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BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1 SEGMENTATION, TARGETING, AND POSITIONING Segmentation Product positioning strategy.

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Presentation on theme: "BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1 SEGMENTATION, TARGETING, AND POSITIONING Segmentation Product positioning strategy."— Presentation transcript:

1 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1 SEGMENTATION, TARGETING, AND POSITIONING Segmentation Product positioning strategy Bases for segmentation Positioning Targeting Repositioning

2 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 2 SEGMENTATION, TARGETING, AND POSITIONING TARGETING SELECTING WHICH SEGMENT(S) TO SERVE POSITIONING IMPLEMENTING CHOSEN IMAGE AND APPEAL TO CHOSEN SEGMENT SEGMENTATION IDENTIFYING MEANINGFULLY DIFFERENT GROUPS OF CUSTOMERS PROUDCT DISTRIBUTION PRICE PROMOTION

3 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 3 Learning Objectives Appreciate different unique needs and expectations of different customer groups Appreciate tradeoffs among strategies of serving different segments Understand methods for selecting and targeting customer groups Understand bases for implementing target selection through positioning

4 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 4 Definitions Segmentation: “Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.” “The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.” (Text, p. 97) Although not all these consumers are completely alike, they share relatively similar needs and wants. Marketing action involves: efforts, resources, and decisions--product, distribution, promotion, and price.

5 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 5 Approaches to Marketing Undifferentiated Strategy (no intended difference from competitors; no specific consumer group sought out) Concentrated Strategy (differentiation; one consumer segment sought) Differentiated Strategy (same firm makes different versions for different segments) Some auto makers Southwest Airlines

6 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 6 Segments--Examples (1) Air Travel Business/Executive: Inflexible; relatively price insensitive (Small number of people, but travel often) Leisure Traveler/Student: Relatively flexible; very price sensitive (other methods of travel--e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment) Comfort Travelers: Comfort (e.g., space, food) important; willing to pay (Small segment)

7 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 7 Examples (2): Restaurant Diners High Low Price Sensitivity Convenience Low High Taco Bell McDonald’s Fancy Restaurants --e.g., Ritz Carlton High-end delivered food Denny’s Local, “unbranded” fast food restaurants E.g., --speed --location

8 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 8 Combining variables… Soft drink preferences—some segmentation variables Preferred taste: Cola, lime, no taste, natural juice, ice tea Calorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low calories Usage occasion: Multi-pack for home; single can/bottle; fountain drink Price sensitivity/brand loyalty: Willingness to pay more for name brand or specialty soda

9 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 9 Some combined segments… Price sensitive, non- brand loyal cola-taste, full-flavor segment, multi-pack Price insensitive, cola taste, brand loyal, low calorie, multi-pack Price insensitive, natural juice, taste sensitive, single serving Typical behaviors of these consumers. Circumstances may involve occasional variations.

10 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 10 Bases for Segmentation Geographic Demographic Psychographic Benefit Desired Usage Rate Other Behavior

11 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 11 Geographic Regional differences Climate and physical environment Tastes Campbell’s Soup Lifestyle and values Urban vs. rural areas

12 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 12 Demographics Age Gender Willingness to spend More useful than income—income ≠ willingness to spend! “Trading Up:” Consumers may “splurge” in certain, personally significant categories while buying more downscale in other categories Ethnicity Family lifecycle stage

13 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 13 Psychographics Personality Very difficult to measure Limited empirical support Motives Lifestyle Usually more practical than personality

14 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 14 Usage Rate “80/20” rule—20% of consumers may account for 80% of consumption (in many product categories) Note that larger consumption rate segments may be subject to heavy competition Reasons for targeting smaller segments Reduced competition Opportunity for growth

15 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 15 Other Behavioral Bases for Segmentation Involvement Interest Knowledge Willingness to spend time on making product category decisions “Dealproneness” Coupon usage Brand switching in response to price incentives Outlet (store) choice Specialty Convenience store “Category killer” (e.g., Fry’s, Best Buy, Circuit City) Discount Warehouse

16 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 16 Benefits Sought Based on Differences in arbitrary tastes (e.g., cola vs. non- cola drink) Ideal point Tradeoffs (e.g., taste vs. calories) Usage situation (e.g., coffee for camping (instant) vs. higher quality for home brewing)

17 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 17 Targeting: Selecting Segment(s) and Specializing “You can’t be all things to all people” - --> choose one or more groups. Focus narrows scope of competition, but demands are greater.

