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Steps in Segmentation, Targeting, and Positioning Market Segmentation. Market segmentation is the process of dividing a market into distinct groups of buyers who might require separate products or marketing mixes. All buyers have unique needs and wants. Still it is usually possible in consumer markets to identify relatively homogeneous portions or segments of the total market according to shared preferences, attitudes, or behaviors that distinguish them from the rest of the market. These segments may require different products and/or separate mixes. Market Targeting. Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. Given effective market segmentation, the firm must choose which markets to serve and how to serve them. Discussion Note: In targeting markets to serve the firm must consider its resources and objectives in setting strategy. Market Positioning. Market positioning is the process of formulating competitive positioning for a product and a detailed marketing mix. Marketers must plan how to present the product to the consumer. Discussion Note: The product's position is defined by how consumers view it on important attributes. Steps in Segmentation, Targeting, and Positioning This CTR corresponds to Figure 7-1 on p. 196 and relates to the material on pp. 196.
Market Segmentation This CTR relates to Table 7-1 on p. 203 and the material on pp. 202-209. Bases for Segmenting Consumer Markets Geographic Segmentation. Geographic segmentation divides the market into different geographic units based upon physical proximity. While location determines how geographic segmentation is done, it is also true that many consumer products have attribute differences associated with regional tastes. Demographic Segmentation. Dividing the market into groups based upon variables such as sex, age, family size, family life cycle, income, education, occupation, religious affiliation, or nationality are all demographic segmentations. Consumer needs often vary with demographic variables. Demographic information is also relatively easy to measure. Age and life-cycle stage, sex, and income are three major demographic bases for segmentation. Psychographic Segmentation. Psychographic Segmentation divides the market into groups based on social class, life style, or personality characteristics. Psychographic segmentation cuts across demographic differences. Social class preferences reflect values and preferences that remain constant even as income increases. Life style describes helps group markets around ideas such as health, youthful, or environmentally conscious. Personalities may transcend other differences in markets and may be transferred to products themselves. Behavioral Segmentation. Behavioral Segmentation divides markets into groups based on their knowledge, attitudes, uses, or responses to a product. Types of of behavioral segmentation are based upon occasions, benefits sought, user status, usage rates, loyalty, buyer readiness stage, and attitude.
Segmenting Business Markets This CTR corresponds to Table 7-3 on p. 213 relates to the material on pp. 212. Major Segmentation Variables for Business Markets Demographics . Industry segmentation focuses on which industries buy the product. Company size can be used. Geographic location may be used to group businesses by proximity. Operating Variables. Business markets can be segmented by technology (what customer technologies should we focus on?), user/nonuser status (heavy, medium, light), or customer capabilities (those needing many or few services). Purchasing Approaches. Five approaches are possible. Segmentation can be by purchasing function organization (centralized or decentralized), power structure (selecting companies controlled by a functional specialty), the nature of existing relationships (current desirable customers or new desirable customers), general purchase policies (focus on companies that prefer some arrangements over others such as leasing, related support service contracts, sealed bids), or purchasing criteria (focus on noncompensatory criteria such as price, service, or quality). Situational Factors. Situational segmentation may be based upon urgency (such as quick delivery needs), specific application (specific uses for the product) or size of order (few large or many small accounts). Personal Characteristics. Personal comparisons can lead to segmentation by buyer-seller similarity (companies with similar personnel and values), attitudes toward risk (focus on risk-taking or risk-avoiding companies), or loyalty (focus on companies that show high loyalty to their suppliers.
Segmenting International Markets This CTR relates to the discussion on pp. 213-215. Segmenting International Markets Geographic Segmentation . This works well when proximity is the critical segmentation variable. Economic Factors . Countries might be grouped by population income levels or by overall level of economic development. Political and Legal Factors . Segmentation may be most appropriate in terms of the level of government stability, monetary regulations, receptivity to foreign firms, or the amount of bureaucracy encountered when conducting business. Cultural Factors . Segmentation by common language, religion, or values might be the best way to proceed. Intermarket Segmentation . This involves forming segments of consumer who have similar needs and buying behavior even though they are located in different countries.
