p. 221
PPT 7-19
Requirements for Effective Segmentation
To be useful, 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.
Review Learning Objective 2: List and discuss the major
bases for segmenting consumer and business markets
Assignments, Resources
Use Critical Thinking Exercise 7-8 here
Use Individual Assignment 1 here
Use Think-Pair-Share 2, 3, and 4 here
Use Outside Example 1 here
PPT 7-20
p. 221
PPT 7-21
p. 222
Explain how companies identify attractive market
segments and choose a market-targeting strategy.
MARKET TARGETING
Evaluating Market Segments
In evaluating different market segments, a firm must look at
three factors:
1. Segment size and growth
2. Segment structural attractiveness
3. Company objectives and resources
The largest, fastest-growing segments are not always the
most attractive ones for every company.
The company also needs to examine major structural factors
that affect long-run segment attractiveness.
A segment is less attractive if it already contains
many strong and aggressive competitors.
Learning Objective
3
p. 222
PPT 7-22
PPT 7-23
PPT 7-24
PPT 7-25
p. 123
PPT 7-26
The existence of many actual or potential substitute
products may limit prices and the profits.
The relative power of buyers also affects segment
attractiveness.
A segment may be less attractive if it contains powerful
suppliers who can control prices.
Selecting Target Market Segments
A target market consists of a set of buyers who share
common needs or characteristics that the company decides
to serve.
Figure 7.2: Market-targeting strategies
Undifferentiated Marketing
Using an undifferentiated marketing (or mass-marketing)
strategy, a firm might decide to ignore market segment
differences and target the whole market with one offer.
This mass-marketing strategy focuses on what is common in
the needs of consumers rather than on what is different.
Differentiated Marketing
Using a differentiated marketing (or segmented marketing)
strategy, a firm decides to target several market segments
and designs separate offers for each.
It hopes for higher sales and a stronger position within each
market segment. But it also increases the cost of doing
business.
Concentrated Marketing
Using a concentrated marketing (or niche marketing)
strategy, 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.
It can market more effectively by fine-tuning its products,
prices, and programs to the needs of carefully defined
segments.
p. 222
Figure 7.2:
Market-Targeting
Strategies
p. 222
Key Terms: Target
market,
Undifferentiated
(mass) marketing,
Differentiated
(segmented)
marketing
p. 123
Photo: P&G
p. 123
Key Term:
Concentrated
(niche) marketing
p. 123
Photo: Stance Socks
p. 224
PPT 7-27
p. 224
PPT 7-28
p. 226
PPT 7-29
p. 227
PPT 7-30
It can market more efficiently, targeting its products or
services, channels, and communications programs toward
only consumers that it can serve best and most profitably.
Micromarketing
Micromarketing is the practice of tailoring products and
marketing programs to suit the tastes of specific individuals
and locations.
Micromarketing includes local marketing and individual
marketing.
Local marketing involves tailoring brands and
promotions to the needs and wants of local customer groups
—cities, neighborhoods, and even specific stores.
Local marketing has drawbacks.
It can drive up manufacturing and marketing costs
by reducing economies of scale.
It can create logistics problems.
Individual marketing is the tailoring of products and
marketing programs to the needs and preferences of
individual customers.
Individual marketing has also been labeled one-to-one
marketing, mass customization, and markets-of-one
marketing.
Choosing a Targeting Strategy
Which strategy is best depends on:
Company resources
Product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
p. 224
Photo: Stitch Fix
p. 224
Key Terms:
Micromarketing,
Local marketing
p. 225
Photo: Local
Marketing, Marriott
p. 226
Key Term:
Individual
Marketing
p. 226
Photos:
Rolls-Royce
Assignments, Resources
Use Discussion Questions 7-4 here
Use Online, Mobile, and Social Media Marketing
here
Use Small Group Assignment 2 here
Use Individual Assignment 2 here
Troubleshooting Tip
It may be difficult for students to understand the
concept that there is no one, single way to segment a
market. Students will often point out that companies
segment on a single variable frequently, not
understanding that the concept is much broader than
that. Using a simple pen as an example, you can
point out the various segmentation variables, such as
income, occasion (such as graduation), and lifestyle
that a pen manufacturer could study to determine
effective segments. Although Mont Blanc might
segment based on income and occasion factors, Bic
might consider lifestyle or age.
p. 227
Socially Responsible Target Marketing
Target marketing sometimes generates controversy and
concern. Issues usually involve the targeting of vulnerable
or disadvantaged consumers with controversial or
potentially harmful products.
