1. Segmentation, Targeting & Positioning

2. Overview: Segmentation, Targeting & Positioning

3. Market Segmentation - Principles
Segmentation Variables
Geographic
Demographic
Psychographic
Behavioral
Other (anything!)
No single best way to segment a market.
Often best to combine variables and identify smaller, better-defined target groups.

4. Geographic Segmentation
Divide markets into different geographic units.
Examples:
World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc.
Country Region: Pacific, Mountain, East Coast, etc.
City or Metro Size: New York, San Francisco
Population Density: rural, suburban, urban
Climate: northern, southern, tropical, semi-tropical

5. 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.
Usually the worst variable to use.

6. 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.

7. 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.

8. Loyalty Status Segmentation
Hard-core
Split loyals
Shifting loyals
Switchers

9. User & Loyalty Status Segmentation

10. Geodemographic Segmentation
PRIZM, by Claritas
Organized by ZIP code
Based on U.S. Census data
Profiles on 260,000+ U.S. neighborhoods
62 clusters or types

11. Claritas’ Prizm

12. Requirements for Effective Segmentation
Segments must be
Measurable
Accessible
Substantial
Differentiable
Actionable
“Lefties” are hard to identify and measure, so few firms target this segment.

13. Evaluating Market Segments
Segment Size and Growth Potential
Sales, profitability and growth rates
Segment Structural Attractiveness
Competition, substitute products,
buyers & supplier power, new entrants (Porter’s Five Forces)
Company Objectives and Resources
Core competencies
“What business do we want to be in?”

14. Targeting Segments - Overview

15. Market Preference Patterns

16. Undifferentiated (Mass) Marketing
Ignores segmentation opportunities

17. Differentiated (Segmented) Marketing
Targets several segments and designs separate offers for each.
Coca-Cola (Coke, Sprite, Diet Coke, etc.)
Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)
Toyota (Camry, Corolla, Prius, Scion, etc.)

18. Question du Jour
Should the same company produce and market brands that compete with each other?

19. Niche Marketing Targets one or a couple small segments
Niches have very specialized interests

20. Micromarketing
Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.

21. Flexible Marketing Offerings
“Naked”/Core solution
Product and service elements that all segment members value
Discretionary options
Some segment members value
Options may carry additional charges

22. Patterns of Target Market Selection: Product x Market Matrices

23. Socially Responsible Targeting
Controversies and concerns
Targeting the vulnerable and disadvantaged
Cereal, Cigarettes, Alcohol, Fast-food
The “Catch-22” of Targeting
Psychological Reactance
Failure to target seen as prejudice

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

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

26. 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.”

27. Positioning Maps: Luxury SUVs Price vs. Orientation Dimensions

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

29. Sources of Differentiation
Product Design
Quality
Additional Services
Image
People (Staff)
Price
Other

30. Choosing the Right Competitive Advantages
The best competitive advantages are…
Important
Distinctive
Superior
Communicable
Pre-emptive
Affordable (to company and consumer)
Profitable
Moral: Avoid meaningless differentiation.

31. Positioning Errors Under-positioning: Over-positioning:
Not positioning strongly enough.
Over-positioning:
Giving buyers too narrow a picture of the product.
Muddled Positioning:
Leaving buyers with a confused image of the product.

32. Generic Product Positions & Value Propositions

33. Which is more important: Product or Positioning?
Question du Jour
Which is more important: Product or Positioning?

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

35. In-class Activity, Part 2
Choose one of the companies/brands and…
Identify relevant direct competitors
Choose the two dimensions that are most important to consumers
Develop a perceptual positioning map
Are there any opportunities in this category?

36. In-class Activity, Part 3
Choose a company and invent a segmentation scheme for that company’s customers using the variables we discussed in class.

37. In-class Activity – Developing a Segmentation Scheme
Develop a PSYCHOGRAPHIC/USAGE segmentation scheme for each of the following types of consumers.
Segment the market into three or more substantive groups.
Be sure to think of the key psychological/usage drivers of consumption.
Name your segments – the more creative, the better!
Consumers
Vacationers
Internet Users
Restaurant Patrons
Eco-friendly product consumers
Smartphone Users
Grocery Store Shoppers