Stages in Market Orientation This CTR relates to the discussion on pp. 197-202. Stages in Market Orientation Sellers traditionally have passed through three stages of orientation or philosophy of identifying markets that lead to greater use of segmentation, targeting, and positioning strategies: Mass Marketing . In mass marketing, the seller produces, mass distributes, and mass promotes one product to all buyers. The argument for mass marketing is that it [should] lead to the lowest costs (through economies of scale) and prices and create the largest potential market. Segment Marketing . Here the seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to meeting the needs of those selected segments. As more competitors adopt this practice, fragmentation of the market leads to Niche Marketing. Here the seller focuses on subgroups within market segments who may seek a special combination of benefits. Micromarketing . This is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
Evaluating Market Segments Segment Size and Growth. The company must collect and analyze data on current dollar sales, projected sales-growth, and expected profit margins for each market segment. Segment Structural Attractiveness. Long run attractiveness includes an assessment of current and potential competitors, the threats of substitutes, and the power of buyers and suppliers. Company Objectives and Resources. The company’s resources and core business strengths should also fit well with the market segment opportunities. Evaluating Market Segments This CTR relates to the material on pp. 215-216.
Choosing a Market-Coverage Strategy This CTR relates to the discussion on pp. 219-220. Choosing a Market-Coverage Strategy Factors to consider in choosing a market-coverage strategy include: Company Resources . Sometimes the resources of a firm make a strategy decision fairly simple. For example, a small firm with limited resources is more likely to be successful implementing a concentrated strategy than a full coverage one. Product Variability . The higher the degree of product variation or differentiation, the greater the likelihood that a differentiated or concentrated strategy will be necessary to meet consumer demands for choice. Stage in Life Cycle . Introduction and early growth stages of the product life cycle are more likely to support single-version products. As the market matures, greater consumer numbers and a wider variety of tastes demand more differentiation. Discussion Note: The cost of developing new products is often given as a reason for single-version rollouts. But it is important to remember that consumers don’t know how to use new products as well and so it makes sense to keep a product simple to help consumer learn about its benefits first and then let their experience with product use guide the introduction of additional features. Market Variability . If taste differences in the market are small, then undifferentiated marketing is appropriate. Competitor’s Marketing Strategies . Selecting a coverage strategy is not done in a vacuum. When the market is already served by competitor using a segmentation strategy, undifferentiated marketing is less likely to be successful. However, competitors using undifferentiated strategies may be vulnerable to a well-planned and executed differentiation strategy.
Market Coverage Strategies This CTR corresponds to Figure 7-4 on p. 217 and relates to the discussion on pp. 216-219. Market Coverage Strategies Undifferentiated Marketing . This strategy uses the same marketing mix for the entire market. This strategy focuses on the common needs of the market rather than differences in it. Undifferentiated marketing provides economies of scale on product costs but may be limited in application. Differentiated Marketing. This strategy targets several market segments and designs separate marketing mixes for each of them. Product and marketing variation also helps company image and may produce loyalty in consumers as they change segments. Concentrated Marketing. This strategy commits a company to pursue a large share of one or more submarkets. Economies and segment knowledge and service are strengths of this approach but risk due to smaller market size is greater.
Marketing for MOST: Module 6 – S.T.P StrategyPRESENTED BY• HINA HAMEED ROLL NO: 07• ARSLA YASEEN ROLL NO:04• SIAMA BATOOL ROLL NO: 29• MONIBA NOOR ROLL NO: 14
Marketing for MOST: Module 6 – S.T.P StrategySEGMENTING,TARGETING,POSITIONING • STP STRATEGY • STEPS IN SEGMENTING,TARGETING, AND POSITIONING • MARKET SEGMENTATION • BASIS FOR SEGMENTING CONSUMER MARKET BY HINA HAMEED.
Marketing for MOST: Module 6 – S.T.P StrategySTP Strategy 1. Market 2. Market 3. Market Segmentation Targeting Positioning S T P
Marketing for MOST: Module 6 – S.T.P StrategySteps in Segmentation,Targeting, and Positioning 6. Develop Marketing Mix for Each Target Segment Market 5. Develop Positioning for Each Target Segment Positioning 4. Select Target Segment(s) Market 3. Develop Measures of Segment Attractiveness Targeting 2. Develop Profiles of Resulting Segments 1. Identify Bases Market Segmentation for Segmenting the Market
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Dividing a Market into distinct groups of buyers on the basis of needs, characteristics or behavior who might require separate products or marketing mixes.
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• A Market Segment is a group of customers who respond in a similar way to a given set of marketing efforts.
