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Segmentation, Targeting, and Positioning

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Presentation on theme: "Segmentation, Targeting, and Positioning"— Presentation transcript:

1 Segmentation, Targeting, and Positioning
Product positioning strategy Bases for segmentation Positioning Targeting Repositioning

2 Definition Segmentation: “Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.” 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

3 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) Southwest Airlines Auto makers

4 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)

5 Examples (2): Restaurant Diners
E.g., --speed --location Convenience High Low Low High-end delivered food Fancy Restaurants --e.g., Ritz Carlton Price Sensitivity Denny’s McDonald’s Local, “unbranded” fast food restaurants Taco Bell High

6 Notes on Segments Boundaries between product categories are blurred--”soft drinks” or “non-alcoholic beverages?” Any number of “dimensions” possible--but too many variables cut segment size Segments must differ meaningfully from others large enough to be profitable be serviceable (have need that can be met cost effectively)

7 Criteria in Selecting Segments
Potential for increased profit and ROI Similarity of needs of consumers within Differences of needs of members of different segments Feasibility of serving each specific segments Cost effectiveness of identifying members of each segment

8 Bases for Segmentation: Consumer Characteristics
Geographic Regional Area characteristics: The PRIZM system Income ≠ willingness to spend! Occupation Demographics Gender Age Ethnicity Household size Marital status Single, never married Married Divorced Presence of children

9 Bases for Segmentation: Behavior and Buying Situations
Benefits sought Behavior Involvement Usage rates and status “80/20” rule—20% of consumers may account for 80% of consumption Media preferences Preferred shopping outlets

10 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

11 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.

12 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 Halmark: “When you care to send the very best…” Hertz (vs. “Not exactly”) Zachy Farms (chicken)

13 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 Repositioning: Changing established position may be difficult -- e.g., Sears McDonald Good sales; poor everyday values Lunch; not dinner Good for children

14 Some Repositioning Campaigns
Cadillac: “It’s not your father’s car.” Geritol: “Not too young for Geritol.” Orange juice: “It isn’t just for breakfast anymore.” Chocolate milk for adults NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!

15 Some Brands That Were Dropped Rather Than Repositioned
ValueJet  AirTran Packard Bell  e-Machines German Communist Party  Party for Democratic Socialism

16 Evaluating Target Segments
Sales potential Competitive presence/ potential Cost of service Feasibility of service Impact on segments already served

17 Euphemisms in Positioning
“Loss Prevention Associate” “Sales Counselor” “Pre-Owned” or “Previously Loved” Vehicle “Gaming”

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