Chap 5 Segmentation 2022

Marketing Strategy
Define the major steps in

designing a customer value–
driven marketing strategy:
market segmentation, targeting,
differentiation, and positioning.
Marketing strategy
Figure 7.1 shows the four major steps in designing a
customer value–driven marketing strategy. In the first two
steps, the company selects the customers that it will serve.
Market segmentation involves dividing a market into
distinct groups of buyers who have different needs,
characteristics, or behaviors and who might require
separate marketing strategies or mixes. The company
identifies different ways to segment the market and
develops profiles of the resulting market segments.
Market targeting (or targeting) consists of evaluating
each market segment’s attractiveness and selecting one or
more market segments to enter.
Differentiation
Actually differentiating the market offering to create
superior customer value.
Positioning
Arranging for a market offering to occupy a clear,
distinctive, and desirable place relative to competing
products in the minds of target consumers.
Segmenting Consumer Markets
Behavioral segmentation
+ Dividing a market into segments based on consumer
knowledge, attitudes, uses of a product, or responses to
a product.
Occasion segmentation
+ Dividing the market into segments according to
occasions when buyers get the idea to buy, actually make
their purchase, or use the purchased item.
Benefit segmentation
+ Dividing the market into segments according to the
different benefits that consumers seek from the product.
User Status.
Markets can be segmented
into non-users, ex-users,
potential users, first-time
users, and regular users of a
product. Marketers want to
reinforce and retain regular
users, attract targeted non-
users, and reinvigorate
relationships with ex-users.
Loyalty Status.
A market can also be segmented by consumer loyalty.
Consumers can be loyal to brands (Tide), stores (Target),
and companies (Apple).
Buyers can be divided into groups according to their
degree of loyalty. Some consumers are completely loyal,
they buy one brand all the time and can’t wait to tell others
about it.
Segmenting Business Markets
+ Consumer and business marketers use many of the same
variables to segment their markets. Business buyers can
be segmented geographically, demographically (indus-
try, company size), or by benefits sought, user status,
usage rate, and loyalty status. Yet business marketers also
use some additional variables, such as customer
operating characteristics, purchasing approaches,
situational factors, and personal characteristics.
Segmenting International Markets
Companies can segment international markets using one
or a combination of several variables. They can segment by
geographic location, grouping countries by regions such as
Western Europe, the Pacific Rim, South Asia, or Africa.
Intermarket (cross-market) segmentation
Forming segments of consumers who have similar needs
and buying behaviors even though they are located in
different countries.
Requirements for Effective Segmentation
Measurable. The size, purchasing power, and profiles of the
segments can be measured.
Accessible. The market segments can be effectively reached
and served.
Substantial. The market segments are large or profitable
enough to serve.
A segment should be the largest possible homogeneous group
worth pursuing with a tailored marketing program. It would not
pay, for example, for an automobile manufacturer to develop
cars especially for people whose height is greater than seven
feet.
+ Differentiable. The segments are conceptually
distinguishable and respond differently to different marketing
mix elements and programs. If men and women respond
similarly to marketing efforts for soft drinks, they do not
constitute separate segments.
+ Actionable. Effective programs can be designed for
attracting and serving the segments. For example, although
one small airline identified seven market segments, its staff
was too small to develop separate marketing programs for
each segment.
Market Targeting
The firm now has to evaluate the various segments and
decide how many and which segments it can serve best.
Evaluating Market Segments
A firm must look at three factors: segment size and growth,
segment structural attractiveness, and company objectives
and resources.
Selecting Target Market Segments
Target market
+ A set of buyers who share common needs or
characteristics that a company decides to serve.
Undifferentiated (mass) marketing
+ A market-coverage strategy in which a firm decides to
ignore market segment differences and go after the
whole market with one offer.
Differentiated (segmented) marketing
A market-coverage strategy in which a firm targets several
market segments and designs separate offers for each.
Concentrated (niche) marketing
+ A market-coverage strategy in which a firm goes after a
large share of one or a few segments or niches.
Micromarketing
+ Tailoring products and marketing programs to the needs
and wants of specific individuals and local customer
segments; it includes local marketing and individual
marketing.
Local marketing
+ Tailoring brands and marketing to the needs and wants
of local customer segments—cities, neighborhoods, and
even specific stores.
Individual marketing
+ Tailoring products and marketing programs to the needs
and preferences of individual customers.
Choosing a Targeting Strategy
Companies need to consider many factors when choosing
a market-targeting strategy. Which strategy is best depends
on the company’s resources. When the firm’s resources are
limited, concentrated marketing makes the most sense.
The best strategy also depends on the degree of product
variability. Undifferentiated marketing is more suited for
uniform products, such as grapefruit or steel. Products that
can vary in design, such as cameras and cars, are more
suited to differentiation or concentration. The product’s life-
cycle stage also must be considered. When a firm
introduces a new product, it may be practical to launch one
version only, and undifferentiated marketing or
concentrated marketing may make the most sense.
Socially Responsible Target Marketing
Smart targeting helps companies become more efficient
and effective by focusing on the segments that they can
satisfy best and most profitably. Targeting also benefits
consumers—companies serve specific groups of consumers
with offers carefully tailored to their needs.
Differentiation and Positioning
Beyond deciding which segments of the market it will
target, the company must decide on a value proposition—
how it will create differentiated value for targeted segments
and what positions it wants to occupy in those segments.
Product position
The way a product is defined by consumers on important

attributes—the place it occupies in consumers’ minds relative to
competing products.
Exp:
- Your Visa card is “Everywhere you want to be”
- Tide is “a washing miracle,” an all-purpose, heavy-duty family
detergent that gets out grime and tough stains.
- Positioning: IKEA does more than just sell affordable home
furnishings: it’s the “Life improvement store.”
Positioning Maps
+ In planning their differentiation and positioning
strategies, marketers often prepare perceptual
positioning maps that show consumer perceptions of
their brands versus those of competing products on
important buying dimensions: price and orientation
(luxury versus performance). The size of each circle
indicates the brand’s relative market share.
+
Choosing a Differentiation and Positioning Strategy
Competitive advantage
+ An advantage over competitors gained by offering
greater customer value either by having lower prices or
providing more benefits that justify higher prices.
How Many Differences to Promote.
Many marketers think that companies should aggressively
promote only one benefit to the target market. Former
advertising executive Rosser Reeves, for example, said a
company should develop a unique selling proposition
(USP) for each brand and stick to it.
Which Differences to Promote.
Important: The difference delivers a highly valued benefit
to target buyers.
Distinctive:Competitors do not offer the difference, or the
company can offer it in a more distinctive way.
Superior: The difference is superior to other ways that
customers might obtain the same benefit.
+ Communicable. The difference is communicable and
visible to buyers.
+ Preemptive. Competitors cannot easily copy the
difference.
+ Affordable. Buyers can afford to pay for the difference.
+ Profitable. The company can introduce the difference
profitably.
Selecting an Overall Positioning Strategy
Value proposition
+ The full positioning of a brand—the full mix of benefits on
which it is positioned.
Developing a Positioning Statement
Positioning statement
A statement that summarizes company or brand
positioning using this form: To (target segment and need)
our (brand) is (concept) that (point of difference).
The position of each circle on the map indicates the brand’s
perceived positioning on two dimensions: price and
orientation
The size of each circle indicates the brand’s relative market
share.

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Marketing Strategy

Define the major steps in

The way a product is defined by consumers on important

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