SWOT Analysis

MKTG 5200
What is SWOT?
• A framework for evaluating the overall competitive situation
facing a company/organization:
• Strengths
• Weaknesses
• Opportunities
• Threats

• SWOT accounts for both internal factors related to the company

(strengths / weaknesses), and external factors arising from
customers, competitors, and the broader business environment
3Cs Analysis
• 3Cs is an analytical tool that serves a similar purpose to SWOT;
it sizes up the situation using different categories but achieves
essentially the same ends

• The 3Cs are as follows:

• Company
• Customer
• Competitor
3Cs vs. SWOT
• 3Cs analysis is preferred by some marketers because it aligns
well with the marketing concept—the notion that companies
strive to leverage their skills and resources to satisfy the needs
and wants of customers more effectively than competitors

• However, SWOT is more common

 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 COMPANY ANALYSIS

Objectives
Strengths / weaknesses
Current / past performance
Fit with other products

Analysis

Strengths & Decisions

Weaknesses

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Political
Shopping / usage behavior Their current / previous strategies Economic
Buying process
Importance of this market to them Social
Likely actions and reactions Technological

Analysis

Opportunities Decisions
& Threats

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
SWOT Framework
Helpful Harmful

Internal Strengths Weaknesses

Often, SWOT
is presented
as a 2 × 2 matrix

External Opportunities Threats

SWOT Framework: Example
Helpful Harmful
Strengths Weaknesses
• Well-known brand • No international presence
• Solid finances • Reliant on contract manufacturers
• Limited R&D capabilities
Internal •
•
Good relationship with retailers
Strengths
Excellent quality control • Weaknesses
No patent protection
•
•
Famous for customer service
30+ years experience in industry
• Warehouse & logistics facilities
are at capacity
Often, SWOT
• Strong leadership is presented
Opportunities Threats
as a 2 × 2 matrix
• Growing interest in fitness • Rising cost of raw materials
• Consumer spending is strong • New solutions could make product
• Corporate market expanding
External Opportunities
rapidly •
unnecessary
Threats
Major tech firms (Apple, Meta) are
• Many customers looking for new contemplating market entry
supplier after bankruptcy of • Significant environmental footprint;
leading competitor gov’t may impose regulations
Using SWOT Effectively
• SWOT is a simple but powerful tool that helps you to
organize information about the situation facing your
company
• However, it is not the end of the analysis process…
Using SWOT Effectively
• Once you’ve completed the SWOT matrix, it’s important
to take time to reflect on the key takeaways for your
company / client…
“So what?”
“What does this all mean for us?”
• This last phase of the SWOT analysis process is what
transforms facts into insights and adds most of the
value for the company
Using SWOT Effectively
• Strive to answer questions like:
– Are we in a strong position? Why or why not?
– What’s the main problem / opportunity facing this company?
– If it’s a problem, how serious is it really? Why?
– If it’s an opportunity, does it make sense for us? Why or why not?
– Are there other important issues that need to be considered?
– Which challenges are we equipped to deal with? Which ones will be
difficult for us to resolve?
– Which competitors pose the most serious threat to us? Why?
An important note
 Analysis you present
Analysis you conduct
to arrive at your
recommendations
≠ to explain why you
recommended a
specific course of action
Preparing Your Written Analysis
• In a written marketing plan, the Situation Analysis section
is based on SWOT and should lead naturally into the rest
of the document
• Its role is to provide the key insights that form the
foundation for the recommendations to come
• For that reason, avoid writing (or at least finalizing)
the Situation Analysis until you have a clear sense of
what you intend to recommend
Preparing Your Written Analysis
• When presenting your Situation Analysis in written form,
it is helpful to organize it into 3 parts:

Internal Analysis External Analysis Overall

(Strengths / Weaknesses) (Opportunities / Threats) Conclusions

Competitors
Company
Customers
PEST(LE)
Preparing Your Written Analysis
• In most cases, it is helpful to include the full SWOT matrix
in an appendix, and reference it in the body of your
marketing plan
• This provides the “best of both worlds”—the detail of a
complete SWOT analysis, coupled with the insight that
comes from connecting the individual parts and focusing
on key implications for the decision facing the company
End of Lecture
PEST(LE) Analysis:
Making Sense of the
Business Environment
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 P.E.S.T. ANALYSIS

Political
Economic
Social
Technological

Analysis

Decisions

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
PEST Analysis
• A simple tool for assessing ‘big picture’ factors that influence
the organization’s ability to succeed in the market
• Identifies the trends and forces that the organization should
consider when setting strategy and making decisions
• The ‘big idea’: Nearly all macro-level factors that impact business
fall into one of 4 categories:
• Political
• Economic
• Social
• Technological
PEST Analysis
• Political Keep in mind…
• Economic 1. Although often described as an analytical framework,
PEST is essentially just a device that reminds you to
• Social consider various categories of external factors

• Technological 2. These four categories are rarely equally relevant;

the importance of each (P.E.S.T.) can vary greatly
depending on the situation
3. Don’t worry if some of the factors you identify don’t
fit neatly under a particular category; the purpose
of PEST is to ensure that you consider all relevant
forces—how you categorize them is less important
PEST Analysis
• Think of PEST as the starting point for your analysis of
external factors, not the end
• When writing your marketing strategy, you are not obliged
to organize your written analysis under these 4 headings
– In fact, an integrative discussion of macro-level factors
is often more effective
Political Factors
• Factors arising from political priorities and the manner in
which government intervenes in the economy:
– tax policy – infrastructure spending
– labour law – health policy & spending
– trade restrictions & tariffs – education policy & spending
– industry regulation – etc.
– environmental law
Political Factors
• Also includes considerations related to political stability
and political pressures faced by governments from
domestic and international actors
Economic Factors
• Global, national, and local conditions that affect overall
spending levels, input costs, and cost of capital:
– economic growth – consumer confidence
– exchange rates – investor confidence
– inflation – commodity prices
– interest rates – supply chain disruptions
– wage rates
Economic Factors
• Economic forces are often broad, and intertwined with
political and other considerations
Social Factors
• Forces arising from societal-level changes

