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Segmenting and Targeting Markets Positioning Products. Key Concepts. RELATIONSHIP AMONG SEGMENTATION, TARGETING, & POSITIONING. THE BASIS OF DEVELOPING MARKETING STRATEGY. KEY CONCEPTS - STP.

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relationship among segmentation targeting positioning
RELATIONSHIP AMONG SEGMENTATION, TARGETING, & POSITIONING

THE BASIS OF DEVELOPING MARKETING STRATEGY

key concepts stp
KEY CONCEPTS - STP
  • SEGMENTATION = The PROCESS OF DIVIDING A MARKET into meaningful, relatively similar, identifiable segments or groups.
  • TARGETING = SELECTING and FOCUSING on the most appropriate market segment or segments
  • POSITIONING = Developing a SPECIFIC MARKETING MIX to influence potential customers’ overall perception of a brand, product line, or organization in general.
a market is
A Market Is...

people or organizations with

needs or wants, and with

the ability and

the willingness to buy. A group of people that lacks any one of these characteristics is not a market.

market segmentation

Market

People or organizations with needs or wants and the ability and willingness to buy.

Market

Segment

ASUBGROUPof people or organizations sharing one or more characteristics that cause them to have similar product needs.

Market

Segmentation

ThePROCESS OF DIVIDING A MARKET into meaningful, relatively similar, identifiable segments or groups.

Market Segmentation
why market segmentation is important
Why Market Segmentation is Important?

Explain the importance of market segmentation

why market segmentation is important8
Why Market Segmentation is Important
  • Markets have a variety of product needs and preferences
  • Marketers can better

define customer needs

  • Decision makers can define objectives and allocate resources more accurately
the importance of market segmentation

Market

segmentation

More PRECISE definition of customers needs and wants

More ACCURATE marketing objectives

IMPROVED resource allocation

BETTER marketing results

The Importance of Market Segmentation
successful market segmentation
Successful Market Segmentation

Usefulsegment?

  • Substantial
  • Identifiable and measurable
  • Accessible
  • Responsive

Then, yes: Useful segmentation scheme

steps in segmenting markets

SELECT a market for study

CHOOSE BASISfor segmen-tation

Selectdescriptors

PROFILEandANALYSEsegments

SELECTtargetmarkets

DESIGN,

IMPLEMENTMAINTAINmarketingmix

Steps in Segmenting Markets
bases for segmenting consumer markets

SegmentationBases

Bases for Segmenting Consumer Markets

CHARACTERISTICS of individuals, groups, or organizations used to divide a total market into segments. (variables)

bases for segmentation

Geography

Demographics

Psychographics

Benefits Sought

Usage Rate

Bases for Segmentation
bases for segmenting consumer markets14

Geography

Demographics

Psychographics

Benefits

Usage Rate

  • Region
  • Market size
  • Marketdensity
  • Climate
  • Age
  • Gender
  • Income
  • Race/ethnicity
  • Family life cycle
  • Personality
  • Motives
  • Lifestyle
  • Geodemo-graphics
  • Benefitssought
  • Former
  • Potential
  • 1st time
  • Light orirregular
  • Medium
  • Heavy
Bases for Segmenting Consumer Markets
geographic segmentation
Geographic Segmentation
  • Region of the country or world
  • Market size
  • Market density
  • Climate
benefits of regional segmentation
Benefits of Regional Segmentation
  • NEW WAYS TO GENERATE SALES in sluggish and competitive markets
  • SCANNER DATA allow assessment of best selling brands in region
  • REGIONAL BRANDS appeal to

local preferences

  • QUICKER REATION to

competition

demographic segmentation

Age

Gender

Income

Ethnic background

Family life cycle

Demographic Segmentation
movies demographic segmentation
Movies Demographic Segmentation
  • Largest movie audience markets are:
  • under twenty-five (big in early summer)
  • over twenty-five
  • male (big in early summer)
  • female
  • and a racial category
movies segmentation
Movies Segmentation
  • Largest movie audience markets are:
  • "Clearasil" (coming-of-age)
  • “Action” (fast-paced, spy, war, martial arts, )
  • "genre" (teen-age horror)
  • "romantic comedy" (love story)
  • "ethnic" (black, Hispanic, Asian characters)
  • "franchise" (the carbon-copy sequel of another film)
  • "catastrophe” (volcano, comet/asteroid/monster)
  • The Holy Grail was a film like Titanic, which appealed to all five quadrants
ethnic segmentation
Ethnic Segmentation
  • Largest ethnic markets are:
    • Hispanic Americans
    • African Americans
    • Asian Americans
  • Will comprise 1/3 of U.S. population by 2010 with buying power of $1 trillion annually
family life cycle
Family Life Cycle

Age

MaritalStatus

Children

psychographic segmentation

Market segmentation on the basis of personality, motives, lifestyles, and geo-demographics.

Psychographic Segmentation

PsychographicSegmentation

bases for psychographic segmentation

Personality

Motives

Lifestyles

Geodemographics

Bases for Psychographic Segmentation
lifestyle segmentation
Lifestyle Segmentation
  • How time is spent
  • Importance of things around them
  • Beliefs
  • Socioeconomic characteristics
geo demographic segmentation
Geo-demographic Segmentation

Geo-demographic

Segmentation

Segmenting potential customers into NEIGHBORHOOD LIFESTLE categories.

