Chapter 3 (Partial):

Market Segmentation: Positioning

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.1

Outline/ Learning Objectives

Topic STP Positioning Tools Perceptual Description Review segmentation, targeting, and positioning (STP) Explain positioning companies in markets Review different positioning tools, such as preference maps Execute positioning using perceptual maps © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch 3.2

STP: Segmentation, Targeting, Positioning

STP Segmentation Targeting Positioning

Segmentation:

Subdividing general markets into distinct segments with different needs, and which respond differently to marketing efforts. -Increased customer satisfaction -Increased marketing effectiveness

Targeting:

Selection of market segments. Cannot service every possible segment.

Positioning:

Activities to make consumers perceive that a brand occupies a distinct position relative to competing brands.

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch. 3.3

STP Advantages

Concentration of Force Focus core competencies on relevant market segments STP Advantages Customer Satisfaction Consumers get what they want Profitability Different groups place different values on similar goods Competitive Advantage Hertz: focus on airport rentals Enterprise: focus on local rentals Niche Marketing Specific segments with specific needs © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.4

Positioning

FedEx Overnight Shipping Facial Tissue Adhesive Bandages Kleenex Band-Aid “Positioning Brands in the Mind of the Prospect” © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.5

Positioning

Rental Car Positioning

Positioning Airport business travelers Consumers with auto repairs Relocated employees Price-conscious renters Exotic car aficionados Example Hertz offers its rental cars in many airports Enterprise offers its rental cars locally Thrifty offers multi-month rental program Budget offers rentals at a discount Xotic Dream Cars rents Ferraris in Miami © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.6

Positioning

Office Supply Re-Positioning: Staples “Yeah, We’ve Got That” Positioning: Selection “That Was Easy” Positioning: Convenience

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.7

Sample Perceptual Map

Waring Oster Hamilton Beach Kitchen Aid

Basic Features

Black & Decker

High Power Feature-Rich

Cuisinart Sunbeam

Low Power

Sample Perceptual Map for Household Blenders

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.8

Perceptual Mapping Applications

Cluster Identification Identify clusters (segments) of potential customers with similar needs Competition Assess perception of different competitors; Look at distances Perceptual Mapping Applications Choice of New Opportunity Blank areas in perceptual maps suggest opportunity Caution: might be good reason no one is there Communications Vehicle Customer Perceptions Alert to changes in perceptions over time; see Staples example Show company executives © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.9

Mapping Methods

Map Type Perceptual Maps Description Show consumer perception Preference Maps Show consumer preference Joint Space Maps Show multiple elements © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.10

Mapping Methods

Map Type Perceptual Maps Preference Maps Description Show consumer perception Attribute-based: Good for tangible descriptors, e.g., weight Similarity-based: Good for intangible descriptors, e.g. luxury Show consumer preference Joint Space Maps Show multiple elements © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.11

Mapping Methods

Map Type Perceptual Maps Description Show consumer perception Preference Maps Joint Space Maps Show consumer preference Ideal Point: Adds “most preferred point”, e.g. spiciness Vector Model: Adds preference vector for attributes, e.g. reliability Show multiple elements © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.12

Mapping Methods

Map Type Perceptual Maps Description Show consumer perception Preference Maps Show consumer preference Joint Space Maps Show multiple elements Joint Space: Combines perceptions and preferences on one map External Analysis: Leverages analytical power of external programs © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.13

Perceptual Map Process

Selection Criteria Market Survey Spreadsheet Graphing Spreadsheet Formatting Map Interpretation 5-step process © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.14

Perceptual Map: Step 1: Selection Criteria

Selection Criterion Style Ruggedness Size Economic Orientation Comfort Orientation Rating of 1 (1-10 Scale) Traditional style Delicate; Fine Compact size Economy-oriented Comfort-oriented Rating of 10 Fashionable style Rugged; Durable Full size Luxury-oriented Sportiness-oriented © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.15

Perceptual Map: Step 1: Selection Criteria

Research to understand evaluation and selection criteria Secondary research: -Terminology used -Typical purchasing behavior Existing reviews: J.D. Powers… Primary research -Customer interviews -Focus groups -Behavioral tests, etc.

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.16

Perceptual Map: Step 2. Market Survey

Blender Black & Decker BL 1900 Cuisinart BFP-703CH Hamilton Beach 56221 KitchenAid KSB560 Oster 4093 Beehive Sunbeam 3350W Waring WPB80BC Features: 1-10 Scale 4.6

9.2

3.4

4.1

3.1

3.8

2.1

Effective Power: 1-10 Scale 6.1

4.2

7.2

6.2

9.4

3.6

8.6

Survey Data on Perceptions 1 = Poor 5 = Expected 10 = Outstanding Similar prices © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.17

Perceptual Map: Step 3: Spreadsheet Graphing

10 8 6 4 2 0 0 2 4 6 XY Scatter Plot in Microsoft Excel: Before Formatting 8 10 © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.18

Perceptual Map: Step 4: Formatting

Waring Oster Hamilton Beach Kitchen Aid

Basic Features

Black & Decker

High Power Feature-Rich

Cuisinart Sunbeam

Low Power

-Remove existing legends -Remove horizontal grid lines and axis values -Add labels for each brand: Text Box function from Insert tab; Do not let Excel do automatically -Draw Rectangle to cover entire plot; Use No Fill option -Draw 4 Rectangles for 4 quadrants -Shade upper right (or other) quadrant © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.19

Perceptual Map: Step 5: Map Interpretation

Waring Oster Hamilton Beach Kitchen Aid

Basic Features

Black & Decker

High Power Feature-Rich

Cuisinart Sunbeam

Low Power

Several brands competing in “Basic Features”, “High Power” quadrant Only 1 brand in “Basic Features”, “Low Power” quadrant Only 1 brand in “Feature-Rich”, “Low Power” quadrant No brands in “High Power”, “Feature-Rich” quadrant; Opportunity?

© Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.20

Check for Understanding

Topic Terminology Positioning Tools Execution Description Know definitions of segmentation, targeting, and positioning Explain positioning and re-positioning Know difference between perceptual and preference maps Practice developing perceptual maps © Stephan Sorger 2015 www.StephanSorger.com

Marketing Analytics:Market Seg-Position Ch.3.21