Topic 2: Segmentation, Targeting, Differentiation and Positioning Flashcards
Market segmentation
involves analysing a market with the aim of directing marketing focus towards smaller segments of buyers with distinct characteristics or behaviours that might require tailored marketing strategies or mixes.
Market targeting (or targeting)
consists of evaluating each market segment’s attractiveness and selecting one or more market segments to enter.
Differentiation
involves differentiating the firm’s market offering from that offered by competitors, to create superior customer value
Positioning
consists of arranging for a market offering to occupy a clear, distinctive and desirable place in the minds of target consumers relative to competing products.
four important segmentation topics
1) segmenting consumer markets,
(2) segmenting business markets,
(3) segmenting international markets and (4) requirements for effective segmentation.
main variables that might be used in segmenting consumer markets
geographic, demographic, psychographic and behavioural variables
Geographic segmentation
calls for dividing the market into different geographical units, such as nations, regions, states, local government areas, cities or even neighbourhoods
Demographic segmentation
divides the market into segments based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality
Behavioural segmentation
divides buyers into segments based on their knowledge, attitudes, uses or responses to a product
Psychographic segmentation
divides buyers into different segments based on social class, lifestyle or personality characteristics
market segments must be
- 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.
- Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
- Actionable: Effective programs can be designed for attracting and serving the segments.
In evaluating different market segments, a firm must look at three factors
(1) segment size and growth,
(2) segment structural attractiveness, and
(3) company objectives and resources
target market
consists of a set of buyers who share common needs or characteristics that the company decides to serve
Market targeting can be carried out at several different levels. Figure 6.2 shows that companies can target
very broadly (undifferentiated marketing), very narrowly (micromarketing) or somewhere in between (differentiated or concentrated marketing).
Undifferentiated marketing
firm might decide to ignore market segment differences and target the whole market with one offer
differentiated marketing (or segmented marketing)
strategy, a firm decides to target several market segments and designs separate offers for each
concentrated marketing (or niche marketing)
instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches
Micromarketing
is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Rather than seeing a customer in every individual, micromarketers see the individual in every customer. Micromarketing includes local marketing and individual marketing.
Local marketing
involves tailoring brands and promotions to the needs and wants of local customer groups – cities, neighbourhoods and even specific stores
individual marketing
tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labelled one-to-one marketing, mass customisation and markets-of-one marketing.
Choosing a targeting strategy
Which strategy is best depends on company resources
Socially responsible target marketing
The biggest issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products.
For example, over the years, marketers in a wide range of industries – from cereal and toys to fast food and fashion – have been heavily criticised for their marketing efforts directed towards children.
value proposition
how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments
product’s position
is the way the product is defined by consumers on important attributes – that is, the place the product occupies in consumers’ minds relative to competing products
product’s position
is the complex set of perceptions, impressions and feelings that consumers have for the product compared with competing products
perceptual positioning maps
which show consumer perceptions of their brands versus competing products on important buying dimensions
The differentiation and positioning task consists of three steps
(1) identifying a set of differentiating competitive advantages upon which to build a position;
(2) choosing the right competitive advantages; and
(3) selecting an overall positioning strategy
Identifying possible value differences and competitive advantages
An alert company can find ways to differentiate itself at every customer contact point. In what specific ways can a company differentiate itself or its market offer? It can differentiate along the lines of product, services, channels, people or image.
Choosing the right competitive advantages
Which differences to promote
Not all brand differences are meaningful or worthwhile; not every difference makes a good differentiator. Each difference has the potential to create company costs as well as customer benefits. A difference is worth establishing to the extent that it satisfies the following criteria:
•Important:
•Distinctive:
•Superior:
•Communicable: The difference is communicable and visible to buyers.
•Pre-emptive: Competitors cannot easily copy the difference.
•Affordable: Buyers can afford to pay for the difference.
•Profitable: The company can introduce the difference profitably.
Value proposition
the full mix of benefits upon which the brand is differentiated and positioned.
positioning statement
A statement that summarises company or brand positioning
The statement should follow the form: To (target segment and need) our (brand) is (concept) that (point of difference).21 For example: ‘For every athlete, Nike’s experience and expertise ensures that you have the perfect shoe for your sport.’