Target marketing
Chapter 8 – customer-driven marketing strategy – creating values for target customers -
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Target marketing: indentifying market segments, selecting 1+ and developing products and marketing programs tailored to each o “shotgun approach” = scattering marketing efforts o “rifle approach” = firms to focus on the buyers who have greater interest in the values they create best Market segmentation: dividing a market into smaller groups w/ distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes Market targeting (targeting): the process of evaluating each market segment’s attractiveness and selecting 1+ segments to enter Differentiation: actually differentiating the market offering to create superior customer value Positioning: arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
Market segmentation -
Market segmentation to DIVIDE LARGE hetero markets into small segments (can better math to unique needs)
Segmenting consumer markets Geographic segmentation -
Geographic segmentation: dividing a market into different geographical units such as nations, regions, provinces, counties, cities, or neighbourhoods
Demographic segmentation -
Demographic segmentation: dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality o Most popular for segmenting customer groups o Variables easier to measure in this fomr
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Age and life-cycle stage o Age and life-cycle segmentation: dividing a market into difference age and life-cycle groups o Be careful of stereotypes when using this type of segmentation o Age = poor predictor of person’s life cycle, health, work, family status Gender o Gender segmentation: dividing a market into different groups based on gender o In clothing, cosmetics, toiletries, magazines Income o Income segmentation: dividing a market into different income groups o Targets the affluent often but not always (HQ hotels, vs dollarama)
Psychographic segmentation -
Psychographic segmentation: dividing a market into different groups based on social class, lifestyle, or personality characteristics Personality variables to segements o Ex cruise lines targeting adventure seekers
Behavioural segmentation -
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Behavioural segmentation: dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product o The best starting point in building market segments Occasions o 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 Builds product usage Benefits sought o Benefit segmentation: Dividing the market into groups according to the different benefits that consumers seek from the product User status o Reinforce & retain regular users o Attract targeted NONusers o Reinvigorate relationship w/ ex-users o Potential user group are ppl that are facing life-stage changes -> ex newlyweds/parents Usage rate o Heavy users -> small % of market but HIGh % of total consumption Loyalty status o Loyal to brands, stores, companies
Using multiple segmentation bases -
To identify smaller, better-defined target groups 2
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Ex multivariable segmentation systems merging geographic, demographic, lifestyle, behavioural data
Segmenting business markets -
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Additional variables w/ business marketers o Customer operating characteristics o Purchasing approaches o Situational facts o Personal characteristics Buying behaviours and benefits = best basis for segmenting business markets*
Segmenting international markets -
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Segment by o Geographic location: grouping countries by regions o Economic factors -> ex by pop’n income lvls o Political & legal factors o Cultural factors Intermarket segmentation (aka cross market segmentation): forming segments of consumers who have similar needs and buying behaviour even though they are located in different countries
Requirements for effective segmentation -
Market segments, to be useful, must be… o Measurable-> the size, purchasing power, and profiles of the segments can be measured o Accessible -> segments to be effectively reached and served o Substantial-> segments are large/profitable enough to serve o Differentiable-> segments distinguishable and respond differently to diff marketing mix elements and programs o Actionable-> programs designed for attracting and serving segments
Market targeting Evaluating market segments -
THREE factors in evaluating market segments o Segment size & growth o Segment structural attractiveness Power of buyers affects Powerful suppliers make less attractive Less attractive if have already many strong and aggressive competitors Ie existence of actual/potential substitute products limits prices/profits o Company objectives and resources 3
Selecting target market segments -
Target market: a set of buyers sharing common needs or characteristics that the company decides to serve Marketing targeting strategies
Undifferentiated marketing -
Undifferentiated marketing (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 o Focuses on common needs o Trouble to compete w/ more focused firms o For more UNIFORM products (ex grapefruits/steel) o Used in early stage of product life o Strategy used for ppl that have the same tastes and buy the same amnt o BAD is competitors using differentiated/concentrated marketing
Differentiated marketing -
Differentiated marketing (segmented marketing): a market coverage strategy in which a firm decides to target several market segments and designs separate offers for each o Requires extra marketing research, forecasting, sales analysis, promo planning and channel mgmt o Must weigh increased sales against increased costs o For products that can vary in design o Used in mature stage of product
Concentrated marketing -
Concentrated marketing (niche marketing): a market coverage strategy in which a firm goes after a large share of one or a few segments or niches o Can achieve strong market position Why? Bc greater knowledge of consumer needs in the served niche o Markets effectively through fine-tuning o Markets efficiently by targeting its services to consumers that it can serve best o Niches = SMALL… attracts only FEW competitors o Focuses limited resources on serving the niches o Start as niche to get foothold against larger competitors Ex: WestJet 4
o o o o o
Megamarketers create niche markets to create sales growth Ex: Zappos Used in early stage of product life Higher-than-normal risks For products that can vary in design
Micromarketing -
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Micromarketing: the practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups – includes local marketing and individual marketing Local marketing: tailoring brands and promotions to the needs and wants of local customer groups – cities, neighbourhoods, and even specific stores o Ex Walmart (according to neighbourhood characteristics) o Cab drive up manufacturing and marketing costs by reducing economies of scale o Creates logistic problems o Diluted brand image o Meets the needs of first line customers Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers – aka “one-to-one marketing” “mass customization” and markets-of-one marketing” o Customizing offerings o Stand out against competitors o Builds relationships
Choosing a targeting strategy -
Strategy depends on resources, product variability, product’s life cycle stage, market variability, competitors marketing strategies
Socially responsible target marketing -
Targeting younger children by mistake.. Issue of how and what in target marketing
Differentiation and 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 o Complex set of perceptions, impressions, and feelings that consumers have for the product compared to competitors o Plan positions to give product greatest advantage in selected target markets
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Positioning maps -
Perceptual positioning maps: show consumer perceptions of their brands vs competing products on important buying dimensions
Choosing a differentiation and positioning strategy -
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THREE steps in differentiation and positioning tasks o Identifying a set of differentiating competitive adv up which to build a position o Choosing the right competitive advantages o Selecting an overall positioning strategy Need to communicate and deliver the chosen position to the market
Identifying possible value differences and competitive advantages -
Competitive advantage: an advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices Differentiate by o Product By features, performance, style & design o Services Through speedy, convenient, careful delivery, HQ customer care o Channels Competitive advantage through coverage, expertise, and performance o Ppl Through hiring, and training better ppl than competitors o Image Image to convey benefits and positioning
Choosing the right competitive advantages -
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How many difference to promote o The more claims on brands -> risking loss of clear positioning o Each brand should pick one benefit and stick to it (unique selling proposition USP) Which differences to promote o Difference worth establishing if it satisfies: Important: the difference delivers highly values benefit to target buyers Distinctive: competitors do not offer the difference, or the company can offer it in more distinctive way Superior: the difference is superior to other ways that customers might obtain he same benefit Communicable: visible and communicable to buyers Preemptive: difference cannot be easily copied Affordable: buyer can afford to pay the difference 6
Profitable: introduce difference profitably
Selecting an overall positioning strategy -
Value proposition: the full positioning of a brand = the full mix of benefits upon which it is positioned
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More for more -> provides most upscale product/service for higher price to cover its high costs o Can be vulnerable… imitators More for the same -> comparable quality at lower price The same for less -> powerful proposition , offers same brands w/ LARGE discounts Less for much less -> meets consumers ’lower performance/quality requirements at much lower price (dollar stores) More for less-> the BEST value proposition but its hard to sustain in the LR
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Developing a positioning statement -
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) o Ex: “to busy, mobile pros who need to always be in the loop, BB is a wireless connectivity sol’n that gives you an easier, more reliable way to stay connected to data, ppl, and resources while on the go”
Communicating and delivering the chosen position -
After a position is built need to maintain it through consistent performance and communication Monitor and adapt to changes in consumer needs and competitors strategies Position should change GRAUDALLY if adapting to changing marketing environment
7
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Target marketing: indentifying market segments, selecting 1+ and developing products and marketing programs tailored to each o “shotgun approach” = scattering marketing efforts o “rifle approach” = firms to focus on the buyers who have greater interest in the values they create best Market segmentation: dividing a market into smaller groups w/ distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes Market targeting (targeting): the process of evaluating each market segment’s attractiveness and selecting 1+ segments to enter Differentiation: actually differentiating the market offering to create superior customer value Positioning: arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
Market segmentation -
Market segmentation to DIVIDE LARGE hetero markets into small segments (can better math to unique needs)
Segmenting consumer markets Geographic segmentation -
Geographic segmentation: dividing a market into different geographical units such as nations, regions, provinces, counties, cities, or neighbourhoods
Demographic segmentation -
Demographic segmentation: dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality o Most popular for segmenting customer groups o Variables easier to measure in this fomr
1
-
-
-
Age and life-cycle stage o Age and life-cycle segmentation: dividing a market into difference age and life-cycle groups o Be careful of stereotypes when using this type of segmentation o Age = poor predictor of person’s life cycle, health, work, family status Gender o Gender segmentation: dividing a market into different groups based on gender o In clothing, cosmetics, toiletries, magazines Income o Income segmentation: dividing a market into different income groups o Targets the affluent often but not always (HQ hotels, vs dollarama)
Psychographic segmentation -
Psychographic segmentation: dividing a market into different groups based on social class, lifestyle, or personality characteristics Personality variables to segements o Ex cruise lines targeting adventure seekers
Behavioural segmentation -
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-
-
-
Behavioural segmentation: dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product o The best starting point in building market segments Occasions o 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 Builds product usage Benefits sought o Benefit segmentation: Dividing the market into groups according to the different benefits that consumers seek from the product User status o Reinforce & retain regular users o Attract targeted NONusers o Reinvigorate relationship w/ ex-users o Potential user group are ppl that are facing life-stage changes -> ex newlyweds/parents Usage rate o Heavy users -> small % of market but HIGh % of total consumption Loyalty status o Loyal to brands, stores, companies
Using multiple segmentation bases -
To identify smaller, better-defined target groups 2
-
Ex multivariable segmentation systems merging geographic, demographic, lifestyle, behavioural data
Segmenting business markets -
-
Additional variables w/ business marketers o Customer operating characteristics o Purchasing approaches o Situational facts o Personal characteristics Buying behaviours and benefits = best basis for segmenting business markets*
Segmenting international markets -
-
Segment by o Geographic location: grouping countries by regions o Economic factors -> ex by pop’n income lvls o Political & legal factors o Cultural factors Intermarket segmentation (aka cross market segmentation): forming segments of consumers who have similar needs and buying behaviour even though they are located in different countries
Requirements for effective segmentation -
Market segments, to be useful, must be… o Measurable-> the size, purchasing power, and profiles of the segments can be measured o Accessible -> segments to be effectively reached and served o Substantial-> segments are large/profitable enough to serve o Differentiable-> segments distinguishable and respond differently to diff marketing mix elements and programs o Actionable-> programs designed for attracting and serving segments
Market targeting Evaluating market segments -
THREE factors in evaluating market segments o Segment size & growth o Segment structural attractiveness Power of buyers affects Powerful suppliers make less attractive Less attractive if have already many strong and aggressive competitors Ie existence of actual/potential substitute products limits prices/profits o Company objectives and resources 3
Selecting target market segments -
Target market: a set of buyers sharing common needs or characteristics that the company decides to serve Marketing targeting strategies
Undifferentiated marketing -
Undifferentiated marketing (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 o Focuses on common needs o Trouble to compete w/ more focused firms o For more UNIFORM products (ex grapefruits/steel) o Used in early stage of product life o Strategy used for ppl that have the same tastes and buy the same amnt o BAD is competitors using differentiated/concentrated marketing
Differentiated marketing -
