Chapter 8 Segmenting Targeting and Positioning Market people or organizations with needs or wants and the ability or willingness to buy Market Segment a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs Market Segmentation The process of dividing a market into meaningful relatively similar and identifiable segments or groups Why is it important Groups or organizations have different product needs Helps define wants and needs of customers more precisely By understanding sizes and potential of different markets marketers are able to appropriately develop their marketing objectives and better allocate their resources Criteria for successful segmentation Sustainability a segment must be large enough to justify developing and maintaining a successful marketing mix Identifiability and measurability segments must be identifiable and their sizes need to be measurable Accessibility The firm must be able to reach members of targeted segments with customized marketing mixes Useful for hard to reach segments comprised of senior citizens disabled or those who don t speak English Responsiveness Markets can be segmented using any criteria that seem logical unless one market segment responds to a marketing mix differently than other segments however that segment need not be treated separately Segmentation Bases Variables characteristics of individuals groups or organizations Variables used to segment consumer markets Benefits Needs Demographics o Gender o Age o Race ethnic o Income social class o Family Life Cycle a series of stages determined by a combination of age marital status and the presence or absence of children Psychographics Geography o Personality o Motives o Lifestyle o Region o Climate o Market size Behavior Usage o Former user o Loyal user o 1st time user heavy user o Occasional user Variables used to segment business markets Geographic location Company characteristics o Type of industry o Size of company o Volume of purchase Buying Process satisficers optimizers Analytical tools for segmentation Mediamark Surveys Picking the Target Markets Fit of the segment with company s goals mission and current positioning company s strengths and weaknesses with that segment resources necessary to market successfully to the segment need for availability of appropriate collaborators to market successfully competitive intensity forecasted financial returns from the segment Steps in segmenting a market 1 Select a market or product category for study 2 Choose a basis for segmenting the market 3 Select segmentation descriptors identifications of specific segmentation variables to use 4 Profile and analyze segments should include size expected growth purchase frequency current brand usage brand loyalty long term sales and profit potential 5 Select target markets 6 Design implement and maintain appropriate marketing mixes Target Markets the group of people or organizations that for which an organization designs a marketing mix intended to meet the needs of that group Targeting Strategies Undifferentiated views the market as one big market with no individual segments and thus uses a single marketing mix Aims for the average customer and often the least effective use of a marketing budget Concentrated a strategy used to select one segment of a market for targeting marketing efforts Occupying a niche Multisegment a strategy that chooses two or more well defined market segments and develops a distinct marketing mix for each Can lead to cannibalization sales of a new product cut into the sales of a firm s existing product One to one individualized marketing method that utilizes customer information to build long term personalized and profitable relationships with each customer Technology has led to the growth of this method Positioning developing a specific marketing mix to influence potential customers overall perception of a brand product line or organization in general Umbrella Positioning Used to establish corporate positioning or for a family brand Unique Positioning For an individual brand or individual product Developing positioning strategy Evaluate competition and identify product strengths Identify what s most important to customer choice for your targeted segment Strategy should emphasize something your brand excels at and is important to customer choice The Role of Targeting and Positioning Targeting and Positioning are the foundation from which marketing mix decisions are made Product Service decisions what features or services are needed to deliver the required benefits of your chosen target market Pricing decisions How should the product be priced relative to competition to convey our chosen positioning to our target market Promotion What should promotional messages say to create the desired perception in the target customer s mind Place Through which channels should the good or service be marketed to create the desired perception in the target customer s mind Three Circles Positioning Framework Repositioning changing consumers perceptions of a brand in relation to competing brands Chapter 9 Marketing Research When should marketing research be conducted where there is a high level of uncertainty in what marketing strategy is best when value of research information exceeds the cost of generating information when time and budget permits Marketing research s role Descriptive Gathering and presenting factual information Diagnostic Analyzing and explaining data to diagnose causes Predictive Making what if predictions regarding marketing decisions Marketing Research Process 1 2 3 4 5 6 7 Identify and define problem to research plan the design and gather secondary data Specify sampling procedure collect primary data analyze data Prepare and present report Follow up Sampling Sample is a subset of a universe or a population Probability samples a sample in which every element in the population has a known statistical likelihood of being selected ex random sampling Non probability sample Any sample in which little or no attempt is made to get a representative cross section of the population ex convenience sampling E mail web increasing phone mall intercept interviews mail decreasing Good for measuring descriptive data such as Most common research tool Methods Research methods for collecting primary data Survey Research Focus Groups brand awareness satisfaction brand perceptions demographics purchase intentions importance Accounts
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