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

Demographics Age Income Gender Occupation Education Ethnicity Family Life Cycle

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

Benefits Sought Find (or create) a key benefit that the product satisfies Toothpaste Example:

Segmenting Consumer Markets Demographic Segmentation Benefits-Sought Segmentation Geographic Segmentation Situation Segmentation Psychographic Segmentation Behavior/Usage Segmentation

Situation Segmentation Time of Year / Week, Event etc.

Segmenting Consumer Markets Demographic Segmentation Benefits-Sought Segmentation Geographic Segmentation Situation Segmentation Psychographic 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: