International Business Marketing MARKEC04 - Lecture 3

International Business Marketing MARKEC04 - Lecture 3

• Course: International Business Marketing MARKEC04
• Cluster: A-cluster (1st year, 1st semester)
• Lecture: 3
• Topic: Segmentation, Targeting, and Positioning

Learning Objectives

• 7.1: Identify steps in the target marketing process.
• 7.2: Understand the need for market segmentation and different approaches.
• 7.3: Explain how marketers evaluate segments and choose a targeting strategy.
• 7.4: Recognize how marketers develop and implement a positioning strategy.
• 7.5: Understand the importance of target marketing (segmentation, targeting, and positioning) for a successful career.

Segmentation

• Segmentation is dividing a large market into smaller segments with shared characteristics.
• Useful for both consumer and B2B contexts.
• Many segmentation variables exist.

Segmenting Consumer Markets

• Consumer markets segmented by:
  • Demographic (age, gender, family life cycle, income, social class, ethnicity)
  • Geographic (location)
  • Psychographic (lifestyle, values)
  • Behavioral (usage rate, loyalty)

Demographic Segmentation Examples

• Gender: Many products appeal to one gender or the other.
• Family life cycle: Family needs and expenditures change over time. Different categories ascend or descend in importance.
• Income and social class: Income impacts buying power; marketers match products to consumer groups considering discretionary and non-discretionary income. Many consumers buy based on desired image, not their actual social class. "Easy credit" can lead to buying more than can be afforded.
• Geographic segmentation: Using geographic information systems (GIS) to tailor products to an area based on the preference of people in that area.

Segmenting by Psychographics

• Uses psychological, sociological, and anthropological factors to categorize customers.
• Shared activities, interests, and opinions (“AIO's”)

Segmenting by Behavior

• Behavioral segmentation categorizes based on how consumers act toward or use a product/service.
• Examples include: users/non-users, 80/20 rule, customer loyalty, experiential loyalty, usage rate, long-tail approach, and usage occasions.

Lifestyle Attitudes

• Shows various lifestyle attitudes (e.g., importance of looking good, being health conscious) quantified.

Segment B2B Markets

• Segmentation is useful for B2B firms.
• Helps B2B companies understand needs and characteristics of potential customers.
• Firms categorized based on: organizational demographics, production technologies, user/non-user status.

Disruptions in Segmentation: When Everybody's a Segment of One

• Predictive analytics, driven by AI, allows marketers to know customer needs before they act.
• Anticipatory shipping uses AI to supply the customer with the product based on preferences.
• "Segment of one" means tracking customer preferences/tailoring products/ads to that customer.
• Younger generations prefer digitally driven solutions.

Targeting

• The next step is identifying attractive segments where marketers invest marketing resources.
• Selected segments known as target markets.
• Targeting strategy involves:
  • Evaluating market segments
  • Developing segment profiles
  • Choosing a targeting strategy

Step 1: Evaluate Market Segments

• Members have similar wants/needs, different from other segments.
• Measurable size and purchasing power.
• Large enough to be profitable.
• Effectively reachable by marketing communications.
• Needs satisfied better than competition.

Step 2: Develop Segment Profiles

• Segment profiles detail the typical customers within a segment
• Include: demographic, location, lifestyle, product/usage characteristics.
• Personas, fictional characters representing the users within each segment.

Step 3: Choose Targeting Strategy

• Undifferentiated: Broad spectrum of people, focuses on economies of scale.
• Differentiated: Multiple products for each customer group with different needs.
• Concentrated: One or more products for a single segment.
• Customized: Products tailored to individual customers (e.g., personal/professional services).
• Mass Customization: Modifying basic product to meet an individual customer's needs and tastes.

Positioning

• Positioning involves marketers developing a marketing strategy to influence how a market segment perceives a good/service relative to competitors.
• Steps in positioning:
  • Analyze competitors' positions
  • Define your competitive advantage (reason why customers perceive your product as better)
  • Finalize marketing mix (product, price, place, promotions)
  • Evaluate responses/modify as needed.

Step 1: Analyze Competitors' Positions

• Understanding positioning of direct and indirect competitors.
• Evaluating your product's benefits compared to competitors.

Step 2: Define Your Competitive Advantage

• Providing reasons why consumers will perceive your product as better.
• Defining a positioning statement—internally developed & maintained.
• Aligning successful brand positioning with company's competitive advantage(s).

Step 3: Finalize the Marketing Mix

• Marketing elements support distinctive brand image and value proposition.
• Mix elements (product, price, place, promotion) match selected segment(s).

Step 4: Evaluate Responses and Modify as Needed

• Repositioning is establishing a new position in response to market changes.
• Brand image changes and repositioning may breathe new life into "retro" brands. Perceptual maps

Perceptual Maps

• Visual representations that illustrate how brands are perceived in a market.
• Show attributes and how one perceives one brand versus another (e.g., in the case of automobile brands).