Chapter 7 - Segmentation, Targeting, and Positioning

Concentrated marketing (or niche marketing)

A market- coverage strategy in which a firm goes after a large share of one or a few segments or niches

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. Focus on the common needs of the consumers rather than what is different

Differentiated (segmented) marketing

A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each

Target market

A set of buyers sharing common needs or characteristics that the company decides to share

Local marketing

A small group of people who live in the same city, or neighborhood, or who shop at the same store.

Positioning Statement

A statement that summarizes company or brand positioning - it takes this form: To (target segment and need) our (brand) is (concept) that (point of difference).

Which value proposition is Mercedes (an upscale automobile manufacturer) going after? A) More for more B) More for less C) More for the same D) The same for less

A) More for more

Which targeting strategy is used by a company (like Coca-Cola, for example) that chooses to ignore market segment differences? A) Undifferentiated B) Differentiated C) Concentrated D) Special

A) Undifferentiated

Markets can be segmented into groups of non-users, ex-users, potential users, first-time users, and regular users of a product. This method of segmentation is called ________. A) user status B) usage rate C) benefit D) behaviour

A) user status

Competitive advantage

An advantage over competitors gained by offering greater customer value, either through lower prices, or by providing more benefits that justify high prices

Positioning

Arranging for a marketing offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

Lifestyle (Psychographic segmentation)

Athletic/outdoors type, student, etc

Which of the following is not a major segmentation variable for consumer markets? A) Geographic B) Feelings C) Demographic D) Psychographic

B) Feelings

Product Differentiation

Brands can be differentiated on features, performance, or style and design

Segmenting Business Markets

Business buyers can be segmented: - Geographically - Demographically (Industry, company size) - By benefits sought - User status - Usage rate - Loyalty Status + Operating characteristics + Purchasing approaches + Stimulational factors +Personal characteristics

Variables such as social class, lifestyle, and personality are components of A) geographic segmentation. B) demographic segmentation. C) psychographic segmentation. D) behavioural segmentation.

C) psychographic segmentation.

House hold Income (HHI) segmentation

Dividing a market into different income segments - This may also include who does the shopping in each household and directing products to that consumer

Gender segmentation

Dividing a market into different segments based on gender - Clothing - Cosmetics - Magazines

Psychographic segmentation

Dividing a market into different segments based on social class, lifestyle, or personality characteristics - New luxury class in Canada

Behavioral Segmentation

Dividing a market into segments based on consumer knowledge, attitudes, uses, 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 purchase item

Benefit segmentation

Dividing the market into segments according to the different benefits that consumers seek from the product

Demographic segmentation

Dividing the market into segments based on variables such as age, gender, family size, life cycle, house hold income (HHI), occupation, education, ethical or cultural group, and generation

Less for Much less

Few people need, want or can afford "the very best" in everything they buy - Winners, dollar store

Intermarket segmentation

Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries

Channel Differentiation

Gain competitive advantage through the way they design their channel's coverage expertise, and performance

More for less

Offering the best selection, the best service and with the lowest prices. This is very difficult to do - RONA, Canadian tire

Segmenting International markets (Cross-market segmentation)

Operating in new countries presents new challenges as they vary greatly in their economic, cultural and political makeup. Countries can be segmented according to: - Geographic location - Economic factors - Developing economies

Positioning maps

Positioning maps are used by marketers in planning their differentiation and positioning strategies

More for More

Providing a more upscale product or service and charging a higher price to cover the higher costs

Individual marketing (mass customization)

Tailoring products and marketing programs to the needs and preferences of individual customers

The same for less

The concept of everyone likes a good deal: they get the same product at the same price- stores such as Walmart or Best buy

Choosing the right competitive advantage

When a company is fortunate enough to discover several differentiation's that give then a competitive advantage. It must choose the ones on which to build its positioning strategy. (USP)

Loyalty status

When a market is segmented into consumer loyalty. - These consumers are Brand Loyal

