Chapter Seven Segmentation, Targeting and Positioning: Building the Right Relationships with the Right Customers

1. Chapter SevenSegmentation, Targeting and Positioning:Building the Right Relationships with the Right Customers with Duane Weaver

2. Segment markets. Identify bases for segmentation. Develop segmentation profiles. Target segment(s). Measure of segment attractiveness. Select the target segment(s). Position for target segment(s). Develop positioning for each segment. Develop appropriate marketing mix. Segmentation/Positioning

3. Geographic. Area, population density, climate, etc. Demographic. Age, sex, life cycle, income, job, etc. Psychographic. Lifestyle, personality, etc. Dividing a market into different groups based on: Social class. Lifestyle. Personality characteristics. Behavioural. Benefits sought, status, usage rate, loyalty, attitudes, etc. Segmentation Variables

4. Market Segmentation (How To) • Best to use multiple approaches in order to identify smaller, better-defined target groups. • Start with a single base and then expand to other bases.

5. Segmenting Business Markets • Consumer and business markets use many of the same variables for segmentation. • Business marketers can also use: • Operating characteristics. • Purchasing approaches. • Situational factors. • Personal characteristics.

6. Evaluating Market Segments • Segment size and growth. • Analyze current segment sales, growth rates and expected profitability. • Segment structural attractiveness. • Consider effects of: competitors, existence of substitute products, the power of buyers/suppliers. • Company objectives and resources. • Examine company skills and resources needed to succeed in that segment. • Offer superior value/gain competitive advantage.

7. Measurable – Ability to measure numerically. Accessible – Ability to reach segment. Substantial – Ability to support the business. Differentiable – Ability to find unique position in segment. Actionable – Ability to pursue and capture the segment. Segment Success Criteria

8. Mass marketing. No segments and single marketing mix. Differentiated marketing. Large segments with specific marketing mixes. Niche marketing. Small segments with specialized marketing mixes. Micro-marketing. Customized marketing to individuals. Levels of Segmentation

9. Undifferentiated (Mass Marketing) • Focus is on common (not different) needs of consumers. • Product and marketing program are geared to the largest number of buyers. • Uses mass advertising and distribution. • Henry Ford’s Model T is an excellent example of undifferentiated or mass marketing.

10. Differentiated Marketing • Firm targets several market segments and designs separate offers for each. • The goal is to have higher sales and a stronger position with each market segment. • This approach increases the costs of doing business. • General Motors claims to make a car for every segment.

11. Niche Marketing • The focus is acquiring a large share of one or a few segments of niches. • Generally, there are fewer competitors. • The Internet is ideal for targeting small niche markets. • There is some risk in focusing on only one market.

12. Micromarketing • Tailoring products and marketing programs to suit the tastes of specific individuals and locations. • Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighbourhoods, specific stores. • Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

13. Mass Customization • The process of creating customer-unique value by designing products and services tailor-made to individual needs, on a large scale. • Having your next car or sneakers built to order? (life insurance e.g.)

14. Product position. How a product is viewed by consumers relative to competing products. Three positioning steps. Identify competitive advantages on which to build a differentiated position. Choose the right competitive differentiation. Select an overall positioning strategy. Successful Positioning

15. Gaining Competitive Advantage • Key to winning target customers is to understand their needs better than competitors do and to deliver more value. • Competitive advantage – extent to which a company can position itself as providing superior value.

16. Product differentiation. Consistency, durability, reliability, reparability. Services differentiation. Speed, convenience, careful delivery. Image differentiation. Convey benefits and positioning. People differentiation. Hiring, training better people than the competition. Get into Groups of three and select a product you think has market dominance. Discuss the competitive advantage that company holds in the market place. What is it? (be prepared to share with the class). Identifying Competitive Advantage

17. Important – of value to consumers. Distinctive – obvious and clear. Superior – better value than the competitors. Communicable – explainable. Pre-emptive – defendable and unique. Affordable – delivers value for cost. Profitable – company can make money. Successful Differentiation

18. Positioning Errors • Under-positioning. • Failing to really position the company at all. • Over-positioning. • Giving buyers too narrow a picture of the company. • Confused positioning. • Leaving buyers with a confused image of a company.

19. More The same Less More for more More for the same More for less More The same for less The same Less for much less Less Value Propositions Price Benefits

20. THANKS! Does Market Segmentation and Customer Positioning enable marketers to hit the right buttons; providing differentiated value at a profit??? IT’S ALL ABOUT THE LEVERAGE…BABY!