses on only one or a few segments?

  • How does each company you choose differentiate its marketing offer and image?

  • How has each done a good job of establishing this differentiation in the minds of targeted consumers?


Step 3 positioning for competitive advantage

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.

Step 3. Positioning for Competitive Advantage


Step 3 positioning for competitive advantage strategies

G

H

C

A

D

E

B

F

Step 3. Positioning for Competitive Advantage: Strategies

Product

Class

Product

Attributes

Away from

Competitors

Benefits

Offered

Usage

Occasions

Against a

Competitor

User Class


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.

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

Steps to Choosing and Implementing a Positioning Strategy


Developing competitive differentiation

Product

Service

Areas for Competitive

Differentiation

Developing Competitive Differentiation

Image

People


Selecting the right competitive advantages

Selecting the Right CompetitiveAdvantages

Important

Profitable

Distinctive

Criteria

for

Determining

Which

Differences

to

Promote

Affordable

Superior

Communicable

Preemptive


Step 4 supporting the positioning strategy

At this stage the company has decided on its positioning strategy and must now design a marketing mix to support this strategy. The next part of the course looks at ‘Developing the Marketing Mix’

Step 4 – Supporting the positioning strategy


Lesson 15

Reviewing the Concepts

  • Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

  • List and discuss the major levels of market segmentation and bases for segmenting consumer and business markets.

  • Explain how companies identify attractive market segments and choose a market coverage strategy.

  • Discuss how companies position their products for maximum competitive advantage in the marketplace.


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