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Market Segmentation, Targeting and Positioning. chapter 7. Ch. 7 Objectives. Understand the concepts: market segmentation, and target marketing. positioning Learn the advantages and disadvantages of target marketing Discuss segmentation criteria, strategies, and seg. bases

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ch 7 objectives
Ch. 7 Objectives
  • Understand the concepts: market segmentation, and target marketing. positioning
  • Learn the advantages and disadvantages of target marketing
  • Discuss segmentation criteria, strategies, and seg. bases
  • Understand typical positioning strategies
what is a market
What is a market?
  • Individuals or organizations who:
    • Are willing, able, and capable of purchasing a firm’s product
    • Segmentation is critical because demand is often heterogeneous
market segmentation targeting
Market Segmentation/Targeting

Market Segmentation is:

  • The process of dividing up the total market into distinct subsets of customers with common needs or characteristics

Targeting is:

  • Selecting one or more segments that are appropriate
target marketing
Target Marketing
  • Advantages
    • Easier analysis of potential and actual consumers
    • Tailoring of products to market
    • Assessment of demand potential
    • Identify competing products
    • Increased sales effectiveness
target marketing6
Target Marketing
  • Disadvantages
    • Increased marketing costs
    • More complex strategy to implement
    • Narrow segmentation can impact brand loyalty
    • Ethics and stereotyping issues
    • Can hinder a “Global” Brand Image
    • Faux segmentation may be viewed cynically
      • See Excedrin Migraine:
market criteria
Market Criteria
  • Segmentable markets are:
    • Heterogeneous
    • Measurable
    • Substantial
    • Actionable
      • Companies must be able to respond to preferences with an appropriate marketing mix
    • Accessible
      • Market must be efficiently reachable
segmentation variables
Segmentation Variables

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

demographics
Demographics
  • Age
  • Income
  • Gender
  • Occupation
  • Education
  • Ethnicity
  • Family Life Cycle
segmentation variables11
Segmentation Variables

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

geographics
Geographics
  • By region of country
  • Micro-Beers do it
  • Campbell’s Soup does it
  • Frito-Lay does it:
segmenting consumer markets
Segmenting Consumer Markets

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

psychographic segmentation
Psychographic Segmentation
  • Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)
segmenting consumer markets15
Segmenting Consumer Markets

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

benefits sought
Benefits Sought
  • Find (or create) a key benefit that the product satisfies
  • Toothpaste Example:
segmenting consumer markets17
Segmenting Consumer Markets

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

situation segmentation
Situation Segmentation
  • Time of Year / Week, Event etc.
segmenting consumer markets19
Segmenting Consumer Markets

Demographic Segmentation

Benefits-Sought Segmentation

Geographic Segmentation

Situation Segmentation

Psychographic Segmentation

Behavior/Usage Segmentation

behavior usage segmentation
Behavior/Usage Segmentation
  • Markets can be segmented by how often or how heavily consumers use a specific product
    • 80/20 Principle - 80% of revenue generated by 20% of customers

Light Users

80%

Heavy Users

20%

behavior usage segmentation21
Behavior/Usage Segmentation

80/20 true for many products

  • For Beer it’s 88% to 16%
  • Who are the heavy users?
how to position brands
How to Position Brands:

Positioning:

  • “an image that a product projects in relation to competitive products and to the firm’s other products”
7 ways to position differentiate a product
7 Ways to Position (differentiate) a product
  • Show MGD clip(s)
  • How is MGD differentiated?

1) Product Attribute

  • It has something that others do not have
  • Whatever attributes seem important to consumers
  • Key attribute may in reality be bogus...
7 ways to position differentiate a product25
7 Ways to Position (differentiate) a product
  • Show Kia clip

2) By Competitor

  • Show Similarity
  • Show Difference
7 ways to position differentiate a product26
7 Ways to Position (differentiate) a product

3) By Cultural Symbol (brand marks)

7 ways to position differentiate a product28
7 Ways to Position (differentiate) a product

4) By Price / Quality

    • Can be high or low (Generics)

5) By Product Class

    • Different type of product/service, but provides the same or better benefits
  • Example: New AmTrak Acela service to NY
slide29

6) By Use or Application

Typically used to add uses of product and expands user base

7 ways to position differentiate a product30
7 Ways to Position (differentiate) a product

7) By Product User

  • Product is positioned for a particular group of users
  • List some potential target markets for cellular phones: