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Formulating Strategic Marketing Programs. Market Segmentation and Positioning. What is Market Segmentation?. Process of dividing a potential market into distinct subsets of consumers with common needs or characteristics. Separating a heterogeneous market into smaller homogeneous units.

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formulating strategic marketing programs

Formulating Strategic Marketing Programs

Market Segmentation

and Positioning

what is market segmentation
What is Market Segmentation?
  • Process of dividing a potential market into distinct subsets of consumers with common needs or characteristics.
  • Separating a heterogeneous market into smaller homogeneous units.
important elements of market segmentation
Important Elements of Market Segmentation
  • Each market segment has unique needs and wants and will have a unique demand curve.
  • Each market segment requires its own marketing strategy and marketing plan.
  • Market segmentation produces increased costs to the firm in the short run.
  • Increased costs are generally offset by increasing sales in the long run.
market positioning
Market Positioning
  • Match offerings of firm to the needs and wants of market segments.
  • Effective positioning involves understanding customers’ perceptions about both the psychological and physical characteristics of offerings.
slide6

Primary

needs

Exciting

needs

Articulated

needs

the segmentation process
The Segmentation Process

Needs-Based

Segmentation

Segment

Identification

segmentation bases
Geographic

Country

Region

County size

SMSA population

Density

Demographic

Age

Sex

Education

Occupation

Race

Family life cycle

Segmentation Bases
segmentation bases9
Psychographic

Social class

Personality

Lifestyle

Activities, interests, & opinions (AIO’s)

Behavioralistic

Decision unit

Usage rate

Readiness

Benefits sought

Occasion

Brand loyalty

Segmentation Bases
the segmentation process10
The Segmentation Process

Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

the segmentation process12
The Segmentation Process

Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

positioning strategy
Positioning Strategy
  • Create positioning statement based on unique customer needs.
  • Differentiating your product from the competitions’ in the minds of the target customers
positioning statement
Positioning Statement
  • To communicate positioning, a marketing plan should include a positioning statement following the form:

“To (target group and need) our (brand) is (concept) that (point of difference).”

points to remember about positioning
Points to Remember About Positioning:
  • Based on consumer perceptions of tangible and intangible characteristics of offering.
  • The intensity of the brand will affect positioning.
slide16

The Segmentation

Process

Needs-Based

Segmentation

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

Positioning

“Acid” Test

testing the positioning statement
Testing the Positioning Statement
  • Test the positioning statement with target consumers--what do they think, how do they react to the statement?
  • Assess need level: the stronger the need, the higher the expected customer interest.
    • “Do you see this product as solving a problem or filling a need for you?”
testing continued
Testing, continued...
  • Communicability and believability: if the scores on these dimensions are low, the positioning must be refined or revised.
    • “Are the benefits clear to you and believable?”
testing continued19
Testing, continued...
  • Perceived value: The higher the perceived vale, the higher the expected consumer interest.
    • “Is the price reasonable in relation to the value?”
testing continued20
Testing, continued...
  • Gap level between the new product and existing products: The greater the gap, the higher the expected consumer interest.
    • “Do other products currently meet this need and satisfy you?”
slide21

Needs-Based

Segmentation

The Segmentation

Process

Segment

Identification

Segment

Attractiveness

Segment Positioning

Strategy

Positioning

“Acid” Test

Strategy

Implementation

segmentation strategies
Segmentation Strategies

Mass

Marketing

Mass

Customization

multisegment strategy
Multisegment Strategy
  • Pursue two or more segments that are attractive and profitable, but not the whole market.
sequential segment strategy
Sequential Segment Strategy
  • Multisegment approach, but rather than pursuing all the attractive segments simultaneously, pursue the most attractive first; when cash flow from that segment is positive, then pursue the next most attractive segment, and so on.
single segment strategy
Single-Segment Strategy
  • Focus on just one attractive segment.
niche segment strategy
Niche Segment Strategy
  • Focus on a smaller group within a segment.
  • Requires a further customization of marketing strategy.
mass customization strategy
Mass Customization Strategy
  • Focus on all niches within a segment by customizing strategies to each subsegment.