Demographic changes Geographic shifts

• Age distribution of society • Growing urbanization
• Changes in family structure • Population growth in Asia; stagnation in Europe
• Growing ethnic diversity • Migration to Western Canada

Changing values
• Role of men and women
• Quality of life focus
• Eco-consciousness
 Social Factors
• Forces arising from societal-level changes

Family structure
Age & wealth distribution

Ethnic diversity
Technological Factors
• Factors related to the evolution and adoption of new
technologies by consumers and companies
• Includes things like:
– revolutionary products
– better ways to perform existing tasks
– automation of processes
– need for new equipment
• Technological change can influence costs, quality, barriers
to entry, and the need for innovation
Technological Factors
PESTLE Analysis
• Adds 2 additional categories to PEST analysis, in order
to ensure that legal and environmental issues receive
explicit attention:
• Political
• Economic In a PEST analysis, these
factors are captured by the
• Social original 4 categories
• Technological
• Legal
• Environmental
Legal Factors
• Factors related to legislation and regulation:
– antitrust law
– employment law
– consumer protection legislation
– product standards
– health & safety regulations

• Frequently, these have a political dimension

Environmental Factors
• Factors related to ecological concerns and environmental
protection:
– environmental regulation (existing and potential)
– impact on consumer preference & choice
– brand / corporate image considerations

• Consider risks and costs, but also opportunities

Boundary-Spanning Factors
• Some factors are so broad in concept and impact that
they do not fit neatly under a single category
Boundary-Spanning Factors
• Consider climate change
Political Carbon tax / Cap & trade
Economic Rising energy costs, insurance costs
Social Public resistance to resource development
Technological Clean technologies, improved battery performance
Legal Stricter regulation & enforcement
Environmental Severe weather events, ecosystem pressures
PEST: The Marketer’s Task
1. Identify key “big picture” factors
2. Consider their implications for the organization
– short- vs. long-term
3. Respond appropriately
Fads vs. Trends
• When deciding how to respond, managers also need to
decide whether to respond
• A key part of the marketing challenge is to distinguish
short-term fads from more enduring trends
Fads vs. Trends
• Gluten-free

Fad?

Trend?
Fads vs. Trends
• Keto

Fad?

Trend?
Fads vs. Trends
• Introducing new product lines is time-consuming and costly:
– product development costs
– consumer testing costs
– test marketing costs & risks
– listing costs / slotting fees
– launch campaign costs

• Companies must determine whether the opportunity is

likely to be sufficiently profitable and long-lasting to
justify the investment
Identifying Trends
• For managers, there are many ways to stay informed on
macro-level factors that can affect your business:

Reports and ‘white papers’

from consulting firms
Identifying Trends
• For managers, there are many ways to stay informed on
macro-level factors that can affect your business:

Magazines aimed at
senior managers
Identifying Trends
• For managers, there are many ways to stay informed on
macro-level factors that can affect your business:

Business intelligence
websites
End of Lecture
Sales Forecasting &
Marketing Intelligence
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 CUSTOMER ANALYSIS
Statistics
Shopping / usage behavior
Buying process

SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

TARGET
MARKET
SELECTION

Decisions
OUTCOMES
Financial
Other

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
Sales Forecasting
• As a marketing manager or entrepreneur, one of your first
tasks is to answer two key questions:
How much can I expect to sell?
Who will my customers be?
• The answers have important implications for planning:
– Production volumes – Pricing
– Viability / profitability of the product – Focus for distribution
– Product design – Focus and cost of promotion
Sales Forecasting
• This leads naturally to another question:

How big is the market?

Which Market to Measure?

Potential market Interested in the product

Have interest, income &

Available market
access to the product

Actively pursued
Target market
by company

Penetrated market Actually buy

How to Estimate Demand?
• Managers draw on a variety of information sources:
– Surveys of buyer intentions
– Composites of sales force opinions
– Expert opinions
– Past-sales analyses
– Test markets

• These elements are part of, and serve to inform, a system

commonly referred to as marketing intelligence
Marketing Intelligence
Marketing Intelligence
• A Marketing Intelligence System is a coordinated set of
processes used to collect info about developments and
trends in the marketing environment
• Organizations use marketing intelligence to monitor
information from various sources, make sense of it, and
present key info to decision-makers in a timely manner
• Marketing intelligence can serve as a valuable input to
market size estimates and many other aspects of
marketing decision-making
Marketing Intelligence
• Marketing intelligence systems gather information from a
variety of sources:
– Sales force
– Channel partners
– Competitive intelligence
– Customers
– Government data
– Market research companies
– Online reviews
Let’s examine each of these in turn…
1. Sales Force
• Encourage your sales force to scan for new developments
– Sales reps observe unintended ways that customers use the
company’s products, leading to new marketing opportunities and
product development efforts
Example: Bounce dryer sheets
2. Channel Partners
• Motivate your channel partners to share intelligence
– Dialogue with retailers to pass along feedback from front-line
salespeople about what customers think about your products
 Example: Crystal Light drink crystals

“Customers love the flavors.