COMBINES geographic, demographic, and lifestyle segmentation.

benefit segmentation

The process of grouping customers into market segments according to the benefits they seek from the product.

Benefit Segmentation

Benefit Segmentation

benefit segmentation28

Usage-RateSegmentation

Dividing a market by the AMOUNT of product bought or consumed.

80/20Principle

A principle holding that 20 percent of all customers generate 80 percent of the demand.

Benefit Segmentation
slide29
Verizon, Sprint Nextel and others allow consumers with standard contracts to access the Internet via cellular high-speed services.

Some customers’ service is being cancelled because they are using excessive network capacity.

Sprint and Cingular Wireless charge based on usage: the amount of data bits they wirelessly transfer each month.

Example of Usage-Rate

SOURCE: Amol Sharma and Dionne Searcey, “Cell Carriers to Web Customers: Use Us, but Not too Much,” Wall Street Journal, May 11, 2006, B1.

segmenting business markets
Segmenting Business Markets
  • How segmenting business markets is different from segmenting consumer markets
segmenting business markets31

Company Characteristics

Producers

Resellers

Governments

Institutions

Buying Process

Segmenting Business Markets
bases for segmenting business markets

Producers

Resellers

Government

Institutions

Bases for Segmenting Business Markets

Company

Characteristics

Buying

Processes

bases for segmenting business markets33

Company Characteristics

Bases for Segmenting Business Markets
  • Geographic location
  • Type of company
  • Company size
  • Volume of purchase
  • Product use
buyer characteristics

Satisficers

Business customers who place an order with the first familiar supplier to satisfy product and delivery requirements.

Optimizers

Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one.

Buyer Characteristics
buyer characteristics35

Demographic characteristics

Decision style

Tolerance for risk

Confidence level

Job responsibilities

Buyer Characteristics
strategies for selecting target markets
Strategies for Selecting Target Markets
  • How to select target markets
strategies for selecting target markets37
Strategies for Selecting Target Markets

TargetMarket

AGROUP of people or organizations for which an organization designs, implements, and maintains a MARKETING MIX INTENDED TO MEET THE NEEDS of that group, resulting in mutually satisfying exchanges.

strategies for selecting target markets38

Undifferentiated

Strategy

Concentrated

Strategy

Multisegment

Strategy

Strategies for Selecting Target Markets
slide39

UndifferentiatedTargetingStrategy

A marketing approach that views the market asONE BIG MARKETwith no individual segments and thus REQUIRES A SINGLEmarketing mix.

Undifferentiated Targeting Strategy

slide40

Undifferentiated

Strategy

Undifferentiated Targeting Strategy

Advantage:

  • Potential savings on production and marketing costs

Disadvantages:

  • Unimaginative product offerings
  • Company more susceptible to competition
slide41

Concentrated Targeting Strategy

ConcentratedTargeting Strategy

A strategy used to select ONE SEGMENT of a market for targeting marketing efforts.

NicheOne segment of a market.

slide42

Concentrated

Strategy

Concentrated Targeting Strategy

Advantage:

  • Concentration of resources
  • Meets narrowly defined segment
  • Small firms can compete
  • Strong positioning

Disadvantages:

  • Segments too small, or changing
  • Large competitors may market to niche segment
slide43

Multisegment

TargetingStrategy

MultisegmentTargeting Strategy

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

slide44

Multisegment

Strategy

MultisegmentTargeting Strategy

Advantage:

  • Greater financial success
  • Economies of scale

Disadvantages:

  • High costs
  • Cannibalization
slide45

Multisegment

Strategy

Costs of Multisegment Targeting

  • Product design costs
  • Production costs
  • Promotion costs
  • Inventory costs
  • Marketing research costs
  • Management costs
  • Cannibalization
slide46

Situation that occurs when sales of a new product cut into sales of a firm’s existing products.

Cannibalization

Cannibalization

positioning positioning strategies
Positioning & Positioning Strategies
  • How and why firms implement positioning strategies and how product differentiation plays a role
positioning
Positioning

Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.

positioning of procter gamble detergents

Brand

Positioning

MarketShare

Tide

Tough, powerful cleaning

31.1%

Cheer

Tough cleaning, color protection

8.2%

Bold

Detergent plus fabric softener

2.9%

Gain

Sunshine scent and odor-removing formula

2.6%

Era

Stain treatment and stain removal

2.2%

Dash

Value brand

1.8%

Oxydol

Bleach-boosted formula, whitening

1.4%

Solo

Detergent and fabric softener in liquid form

1.2%

Dreft

Outstanding cleaning for baby clothes, safe

1.0%

LO9

Ivory Snow

Fabric & skin safety on baby clothes

0.7%

Ariel

Tough cleaner, aimed at Hispanic market

0.1%

Positioning of Procter & Gamble Detergents
effective positioning
Effective Positioning
  • Assess the positions occupied by competing products
  • Determine the dimensions underlying these positions
  • Choose a market position where marketing efforts will have the greatest impact
product differentiation
Product Differentiation

A positioning strategy that some firms use to distinguish their products from those of competitors.

DISTINCTIONS CAN BE REAL OR PERCEIVED.

perceptual mapping

A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.

Perceptual Mapping
positioning bases

Attribute

Price and Quality

Use or Application

Product User

Product Class

Competitor

Emotion

Positioning Bases