Marketers in a wide range of industries have been criticized
for their marketing efforts directed toward children.
Problems arise when marketing adult products to kids,
whether intentionally or unintentionally.
The growth of the Internet and other carefully targeted
direct media has raised new concerns about potential
targeting abuses.
The issue is not so much who is targeted, but how and for
what. Controversies arise when marketers attempt to profit
by unfairly targeting vulnerable segments or targeting them
with questionable products or tactics.
Socially responsible marketing calls for segmentation and
targeting that serves not just the interests of the company,
but also the interests of those targeted.
Review Learning Objective 3: Explain how companies
identify attractive market segments and choose a
market-targeting strategy.
p. 228
Photo:
Hypertargeting
Assignments, Resources
Use Real Marketing 7.1 here
Use Marketing Ethics here
PPT 7-31
p. 228
Discuss how companies differentiate and position their
products for maximum competitive advantage.
Learning Objective
4
PPT 7-32
p. 229
PPT 7-33
p. 230
PPT 7-34
PPT 7-35
PPT 7-36
p. 231
DIFFERENTIATION AND POSITIONING
Value proposition: How a company will create
differentiated value for targeted segments and what
positions it wants to occupy in those segments.
A product position is the way the product is defined by
consumers on important attributes.
Positioning Maps
Perceptual positioning maps show consumer perceptions
of their brands versus competing products on important
buying dimensions.
Choosing a Differentiation and Positioning Strategy
The differentiation and positioning task consists of three
steps:
1. Identifying a set of possible competitive advantages
upon which to build a position
2. Choosing the right competitive advantages
3. Selecting an overall positioning strategy
Identifying Possible Value Differences and Competitive
Advantages
To the extent that a company can differentiate and position
itself as providing superior customer value, it gains
competitive advantage.
It can differentiate along the lines of product, service,
channel, people, or image.
Choosing the Right Competitive Advantages
How Many Differences to Promote
Ad man Rosser Reeves believes a company should develop
a unique selling proposition (USP) for each brand and stick
to it.
Other marketers think that companies should position
themselves on more than one differentiator.
p. 228
Key Term: Product
position
p. 229
Ad: IKEA
p. 229
Figure 7.3:
Positioning Map
p. 230
Key Term:
Competitive
advantage
p. 230
Ad: Jimmy John’s
p. 231
PPT 7-37
PPT 7-38
p. 232
p. 233
Which Differences to Promote
A competitive advantage should be:
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
The full positioning of a brand is called the brand’s value
proposition. (see Figure 7.4)
More for more positioning involves providing the most
upscale product or service and charging a higher price to
cover the higher costs.
More for the same positioning involves introducing a
brand offering comparable quality but at a lower price.
The same for less positioning can be a powerful value
proposition—everyone likes a good deal.
Less for much less positioning involves offering products
that offer less and therefore cost less. This involves meeting
consumers’ lower performance or quality requirements at a
much lower price.
More for less positioning is the winning value
proposition.
In the long run, companies will find it very difficult to
sustain such best-of-both positioning.
p. 232
Key Term: Value
proposition
p. 232
Figure 7.4: Possible
Value Propositions
p. 233
Ad: Hearts On Fire
p. 234
Photo: ALDI
p. 235
PPT 7-39
PPT 7-40
p.
235-236
PPT 7-41
Developing a Positioning Statement
Company and brand positioning should be summed up in a
positioning statement.
The statement should follow the form: To (target segment
and need) our (brand) is (concept) that (point of
difference).
Communicating and Delivering the Chosen Position
Once it has chosen a position, the company must take strong
steps to deliver and communicate the desired position to
target consumers. All the company’s marketing mix efforts
must support the positioning strategy. Once a company has
built the desired position, it must take care to maintain the
position through consistent performance and
communication.
Review Learning Objective 4: Discuss how companies
differentiate and position their products for maximum
competitive advantage.
p. 235
Key Term:
Positioning
statement
p. 235
Ad: Evernote
Assignments, Resources
Use Real Marketing 7.2 here
Use Discussion Questions 7-4 and 7-5 here
Use Company Case here
Use Critical Thinking Exercise 7-7 and 7-8 here
Use Marketing by the Numbers here
Use Additional Project 4 here
Use Video Case here