A lot of them tell us they wish
they could use the product at the gym.”
 Example: Samsung mobile phones
Bigger buttons are just the beginning

BACKLIT KEYPAD WITH BIG BUTTONS LONG-LASTING BATTERY

For effortless dialing For more talk time

BRIGHT COLOUR SCREEN 5-STAR BUTTON

Makes it easy to view phone numbers Get help in any emergency

POWERFUL SPEAKER BUILT-IN CAMERA

Conversations are loud and clear Take photos anywhere you go

EASY TO NAVIGATE VOICE DIAL

Simple YES/NO menu buttons Quickly access contacts

“Seniors tell us that cell phones

are too complicated and $99
the buttons are too small.” + monthly plan and activation
3. Competitive Intelligence
• Keep a close eye on your closest rivals
– Use their products, monitor their advertising, and read their
company reports / news releases
4. Customers
• Listen carefully to customer feedback
• Consider establishing a customer advisory panel to gather
proactive advice and insights
– Depending on your objectives, these could be your most
representative, outspoken, or knowledgeable customers
– Social media influencers are increasingly sought after as “C2B”
representatives
5. Government Data
• Government statistics bureaus
offer a wide range of reports and
data that may be relevant to your
business
– Within Canada, Statistics Canada is
the best source of information
– Other sources include
Export Development Canada (EDC),
Business Development Bank of
Canada (BDC), and various provincial
governments
6. Market Research Companies
• Private-sector market research companies publish
sector-specific reports—some free, most for a fee
• They also offer opportunities to participate in syndicated
research, giving you the ability to buy access to specific
data and incorporate tailored questions into their studies
– EKOS, AC Nielsen, IDC, Ipsos, Angus Reid
7. Online Reviews
• Online reviews are a cheap and readily-available source of
info on how customers regard you and your competitors
• Although imperfect and potentially biased, they can be a
valuable early warning system, enabling you to identify and
respond to issues
• Monitoring online reviews is also important because many
customers rely on them to make decisions
Online Reviews: Amazon
Online Reviews: Yelp
Online Reviews: TripAdvisor
End of Lecture
Understanding Customers
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 CUSTOMER ANALYSIS
Statistics
Shopping / usage behavior
Buying process

Analysis

Decisions

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
The Marketing Manager’s Task
• Marketing aims to identify—and profitably satisfy—the
needs and wants of target customers more effectively
than competitors

BUT
Customers are Complex
a baseball fan
a value-conscious lazy
shopper occasionally
brilliant

forgetful
gluttonous

a beer drinker a procrastinator

a son
sometimes idealistic
but mostly cynical
a husband

loves donuts
a high school
a nuclear power graduate
plant worker
What does Homer want?
What does a middle-aged, married,
modestly educated professional with children want?
What do customers want?
Conceptual diagram of factors important to consumer
Cultural Influences Social Influences
Nationality / Ethnicity / Social Class Family / Reference Groups
behaviour
Information Processing
- Attention
External Stimuli Personal Factors - Comprehension
- Retention to memory
Marketer-Controlled: • Past experiences
- Product • Pre-existing beliefs
- Price • Pre-existing attitudes Attitude Formation
- Distribution • Self-concept - Beliefs
- Promotion • Personality - Emotions
• Core values - Intentions
Other-Controlled:
• Lifestyle
- Mass media
• Demographics
- Social media
• Benefits sought Decision Making
- Word-of-mouth
- Need recognition
- Search for alternatives
- Evaluation of alternatives

Outcomes
- Purchase (or not)
- Satisfaction (or not)
- Dissonance (or not)
Why is this important?

If marketer-controlled stimuli are

to have the desired effect, it is essential
to understand the other factors that
influence consumer choice…
The Role of Personal Factors

Personal Factors
• Past experiences
• Pre-existing beliefs Marketing research
• Pre-existing attitudes provides the tools
• Self-concept
• Personality to peer into the “black box”
• Core values of the customer’s mind
• Lifestyle
• Demographics
• Benefits sought
The Role of Personal Factors

Marketing research need not

be complicated or expensive
to be valuable

QUESTION:
What can you infer about this
woman’s needs and wants
based on this single image?
Cultural Influences
Cultural Influences
• Culture exerts a powerful influence on the values,
preferences, and purchase behaviours of consumers
• Consider the differences between the United States and
Canada—two countries with a shared history and border…
Cultural Influences: Canada
Cultural Influences: USA
Case Study: ING Direct

The Big Banks charge high fees,

just to access your own money.
And when you put money in one of their
bank accounts, they pay almost no interest.

Is that fair?
At ING Direct, our low fees and high
interest rates help you save your money.
Case Study: ING Direct

Big things can happen

when you save your money.
You save with no fees, and
no minimum deposit.

Turn your money

into BIG money.
Cultural Influences: Quebec
Cultural Influences: Pepsi in Quebec
In Quebec, Pepsi holds 29.9% of the
retail soft drink market, compared to
12.3% for Coca-Cola

This is attributed largely to Pepsi’s effort

to engage Quebec as a distinct market,
with advertising that caters to local tastes

In-depth article: [Link]

Social Influences
Social Influences: Family
• Family is one of the most important influences on a person’s
lifestyle, preferences, and decision-making
• An individual’s values, life goals, expectations, and many
habits are shaped by norms set by family during childhood
• Consumer behaviour is also impacted by a person’s role
within the family and within the decision-making process
– Joint decision-making by spouses
– Children as influencers
– Influence of older siblings
Social Influences: Reference Groups
• A reference group is a collection of people that individuals
use as a standard of comparison
• Consumers rely on reference groups for information about social
norms—what’s ‘cool’, normal, and/or acceptable—which then
shapes their opinions, beliefs, attitudes, and behaviours
• Reference groups are important to marketers because they
influence the products and brands that people choose
Social Influences: Reference Groups
• Several kinds of groups can influence consumer behaviour:

Associative Groups Aspirational Groups Dissociative Groups

Groups we belong to and identify with. Groups to which we’d like to belong Groups with which we don’t want to be
They include equals and near-equals or are striving to join. They typically associated. Use of a product or brand
with whom we share one or more embody a version of our ideal self, or by these groups will usually deter
specific interests. at least a ‘better’ version of ourselves. other buyers.
Social Influences: Reference Groups
• Reference groups exert two types of social influence:
1. Informational influence – What’s objectively best based on
the experience and insights of other people. (This is especially
important when “what’s best” is otherwise hard to discern.)

