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Lecture

ADMS 2200 Lecture Notes - Mass Customization, Rosser Reeves, Longrun


Department
Administrative Studies
Course Code
ADMS 2200
Professor
Li Lee

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Part 3 Designing a Customer-Driven Marketing Strategy and Marketing Mix
CHAPTER 7
SEGMENTATION, TARGETING, AND POSITIONING
PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES
1. define the four major steps in designing a customer-driven marketing strategy: market
segmentation, market targeting, differentiation, and positioning
2. list and discuss the major bases for segmenting consumer and business markets
3. explain how companies identify attractive market segments and choose a market targeting
strategy
4. discuss how companies differentiate and position their products for maximum competitive
advantage
JUST THE BASICS
CHAPTER OVERVIEW
This chapter looks further into key customer-driven marketing strategy decisions—how to divide
up markets into meaningful customer groups (segmentation), choose which customer groups to
serve (targeting), create market offerings that best serve targeted customers (differentiation),
and positioning the offerings in the minds of consumers (positioning).
Then, the chapters that follow explore the tactical marketing tools—the Four Ps—by which
marketers bring these strategies to life.
ANNOTATED CHAPTER NOTES/OUTLINE
INTRODUCTION
Biotherm Homme: Targeting a New Market Segment
Male grooming is a booming market. The category has seen 25 to 30 percent growth per year,
reaching $2.7 billion in Canada in 2009.
Founded in France in 1985, Biotherm Homme is the pioneer and world-leading men’s skin-care
brand, known for breaking barriers and eliminating taboos while standing by men and helping
them feel comfortable about taking care of their skin to look and feel better.
The Biotherm Homme brand strives to develop close relationships with men by communicating an
in-depth understanding of their skin, and challenging men—in a friendly manner—to change their
habits without challenging who they are.
Today, Biotherm Homme products are available in over 70 countries, and include full lines of:
cleansers
moisturizers
anti-aging creams
eye creams

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Part 3 Designing a Customer-Driven Marketing Strategy and Marketing Mix
Though Biotherm Homme was a pioneering brand in men’s skin care, nearly every major
cosmetics brand has since entered the market:
Unilever Canada recently launched a new line of products called Dove Men + Care.
Nivea for Men offers a website called The Groom Room.
At Biotherm Homme, the future of men’s skin care is high-precision, high-tech instruments and
formulations, dedicated to making men look good with minimum time wasted in front of the
mirror.
Figure 7.1 shows the four major steps in designing a customer-driven marketing strategy.
Market segmentation involves dividing a market into smaller groups of buyers with distinct
needs, characteristics, or behaviours that might require separate marketing strategies or mixes.
Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and
selecting one or more market segments to enter.
Differentiation involves actually differentiating the firm’s 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.
MARKET SEGMENTATION
Through market segmentation, companies divide large, heterogeneous markets into smaller
segments that can be reached more efficiently and effectively with products and services that
match their unique needs.
Segmenting Consumer Markets
Table 7.1 outlines the major variables that might be used in segmenting consumer markets.
Geographic Segmentation
Geographic segmentation calls for dividing the market into different geographical units such as
global regions, countries, regions within a country, provinces, cities, or even neighbourhoods.
Demographic Segmentation
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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Chapter 7: Segmentation, Targeting, and Positioning
Demographic factors are the most popular bases for segmenting customer groups.
Age and Life-Cycle Stage is offering different products or using different marketing approaches
for different age and life-cycle groups.
Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
Household Income (HHI) segmentation has long been used by the marketers of products and
services such as automobiles, clothing, cosmetics, financial services, and travel.
Ethnic or Cultural Group
Statistics Canada compiles census data about Canadians, and makes it available to marketers. It’s
fairly easy to identify markets in Canada with high numbers of Chinese-speaking consumers, and
place your advertising accordingly.
Quebec is a large market segment of its own, defined by geography, but more importantly by
ethnicity and language.
Psychographic Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle,
or personality characteristics.
Marketers use personality variables to segment markets.
Behavioural Segmentation
Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses,
or responses to a product.
Occasion segmentation is grouping buyers according to occasions when they get the idea to buy,
actually make their purchase, or use the purchased item.
Benefit segmentation is grouping buyers according to the different benefits that they seek from
the product.
User Status is segmenting markets into nonusers, ex-users, potential users, first-time users, and
regular users of a product.
Usage Rate is grouping markets into light, medium, and heavy product users.
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