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Lesson 3

The document discusses market segmentation, targeting, and positioning. It covers segmenting markets based on geographic, demographic, psychographic, and behavioral factors. It also discusses evaluating market segments, choosing target segments, and differentiating products through physical attributes, services, personnel, location, image, and choosing the right competitive advantages.

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lacbayenarjie2002
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22 views

Lesson 3

The document discusses market segmentation, targeting, and positioning. It covers segmenting markets based on geographic, demographic, psychographic, and behavioral factors. It also discusses evaluating market segments, choosing target segments, and differentiating products through physical attributes, services, personnel, location, image, and choosing the right competitive advantages.

Uploaded by

lacbayenarjie2002
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Lesson 3: Market Segmentation, Targeting and Positioning

Three Steps of the Target Marketing Process


1. Market segmentation is the process of dividing a market into distinct groups of buyers who might
require separate products and/or marketing mixes.
2. Market targeting is the process of evaluating each segment’s attractiveness and selecting one or more
of the market segments.
3. Positioning is the process of developing competitive positioning for the product and an appropriate
marketing mix.
Market Segmentation
Bases for Segmenting a Market. There is no single way to segment a market. A marketer has to
try different segmentation variables, alone and in combination, hoping to find the best way to view the
market structure.
1. Geographic segmentation calls for dividing the market into different geographic units, such as
nations, states, regions, counties, cities, or neighborhoods.
2. Demographic segmentation consists of dividing the market into groups based on demo- graphic
variables such as age, gender, family life cycle, income, occupation, education, religion, race, and
nationality.
3. Psychographic segmentation divides buyers into different groups based on social class, lifestyle, and
personality characteristics.
4. Behavior segmentation divides buyers into groups based on their knowledge, attitude, use, or
response to a product.

Requirements for Effective Segmentation


Measurability - The degree to which the segment’s size and purchasing power can be measured.
Accessibility - The degree to which segments can be accessed and served.
Substantiality - The degree to which segments are large or profitable enough to serve as markets.
Actionability - The degree to which effective programs can be designed for attracting and serving
segments.

Market Targeting
Marketing segmentation reveals a company’s market-segment opportunities. The firm has to
evaluate the various segments and decide how many and which ones to target. We now look at
how companies evaluate and select target markets. (Kotler et al., 2016)

Evaluating Market Segments


Segment size and growth. Companies analyze the segment size and growth and choose the segment that
provides the best opportunity.
Segment structural attractiveness. A company must examine major structural factors that affect long-
run segment attractiveness.
Company objectives and resources. The company must consider its own objectives and resources in
relation to a market segment.

Selecting Market Segments


Segmentation reveals market opportunities available to a firm. The company then selects the most
attractive segment or segments to serve as targets for marketing strategies to achieve desired objectives.
Undifferentiated marketing strategy. An undifferentiated marketing strategy ignores market
segmentation differences and goes after the whole market with one market offer.
Differentiated marketing strategy. The firm targets several market segments and designs separate offers
for each.

Selecting Market Segments


Concentrated marketing strategy. Concentrated marketing strategy is especially appealing to
companies with limited resources. Instead of going for a small share of a large market, the firm pursues a
large share of one or more small markets.
Micromarketing—local marketing and SoloMo. Micromarketing is the practice of tailoring products
and marketing programs to fit the tastes of specific individuals and locations. Local marketing and
SoLoMo (social, local, mobile) marketing are forms of micromarketing.

Choosing a market-coverege strategy


Companies need to consider several factors in choosing a market-coverage strategy.
Company resources. When the company’s resources are limited, concentrated marketing makes the
most sense.
Degree of product homogeneity. Undifferentiated marketing is more suited for homogeneous products.
Products that can vary in design, such as restaurants and hotels, are more suited to differentiation or
concentration.
Market homogeneity. If buyers have the same tastes, buy a product in the same amounts, and react the
same way to marketing efforts, undifferentiated marketing is appropriate.