2. Normative influence – What’s “right,” “acceptable,” or “cool”

among members of the group (i.e., things you must do to fit in).
Information Processing
Information Processing
Exposure

Attention Interpretation Retention

STIMULI

Sensory Processing Activity Meaning Assigned Info Committed

Receptors Devoted to Stimulus to Stimulus to Memory
Exposure
• Consumers will…
1. Seek out some stimuli
e.g., buying certain magazines, but not others
2. Avoid some stimuli
“zipping” and “zapping” TV ads
3. Be unaware of other stimuli
Attention
• Things to note about consumer attention:
1. It is limited
multi-tasking is feasible only when tasks can be done
relatively automatically
2. It is selective
consumers decide what to focus on
3. It is frequently divided
consumers often try to focus on several things at once
Interpretation
• Marketing messages are not always received as intended:
1. The message might be unclear
overly ‘high concept’ or simply poor execution
2. The consumer might not be paying sufficient attention
complex messages require more mental resources
3. A common knowledge base could be lacking
advertisements often rely heavily on common tropes,
cultural references, or technical terminology
Retention
• Marketing messages may not be retained:
1. The ad might be hard to remember
there may be too much information, or the ad may lack a suitable
‘hook’ to aid recall (e.g., repetition, rhyme, chunking)
2. The consumer might not care
info may simply be discarded, rather than elaborated upon and
integrated into the consumer’s knowledge structures
3. Additional exposure may be needed
most ads must be seen several
times to be remembered
Decision-Making
The Decision-Making Process
• Consumer seeks to satisfy a need
• Consumer is looking for specific benefits
• They see each product as a bundle of attributes
with varying abilities to deliver benefits that
satisfy needs
• The attributes the consumer regards as important
will vary by product
Steps in the Buying Process
 Steps in the Buying Process
Homer realizes he’d fed up with his 32-inch TV that won’t allow
1. Need recognition
him to watch “Dancing with the Stars” in ultra-high definition

2. Information search Homer surfs the Web to learn about 4K televisions

Homer compares several models at Best Buy on brand

3. Evaluation of alternatives
reputation and available features
Homer chooses a particular model because it has
4. Purchase decision
Surround Sound, a feature he really likes
Homer brings home his TV and enjoys his purchase; he tells
5. Post-purchase evaluation
friends about his “awesome new TV”
1. Need Recognition
• Occurs when consumers perceive a gap between their
actual and ideal states
• Sometimes, this occurs naturally, but it can also be
prompted by marketers:
– Opportunity recognition – Introducing the consumer to a
superior solution that they were previously unaware of
– Problem recognition – Highlighting a problem that
the consumer didn’t realize they had
1. Need Recognition
Ideal

Ideal State Ideal

Actual State Actual

Actual

NO PROBLEM OPPORTUNITY PROBLEM

RECOGNITION RECOGNITION
Opportunity Recognition

“Think your life is good?

You can do better.”
Opportunity Recognition
Problem Recognition

“Check your breath.

It’s probably pretty bad.”
Problem Recognition
Problem Recognition

In 1968, ad agency BBDO launched

a campaign that introduced consumers
to ‘ring around the collar’—the
previously-unrecognized problem of
hard-to-treat stains on the inner shirt
collars of office workers.
The ads then presented Wisk
as the solution.
2. Information Search
• Once the consumer concludes that they have a problem,
they need information on how to solve it
• Sometimes, they already know most of what they need
to make a decision (“internal” search)
• Other times, they have to seek out additional information
from the world around them (“external” search)
2. Information Search
• The amount of effort a consumer will expend on
external search depends on two factors…
How motivated are they? Do they have the ability and
opportunity to search?
• What is the cost / benefit of searching? • Are they facing time pressure?
• Do they care about the product category? • Do they have the cognitive ability to process
• Is the purchase a risky one? information?

• Do they enjoy searching for info? • How many options do they need to consider?
• How much information is available and is it
easy to understand?
 QUESTION:

Should marketers encourage or discourage

external information search?
3. Evaluation of Alternatives
• Once the consumer has gathered relevant information,
they assess their options
• This is a multi-stage process that eliminates some alternatives
and allows the consumer to focus their energies on the subset of
options that most closely meets their needs
• In this way, they are able to make a decision without being
overwhelmed by choices
3. Evaluation of Alternatives
• Key concepts:
– Awareness set (Evoked set)
 Brands the consumer can recall from memory or
becomes aware of during external information search

– Consideration set
 Brands the consumer recalls and considers

– Choice set
 Brands the consumer actively compares
when choosing
3. Evaluation of Alternatives
Total Set Awareness Set Consideration Set Choice Set Decision

Homer concludes
that Samsung offers
the best combination
of features and price

Homer rules out Philips

for price reasons, and
RCA due to concerns
about features
Homer quickly dismisses
Sanyo and Haier
He actively considers
because friends had bad
. experiences with them
Samsung, Sony,
. Hisense, TCL, and LG
. Homer is unaware of
other brands due to
lack of advertising or
non-availability in
stores where he shops
 QUESTION:

What can marketers do to influence

whether their brand will be included in
a consumer’s consideration set?
4. Purchase Decision

Homer buys the

Samsung TV at his
local electronics store
5. Post-Purchase Evaluation
• Consumers learn from their experiences, which affects
what they do next time
– “how do we get them to buy” is often less critical to success than
“how do we get them to buy again”

• Customer satisfaction is critical

– This drives repeat business and loyalty:
Retaining 5% more customers  25-85% increase in profits
– It also drives positive word-of-mouth
5. Post-Purchase Evaluation

Consumers share their

opinions with their friends,
family members, and
peer groups
5. Post-Purchase Evaluation

And with complete strangers

via online reviews and social
media
 QUESTION:

Do consumers always make decisions this way?

