1. Professor Marshall Queens College
Chapter 6 Segmentation, Targeting, & Positioning: Building the Right Relationships with the Right Customers
Professor Marshall
Queens College

2. What brands are produced by Proctor & Gamble?
P&G’s Story
What brands are produced by Proctor & Gamble?
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

3. 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

4. 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

5. 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!

6. Steps in Target Marketing
Market Segmentation
Identify bases for segmenting the market
Develop segment profiles
Target marketing
Develop measure of segment attractiveness
Select target segments
Market Positioning
Develop positioning for target segments
Develop a marketing mix for each segment

7. 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:
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

8. Market Segmentation Demographic:
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.

9. Market Segmentation Age and Life-Cycle Stage
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.

10. Market Segmentation Gender
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.

11. Market Segmentation Income
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

12. Market Segmentation
Psychographic
Social class
Lifestyle
Personality

13. Market Segmentation Behavioral Occasions:
Special promotions and labels for holidays.
(e.g., Hershey Kisses)
Special products for special occasions.
(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.

14. Market Segmentation Behavioral Benefits Sought:
Different segments desire different benefits from products.
(e.g., P&G’s multiple brands of laundry detergents to satisfy different needs in the product category)

15. Market Segmentation Behavioral
User Status: Nonusers, ex-users, potential users, first-time users, regular users
Usage Rate: Light, medium, heavy
Loyalty Status: Brands, stores, companies

17. 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.

18. Market Segmentation Geodemographic 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:
Zip Code lookup for lifestyle breakdown:

19. Segmenting Business Markets
Consumer and business markets use many of the same variables for segmentation.
Business marketers can also use:
Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics

20. Segmenting International Markets
Factors Used:
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.

21. 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.

22. Evaluating Market Segments
Segment Size and Growth
Analyze current segment sales, growth rates, and expected profitability.
Segment Structural Attractiveness
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
Examine company skills & resources needed to succeed in that segment.
Offer superior value & gain advantages over competitors.

23. Selecting Target Segments
Micromarketing
Local or individual marketing
Undifferentiated
Mass Marketing
Differentiated
Segmented Marketing
Concentrated
Niche 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.

24. Micromarketing
Tailoring products and marketing programs to suit the tastes of specific individuals and locations.
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.

25. Choosing a Market Coverage Strategy
Factors to Consider
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.

26. Socially Responsible Marketing
Smart targeting helps both companies and consumers.
Target marketing sometimes generates controversy and concern.
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.

27. 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.

28. Positioning Map: Luxury SUVs

29. Choosing a Positioning Strategy
Identify a set of possible competitive advantages on which to build a position.
Competitive Advantages are advantages over competitors gained by offering greater value through lower prices or providing more benefits.
Choose the right competitive advantages.
How many differences to promote and which ones
Select an overall positioning strategy.

30. 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

31. 5 Winning Value Propositions
PRICE
More The Same Less
More for More More for the Same More for Less
Mercedes-Benz Toyota’s luxury models Dell
The Same for Less
BENEFITS
Wal-Mart
More The Same Less
Less for much Less
Conway

32. Positioning Errors Underpositioning: Overpositioning:
Failing to really position the company at all.
Overpositioning:
Giving buyers too narrow a picture of the company.
Confused Positioning:
Leaving buyers with a confused image of a company.

33. 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.

34. Video Case
Marriott
(10 minutes)

35. 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?