Market Segmentation, Targeting and Positioning

chapter 7

Ch. 7 Objectives

• •

Understand the concepts: market segmentation, and target marketing. positioning

•

Learn the advantages and disadvantages of target marketing

•

Discuss segmentation criteria, strategies, and seg. bases Understand typical positioning strategies

What is a market?

• Individuals or organizations who: – Are willing, able, and capable of purchasing a firm’s product – Segmentation is critical because demand is often heterogeneous

Market Segmentation/Targeting

• Market Segmentation is:

The process of dividing up the total market into distinct subsets of customers with common needs or characteristics

• Targeting is:

Selecting one or more segments that are appropriate

Target Marketing

• Advantages – Easier analysis of potential and actual consumers – Tailoring of products to market – Assessment of demand potential – Identify competing products – Increased sales effectiveness

Target Marketing

• Disadvantages – Increased marketing costs – More complex strategy to implement – Narrow segmentation can impact brand loyalty – Ethics and stereotyping issues – Can hinder a “Global” Brand Image – Faux segmentation may be viewed cynically • See Excedrin Migraine:

Market Criteria

• Segmentable markets are: – Heterogeneous – Measurable – Substantial – Actionable • Companies must be able to respond to preferences with an appropriate marketing mix – Accessible • Market must be efficiently reachable

Segmentation Variables

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Demographics

• Age • Income • Gender • Occupation • Education • Ethnicity • Family Life Cycle

Segmentation Variables

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Geographics

• By region of country • Micro-Beers do it • Campbell’s Soup does it • Frito-Lay does it:

Segmenting Consumer Markets

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Psychographic Segmentation

– Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)

Segmenting Consumer Markets

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Benefits Sought

•

Find (or create) a key benefit that the product satisfies

• Toothpaste Example:

Segmenting Consumer Markets

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Situation Segmentation

• Time of Year / Week, Event etc.

Segmenting Consumer Markets

Demographic Segmentation Geographic Segmentation Psychographic Segmentation Benefits-Sought Segmentation Situation Segmentation Behavior/Usage Segmentation

Behavior/Usage Segmentation

• Markets can be segmented by how often or how heavily consumers use a specific product – 80/20 Principle - 80% of revenue generated by 20% of customers Light Users 80% Heavy Users 20%

Behavior/Usage Segmentation

80/20 true for many products • For Beer it’s 88% to 16% • Who are the heavy users?

Product Positioning

How to Position Brands:

Positioning: •

“an image that a product projects in relation to competitive products and to the firm’s other products”

7 Ways to Position (differentiate) a product • Show MGD clip(s) • How is MGD differentiated?

1) Product Attribute

• It has something that others do not have • Whatever attributes seem important to consumers • Key attribute may in reality be bogus...

7 Ways to Position (differentiate) a product • Show Kia clip

2) By Competitor

• Show Similarity • Show Difference

7 Ways to Position (differentiate) a product

3) By Cultural Symbol (brand marks)

TV Ad.

7 Ways to Position (differentiate) a product

4) By Price / Quality

– Can be high or low (Generics)

5) By Product Class

– Different type of product/service, but provides the same or better benefits • Example: New AmTrak Acela service to NY

6) By Use or Application

Typically used to add uses of product and expands user base

7 Ways to Position (differentiate) a product

7) By Product User

• Product is positioned for a particular group of users • List some potential target markets for cellular phones: