Transcript Chapter 6 Segmentation, Targeting, & Positioning: Building

Chapter 6
Segmentation, Targeting, &
Positioning: Building the
Right Relationships
with the
Right Customers
Professor Marshall
Queens College
P&G’s Story
Laundry
Detergent
Soap
Shampoo
Dishwashing
Detergent
Tissue
Deodorant
Tide, Cheer, Bold, Gain, Era, Dreft, Febreeze,
Ivory Snow
Ivory, Safeguard, Camay, Olay, Zest, Old Spice
Pantene, Pert, Head & Shoulders, Vidal Sassoon
Dawn, Ivory, Joy, Cascade
Charmin, Bounty, Puffs
Secret, Sure, Old Spice
Why does P&G compete with itself?
Why do they produce brands that compete against one
another? Why not focus on one leading brand?
Answer: Different people want different mixes of benefits
from the products they buy. People prioritize the benefits
that they want from each type of product.
Laundry Detergent brand positioning:
Tide: all purpose family detergent ‘tough on greasy stains’
Cheer: color expert – prevents fading
Bold: built-in fabric softener
Gain: detergent that ‘gives you fresh smelling clothes’
Era: ‘power tool for stain removing and pretreating’
Ivory Snow: ‘mild cleansing benefits for a pure and simple
clean’
Dreft: ‘helps remove tough baby stains’ pediatrician
recommended
Even Narrower Niches
Tide with Bleach
Tide Liquid with Bleach Alternative
Tide High Efficiency
Tide Clean Breeze
Tide Mountain Spring
Tide Free
Tide Rapid Action Tablets
P&G Results
Tide captures 38% of the market share
All P&G brands of laundry detergent
capture 60% of the market share
Much more than any one brand could
capture on its own!
Steps in Target Marketing
Market Segmentation
Target marketing
Market Positioning
Identify bases for
segmenting the market
Develop measure of
segment attractiveness
Develop positioning for
target segments
Develop segment
profiles
Select target segments
Develop a marketing mix for
each segment
Market Segmentation
Divide large heterogeneous markets into smaller segments
that can be reach more efficiently with products or services
that meet their unique needs.
Geographic:
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World region or country
Region of country
City or metro size
Density or climate
Examples: Campbell sells Cajun gumbo soup in Louisiana and Mississippi
Localized versions of the game Monopoly for Chicago, New York, Las Vegas
Market Segmentation
Demographic:
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Age, gender, family size, income,
occupation, etc.
The most popular bases for segmenting
customer groups – because customer
needs, wants, and usage rates change very
closely with demographic variables.
Easier to measure than most other types of
variables.
Market Segmentation
Age and Life-Cycle Stage
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Example: P&G has different toothpastes for
different age groups.
Avoid stereotypes in promotions
Promote positive messages
Example: Gap has different stores: Baby Gap, Gap Maternity, Gap kids, in
addition to The Gap.
Market Segmentation
Gender
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Women make 90% of home improvement
decisions.
Women influence 80% of all household consumer
purchases.
Example: Products geared toward women: clothing, toiletries, magazines,
Oxygen television network.
Market Segmentation
Income
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Identifies and targets the affluent for luxury goods.
People with low annual incomes can be a lucrative
market.
Some manufacturers have different grades of
products for different markets.
Lexus verses Hyndai
Family Dollar targets lower income
Tiffany’s targets the affluent
Market Segmentation
Psychographic
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Social class
Lifestyle
Personality
Market Segmentation
Behavioral
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Occasions:
Special promotions and labels for holidays.
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(e.g., Hershey Kisses)
Special products for special occasions.
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(e.g., Kodak disposable cameras)
Some holidays, such as Mother’s Day and Father’s Day were promoted to
increase the sale of candy, cards, flowers, and gifts.
Market Segmentation
Behavioral
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Benefits Sought:
Different segments desire different benefits from products.
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(e.g., P&G’s multiple brands of laundry detergents to satisfy
different needs in the product category)
Market Segmentation
Behavioral
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User Status: Nonusers, ex-users,
potential users, first-time users, regular
users
Usage Rate: Light, medium, heavy
Loyalty Status: Brands, stores,
companies
Market Segmentation
Best to use multiple approaches in order to
identify smaller, better-defined target groups.
Start with a single base and then expand to
other bases.
Example: a bank may target wealthy retirees and they would further segment them
into groups based on savings preferences, risk preferences, income, and lifestyle.
Market Segmentation
Geodemographic
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Claritas, Inc.
Potential Rating Index for Zip Markets (PRIZM)
Based on U.S. Census data
Profiles on 260,000 U.S. neighborhoods
62 clusters or types
Claritas (marketing research company) geodemographic research:
http://www.usatoday.com/news/graphics/whoweare/flash.htm
Zip Code lookup for lifestyle breakdown:
http://www.clusterbigip1.claritas.com/MyBestSegments/Default.jsp?ID=20
Segmenting Business Markets
Consumer and business markets use many of
the same variables for segmentation.
Business marketers can also use:
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Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
Segmenting International Markets
Factors Used:
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Geographic location
Economic factors
Political and legal factors
Cultural factors
Intermarket Segmentation – forming segments
who have similar needs and buying behavior
even though they are located in different
countries.
