Segmentation, Targeting and Positioning Linking Customer Needs to Marketing Action

Learning Objectives After studying this chapter, you should be able to: Define the three steps of target marketing: market segmentation, target marketing, and market positioning List and discuss the bases for segmenting consumer and business markets Explain how companies identify attractive market segments and choose a market coverage strategy Discuss how companies position their products for maximum competitive advantage in the marketplace 10/29/2014 Jahanzaib Yousaf

TARGET MARKETING PROCESS WHO TO SERVE? 3 STEPS: Segmentation Targeting Positioning 10/29/2014 Jahanzaib Yousaf

STP Market segmentation: dividing market into distinct groups which will require separate marketing mixes Target marketing: choosing which group(s) to appeal to Market positioning: creating a clear, distinctive position in the consumer’s mind relative to competition 10/29/2014 Jahanzaib Yousaf

Consumer Market Segmentation Geographic: Regions Size/density Climate Demographic: Age/generation Gender Family size/life-cycle Income Occupation Religion Ethnic origin Psychographic: Social class Lifestyle Personality Behavioral: Occasions Benefits User status Usage rate Loyalty status Readiness state Attitude toward product

Geographic Segmentation Divide markets into different geographic units. Examples: World Region or Country: Middle East, South Asia or Pakistan, India etc. Country Region: Punjab, KPK, Sindh, etc. City or Metro Size: Lahore, Karachi. Population Density: rural, suburban, urban Climate: northern areas, southern, tropical

Demographic Segmentation Use Differences in: age, gender, family size, family life cycle, income, occupation, education, race, and religion Most frequently used segmentation variable Ease of measurement and high availability.

Psychographic Segmentation Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic classification often have very different lifestyles and personalities.

Behavioral Segmentation Occasion Special promotions & labels for holidays. Special products for special occasions. Benefits Sought Different segments desire different benefits from the same products. Loyalty Status Nonusers, ex-users, potential users, first-time users, regular users. Usage Rate Light, medium, heavy.

Loyalty Status Segmentation Hard-core Split loyals Shifting loyals Switchers

User & Loyalty Status Segmentation

Requirements for Effective Segmentation To be useful, market segments must be: Measurable: Size, purchasing power, and profiles can be measured Accessible: Segments can be reached Substantial: Large enough to be profitable Actionable: Programs can be developed to attract and serve the segments “Lefties” are hard to identify and measure, so few firms target this segment.

Market Preference Patterns

Target Marketing Strategies

Undifferentiated Marketing (Mass Marketing) Appeals to a broad spectrum of people Efficient due to economies of scale Effective when most consumers have similar needs

Differentiated Marketing (Segment Marketing) Develops one or more products for each of several customer groups with different product needs Coca-Cola (Coke, Sprite, Diet Coke, etc.) Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.) Toyota (Camry, Corolla, Prius, Scion, etc.)

Concentrated Marketing (Niche Marketing) Entails focusing efforts on offering one or more products to a single segment Useful for smaller firms that do not have the resources to serve all markets Niches have very specialized interests

Micro Marketing Local Marketing Individual Marketing (one-to-one Marketing) Segments are so precisely defined that products are offered to exactly meet the needs of each individual Example: Levi’s Original Spin (custom) jeans, hair stylists Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual Example: Proctor & Gamble’s products at Reflect.com Form Products to Be Sold into Groups

Positioning The place a product occupies in consumers’ minds relative to competing products.

Positioning Example eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

Positioning Strategy Competitive advantages Points of Parity (POP) Points of Difference (POD) => Differentiation Positioning results from differentiation and competitive advantages. Positioning may change over time.

Positioning Example To (target segment and need) our (brand) is a (concept) that (point-of-difference). “To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”

Positioning Maps: Luxury SUVs Price vs. Orientation Dimensions

Generic Product Positions & Value Propositions

In-class Activity Describe how each of the following brands, companies, or products is positioned: