Market Segmentation, Targeting and Positioning Zou Deqiang, Ph. D School of Management, Fudan University Apri16,2008
1 Market Segmentation, Segmentation, Targeting and Targeting and Positioning Positioning Zou Deqiang, Ph.D. School of Management, Fudan University April 16, 2008
Chapter Questions What are the requirements for effective segmentation? What criteria can a company use in selecting attractive segments to enter through target marketing How can a firm choose and communicate an effective position? How are brands differentiated? O Copy rights reserved, Zou Deqiang
2 2 © Copy rights reserved, Zou Deqiang Chapter Questions • What are the requirements for effective segmentation? • What criteria can a company use in selecting attractive segments to enter through target marketing? • How can a firm choose and communicate an effective position? • How are brands differentiated?
Case Study P&G- Segments the Market Strategy The Payoff Sells multiple brands P&G generates revenues within the same product in excessive of $4 billion in category for detergents U.S. laundry detergent soaps, and other goods market alone Each brand features a Tide has 34% share of different mix of benefits powder and 24% share of and appeals to a different liquid market segments segment Combined all P&G brands Product modifications account for 75 share of appeal to different niches powder and 55% share of within certain segments liquid detergent markets O Copy rights reserved, Zou Deqiang
3 3 © Copy rights reserved, Zou Deqiang Strategy • Sells multiple brands within the same product category for detergents, soaps, and other goods. • Each brand features a different mix of benefits and appeals to a different segment. • Product modifications appeal to different niches within certain segments. P & G – Segments the Market Segments the Market Case Study Case Study The Payoff • P&G generates revenues in excessive of $4 billion in U.S. laundry detergent market alone. • Tide has 34% share of powder and 24% share of liquid market segments. • Combined, all P&G brands account for 75% share of powder and 55% share of liquid detergent markets
The Importance of STP The heart of modern strategic marketing can be described as STP marketing- namely, segmenting, targeting, and positioning. This does not obviate the importance of LGD marketing-/unch, golf, and dinner but provides the broader framework for strategic success in the marketplace Philip Kotler O Copy rights reserved, Zou Deqiang
4 4 © Copy rights reserved, Zou Deqiang The heart of modern strategic marketing can be described as STP marketing - namely, segmenting, targeting, and positioning. This does not obviate the importance of LGD marketing - lunch, golf, and dinner - but provides the broader framework for strategic success in the marketplace. Philip Kotler The Importance of STP
Marketing Analysis (The 5Cs Customers Company Competitors Collaborators Context Market Target Market Product and Service Segmentation Selection Positioning Creating value Marketing Mⅸ(The4Ps Product and Service Place chane Promotion Capturing Pricing alue Customer Customer Sustaining Acquisitio Retention value Profit
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Mass Marketing The firm engages in the mass production, mass distribution, and mass promotion of one product for all buyers Buyers can have the Model T in any color they want. as long as it's black Henry Ford O Copy rights reserved, Zou Deqiang
6 6 © Copy rights reserved, Zou Deqiang Mass Marketing • The firm engages in the mass production, mass distribution, and mass promotion of one product for all buyers Buyers can have the Model T in any color they want … as long as it’s black. Henry Ford Buyers can have the Model T in any color they want … as long as it’s black. Henry Ford
Target Marketing Target marketing requires marketers to take three major steps ldentify and profile distinct groups of buyers who differ in their needs and preferences(market segmentation) Select one or more market segments to enter (market targeting For each target segment, establish and communicate the key distinctive benefit(s)of the company's market offering(market positioning) 7 O Copy rights reserved, Zou Deqiang
7 7 © Copy rights reserved, Zou Deqiang • Target marketing requires marketers to take three major steps: ¾Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). ¾Select one or more market segments to enter (market targeting). ¾For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning). Target Marketing
Levels of segmentation Mass Segment Niche Local Individual- Customization The key distinction is between mass marketing and segment marketing 8 O Copy rights reserved, Zou Deqiang
8 8 © Copy rights reserved, Zou Deqiang • Mass • Segment • Niche • Local • Individual- Customization The key distinction is between mass marketing and segment marketing Levels of Segmentation
Area of potential for market segmentation One-to marketing Increasing Zone of market flexibility segmentation Mass market Increasing market granularity 9 O Copy rights reserved, Zou Deqiang
9 9 © Copy rights reserved, Zou Deqiang Area of potential for market segmentation
Steps in STP Marketing Market Market Market Segmentation Targeting Positioning 1. Identify 3. Evaluate 5. Identify segmentation attractiveness possible variables and of each positioning concepts for segment the segment each target market segment 4. Select the 2. Develop target 6. Select profiles of segment(s) develop, and communicate resulting the chosen segments positioning concept O Copy rights reserved, Zou Deqiang
10 10 © Copy rights reserved, Zou Deqiang Steps in STP Marketing 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Segmentation 3. Evaluate attractiveness of each segment 4. Select the target segment(s) Market Targeting 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept Market Positioning