Not all consumer decision-making is effortful

I’VE GOT A BEAUTIFUL WIFE, THREE WONDERFUL

CHILDREN, AND A GREAT JOB, BUT I’M NOT HAPPY
WITH MY CURRENT BRAND OF TOOTHPASTE.
Complex vs. Simple Decision-Making
• The buying process is not always complex
• The level of effort a consumer will expend on a buying
decision depends on how involved they are with that
purchase
Consumer Involvement
• The degree to which a consumer is interested in something
as a result of its perceived relevance to their needs and values

vs.
Enduring Involvement Situational Involvement
Something consumer shows interest Something the consumer is only temporarily interested
in over a long period of time in as a result of situational circumstances
(e.g., teen interested in gaming) (e.g., grandparent buying gaming system for grandchild)
Consumer Involvement
• Involvement arises when personal relevance or
perceived risk is high
 If you want customers to think more
about their decisions, encourage them to consider
its personal relevance to them or
the risks of a poor choice
Increasing Involvement

This ad from Happy Egg

emphasizes the ethics of
how eggs are produced
to increase personal relevance
and persuade consumers
to put more thought into
their decision-making
Increasing Involvement

Here, Michelin reminds consumers

that driving is inherently risky and
tires are critical to safety.

The image of the baby is specifically

intended to resonate with parents
and grandparents.
Increasing Involvement

Behr sells high-quality acrylic paints

that are more expensive than
conventional offerings.

This ad highlights the costs of

using inferior products in order to
encourage consumers to think
more carefully about their
purchase decision.
Types of Purchase Risk
1. Performance risk – Product may not perform as expected
(i.e., it doesn’t do the job)
2. Financial risk – Product may not be worth the price paid
(i.e., it’s a waste of money, cannot afford to switch)
3. Physical risk – Product could harm the user through normal use
or if its safety features fail when needed
4. Social risk – A poor choice could damage status among peers
(e.g., buying a product or brand that’s not seen as ‘cool’)
5. Time risk – Product may not be worth the time involved to buy it,
assemble it, learn to use it, etc.
 In summary, consumers use different kinds of
decision-making strategies.
The type of strategy they use will depend on how
much effort they choose to invest.
Decision-Making Strategies
High Effort:
EXTENDED PROBLEM SOLVING
(Elaborate decision process)
Moderate Effort: • Extensive search &
careful comparison of alternatives
LIMITED PROBLEM SOLVING
(Simplifying strategies)
Low Effort: • Buy familiar brands
ROUTINE PROBLEM SOLVING • Buy lowest price
(Little or no conscious effort) • Buy highest price
• Habit-based choice • “How do I feel about it?”
(Affect referral)
• Variety-seeking
• Brand loyalty
End of Lecture
Marketing Research
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 CUSTOMER ANALYSIS
Statistics
Shopping / usage behavior
Buying process

Analysis

Decisions

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
What is Marketing Research?
• A formal process of:
– identifying questions about the market;
– collecting & analyzing information to answer those questions, and;
– recommending actions

…to improve an organization’s marketing activities

Marketing Research Is Important
IF I WERE OUR TEENAGE
GIRL TARGET, I WOULD HAVE YOU ACTUALLY It can be tempting to simply
LOVE OUR NEW PRODUCT. TALKED TO ANY TO make assumptions about
MAKE SURE?
what customers want.
Avoid that temptation.
WHAT? AND
LEAVE THIS
Make a point of talking to
ROOM? them, observing their
behaviour, and listening to
what the data tell you.
Research Supports Decision-Making
• Research is not done for its own sake; it gives you a better
understanding of customers:
– Lifestyles / values
– General needs / wants
– Pain points (especially regarding particular products / experiences)
– Shopping & media consumption habits
– Decision making processes / influences

• It also lets you to test concepts before bringing them to market:

– New products
– Ad campaigns (concepts, slogans, ad creative)
Stages in the Research Process
1. Problem recognition / definition
What are the problems that require insight?
What “big questions” are you trying to answer?

2. Research design
Research consists of What methodology is appropriate?
What questions will you ask, and to whom?
6 discrete steps:
3. Data collection
4. Data analysis
5. Conclusions and report
6. Decision
The Problem with Research
WE FINALLY GOT THROUGH ALL Research costs you money.
THE MARKET RESEARCH REQUIRED And it costs you time.
TO LAUNCH OUR NEW PRODUCT.
Before making the investment, ask
BUT WE’RE yourself how the answers
RETIRED NOW will inform your decision-making
and whether the benefits are worth
ZZZ
the expense and delay.

Remain open to less elaborate

options that provide “good enough”
answers quickly and cheaply.
A Range of Methodologies
EXPLORATORY DESCRIPTIVE CAUSAL
RESEARCH RESEARCH RESEARCH
Done with the expectation that Provides a general understanding Used to identify cause-and-effect
more conclusive research will be of the marketing problem and relationships among variables;
conducted later; its purpose is to seeks conclusive data to answer usually preceded by exploratory
give the researcher an overview questions necessary to determine and descriptive research
of the situation, flag issues, and a particular course of action
offer ideas for possible solutions

focus groups diaries surveys lab experiments

projective techniques observation short interviews field experiments
long interviews
ethnography
A Range of Methodologies
EXPLORATORY DESCRIPTIVE CAUSAL
RESEARCH RESEARCH RESEARCH

QUALITATIVE QUANTITATIVE

focus groups diaries surveys lab experiments

projective techniques observation short interviews field experiments
long interviews
ethnography
Qualitative Research
• Generally exploratory – no specific predictions
• Few participants, but questions are elaborate and probing
• Typically, the aim is to uncover “deep insights” about customers
that can be further validated and elaborated through subsequent
research
• Results are valuable, but will typically not…
– answer specific research questions
– address specific managerial problems
Quantitative Research
• Examines specific variables and, very often, the relationships
between variables
• Uses large numbers of participants, with questions that are
narrowly-focused and often require respondents to choose
from a list of pre-defined options
• Can be descriptive or causal
Quantitative Research: Descriptive
• Offers a “snapshot” of the characteristics or attitudes of
a particular group of customers
e.g., Surveys, which come in many forms
– Online surveys—the most common and convenient
– Telephone surveys—fast and effective
– Personal interview surveys—can be in-depth
– Consumer panels—a representative group of consumers
who agree to share information about their views and
behavior on an ongoing basis
Quantitative Research: Causal
• Identifies variables that cause changes in other variables, and the
process by which these effects occur
– Lab Experiments: Consumers are randomly assigned to receive different
“treatments” and the effect of these treatments is observed
– Field Experiments: Similar to lab experiments, but done in a real-world setting
• Most common in academic research
• Key features:
– manipulation of causal variables
– control over extraneous variables
– participants randomly assigned to treatment conditions
Limitations of
Marketing Research
Limitations of Marketing Research
I WOULD DEFINITELY CHOOSE THE
KALE TOFU SALAD OVER THE CRISPY
BACON CHEESEBURGER. DEFINITELY.

