Chp 03 Focusing Marketing Strategy With Segmentation and Positioning

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© 2004 McGraw-Hill Ryerson, All Rights Reserved

A Global Managerial ApproachEleventh Canadian Edition

■ Wong ■ Shapiro

■ Perreault ■ McCarthy

Basic MarketingBasic Marketing

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Focusing Marketing Strategy with Segmentation

www.mcgrawhill.ca/college/wongFor use only with this text. © 2004 McGraw-Hill Ryerson, All Rights Reserved

Chapter ThreeChapter Three

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When we finish this chapter, you should

Know about the different kinds of marketing opportunities.

Understand why opportunities in international markets should be considered.

Understand why marketing strategy planning involves a process of narrowing down from broad opportunities to a specific target market and marketing mix.

Know how to define a market and distinguish between generic markets and product-markets.

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When we finish this chapter, you should

Know three approaches to market-oriented strategy planning.

Know dimensions that may be useful for segmenting markets.

Know what positioning is and why it is useful.

Know what market segmentation is and how to segment product-markets into submarkets

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Types of Opportunities to PursueExhibit 3-1

DiversificationMarketdevelopment

Productdevelopment

Marketpenetration

Present products New products

Presentmarkets

Newmarkets

© 2004 McGraw-Hill Ryerson, All Rights Reserved.

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Market Penetration

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Market Development

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Product Development

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Diversification

http://www.canon.ca

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Early StartEarly Start Competitive Advantage

Competitive Advantage

Better Trends?

Better Trends?

Smaller World

Smaller WorldSmaller World

Smaller World



Better Trends?

Better Trends?

International Opportunities Should Be Considered

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Breakthrough OpportunitiesBreakthrough Opportunities


What Are Attractive Opportunities

Lower costHigher quality

Customer focus

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Overview of Marketing Strategy Planning Process

Exhibit 3-2

External Market Environment

TargetMarket


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Market1.In general Market is a group of potential customer’s with similar needs who are willing to exchange something of value with sellers offering various goods or services –that is ways of satisfying those needs. A Generic MarketLooks at market broadly and from a customer’ viewpoint. A generic market is a market with broadly similar needs and sellers offering various , often diverse ways of satisfying those needs. For example: Entertainment seekers might have very different products that may satisfy the entertainment needs .

Product Market Is a market with very similar needs and sellers offering various close substitute ways of satisfying those needs.

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Product Market Definations

•What: Product is the product type (Goods or services)Product types describes the goods and services that customers want. Sometimes the product type is strictly a physical goods or strictly a service.

•To meet what: Customer (user)needs

•Whom: Customer types•Where: At what Geographic area

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Customer Needs

Customer Needs

Customer TypeCustomer Type

Customer Needs

Customer Needs

Customer TypeCustomer Type

Naming Product Markets and Generic Markets

Geographic Area

Geographic Area

No Product Type in Generic Market DefinitionNo Product Type in Generic Market Definition

Product-MarketDefinition

Product-MarketDefinition

Product Type

Geographic Area

Geographic Area

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Singletargetmarket

approach

Multipletargetmarket

approach

Combinedtargetmarket

approach

Selectingtarget

marketingapproach

Homogeneous(narrow)product-markets

Segmentinginto possible

target markets


Narrowing Down to Target Markets

Exhibit 3-3

Allcustomer

needs

Somegenericmarket

Onebroad

product-market

Narrowing down tospecific product-market

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Finding the Target MarketSingle Target Market Approach: Segmenting the market and picking one of the homogenous Segments as the firm’s target market

Multiple target market approach: Segmenting the market and choosing two or more segments, then treating each as separate target marketing needing different marketing mix

Combined Target Market Approach: Combining two or more Sub-Markets into one larger target market as a basis of one strategy.

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Segmenters vs CombinersCombinersTry to increase their markets by combining two or more segments

Segmenters on the other hand aim at one or more homogenous segments and try to develop a different Marketing mix for each segments.

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1) Naming – disaggregating needs into possible markets

2) Segmenting – aggregating customers of similar needs in each market; creating submarkets

Market Segmentation Defines Possible Target Markets

Exhibit 3-5

Broad product-market (or generic market) name goes here (The bicycle-riders product-market)

Submarket 1(Exercisers)

Submarket 2(Off-road

adventurers)

Submarket 3(Transportation riders)

Submarket 4(Socializers)

Submarket 5(Environmentalists)

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A. Product-market showingthree segments

Dependability dimension

Sta

tus

dim

ensi

on

How Far Should the Aggregating Go?

Exhibit 3-6

B. Product-market showingsix segments

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© 2004 McGraw-Hill Ryerson, All Rights Reserved© 2004 McGraw-Hill Ryerson, All Rights Reserved.

Target Marketers Aim at Specific Targets

Exhibit 3-7

In a product-market area

A segmenter

Single target market approach – can aim at one submarket with one marketing mix

Multiple target market approach – can aim at two or more submarkets with different marketing mixes

A combiner

Combined target market approach – can aim at two or more submarkets with the same marketing mix

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Too Much Combining Is

Risky

Segmenters Try to Satisfy “Very Well”


Combiners Try to Satisfy “Pretty Well”

Combiners Try to Satisfy “Pretty Well” Too Much

Combining Is Risky

Too Much Combining Is

Risky

Combiners Try to Satisfy “Pretty Well”


Segmenting May Produce Bigger Sales

Segment or Combine?

Segment or Combine?Segment or Combine?

Segment or Combine?

Profit Is the Balancing

Point

KeyIssuesKey

Issues

Segmenting vs. Combining



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What Dimensions Are Used to Segment Markets?

OR

QualifyingDimensionsQualifying

Dimensions

• Relevant to including a customer type in a product market

• Help identify “core features”

DeterminingDimensionsDeterminingDimensions

• Affect the customer’s purchase of a product or brand

• Can be further segmented

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Possible Segmenting Dimensions - Consumer

Exhibit 3-10

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Possible Segmenting Dimensions - Consumer

Exhibit 3-10 (continued)

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Possible Segmenting Dimensions - Business

Exhibit 3-11

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Different Dimensions For

Different Submarkets

Different Dimensions For

Different Submarkets

Qualifying Dimensions Are Important Too




Determining Dimensions May

Change


Change

Determining Dimensions May Be Very Specific


Key IssuesKey Issues

Determining vs. Qualifying Dimensions




Change


Change

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Finding the Relevant Segmenting Dimensions

Exhibit 3-12

Allpotential dimensions

Qualifying dimensionsDetermining dimensions

(product type)Determining dimensions

(brand-specific)

Segmenting dimensions become more specific to reasons why the targetsegment chooses to buy a particular brand of the product

Dimensions generallyrelevant to purchasing

behaviour

Dimensions relevant toincluding a customer type

in the product-market

Dimensions that affectthe customer’s purchase

of a specific type ofproduct

Dimensions that affectthe customer’s choice

of a specific brand

Chp 03 Focusing Marketing Strategy With Segmentation and Positioning

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