Choosing a Target Strategy

Which strategy is best depends on: - The company resources - The degree product variability - The product life-cycle stage - Market variability - Competitors marketing strategies

Which differences to promote

# Important # Distinctive # Superior # Communicable # Preemptive # Affordable # Profitable

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 # Differentiable: The segments are conceptually distinguishable and respond to different marketing-mix elements and programs # Actionable

Differentiation and position Strategy (3)

1) Identifying a set of differentiating competitive advantages upon which to build a position 2) Choosing the right competitive advantages, and selecting an overall position strategy 3) The company must then effectively communicate and deliver the chosen position to the market

Evaluation market segments (3)

1) Segment Size and growth 2) Segment structural attractiveness - number of aggressive competitors - potential substitutes - relative power of buyers 3) Company objectives and resources

Market Target Strategies

1) Undifferentiated (mass) marketing 2) Differentiated (segmented) marketing 3) Concentrated (niche) marketing 4) Micro-marketing (local or individual marketing)

By studying its less loyal buyers, a company can detect which brands are most ________ with its own. A) competitive B) used C) often overlooked D) similar

A) competitive

Ensuring a product occupies a clear, distinctive, and desirable place relative to competing products in the minds of target consumers is called A) market positioning. B) market segmentation. C) target marketing. D) competitive advantage.

A) market positioning.

Geographic segmentation

Dividing a market into different geographical units, such as global regions, countries, regions within a country, provinces, cities, or even neighborhoods

Using multiple Segmentation Bases

Business do this t identify smaller, better defined target groups. *There are several business information systems that provide multi-variable segmentation systems that merge geographic, demographic, lifestyle, and behavioral data to help companies segment their markets down to neighborhoods, and even households. - PRISM systems - LGBT (Lesbian, Gay, Bisexual and transgender communities)

Which factors are used to evaluate market segments? A) Segment potential, company mission, and company structure B) Company goals, company objectives, and company values C) Segment size and growth, structural attractiveness, and company objectives and resources D) Segment values, segment dimensions, and segment viability

C) Segment size and growth, structural attractiveness, and company objectives and resources

Segmentation

Divide the market into distinct groups with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes

The process of dividing a market into distinct groups with distinct needs, characteristics, or behaviours that might require separate products or marketing mixes is called A) target marketing. B) market positioning. C) market segmentation. D) market research.

C) market segmentation.

More for the same

Companies attack the more-for-more positioning by introducing a brand offering comparable quality but at a lower price

Value proposition

Creating differentiated value for target segments, and what positions it wants to occupy in those segments

Which of the following is not a requirement for effective segmentation? A) Distinct needs B) Characteristics C) Behaviours D) Desirability

D) Desirability

An advantage over competitors gained by offering consumers greater value is called a A) unique selling proposition. B) positioning statement. C) target market. D) competitive advantage.

D) competitive advantage.

Age and Life-cycle segmentation

Dividing a market into different age and life-cycle groups

Differentiation

Differentiate the market offering to create superior customer value

Micromarketing

Differentiated and concentrated marketers tailor products & marketing programs to meet the needs of the market segments consisting of groups of peoples. - includes local marketing and individual marketing

Socially responsible Target Marketing

Helps companies become more efficient and effective by focusing on the segments that they can satisfy best and most profitably. * The issue is not really who is being targeted but how and for what

People differentiation

Hiring and training better people than competitors do

Social Class (Psychographic segmentation)

Lower lowers, upper lowers, working class, upper class

Ethical or Cultural group

Marketing to particular ethnicity in order to make the product more appealing to them - McDonald's

User Status

Markets can be segmented into non-users, ex-users, potential users, first-time users, and regular users of a product.

Value Preposition

The full propositioning of a brand - the full mix of benefits upon which it is positioned

Targeting

The process of evaluating each market segment's attractiveness and selecting one or more segments to enter

Product position

The way the product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products

Usage rate

markets can be segmented into light, medium and heavy product users