Segmentation, Targeting & Positioning

Overview: Segmentation, Targeting & Positioning

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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, betterdefined target groups.

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

race. family size. education. family life cycle. occupation. gender.Demographic Segmentation • Use Differences in: – age. income. and religion – Most frequently used segmentation variable • Ease of measurement and high availability. – Usually the worst variable to use. .

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

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

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

User & Loyalty Status Segmentation .

neighborhoods – 62 clusters or types .S.Geodemographic Segmentation • PRIZM. Census data – Profiles on 260.000+ U.S. by Claritas – Organized by ZIP code – Based on U.

Claritas’ Prizm .

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.

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

Targeting Segments .Overview .

Market Preference Patterns .

Undifferentiated (Mass) Marketing – Ignores segmentation opportunities .

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

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

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

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

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 .

Patterns of Target Market Selection: Product x Market Matrices .

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

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

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

Positioning Example To (target segment and need) our (brand) is a (concept) that (point-of-difference).” . 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. “To busy mobile professionals who need to always be in the loop.

Positioning Maps: Luxury SUVs Price vs. Orientation Dimensions .

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

Sources of Differentiation – – – – – – – Product Design Quality Additional Services Image People (Staff) Price Other 6-29 .

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. .

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

Generic Product Positions & Value Propositions .

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

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

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? .

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

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

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