Differentiated marketing (segmented marketing): a market coverage strategy in which a firm decides to target several market segments and designs separate offers for each o Requires extra marketing research, forecasting, sales analysis, promo planning and channel mgmt o Must weigh increased sales against increased costs o For products that can vary in design o Used in mature stage of product
Concentrated marketing -
Concentrated marketing (niche marketing): a market coverage strategy in which a firm goes after a large share of one or a few segments or niches o Can achieve strong market position Why? Bc greater knowledge of consumer needs in the served niche o Markets effectively through fine-tuning o Markets efficiently by targeting its services to consumers that it can serve best o Niches = SMALL… attracts only FEW competitors o Focuses limited resources on serving the niches o Start as niche to get foothold against larger competitors Ex: WestJet 4
o o o o o
Megamarketers create niche markets to create sales growth Ex: Zappos Used in early stage of product life Higher-than-normal risks For products that can vary in design
Micromarketing -
-
-
Micromarketing: the practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups – includes local marketing and individual marketing Local marketing: tailoring brands and promotions to the needs and wants of local customer groups – cities, neighbourhoods, and even specific stores o Ex Walmart (according to neighbourhood characteristics) o Cab drive up manufacturing and marketing costs by reducing economies of scale o Creates logistic problems o Diluted brand image o Meets the needs of first line customers Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers – aka “one-to-one marketing” “mass customization” and markets-of-one marketing” o Customizing offerings o Stand out against competitors o Builds relationships
Choosing a targeting strategy -
Strategy depends on resources, product variability, product’s life cycle stage, market variability, competitors marketing strategies
Socially responsible target marketing -
Targeting younger children by mistake.. Issue of how and what in target marketing
Differentiation and 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 o Complex set of perceptions, impressions, and feelings that consumers have for the product compared to competitors o Plan positions to give product greatest advantage in selected target markets
5
Positioning maps -
Perceptual positioning maps: show consumer perceptions of their brands vs competing products on important buying dimensions
Choosing a differentiation and positioning strategy -
-
THREE steps in differentiation and positioning tasks o Identifying a set of differentiating competitive adv up which to build a position o Choosing the right competitive advantages o Selecting an overall positioning strategy Need to communicate and deliver the chosen position to the market
Identifying possible value differences and competitive advantages -
Competitive advantage: an advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices Differentiate by o Product By features, performance, style & design o Services Through speedy, convenient, careful delivery, HQ customer care o Channels Competitive advantage through coverage, expertise, and performance o Ppl Through hiring, and training better ppl than competitors o Image Image to convey benefits and positioning
Choosing the right competitive advantages -
-
How many difference to promote o The more claims on brands -> risking loss of clear positioning o Each brand should pick one benefit and stick to it (unique selling proposition USP) Which differences to promote o Difference worth establishing if it satisfies: Important: the difference delivers highly values benefit to target buyers Distinctive: competitors do not offer the difference, or the company can offer it in more distinctive way Superior: the difference is superior to other ways that customers might obtain he same benefit Communicable: visible and communicable to buyers Preemptive: difference cannot be easily copied Affordable: buyer can afford to pay the difference 6
Profitable: introduce difference profitably
Selecting an overall positioning strategy -
Value proposition: the full positioning of a brand = the full mix of benefits upon which it is positioned
-
More for more -> provides most upscale product/service for higher price to cover its high costs o Can be vulnerable… imitators More for the same -> comparable quality at lower price The same for less -> powerful proposition , offers same brands w/ LARGE discounts Less for much less -> meets consumers ’lower performance/quality requirements at much lower price (dollar stores) More for less-> the BEST value proposition but its hard to sustain in the LR
-
Developing a positioning statement -
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) o Ex: “to busy, mobile pros who need to always be in the loop, BB is a wireless connectivity sol’n that gives you an easier, more reliable way to stay connected to data, ppl, and resources while on the go”
Communicating and delivering the chosen position -
After a position is built need to maintain it through consistent performance and communication Monitor and adapt to changes in consumer needs and competitors strategies Position should change GRAUDALLY if adapting to changing marketing environment
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