Market Segmentation and Positioning CHAPTER 8 Market Segmentation

Market Segmentation and Positioning CHAPTER 8

Market Segmentation �Dividing the total heterogeneous market for a good or product into smaller groups which are more homogeneous.

Steps in Segmentation & Targeting 1. Break market down 2. Group into segments 3. Choose target market TARGET MARKET

Segmentation works because, …. � Not all buyers are alike � Subgroups may be identified � Subgroups are smaller and more homogeneous � Easier to satisfy smaller groups � www. fordvehicles. com

Effective Segmentation To be useful, market segments must be: Measurable: size, purchasing power, and profile Accessible: can be reached and served/responsive Substantial: large enough to profitably serve Differentiable: respond differently to a marketing mix Actionable: effective programs can be designed � Segments should be evaluated for: Size Growth characteristics Structural attractiveness Compatibility with company objectives and resources �

Discussion Questions Put yourselves into small groups and answer the following assigned questions on page 218: �Question 2 and all parts of 4

Market Segmentation Variables � Geographic: dividing a market into different geographical units, such as nations, states, regions, counties, cities, or neighbourhoods � Demographic: dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, religion, race, and nationality � Socioeconomic: identifying differences in income, education, occupation and social class � Psychographic: dividing a market into different groups based on activities, interests, lifestyle, opinions, values or personality characteristics � Behavioural: dividing a market into groups based on consumer loyalty (to brand or store), usage, benefits sought/ expected, response to a product and price

Identifying Market Differences �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.

Four strategies for target marketing Undifferentiated Marketing: 1. Ø When everyone is a customer. Firm decides to ignore market segment differences and go after the whole market with one offer. Concentrated Marketing: 2. Ø Zeroing in on a single target. A firm goes after a large share of one market. Differentiated Marketing: 3. Ø Different Buyers, Different Strategies. A firm decides to target several market segments and designs separate offers for each. http: //www. tide. com/en_CA/index. jsp Custom/Individual Marketing: 4. Ø Tailoring marketing offers to the needs and preferences of individual customers

Choosing a Market Coverage Strategy Depends on: � Company resources � Degree of product variability � Product life cycle stage � Market viability � Competitors’ marketing strategies

What’s Happening? �Mid-term Exams �Term Projects! From Jill Day, � http: //www. youtube. com/watch? v=3 iu. G 1 Opn. HP 8 Brendan O’Donovan, � http: //www. youtube. com/watch? v=l 7 Ng. LAr. Jid. Y

Market Positioning � Market positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. � Product position: the way the product is defined by consumers on important attributes, relative to competing products The “quicker-pickerupper? ” The “uncola? ” “Great taste, less filling? ”

Positioning Maps for Tea (Exhibit 8 -12, PAGE 215)