Market Positioning
A product’s 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.

Positioning Strategies
1. Specific product attributes. Price and product features can be used to position a product.
2. Needs products fill or benefits products offer. Marketers can position products by the needs that they
fill or the benefits that they offer. For example, a restaurant can be positioned as a fun place.
Choosing and Implementing a Positioning Strategy
The positioning task consists of three steps:
• identifying a set of possible competitive advantages on which to build a position
• selecting the right competitive advantages, and effectively communicating; and
• delivering the chosen position to a care- fully selected target market.

Product Differentiation
Physical Attribute Differentiation. Physical attribute that excites the consumer and offers something
new can lead to excellent public relations opportunities, customer loyalty, and greater profits.
Service Differentiation. Hospitality companies differentiate themselves on service. Mature consumers
place special value on friendly staff, guest name recognition by staff, assistance in making a product
decision, opportunities to socialize, and no pressure to leave. These simple services can reap large
rewards for members of the hospitality industry. Because so many companies overlook the importance of
good service, those who truly emphasize service will achieve positive differentiation
Personnel Differentiation. Companies can gain a strong competitive advantage through hiring and
retaining better people than their competitors. Personnel differentiation requires that a company select its
customer-contact people carefully and train them well. These personnel must be competent and must
possess the required skills and knowledge. They need to be courteous, friendly, and respectful. They must
serve customers with consistency and accuracy, and they must make an effort to understand their
customers, communicate clearly with them, and respond quickly to customer requests and problems.
Local Differentiation. Location can provide a strong competitive advantage. For example, hotels facing
Central Park in New York City have a competitive advantage over hotels a few blocks away.
Image Differentiation. Even when competing offers look the same, buyers may perceive a difference
based on company or brand image. Thus, hospitality companies need to work to establish images that
differentiate them from competitors. A company or visitor destination image should convey a singular or
distinctive message that communicates the product’s major benefits and positioning

Choosing the Right Competitive Advantage


Suppose that a company is fortunate enough to discover several potential competitive
advantages. It must now choose the ones on which it will build its positioning strategy.
Not all brand differences are meaningful or worthwhile. Not every difference makes a good
differentiator. Each difference has the potential to create company costs as well as customer
benefits. Therefore, a hospitality company or a visitor destination must carefully select the ways
in which it will distinguish itself from competitors. A difference is worth establishing to the
extent that it satisfies the following criteria:

Choosing the Right Competitive Advantage


• Important. The difference delivers a highly valued benefit to target buyers. In the case of a visitor
destination, personal safety has become top benefit

• Distinctive. Competitors do not offer the difference, or the company can offer it in a more distinctive
way
• Superior. The difference is superior to other ways that customers might obtain the same benefit
• Communicable. The difference is communicable and visible to buyers.
• Preemptive. Competitors cannot easily copy the difference.
• Affordable. Buyers can afford to pay for the difference
• Profitable. The company can introduce the difference profitability.

Selecting an Overall Positioning Strategy


The full positioning of a brand is called the brand’s value proposition, the full mix of benefits on
which a brand is differentiated and positioned. It is the answer to the customer question, “Why should I
buy your brand. ” Value Place is a low-priced hotel with a full kitchen and a low weekly rate. Sometimes
low-priced hotels attract persons who do not have the credit or money to rent an apartment, such as drug
dealers, and prostitutes. This can create an unsafe atmosphere. Value Place stresses safety as a point of
differentiation in their value proposition. They stress the affordability, cleanliness and safety of their
properties. Fairmont, an upscale hotel chain, values providing exceptional service experiences that will
create favorable memories for its guests.

Selecting an Overall Positioning Strategy


Positioning is enhanced and supported by creating memorable customer experiences. Hospitality
companies provide many services throughout the day. Most of these become routine and are
indistinguishable from competitors. The key to creating memorable and differentiating customer
experiences is not simply to improve them but to layerenjoyable or memorable experience on top.

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