Presentation on theme: "Professor Marshall Queens College"— Presentation transcript:
1 Professor Marshall Queens College Chapter 6 Segmentation, Targeting, & Positioning: Building the Right Relationships with the Right CustomersProfessor MarshallQueens College
2 What brands are produced by Proctor & Gamble? P&G’s StoryWhat brands are produced by Proctor & Gamble?Laundry DetergentSoapShampooDishwashing DetergentTissueDeodorantTide, Cheer, Bold, Gain, Era, Dreft, Febreeze, Ivory SnowIvory, Safeguard, Camay, Olay, Zest, Old SpicePantene, Pert, Head & Shoulders, Vidal SassoonDawn, Ivory, Joy, CascadeCharmin, Bounty, PuffsSecret, 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 fadingBold: built-in fabric softenerGain: 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 AlternativeTide High EfficiencyTide Clean BreezeTide Mountain SpringTide FreeTide 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 shareMuch more than any one brand could capture on its own!
6 Steps in Target Marketing Market SegmentationIdentify bases for segmenting the marketDevelop segment profilesTarget marketingDevelop measure of segment attractivenessSelect target segmentsMarket PositioningDevelop positioning for target segmentsDevelop a marketing mix for each segment
7 Market SegmentationDivide 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 countryRegion of countryCity or metro sizeDensity or climateExamples: Campbell sells Cajun gumbo soup in Louisiana and MississippiLocalized 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 promotionsPromote positive messagesExample: 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 HyndaiFamily Dollar targets lower incomeTiffany’s targets the affluent
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)
17 Market SegmentationBest 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 dataProfiles on 260,000 U.S. neighborhoods62 clusters or typesClaritas (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 CharacteristicsPurchasing ApproachesSituational FactorsPersonal Characteristics
20 Segmenting International Markets Factors Used:Geographic locationEconomic factorsPolitical and legal factorsCultural factorsIntermarket 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 servedSubstantial – segments are large or profitable enoughDifferentiable – segments are distinguishable and respond differently to marketing mix elements and programsActionable – effective programs can be designed for attracting and serving the segments.
22 Evaluating Market Segments Segment Size and GrowthAnalyze current segment sales, growth rates, and expected profitability.Segment Structural AttractivenessConsider 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 ResourcesExamine company skills & resources needed to succeed in that segment.Offer superior value & gain advantages over competitors.
23 Selecting Target Segments MicromarketingLocal or individual marketingUndifferentiatedMass MarketingDifferentiatedSegmented MarketingConcentratedNiche MarketingTargeting Broadly Targeting NarrowlyGoes 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 MicromarketingTailoring 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 ConsiderCompany resources – limited resources warrant some sort of concentrated marketingProduct variability – uniform products (milk, eggs) lend themselves best to undifferentiated marketingProduct’s life-cycle stage – in the mature stage, differentiated marketing makes the most senseMarket 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.
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 onesSelect 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 benefitDistinctive – competitors do not offer the difference or we can offer it in a more distinctive waySuperior – the difference is superiorCommunicable – difference in communicable and visiblePreemptive – competitors cannot easily copy the differenceAffordable – buyers can afford to pay for the differenceProfitable – we can introduce the difference profitably
31 5 Winning Value Propositions PRICEMore The Same LessMore for More More for the Same More for LessMercedes-Benz Toyota’s luxury models DellThe Same for LessBENEFITSWal-MartMore The Same LessLess for much LessConway
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.
35 ThoughtsWhy 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?