Example: Coca-Cola has different types of soft drinks for many of the countries
where they are present. Flavors include: fruity Fanta Kolita from Costa Rica,
non-carbonated, sour cherry Cappy from the Czech Republic, and a very bitter
Beverly from Italy, among many others.
Requirements for Effective Segmentation
There are many ways to segment a market, but not all segmentations
are effective. Buyers of sugar could be divided up by hair color. But
obviously, hair color does not impact the purchasing decision for this
product.
Measurable – size, purchasing power, profiles of the
segments can be measured.
Accessible – segments can be reached and served
Substantial – segments are large or profitable enough
Differentiable – segments are distinguishable and
respond differently to marketing mix elements and
programs
Actionable – effective programs can be designed for
attracting and serving the segments.
Evaluating Market Segments
Segment Size and Growth
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Analyze current segment sales, growth rates, and expected
profitability.
Segment Structural Attractiveness
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Consider effects of: competitors (how aggressive are they?),
existence of substitute products (do they limit prices?), and
the power of buyers & suppliers (bargaining power).
Company Objectives and Resources
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Examine company skills & resources needed to succeed in
that segment.
Offer superior value & gain advantages over competitors.
Selecting Target Segments
Undifferentiated
Differentiated
Concentrated
Micromarketing
Mass Marketing
Segmented
Marketing
Niche
Marketing
Local or
individual
marketing
Targeting Broadly
Targeting Narrowly
Goes after a small share of
a large market.
Appealing when resources are limited. Goes after a
large share of one or a few segments or niches.
Micromarketing
Tailoring products and marketing programs to suit the
tastes of specific individuals and locations.
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Local Marketing: Tailoring brands and promotions to the
needs and wants of local customer groups—cities,
neighborhoods, specific stores.
Individual Marketing: Tailoring products and marketing
programs to the needs and preferences of individual
customers. Also called one-to-one, or customized marketing.
Imagine walking through an airport and seeing digital billboards which call out to you, by
name. This is individual marketing. It’s the ultimate extreme in target marketing.
Choosing a Market Coverage Strategy
Factors to Consider
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Company resources – limited resources warrant some sort of
concentrated marketing
Product variability – uniform products (milk, eggs) lend
themselves best to undifferentiated marketing
Product’s life-cycle stage – in the mature stage, differentiated
marketing makes the most sense
Market variability – if most buyers have the same taste, react
the same way, and buy the same amounts, undifferentiated
marketing is best.
Competitors’ marketing strategies – if competitors use
differentiated, you should also use differentiated. If
competitors use undifferentiated, you should use
differentiated or concentrated marketing to gain an
advantage.
Socially Responsible Marketing
Smart targeting helps both companies and
consumers.
Target marketing sometimes generates controversy
and concern.
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Vulnerable and disadvantaged can be targeted.
Cereal, cigarette, beer, and fast-food marketers have
received criticism.
The issue is not really who is targeted but how and for what. Controversies arise
when people feel that marketers are unfairly targeting vulnerable segments with
questionable products or tactics.
Positioning for Competitive
Advantage
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.
Consumers will position products with out without the help of marketers.
Marketers do not want to leave their products’ positions to chance. They want to
plan positions that give their products the greatest advantage in selected target
markets.
Positioning Map: Luxury SUVs
Choosing a Positioning Strategy
Identify a set of possible competitive
advantages on which to build a position.
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Competitive Advantages are advantages over
competitors gained by offering greater value
through lower prices or providing more
benefits.
Choose the right competitive advantages.
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How many differences to promote and which
ones
Select an overall positioning strategy.
Choosing the Right Competitive
Advantages
In deciding which differences to promote, we must look at how
well it satisfies each of the following criteria:
Important – the difference delivers a highly valued benefit
Distinctive – competitors do not offer the difference or we can
offer it in a more distinctive way
Superior – the difference is superior
Communicable – difference in communicable and visible
Preemptive – competitors cannot easily copy the difference
Affordable – buyers can afford to pay for the difference
Profitable – we can introduce the difference profitably
5 Winning Value Propositions
More
More
More for More
Mercedes-Benz
PRICE
The Same
Less
More for the Same
More for Less
Toyota’s luxury models
Dell
The Same
BENEFITS
The Same for Less
Wal-Mart
Less
Less for much Less
Conway
Positioning Errors
Underpositioning:
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Failing to really position the company at all.
Overpositioning:
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Giving buyers too narrow a picture of the company.
Confused Positioning:
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Leaving buyers with a confused image of a company.
Communicating and Delivering the
Chosen Position
Company must take strong steps to deliver and
communicate the desired position to target
consumers.
The marketing mix efforts must support the
positioning strategy.
Must monitor and adapt the position over time to
match changes in consumer needs and
competitors’ strategies.
Video Case
Marriott
(10 minutes)
Thoughts
Why aren’t most businesses satisfied with
going after just one niche in a market?
Given the issues regarding segmentation,
would surcharges such as energy or an
early checkout fee be acceptable for any
particular Marriott hotel lines?
http://marriott.com/