Market Segmentation, Targeting and Positioning

1. Market Segmentation, Targeting and Positioning chapter 5

2. Ch. 5 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

3. 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

4. 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

5. 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

6. 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:

8. 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

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

10. Demographics • Age • Income • Gender • Occupation • Education • Ethnicity • Family Life Cycle

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

12. Geographics • By region of country • Micro-Beers do it • Campbell’s Soup does it • Frito-Lay does it:

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

14. Psychographic Segmentation • Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)

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

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

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

18. Situation Segmentation • Time of Year / Week, Event etc.

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

20. 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%

21. Behavior/Usage Segmentation 80/20 true for many products • For Beer it’s 88% to 16% • Who are the heavy users?

22. ProductPositioning

23. How to Position Brands: Positioning: • “an image that a product projects in relation to competitive products and to the firm’s other products”

24. 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...

25. 7 Ways to Position (differentiate) a product • Show Kia clip 2) By Competitor • Show Similarity • Show Difference

26. 7 Ways to Position (differentiate) a product 3) By Cultural Symbol (brand marks)

27. TV Ad.

28. 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

29. 6) By Use or Application Typically used to add uses of product and expands user base

30. 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:

31. Product Repositioning • What is meant by Repositioning? • Why might a company want to do it? (4X) • Know any products that have been repositioned?

32. Mountain Dew(The most successful re-position in history) • What is MD’s current image/target market?

33. Mountain Dew(The most successful re-position in history) • Remember MD’s initial positioning? (1968-Early 1970’s)

34. Mountain Dew(The most successful re-position in history)

35. Mountain Dew(The most successful re-position in history)

36. A rather unusual example of segmentation/positioning...