Marketing Management

Session 4
Company, Competitor (III)
Segmentation, Targeting, Positioning (I)

Prof. Wenbo Wang

Last Session
Understand
Customers

Firms’ Valuation
Value to Customers
of Customers

• Needs/ Wants • Lifetime Value of a Customer

• Decision Making Process • Acquisition Costs of a Customer
• How to influence Decisions • Customer Retention
- Economics of Loyalty
- Loyalty Programs
 This session

What is my
3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there?
PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
Company
The big question: how do you see yourself/company?
One of the popular tools: SWOT Analysis
http://www.youtube.com/watch?v=9n-erTzwu8I (from 1:01 to 3:25)

Strength
Weakness
Opportunity
Threat

4
Company - SWOT: Internal
Company - SWOT: External
Competitors
The big question: how to identify your competitors?
• Serving the same customers (recall the Facebook example)
• Satisfying same/similar needs / wants

Competitors can be from

• Your own industry (BMW, Audi) or similar
industry (taxi, mini-bus, MTR)
• Your partners (iPhone, carrier, content provider)

7
 Apple’s competitors
Product level
competitors
Samsung

Nokia

Carrier (e.g.,
PCCW, AT&T)
Upstream suppliers: Final
screen, battery, shell…
Apple’s iPhone Apps product
(e.g., Foxconn)
Content (music,
movie, book)

Value-chain level When analyzing competition, think about

competitors both on product level and value chain level.

Value chain: a business chain that receives raw materials as input, add value to the raw
materials through various processes, and sell final products to customers.
Why stock market price for Apple falls (Sep 2012 – Jan 2013)?
Samsung is not the only competitor that drives down Apple’s stock
market price, but also China Mobile!

Sep 14-21, iPhone 5 Mid-Dec, iPhone 5 End of Jan (453$)

global launch(702$). launched in Mainland
(530$)

9
Research assistant job

A marketing professor in the Marketing Department is

looking for a research assistant, staring this month

Job: handle survey, industry research, literature search,

paper work

If you are interested, pls send your cv to my email by this

Friday: wenbowang@ust.hk
 The Marketing Framework

What is my
3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there?
PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
 Marketing Framework

What is my
Business? CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want
to go? SEGMENTATION TARGETING POSITIONING
MARKETING
STRATEGY

Create an image or identity

Divide a market into Decide which groups in the target market for the
smaller subsets of to market to product
customers

STP Strategy
Segmentation
• Segmentation is the process of dividing a market into
smaller subsets of customers (i.e., segments or niche
markets) with similar needs and responses to
marketing actions.
?

Why bother doing segmentation? Why

not just serving the whole market?
 Laptop (notebook) market
High quality

High price sensitivity Low price sensitivity

Low quality
• Two aspects we will cover today:
 Bases for Segmenting? Age, sex, income, lifestyle …
 Characteristics of a good segment?
Bases for Segmenting Consumer Markets- Geographic
Real estate
Geographic Restaurants
Nations, states,
regions, cities, climate
Schools
Movies
Basketball teams
…….

Paris China Town McDonald's Paris McDonald's

Bases for Segmenting Consumer Markets - Demographic

Geographic
Nations, states,
regions or cities

Demographic
Age, gender, family size and
life cycle, or income
 WSJ, 2/27/03

The New York Times

3/5/04

The Wall Street Journal

December 21, 2005
Target Ad
Target is a big retail store
In Jan, 2015, Tiffany & Co. debuted a new ad featuring a same-sex couple —
a very welcome first for the brand. The image is a sneak preview of Tiffany‘s
forthcoming “Will You” campaign, which “honors the idea that love knows no
boundaries”
2.2k Facebook shares on day 1 of the campaign.
Bases for Segmenting Consumer Markets- Psychographic

Geographic
Nations, states,
regions, cities, climate

Demographic
Age, gender, family size and
life cycle, or income

Psychographic
Social class, lifestyle, or
personality
Segment Men’s Perfume ?

• My own experience with men’s perfume

• What perfume should I use? Who is the “ideal me”?

George Clooney Korean “Flower” beauty man Wild cowboy

Who is the “actual me”?
Who is the “actual me”?
• It turns out that …
I am 40% straight, 40% gay and 20% in between.

• And the right perfume for me is

Gucci Guilty Black

• Takeaway: difficult to segment

based on psychographic
when consumers don’t know
their own needs & wants
II. Bases for Segmenting Consumer
Markets
Geographic
Nations, states,
regions, cities, climate

Demographic
Age, gender, family size and
life cycle, or income

Psychographic
Social class, lifestyle, or
personality

Behavioral
Occasions, BENEFITS,
uses, or responses
Segmentation by benefit
Example: Early Pregnancy Test Market
Segmentation
Early Pregnancy Test Market

Segment The hopefuls The fearfuls

Brand Conceive RapidVue
Name
Price $9.99 $6.99

Packaging Pink box, Mauve

smiling baby background,
no baby
Shelf Near ovulation- Near condoms
Position testing kits
Segmentation by multiple bases
 Marketing Framework

What is my
Business? CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want
to go? SEGMENTATION TARGETING POSITIONING
MARKETING
STRATEGY

Create an image or identity

Decide which groups in the target market for the
Divide a market into
to market to product
smaller subsets of
customers

STP Strategy
Targeting Strategies
• Single target approach
 Select one of the segments as the firm’s target market

SEGMENTS

Military Business Engineering Humanity

Targeting Strategies
• Multiple target approach
 Choose two or more segments and offer different
marketing mixes for each segment
SEGMENTS

Military Business Engineering Humanity

 Volkswagen: target multiple segments with multiple brands

Why not use VW’s own brand name for high end segments?

Low end middle end High end

VW VW VW
City Golf Beetle Routan Passat Phaeton

Bought in 1966 Bought in 1998

 Characteristics of a good segment
• Separating customers into segments, so as to
maximize:
 Within Segment Similarity
 Needs/wants are similar
 Responses to marketing actions are similar
 Between Segment Dissimilarity
 Large Enough (segment size)
 Distinctive (how unique is the target segment, compared to others)
 Identifiable (can easily identify the customers in the segment)
 Stable (customers in the segment do not leave or change their needs
easily)
• Needs are similar?
Exercise:
• Responses are similar?
• Large enough? 1) what segment do you think google TV should
target?
• Identifiable?
• Distinctive? 2) whether this segment is a good segment
• Stable? according to the six criteria?
Video:
http://www.youtube.com/watch?v=diTpeYoqAhc
http://www.youtube.com/watch?v=ZbFFx9kp1lI
Wrap up
What we have learned today:
- SWOT
- How to identify competitors (product level, value chain level)
- Segmentation (characteristics of a good segment, bases for segmenting)
- Targeting (targeting strategies (single, multiple))

Terms you should know from this session

- segmentation, targeting, strategies

To be tested in quiz
- SWOT, STP strategy