Ch 7 -0 Copyright © 2011 Pearson Education
Principles of Marketing,
Arab World Edition
Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki
CHAPTER SEVEN
Customer-Driven Marketing
Strategy: Segmentation,
Targeting & Positioning
Lecturer: Insert your name here
Ch 7 -1 Copyright © 2011 Pearson Education
Chapter Learning Outcomes
Topic Outline
7.1 Customer-Driven Marketing Strategy
7.2 Market Segmentation
7.3 Market Targeting
7.4 Differentiation and Positioning
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Segmentation, Targeting and Positioning
Segmentation and Targeting
Market segmentation is the process that companies use to
divide large heterogeneous markets into small markets that
can be reached more efficiently and effectively with products
and services that match their unique needs.
Market targeting (targeting) is the process of evaluating
each market segment’s attractiveness and selecting one or
more segments to enter.
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Segmentation, Targeting and Positioning
Market Differentiation and Positioning
Differentiation involves actually differentiating the market
offering to create superior customer value.
Positioning consists of arranging for a market offering to
occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
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Market Segmentation
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Market Segmentation
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
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Market Segmentation
Segmenting Consumer Markets
Geographic Demographic
segmentation segmentation
Psychographic Behavioral
segmentation segmentation
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Market Segmentation
Segmenting Consumer Market
Geographic segmentation divides the market into different
geographical units such as nations, regions, provinces,
parishes, cities, or even neighborhoods.
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Market Segmentation
Segmenting Consumer Markets
Demographic segmentation divides the market into groups
based on variables such as age, gender, family size, family life
cycle, income, occupation, education, religion, race,
generation, and nationality.
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Market Segmentation
Demographic Segmentation
Age and life-cycle stage segmentation is the process of
offering different products or using different marketing
approaches for different age and life-cycle groups.
Gender segmentation divides the market based on sex (male
or female).
Income segmentation divides the market into affluent or low-
income consumers.
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Market Segmentation
Psychographic Segmentation
Psychographic segmentation divides buyers into different
groups based on social class, lifestyle, or personality
characteristics.
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Market Segmentation
Behavioral Segmentation
Behavioral segmentation divides buyers into groups based on
their knowledge, attitudes, uses, or responses to a product.
• Occasions
• Benefits sought
• User status
• Usage rate
• Loyalty status
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Market Segmentation
Using Multiple Segmentation Bases
Multiple segmentation is used to identify smaller, better-
defined target groups.
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Market Segmentation
Segmenting Business Markets
Geographic
Demographic
Benefits Sought
User Status
Usage Rate
Loyalty Status
Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
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Market Segmentation
Segmenting International markets
Geographic location
Economic factors
Political-legal factors
Cultural factors
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Market Segmentation
Segmenting International Markets
Inter-market segmentation divides consumers into groups
with similar needs and buying behaviors even though they are
located in different countries.
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Market Segmentation
Requirements for Effective Segmentation
To be useful, market segments must be:
Measurable
Accessible
Substantial
Differentiable
Actionable
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Market Targeting
Target Market
Target market consists of a set of buyers who share common
needs or characteristics that the company decides to serve.
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Market Targeting
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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Market Targeting
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Market Targeting
Selecting Target Marketing Segments
Undifferentiated marketing targets the whole market with
one offer
• Mass marketing
• Focuses on common needs rather than what’s different
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Market Targeting
Selecting Target Marketing Segments
Differentiated marketing targets several different market
segments and designs separate offers for each.
• Goal is to achieve higher sales and a stronger position
• More expensive than undifferentiated marketing
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Market Targeting
Selecting Target Marketing Segments
Concentrated marketing targets a large share of one or a
few smaller segments or niches.
• Limited company resources
• Knowledge of the market
• More effective and efficient
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Market Targeting
Selecting Target Marketing Segments
Micromarketing is the practice of tailoring products and
marketing programs to suit the tastes of specific individuals
and locations.
• Local marketing
• Individual marketing
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Market Targeting
Selecting Target Marketing Segments
Local marketing involves tailoring brands and promotion to
the needs and wants of local customer groups
• Cities
• Neighborhoods
• Stores
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Market Targeting
Target Market Strategies
Individual marketing involves tailoring products and
marketing programs to the needs and preferences of individual
customers.
Also known as:
• One-to-one marketing
• Customized marketing or mass customization
• Markets-of-one marketing
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Market Targeting
Choosing a Targeting Strategy
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
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Market Targeting
Socially Responsible Target Marketing
Concern for vulnerable segments (Children) with controversial
or potentially harmful products.
• Cigarettes
• Internet abuses
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Differentiation and Positioning
Positioning
Product position is the way the product is defined by
consumers on important attributes—the place the product
occupies in consumers’ minds relative to competing products.
• Perceptions
• Impressions
• Feelings
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Differentiation and Positioning
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Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages to build
a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
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Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Competitive advantage is an advantage over competitors
gained by offering consumers greater value, either through
lower prices or by providing more benefits that justify higher
prices.
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Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantages
Identifying a set of possible competitive advantages to build a
position by providing superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
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Differentiation and Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:
Important Distinctive Superior Communicable
Preemptive Affordable Profitable
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Differentiation and Positioning
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Differentiation and Positioning
Developing a Positioning Statement
To (target segment and need) our (brand) is (concept) that
(point of difference).
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Communication and Delivering the Chosen
Position
Delivering the chosen position
A company must take steps to deliver and communicate the
desired position to target consumers.
Choosing the positioning is often easier than implementing the
position.
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