Chapter 8Chapter 8

Market Segmentation, Market Segmentation, Targeting, and Positioning Targeting, and Positioning

StrategiesStrategies

ObjectivesObjectives

Define marketExplain market segmentationRelate marketing mixes to target marketsIdentify various marketing strategiesUnderstand key market segment

selection considerationsIdentify and apply segmentation variablesUnderstand positioning strategy

What is a Market?What is a Market?

Resources

Willingness

Ability

Segmentation Works Segmentation Works Because ...Because ...

Not all buyers alikeSubgroups may be identifiedSubgroups smaller and more

homogeneousEasier to satisfy smaller groups

Major Steps in Major Steps in Segmentation & Segmentation &

TargetingTargeting

1.Break marke

t down

2.Group into

segments

TARGET MARKET

3.Choos

etarget marke

t

Choosing Market Choosing Market SegmentsSegments

Distinguishing/stable characteristic

Significant sizeAccessible with

distribution & promotion

Responsive (similar needs)

Measurable potential

We need a

YES response to

each of these!

GenderGender

FF

MM

Age14 - 21 22 - 29

Geo

gra

ph

yG

eog

rap

hy JapanJapan

Western Western EuropeEurope

U.S.U.S.

Segment Cross-Segment Cross-Classification: Aerobic Classification: Aerobic

ShoesShoes

Matching the Marketing Matching the Marketing Mix to Target Market Mix to Target Market

Our target market: Women aged 14-21

living in the United States

The right…

Product?

Price?

Promotion?

Place?

Possible Strategies for Possible Strategies for Target MarketingTarget Marketing

Undifferentiated marketing

Possible Strategies for Possible Strategies for Target MarketingTarget Marketing

Concentrated Marketing80 / 20 PrincipleMajority fallacy

80/2080/20 Rule Rule

A relatively small percentage of customers accounts for a disproportionately large share of the sales

Target Target customerscustomers

20%20%Share ofShare ofcustomerscustomers

Target Target customerscustomers

80%80%

Share ofShare ofsalessales

Possible Strategies for Possible Strategies for Target MarketingTarget Marketing

Differentiated marketingMultiple market segmentation

Possible Strategies for Possible Strategies for Target MarketingTarget Marketing

Custom Marketing: “To each his/her own.”

Custom MarketingCustom Marketing

One-to-one marketing

Uses data based-marketing and information technology

For example...

•Your name

•Room preferences

•Special requests

•Smoking or non smoking

•Credit card number

•Frequent hotel user discount

FOR REPEAT HOTEL GUESTS

Bases for Segmenting Bases for Segmenting Consumer MarketsConsumer Markets

Demographic

Sociographic

Lifestyle

Geographic

Behavior

Consumption

Predispositions

Bases for Segmenting Bases for Segmenting Business MarketsBusiness Markets

GeographyGeographyOrganizational charateristicsOrganizational charateristics

Purchase behaviorPurchase behaviorUsage patternsUsage patterns

Organizational predispositionsOrganizational predispositions

PositioningPositioning

The way consumers perceive the brand relative to its competitionID competitive advantageStress salient characteristicsDifferentiate

Market Positioning Map: Market Positioning Map: Tea - 1980s Tea - 1980s

IcedIced HotHot

Traditional flavorTraditional flavor

Unique flavorUnique flavor

Luzianne Luzianne

LiptonLipton

TetleyTetley

Celestial SeasonsCelestial Seasons

NesteaNestea

Repositioning: TeaRepositioning: Tea - Late - Late 1990s1990s

IcedIced HotHot

Traditional flavorTraditional flavor

Unique flavorUnique flavor

Luzianne Luzianne

LiptonLipton

TetleyTetley

Celestial SeasonsCelestial Seasons

NesteaNestea

Arizona Iced TeaArizona Iced Tea

SnappleSnapple

Lipton RoundsLipton Rounds

Tetley RoundsTetley Rounds

Lipton Natural TeasLipton Natural Teas

Lipton FlavoredLipton Flavored

ReviewReview

Define marketExplain market segmentationRelate marketing mixes to target marketsIdentify various marketing strategiesUnderstand key market segment

selection considerationsIdentify and apply segmentation variablesUnderstand positioning strategy