Marketing Management 2nd Edition

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Marketing Management2nd Edition

• Michael R. Czinkota and Masaaki Kotabe

• Chapter 7
• Market Segmentation, Positioning, and Branding

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Choosing the Value

• Segmentation
• Targeting
• Positioning

• Understanding the customers
• Selecting customers
• Defining offering

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What is a Market?

• All the potential customers sharing particular
  needs and wants who might be willing to engage in
  exchange to satisfy their needs or wants.

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Market Boundaries
Examples
Product or service category
People who buy luxury cars
Geography
Westerners prefer dark roasted coffee
Hospitals have different needs than
corporate health centers
Physical customer groupings
Intangibles
Low-end versus high-end market
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Market Boundaries (cont.)
Customers
Who are your own customers?
Users
Who uses the category of products?
Prospects
Individuals in the market who are not
your customers.
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Market Share and the Pareto Effect
Market Share
Pareto Effect
A small number of customers (20) may represent
a large percentage of sales (80).
Percentage of sales that a firms product has in
a particular market. Note Volume vs. Value
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Market SegmentationMobils Gas Segments
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Market SegmentationBy Consumer Behavior

• Consumer characteristics (who buys)
• Geographic
• Demographic
• Socio-economic
• Lifestyles

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Market SegmentationBy Consumer Behavior (cont.)

• Consumer responses (what is bought)
• Occasions
• Benefits
• Usage frequency (heavy vs. light)
• Attitudes (including loyalty)

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Market SegmentationOther Types of Segmentation

• Benefit segmentation
• Why Consumers Buy What They Buy
• e.g., conservationists
• Segmentation by consumption profile
• Based on Consumers Purchasing Patterns (e.g.,
  products, brands, media)
• Segmentation by national boundaries
• Regional Segmentation Often More Effective

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Segment Viability

• Characteristics of segment viability
• Size Must be large enough to generate volume for
  adequate profit.
• Identity Should have unique characteristics that
  can be identified.
• Relevance Must be relevant to the important
  characteristics of the product.
• Access Must be able to be reached (i.e.,
  distribution, promotion).

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Target Marketing

• Absolut Vodka targets members of the gay and
  lesbian market segment with advertising in The
  Advocate and other targeted publications as well
  as sponsorship of events such as gay and lesbian
  film festivals.

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Internet and Segmentation

• Traditional sales push model is replaced by a
  market pull model.

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Segmentation in Practice

• Background Investigation
• Qualitative Research (e.g., focus groups)
• Quantitative Research
• Analysis
• Segmentation/ Positioning/ Repositioning
• Positioning Maps
• Perceptual Maps

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Positioning
Segmentation grouping of people by needs or
wants.
Positioning how a product is geared to
attract this market segment.
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Approaches to Segmentation

• Single Segment (aka niche marketing) Focus on a
  single market segment.
• e.g., Mercedes
• Multiple Segments Target two or more segments
  with one or more brands.
• e.g., The Gap

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Positioning

• Gap positions
• Banana Republic for higher-income segments
• Gap for mid-market customers
• Old Navy for the budget conscious consumer

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Approaches to Segmentation

• Cross segments Offer same product across
  different segments.
• e.g., Duponts Teflon
• Full coverage (aka Mass Marketing) Offer product
  to entire market.
• e.g., Coca-Cola

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Approaches to Segmentation

• Counter segmentation Consolidate several
  segments and launch or reposition a product to
  cover several segments.
• e.g., Nissan and Toyota

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Segmentation and Ethics

• Marketers must be care that the end result of
  segmentation efforts do not go against ethical
  standards.
• e.g, Malt Liquors targeting poor inner-city
  segment of the beer market
• e.g,, Cigarette ads targeted at the youth market

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Product Differentiation

• Used to give products unique identities to
  distinguish them from their competitors.
• Example Branding

Glass cleaners
Windex
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Branding Policiesfor New Products

• Company name
• e.g., IBM
• Family branding
• e.g., Mercedes, Black Decker
• Individual branding
• e.g., McDonalds, Seven-Up

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Branding Policies for Existing Products
Brand extension
Use existing brand name for new or modified
products. e.g., Diet Coke, Cherry Coke
Multibrands
Offer several different brands in competition
with each other. e.g., PGs Tide, Fab
Cheer Cannibalization Risk
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Branding Policies for Existing Products
Two different brands team up to create a new
product. e.g., General Foods Hersheys created
Reeses Peanut Butter Puffs cereal
Co-branding
Private brand retailers own branded
product. e.g., Sears uses Kenmore Generic brand
no brand name. e.g., Potato chips,
macaroni and cheese
Private and generic brands
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Top 10 Best Brands in U.S.

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Top 10 Best Brands in U.S.

1. Sony
2. Kraft
3. Dell
4. GM
5. Microsoft

1. Ford
2. Coca-Cola
3. PG
4. Kelloggs
5. General Electric/ Pepsi-Cola

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Best Brands in U.S. vs. Britain

1. Sony
2. Kraft
3. Dell
4. GM
5. Microsoft
6. Ford
7. Coca-Cola
8. PG
9. Kelloggs
10. GE/Pepsi-Cola

1. Sony
2. Heinz
3. Marks Spencer
4. Kelloggs
5. Tesco
6. Flora
7. Coca-Cola
8. Boots
9. Nestle
10. Cadbury