MGCR 352: Chapter 9 - Market segmentation, targeting, and positioning

step 2: group products into categories (when possible)

important for firms with lots of products, often uses product lines

Market segment

subgroup of people or organizations sharing characteristics that cause them to have similar product needs

Market segmentation

the process of dividing a market into meaningful, relatively similar, identifiable segments or groups

step 3: develop market-product grid and estimate market size

thing with school and meals (look @ slides)

differentiation

what you do to product or service to distinguish it (measurable, tangible differences)

positioning

what you do to the mind of the customer to create a unique, definite image of the product in eyes of the consumer (Supreme, Fiji Water - no tangible differences)

head-to-head positioning

when two companies present as the same thing, but one tries to be better (McD and BK)

demographic variables

- age, gender, family size, income, etc - most popular segmentation base

behavioural segmentation

- benefits sought (energy drinks to wake ppl up, vegan restos only serve vegan food) - usage rate (80% of your profits come from 20% of customers)

Segmentation bases/variables

- demographic variables - geographic variables - behaviouristic variables - psychographic variables

why is positioning important?

- designing marketing strategies (product, location/distribution, pricing, promotion) - identifying direct/indirect competitors

criteria to group buyers into segments (step 1)

- determine potential for increased profit - ensure similarity of needs within segments (students might not be good bc diverse needs) - reachability within marketing mix (make sure ppl know abt your prodcut) - simplicity (keep your product simple)

steps in segmenting and targeting markets

- group potential buyers into segments - group products into categories (if applicable) - develop a market-product grid and estimate market size - select target markets - take marketing actions to reach target market

one product and multiple segments

- laundry detergent for enviro conscious in west, for ppl who care about clothing in qc - minivans for soccer moms in North America, for young travellers in Europe

perceptual maps

- lets you see location of brands in mind of consumers using two axes that you define - given to consumers as a questionnaire - two axes need to be as independent as possible (price and quality are bad ones for instance)

criteria for selecting target markets/target segments (step 4)

- market size (bigger market = more customers) - expected growth (will there be new dvpts that will attract/repel consumers?) - competitive position (lots of competitors?) - cost of reaching segment (how easy is it to let your target segment know that you're there?) - match firm capabilities (if you're a small entrepreneur, better suited for small markets)

types of markets (take marketing action, step 5)

- mass marketing (undifferentiated strategy): no segments and single marketing mix (TH all day breakfast) - differentiated marketing: large segments with specific marketing mixes (Lola Rosa is just vegetarian) - concentrated (niche) marketing: one segment of market with specialized marketing mix (minimal diff w/ differentiated mrktg) - micromarketing (1:1): customized marketing to individuals (Subway or Jimmy Johns)

psychographic segmentation

- personality (deodorant for "manly" men) - motives (happy and fearful pregnancy tests) - lifestyle (Harley Davidson lifestyle draws people from over)

S-T-P

Segmentation (discover groups and needs in a market), targeting (target groups you can best serve) and positioning (make target recognize your product's superiority)

why segment markets?

it lets us save money and be more direct + efficient

segments of one

mass customization (indochino.com, one suit uniquely for you)

multiple products and multiple segments

minivans vs SUVs vs sedans

Market

people or organizations with wants/needs and ability/willingness to buy

differentiation positioning

position products similarly, but make themselves different (like Apple and Samsung)

Principle of market segmentation

segmentation on non-demographic factors is harder, but more effective