Chapter 5: Market Segmenting, Targeting, and Positioning


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Chapter 5: Market Segmenting, Targeting, and Positioning

  1. 1. by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond Principles of Marketing
  2. 2. Chapter 5Chapter 5 Market Segmenting, Targeting,Market Segmenting, Targeting, and Positioningand Positioning ©2010 Flat World Knowledge, Inc.
  3. 3. ©2010 Flat World Knowledge, Inc. 3
  4. 4. Learning ObjectivesLearning Objectives ©2010 Flat World Knowledge, Inc. 4 1. Distinguish between targeted marketing and mass marketing and explain what led to the rise of each. 2. Describe how targeted marketing can benefit firms. 3. Explain why companies differentiate among their customers.
  5. 5. ©2010 Flat World Knowledge, Inc. 5 Targeted marketing—selecting a group(s) of consumers for marketing 1.A relatively new phenomena 2.A rifle approach vs. Mass marketing—selling the same product to all consumers 1.Came first 2.Evolved with mass production 3.A shotgun approach Mass vs. Targeted MarketingMass vs. Targeted Marketing
  6. 6. Benefits in Segmenting and TargetingBenefits in Segmenting and Targeting ©2010 Flat World Knowledge, Inc. 6
  7. 7. ©2010 Flat World Knowledge, Inc. 7 Targeting MarketsTargeting Markets
  8. 8. ©2010 Flat World Knowledge, Inc. 8 Targeting MarketsTargeting Markets
  9. 9. Segment and Target Existing CustomersSegment and Target Existing Customers ©2010 Flat World Knowledge, Inc. 9 Finding new customers is more expensive than keeping existing ones! • Changing vendors can be a hassle for customers, too. • Both parties can benefit by a continued relationship . Economic downturns make it hard to find new customers. • Focusing on current customers is required. • Social networking sites are being followed by providers of products. Not all customers are equal. • Often it is found that 20% of the customers account for 80% of sales or profits. • But, impactful customers have clout—they may want different products.
  10. 10. ©2010 Flat World Knowledge, Inc. 10 One to One Marketing StepsOne to One Marketing Steps
  11. 11. ©2010 Flat World Knowledge, Inc. 11 Mass marketing—selling the same product to everyone Differentiated marketing—targeting select groups Major vs. minor customers—all customers are not equal •It costs significantly more to find a new customer vs. keeping current ones. • 20% of the customers can lead to 80% of revenue/profits • CRM products and messages tailored to major customers Key TakeawaysKey Takeaways
  12. 12. Segmenting MarketsSegmenting Markets ©2010 Flat World Knowledge, Inc. 12 Learning Objectives 1.Understand techniques used in segmentation. 2.Explain why some marketing people use segmentation while others do not.
  13. 13. Types of Segmentation BasesTypes of Segmentation Bases ©2010 Flat World Knowledge, Inc. 13
  14. 14. Segmenting by BehaviorSegmenting by Behavior ©2010 Flat World Knowledge, Inc. 14 Benefits—segmenting buyers by the benefits that they seek from the product Usage—segmenting buyers by the frequency that they use/buy products Application—segmenting buyers by the way in which they use products Knowing the benefits that buyers seek, how often they purchase the product, and the manner in which the product is used allows marketing people to tailor products to buyers for optimum results.
  15. 15. Segmenting by DemographicsSegmenting by Demographics ©2010 Flat World Knowledge, Inc. 15 Demographic segmentation is the most commonly used technique because of the ready access to extensive global data and information. Product needs and wants are readily identified with life cycle, purchasing power, and interests of classes of individuals Demographic factors aid the targeting of markets.
  16. 16. ©2010 Flat World Knowledge, Inc. 16 Where do buyers live? What are the unique needs/wants in this area? Geocoding is the process of mapping customer zip code and purchase information. Geodemographics combines both geographic and demographic information. Claritas PRISM NE is a good source to see how this process works. (bring up the site with an online computer) Segmentation by GeographySegmentation by Geography
  17. 17. Segmentation by PsychographicsSegmentation by Psychographics ©2010 Flat World Knowledge, Inc. 17
  18. 18. Psychographic SegmentationPsychographic Segmentation ©2010 Flat World Knowledge, Inc. 18
  19. 19. Value and Lifestyle (VALS)Value and Lifestyle (VALS) ©2010 Flat World Knowledge, Inc. 19 SRI did/is doing this with VALS • value • life style • primary and secondary • now a Pacific data base is available Take the survey at
  20. 20. The VALS TypesThe VALS Types ©2010 Flat World Knowledge, Inc. 20 Innovators—successful, satisfied, take charge people Thinkers—mature, satisfied, comfortable, well informed Achievers—goal oriented, conservative, predictable, stable Experiencers—young, enthusiastic, seek variety and excitement Believers—conservative, conventional, moral codes, in organizations Strivers—trendy, fun loving, seek approval, job vs. career Makers—practical, self sufficient, suspicious of large institutions Survivors—few resources, concerned with safety, low motivation
  21. 21. ©2010 Flat World Knowledge, Inc. 21 Segmentation uses criteria to classify buyers • Behavioral—how buyers behave towards products • Geographic—where buyers live • Demographic—age, income, education, ethnicity, etc. • Psychographic—buyer values and lifestyles Firms may use more than one technique to get a fuller picture of buyers. Marketing professionals gather qualitative and quantitative information. Key TakeawaysKey Takeaways
  22. 22. ©2010 Flat World Knowledge, Inc. 22 Learning Objectives 1.What makes some markets more attractive then others? 2.Describe various market segmentation strategies. 3.Global segmenting strategies. Market Targeting StrategiesMarket Targeting Strategies
  23. 23. ©2010 Flat World Knowledge, Inc. 23 Targeting CriteriaTargeting Criteria
  24. 24. Multi-Segment MarketingMulti-Segment Marketing ©2010 Flat World Knowledge, Inc. 24 Pursuing multi-segment markets reduces the risk from competition. Some firms, including those with limited resources, choose to concentrate activities to a very select set of customers (concentrated marketing). Niche marketing addresses very select groups of customers— big fish, small pond. Microtargeting addresses unique characteristics of buyers that combine a variety of features identified with individuals or small groups. It raises The issue of ethics as to how the targeting information was developed.
  25. 25. ©2010 Flat World Knowledge, Inc. 25 Targeting techniques for global markets may be the same as domestic markets. Due to varying customs and ethnicities most companies tailor their products and messages for global markets. Targeting Global MarketsTargeting Global Markets
  26. 26. ©2010 Flat World Knowledge, Inc. 26 Targeting Criteria 1.Can it be profitable? 2.Is it growing? 3.Is there room for another competitor? 4.Is it accessible? 5.Are sufficient resources available? 6.What is the fit with company objectives? Other Target-segment Considerations 1.Multi-segment 2.Concentrated marketing 3.Microtargeting 4.Global target parameters Key TakeawaysKey Takeaways
  27. 27. Positioning OfferingsPositioning Offerings ©2010 Flat World Knowledge, Inc. 27 Learning Objectives 1.Explain positioning and targeting customers. 2.Describe product positioning and mapping. 3.Explain what repositioning is designed to do.
  28. 28. PositioningPositioning ©2010 Flat World Knowledge, Inc. 28 Positioning—allowing a product to stand out from competition Positioning can use a perceptual map and seeks a position where competitors are not clustered. Re-positioning—moving a product to a different place in buyers’ minds
  29. 29. ©2010 Flat World Knowledge, Inc. 29 Key TakeawaysKey Takeaways