Marketing for MOST: Module 6 – S.T.P StrategyStep 1. Market SegmentationBases for Segmenting Consumer MarketsGeographic Nations, states, regions or cities Demographic Age, gender, family size and life cycle, or income Psychographi cSocial class,personality lifestyle, or Occasions, benefits, uses, Behavioral or responses
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Geographic Segmentation – Dividing the market into different geographical units such as nations, states, regions, countries, cities, or neighborhoods. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Demographic Segmentation – Dividing the market into groups based on demographic variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, and nationality. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Psychographic Segmentation – Dividing a market into different groups based on social class, lifestyle, or personality characteristics. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Behavioral Segmentation – Dividing a market into groups based on consumer knowledge, attitude, use, or response to a product. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Occasion Segmentation – Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Benefit Segmentation – Dividing the market into groups according to the different benefits that consumers seek from the product. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMARKET SEGMENTATION• Bases for Segmenting Business Markets• Bases for Segmenting International Markets• Levels of Market Segmentation• Effective segmentation BY ARSLA YASEEN
Marketing for MOST: Module 6 – S.T.P StrategyStep 1. Market SegmentationBases for Segmenting Business Markets Personal Demographics Characteristics Bases Bases for Segmenting for Segmenting Situational Business Business Operating Factors Markets Markets Characteristics Purchasing Approaches
Marketing for MOST: Module 6 – S.T.P StrategyStep 1. Market SegmentationBases for Segmenting International Markets Industrial Markets Industrial Markets Political/ Political/GeographicGeographic Economic Economic Legal Legal Cultural Cultural Intermarket Intermarket
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation• Multi-Attribute Segmentation Crossing several variables to identify smaller, better defined target groups
Marketing for MOST: Module 6 – S.T.P StrategyMarket Segmentation
Marketing for MOST: Module 6 – S.T.P StrategyStep 1. Market SegmentationLevels of Market Segmentation Mass Marketing Mass Marketing Same product to all consumers Same product to all consumers (no segmentation) (no segmentation) Segment Marketing Segment Marketing Different products to one or more segments Different products to one or more segments (some segmentation) (some segmentation) Niche Marketing Niche Marketing Different products to subgroups within segments Different products to subgroups within segments (( more segmentation) more segmentation) Micromarketing MicromarketingProducts to suit the tastes of individuals or locationsProducts to suit the tastes of individuals or locations (complete segmentation) (complete segmentation)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Targeting – Five Patterns of Target Market Selection S1 S2 S3 • (by D.F. Abell) P1 Full Market Coverage P2 P3P = ProductsS = Market Segment
Marketing for MOST: Module 6 – S.T.P StrategyStep 2. Market TargetingMarket Coverage Strategies Company Company Marketing Marketing Market Market Mix Mix A. Undifferentiated Marketing Company Company Marketing Mix 1 Segment 1 Segment 1 Marketing Mix 1 Company Company Segment 2 Segment 2 Marketing Mix 2 Marketing Mix 2 Company Company Segment 3 Segment 3 Marketing Mix 3 Marketing Mix 3 B. Differentiated Marketing Segment 1 Segment 1 Company Company Marketing Marketing Segment 2 Mix Segment 2 Mix Segment 3 Segment 3 C. Concentrated Marketing
Marketing for MOST: Module 6 – S.T.P StrategyPOSITIONING• MARKET POSITIONING• CHOOSING A POSITIONING STRATEGY• COMMUNICATING THE CHOOSEN PPOSITION• USP BY MONIBA NOOR
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• Market Positioning • Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• “Positioning” according to Ries and Trout • “Positioning is what you do to the minds of the prospect. That is, you position the product in the mind of of the prospect. Here! – (Al Ries and Jack Trout: “Positioning: The Battle for Your Mind”, NY Warner Books, 1982)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• “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. (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• Choosing a Positioning Strategy – Identifying and choosing the right competitive advantages – Differentiation • (How many differences to promote? Which Differences to Promote?)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• Product Differentiation – Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offering from competitor’s offerings. – Q: Is only the product differentiable? (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• A difference is worth establishing if it is: – Important – Distinctive – Superior – Communicable – Pre-emptive – Affordable – Profitable (Philip Kotler)
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• Communicating the Chosen Position – How do you differentiate your message? – How do you get your message across when most people are trying hard to dismiss it – in the midst of information overload?
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• Find your USP – (Unique Selling Proposition) – And stand out from the crowd!
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• USP defined – The concept of "USP" is credited to Rosser Reeves, chairman of the Ted Bates & Co. advertising agency in the 1950s. He was one of the first to develop a technique for communicating in an overcrowded marketplace. His definition of what makes a USP holds true today.
Marketing for MOST: Module 6 – S.T.P StrategyMarket Positioning• USP defined • All advertising must make a proposition to the customer: Buy this, and you will receive a specified benefit. • The proposition must be unique; something competitors cannot claim, or have not chosen to emphasize in their promotions. • The proposition must be so compelling that it motivates individuals to act.
Marketing for MOST: Module 6 – S.T.P StrategyCONCLUSION