DOES ANYONE WANT THAT LAST DONUT?

THE PROBLEM WITH FOCUS GROUPS

Customers may not be honest with you.

And they may lack self-awareness.
Limitations of Marketing Research
ACCORDING TO OUR BRAND STRATEGY,
YOU BUY OUR BRAND “TO COMPENSATE
FOR BEING A TIME-PRESSED WORKING
PARENT WHO MISSES THE IDEALIZED
FAMILY MEALS OF YOUR OWN
CHILDHOOD.” ISN’T THAT RIGHT?
IT’S A BOX OF
CROUTONS.

Customers don’t necessarily care about your product

and they don’t always put effort into their decisions.
Limitations of Marketing Research
IF OLDER CONSUMERS HAVE
MORE BUYING POWER, WHY DO
MARKETERS SEEM TO IGNORE
ANYONE OVER THE AGE OF 35? DID YOU NOTHING
HEAR IMPOR-
SOME- TANT
THING?

To get useful answers, you need to ask the right people

and the right questions.
Limitations of Marketing Research
GIVE ME A MOMENT TO FIND
UNBIASED DATA THAT
SUPPORTS CALLING YOU
AND YOUR IDEA STUPID

Researchers can be biased—

either unintentionally or deliberately.
Bias in Marketing Research
• Occurs when aspects of your research design create an
artificial tendency toward certain responses over others:
– Your overall research design could be biased if you
focus on certain kinds of questions and ignore others
– Samples are biased if some members of the population
are more likely to be included than others
– Questions may be biased if their wording encourages
respondents to respond in a certain way
Common Problems in Wording Questions
PROBLEM SAMPLE QUESTION EXPLANATION
Leading Why do you like Tim Hortons’ fresh-brewed coffee Respondent is led to make
question better than coffee from our competitors? statements favouring Tim Hortons

Ambiguous Do you eat regularly at quick-service restaurants? Meaning of the word regularly is
question  Yes  No not clearly defined

Unanswerable What were the circumstances surrounding your first Who can remember the answer?
question to visit Tim Hortons? Does it matter?

Two questions Have you tried Tim Hortons soups and sandwiches? How do you answer if you’ve tried
in one  Yes  No the soup but not the sandwiches

Non-exhaustive How old are you? Which box do you check

question  Under 20  20-40  Over 40 if you’re 40?
Data Mining
Data Mining
• Extraction of hidden predictive information from large databases
or sometimes, in the case of online behavior, through active
experimentation in real time
• Contrasts with traditional marketing research, which typically
involves developing a hypothesis about a sales driver and then
collecting data
• Commonly used by large firms that have the capacity to collect or
access data by virtue of their size, financial resources, or
frequent engagements with customers
Let’s look at an example…
PC Optimum
PC Optimum is the most popular
loyalty points program in Canada
Coupons are targeted at specific customers,
based on their past purchase behaviour
A computer algorithm determines which
coupons a customer will be offered,
based on:
• The types of products they buy
• Which brands they buy
• What kinds of offers they respond to
• How responsive they are to offers
• What else they buy when they use a coupon
• How profitable they are to the store
Limitations of Data Mining
AND AFTER BIG DATA
SOLVES ALL OUR PROBLEMS,
WE’LL RIDE AWAY ON MAGIC
FLYING UNICORNS

Access to data ≠ Answers to questions

Limitations of Data Mining
THIS YEAR, WE PRE-MADE
YOUR GIFT BASED ON
DATA-DRIVEN INSIGHTS
FROM YOUR WISH HISTORY

Data have an expiry date

End of Lecture
Segmenting Markets
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

Decisions

Outcomes
Marketing Decision Framework (Showing Area of Focus for this Lecture)
 QUESTION:
Why do we segment markets?
Why Segment Markets?
• Why go from this…
Why Segment Markets?
• To this?
Moscow 1980

• Why do we segment markets?

8

“ One Soap to Rule Them All ”

Ottawa Today
“ Different Soaps for Different Folks ”
The Logic of Segmentation
What do you look for in a shampoo?
• Cleaning features
• Conditioning & volumizing
• Dandruff control
• All-in-one convenience
• Quality ingredients
SHAMPOO • Scent
• Packaging design
• Performance guarantee
• Ethical manufacturing
• Price point
• Brand image
The Logic of Segmentation
• Grouping consumers into segments enables firms to
customize the offering (i.e., product, price, distribution,
promotion), while still retaining sufficient economies of scale
to be practical
The Logic of Segmentation
• Since each segment is fairly homogeneous in their needs
and attitudes, they are likely to respond similarly to a given
marketing strategy

• That is, they are likely to have similar feelings and thoughts
about a marketing mix comprised of a given product or
service, sold at a given price, distributed via specific
channels, and promoted in a certain way
 Sensible Segmentation Is Key

I’D LIKE YOUR OPINION I’VE LUMPED YOU IN QUESTION ONE: WOULD
FOR MY MARKET THE MARKET SEGMENT YOU ENJOY HAVING
RESEARCH, RATBERT. THAT INCLUDES WILD YOUR HEAD RUBBED
FUNGI AND PENCIL VIGOROUSLY ON A
ERASERS. PIECE OF PAPER?

WHO
WOULDN’T?