18 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 18 IDENTIFYING TARGETS Customer information “enhancement”— information from different sources integrated (e.g., real estate records, purchase lists, magazine subscription, credit records) “Merge-purge” Customer lists from different sources are combined with removal of duplicates

19 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 19 NON- REDUNDANT FINAL LIST NAMES AND ADDRESSES FROM ALL SOURCES USED SURFER CHICK SURFER DUDE EXTREME SURFING CALIFORNIA SURFER SURFER’S SUPPLY SURF CITY SURFGEAR GENERAL LISTS (E.G., PHONE BOOK LISTINGS) SELECT RESIDENCES W/IN 2 BLOCKS OF BEACH LISTS OF BUYERS FROM ONLINE/CATALOG MERCAHNTS MAGAZINE SUBSCRIPTIONS MERGE PROCESS PURGE PROCESS REMOVE DUPLICATES CALIFORNIA SURFERS’ ASSOC. GEORGIA SURFER SOCIETY ORGANIZATION MEMBERSHIPS SORORITY SURFERS OF AMERICA

20 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 20 SEGMENTATION, TARGETING, AND POSITIONING POSITIONING IMPLEMENTING CHOSEN IMAGE AND APPEAL TO CHOSEN SEGMENT PROUDCT PROMOTION PRICE DISTRIBUTION PREMIUM BASIC DURABLE PRESTIGE FUN POWERFUL PREMIUM LOW PRICE VALUE INTENSIVE SELECTIVE EXCLUSIVE

21 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 21 “STUCK IN THE MIDDLE” PROBLEM Brands that offer a clear benefit tend to do better Clear orientation Wal-Mart Nordstrom’s KFC “Stuck in the middle” Sears—Competition both from “above” and “below.” Nevertheless, there are successful “middlelers:” Denny’s, Vons, Ralph’s

22 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 22 Positioning Strategies “Head-on” competition Airlines (want to differentiate but have difficulty pulling it off in practice) Beef products Differentiation Burger King: Grilled instead of McDonald’s fried burgers Hallmark: “When you care to send the very best…” Hertz (vs. “Not exactly”) Zachy Farms (chicken)

23 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 23 Repositioning Repositioning: Changing established position may be difficult -- e.g., Sears McDonald Good sales; poor everyday values Lunch; not dinner Good for children

24 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 24 Multidimensional Scaling Consumer product perception is identified along two or more “dimensions” Methods: A priori specification of dimensions  respondents make judgments Respondent rating of relative similarity of brands/product categories  statistical model identifies unnamed dimensions  dimensions are inferred from characteristics of items at different points

25 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 25

26 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 26 Snickers Reese’s Mr. Goodbar Toblerone Twix Smores Almond Joy Butterfinger M&M Kitkat York HIGH LOW Mars Milky Way Hershey’s Heath Ritter Dove Milk Chocolate

27 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 27 Similarity Ratings SnickersM&MAlmond JoyMr. Goodbar Snickers 7 M&M 57 Almond Joy 667 Mr. Goodbar =“Not at all similar” 7=“Extremely Similar” Logically, all candy bars are “extremely similar” to themselves. The shaded regions are redundant—only the order is varied.

28 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 28 Some Repositioning Campaigns Geritol: “Not too young for Geritol.” Orange juice: “It isn’t just for breakfast anymore.” Microsoft  “hipper” NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!

29 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 29 Some Brands That Were Dropped Rather Than Repositioned ValueJet  AirTran Packard Bell  e-Machines German Communist Party  Party for Democratic Socialism

30 BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 30 Euphemisms in Positioning “Loss Prevention Associate” “Sales Counselor” “Pre-Owned” or “Previously Loved” Vehicle “Gaming”


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