Think carefully about the variables you use to segment the market.
They should make sense and be appropriate for your specific product and situation.
Good Segmentation Schemes Are…
1. Homogeneous within segments, heterogeneous across segments
– In terms of the preference of segment members for various product attributes
– In terms of media consumption, shopping behavior, and decision-making processes

2. Identifiable and Measurable

– You must be able to find them and assess their size and characteristics

3. Sizeable
– Segments must be large enough to justify a unique strategy

4. Accessible
– Segments must be easy and cost-effective to serve

5. Actionable
– It must be possible to develop a marketing mix
that will attract the segments
Segmentation Variables
• Companies may segment using a single variable or
two or more variables. For example:

Age when marketing a toy Age / income / geography

when marketing an SUV
Geographic Segmentation
• Segmentation based on the location of the target
• Based on the notion that people in the same general area
have similar needs and wants, and that these differ
meaningfully from those of people in other locations
 Consider these
geographically-based differences…
Climate
Climate
Population Density
Population Density
Population Density
Geographic Segmentation: Geo-Fencing
• Companies also leverage data
from mobile devices to conduct
geo-targeting / geo-fencing
• Technology makes it possible
to connect with customers
based on their location at a
particular moment in time
Geographic Segmentation: Geo-Fencing
• Of course, this is not an
entirely new concept…
Demographic Segmentation
• Partitioning of the market based on factors such as:
– age
– gender
– marital status
– income
– occupation
– education
– ethnicity
Why demographic segmentation?
 It’s simple.
It’s easy to understand.
It’s easy to assess.
And demographic data is readily available.
 But how does a person’s age, gender,
marital status, income, education, or ethnicity
help us understand their needs and preferences?
Demographic Segmentation: Age
• In some product categories, needs and interests vary
predictably with the age of the user
Demographic Segmentation: Sex / Gender
• Sex (and/or gender) is frequently used as a distinguishing
variable, based on the idea that men, women, and non-binary
individuals have distinct needs
• In some product categories, this may be objectively true
• In others, the differences are the result of socialization
Demographic Segmentation: Sex / Gender
Underwear
Demographic Segmentation: Sex / Gender
Razors Antiperspirant

Children’s boots
Demographic Segmentation: Sex / Gender
• Some brands have taken gender segmentation to an extreme,
much to their peril…
Demographic Segmentation: Marital Status
• Marketers have identified specific marital status groups
• Products are often specifically designed for one or more
of these groups:
1. Single, no children
2. Dual-income married couples
3. Single parents
4. Divorced
Demographic Segmentation: Income
• Income is commonly used on its own as a segmentation
variable because it is strong indicator of ability to pay for a
particular product or service
• Often, it is combined with other variables to create more
nuanced segments:
– With age to identify the affluent elderly
– With age, occupation, and geography to produce the
yuppie (young urban professional) segment
Demographic Segmentation: Ethnicity

In certain product categories,

the distinctive needs and
purchasing power of specific
ethnic groups can make them
an attractive target market
Demographic Segmentation: Ethnicity
• For some product categories, ethnicity is the best predictor of:
– whether a consumer will buy
– where they shop
– what features they consider important
– willingness to pay

• In Canada and many other countries, the size of some

ethnic segments is growing dramatically
Geodemographic Segmentation
• A hybrid segmentation scheme: Geography + demographics
• Based on the notion that people who live close to one another
and have similar financial means, will also have similar tastes,
preferences, lifestyles and consumption habits
Psychographic Segmentation
• Another hybrid segmentation scheme:
Psychology + demographics (i.e., lifestyle and personality)
• Its appeal lies in the vivid and practical profiles of consumer
segments that it can produce
• Examples:
– Kellogg’s targets health-conscious consumers with Special K
– Old Spice targets the “active sports lifestyle” segment with
its High Endurance brand of deodorant
Psychographic Segmentation
• Typically accomplished by using “AIO inventories”
• AIO surveys seek consumers’ responses to a large number of
statements that measure
– Activities (what do you DO?)

– Interests (what do you ENJOY?)

– Opinions (what do you BELIEVE?)

 Psychographic Segmentation: Gasoline
Higher income, middle-aged men. Buy premium gas with a credit card,
1. Road Warriors
and buy sandwiches and drinks from store. Sometimes use car wash.

2. True Blues Brand loyal, sometimes station loyal. Pay cash.

“Fuel, food, fast.” Upwardly mobile young men and women.

3. Generation 3F
Half are under 25. Always on the go.
Stay-at-home parents, busy shuttling kids. Use whichever station is
4. Homebodies
on their route.

5. Price Shoppers Aren’t loyal, rarely buy premium. Often on tight budget.
Behavioural Segmentation
• Partitioning the market based on a specific behaviour or
some combination of behaviours
• Can be done on the basis of things like:
1. Usage rate
2. Benefits sought from the product
3. Loyalty to a brand or a store
Behavioural Segmentation: Usage
• Differentiates between:
– heavy users
– moderate users
– light users
– non-users
• In many product categories, a small number of heavy users
account for a disproportionately large fraction of product usage
• Targeting heavy users is a simple and common strategy
Behavioural Segmentation: Benefits

Marketers will often identify the

one attribute of a product that
is the most meaningful to one
or more groups of consumers,
and build their strategy around
that attribute
Behavioural Segmentation: Benefits

Marketers will often identify the

one attribute of a product that
is the most meaningful to one
or more groups of consumers,
and build their strategy around
that attribute
Behavioural Segmentation: Loyalty
• Some consumers repeatedly…
a. select the same brand within a product category, or
b. patronize a particular retail establishment
Behavioural Segmentation: Loyalty
• Marketers strive to identify the characteristics of these
brand-loyal customers so they can reach out to consumers
with similar characteristics in the larger population
• They also target consumers who show no brand loyalty
as a means of penetrating a larger market
• And they reward brand loyalty by offering special benefits
to frequent customers
Predictive Segmentation
• With the growing availability of behavioural and other data on
individual consumers, segmentation is increasingly performed
by complex computer algorithms that consider multiple
variables simultaneously
• Predictive segmentation is the process of automatically
identifying and creating meaningful visitor segments
characterized by a higher probability to react in a certain
manner to specific events or conditions
Predictive Segmentation
• Segments are generated on the basis of machine learning,
and updated constantly as customers provide new data
• This technique is used by digital marketing giants such as
Google, Facebook, and Amazon
Predictive Segmentation

SORRY, KID, OUR MACHINE

LEARNING CRM WITH
PREDICTIVE ANALYTICS SAYS …with an impressive
YOU’RE GETTING COAL THIS YEAR.
and ever-improving
degree of effectiveness
End of Lecture
Choosing a Target
MKTG 5200
 CUSTOMER ANALYSIS COMPETITOR ANALYSIS COMPANY ANALYSIS P.E.S.T. ANALYSIS
Statistics Direct / indirect competitors Objectives Political
Shopping / usage behavior Their current / previous strategies Strengths / weaknesses Economic
Buying process
Importance of this market to them Current / past performance Social
Likely actions and reactions Fit with other products Technological
SEGMENTATION
Possible segments
Size of segments
Growth potential
Analysis

DIFFERENTIATION IMPLICATIONS FOR

TARGET MARKETING STRATEGY
MARKET
Benefits valued by customer
SELECTION Product
Added value from specific
Price
combinations of benefits
Distribution channels
Promotion
- advertising
POSITION - sales force

Decisions
OUTCOMES
Financial
Other

Outcomes
Marketing Decision Framework
 Analysis

TARGET
MARKET
SELECTION

Decisions

Marketing Decision Framework (Showing Area of Outcomes

Focus for this Lecture)
 QUESTION:
Why target specific market segments?
Wouldn’t it make more sense to try to
sell our product to everybody?
Why Target?

YOU’RE RIGHT, THAT DOES

LEAVE OUT MEN AND BOOMERS.
MAYBE WE SHOULD TARGET
EVERYONE IN THE KNOWN UNIVERSE.
The Logic of Targeting
• It’s hard to satisfy anyone when you’re trying to be
“everything to everybody”
• Different segments often have fundamentally incompatible
needs (e.g., performance vs. fuel economy)
• Serving the entire market is expensive, and almost always
difficult to manage
Effective Targeting Requires…
• Identifying and profiling distinct groups of buyers who
differ in their needs and preferences (i.e., market segments)
• Selecting one or more segments to pursue
• Establishing and communicating the distinctive benefits
of the market offering to the customer segments you target
 QUESTION:
But how do you decide who to target?
Choosing Your Target Market(s)

MAYBE THERE’S
A BETTER WAY
TO IDENTIFY
OUR TARGET
MARKET

It shouldn’t be random.
Choosing Your Target Market(s)
WE PICKED OPTION C
BY APPLYING THE
EENIE MEENIE MINEY MOTM
METHODOLOGY

AS LONG AS
IT WASN’T
BASED JUST
ON YOUR GUT

It should be based on sensible criteria

that are explicitly identified.
 Decision Criteria
(Not an exhaustive list.)
Consider all these factors—and others that may be relevant—
then base your choice on those that make sense for your situation

• Market size • Competitive Intensity • Fit with Your Abilities

– # of potential customers – Many competitors – Insight into target customer
– # of likely customers – Strong competitor – Resources to fund R&D and
– Expected sales volume – Potential competitors marketing effort
– Intensity of competitive – Design / manufacturing skills
• Market growth response – Capacity for innovation
– Increase over time – Complementarity with existing
– Potential for expansion to • Risk distribution
complementary segments – Uncertainty of – Customer service requirements
sales/growth forecasts
• Profitability – Financial risk to firm • Fit with Your Brand
– Up-front fixed costs – Helped by your current brand,
– Sales margins • Fit with Your Goals not hurt by it
– Sales growth? – Builds on current customer base
Profitability?
 Wait a second…

Don’t most companies target

more than one customer segment?
Yep.
Market Targeting Strategies
• Up to now, we’ve focused on marketing for a single product
• But most companies have a portfolio of offerings
• When you offer multiple products, several market targeting
strategies are possible…
Market Targeting Strategies
Undifferentiated
Strategy Multi-Segment Strategies Niche Strategies
1. Undifferentiated Strategy
• A strategy that ignores differences between groups within a
market and offers a single offering to the entire market
• Typically, this is only effective when a product is new to the
market and there is minimal or no competition

PROS: Economies in production and marketing

CONS: Vulnerability to competitors offering more differentiated
products and services to market sub-segments
1. Undifferentiated Strategy
When the first iPad was
introduced in 2010, Apple offered
a single model.

This allowed Apple to keep

production costs down and
simplify inventory.

After a few years, competitors

entered the market at the low and
high ends of the market
2. Multi-Segment/Differentiated Strategy
• Targeting two or more segments, with a different offering
for each segment
PRO: Unique product features allow for higher prices
PRO: Minimizes risk, since losses in one segment can be made
up for in others

CON: Increased costs associated with tailoring products and other

marketing mix elements
2. Multi-Segment/Differentiated Strategy

More than a decade after launch,

the iPad line now includes multiple
variants, each aimed at a different
segment of users.

Business users and digital artists

opt for the iPad Pro, teens buy the
iPad mini, and most other users
choose the iPad or iPad Air
3. Niche Strategy
• Serving a single segment
PRO: Greater knowledge of customers’ needs
PRO: Economies of scale

CON: Exposes you to risk if a strong competitor enters

CON: Vulnerable to change in size or tastes of the segment
3. Niche Strategy
Leapfrog specializes in
educational games and toys
for children.

In the tablet market, it offers a

product that’s specifically geared
toward kids, with curated content
and a unique form factor made
for small hands.
3. Niche Strategy
Buyer Personas
Buyer Personas
• Describes a target market in terms of a specific person
(i.e., an “ideal customer”) who exemplifies the group
• Why? It’s often easier to think in terms of a person, rather
than a set of variables
Buyer Personas
• Creating buyer personas makes it easier for the marketing team
to wrap their heads around answers to key questions like:
“Who are we talking / selling to?”
“What kind of life do they lead?”
“What do they like / dislike”
“What needs do they have?”
“Who and what influences their decisions?”
Here are a few examples…
Buyer Personas
Buyer Persona
End of Lecture