Marketing Minute - Ch. 9 Segmentation, Targeting, Positioning Contains unread posts

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segmentation, targeting, and positioning

nine

chapter

Chapter 9 – Segmentation, Targeting, and Positioning

LEARNING OBJECTIVES

LO 9-1 Outline the different methods of segmenting a market.

LO 9-2 Describe how firms determine whether a segment is attractive and therefore worth pursuing.

LO 9-3 Articulate the differences among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

LO 9-4 Determine the value proposition.

LO 9-5 Define positioning and describe how firms do it.

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These are the learning objectives for this chapter.

Segmentation, Targeting, Positioning Process

Step 1

Strategy or Objectives

Step 2

Segmentation Methods

Step 3

Evaluate Segment Attractiveness

Step 4

Select Target Market

Step 5

Identify and Develop Positioning Strategy

Segmentation

Targeting

Positioning

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Previous chapters addressed how to plan marketing strategy; this chapter focuses on how firms use that strategy to identify the target markets they will serve.

Step 1: Establish Overall Strategy or Objectives

Check Yourself

Derived from mission and current state

©M. Hruby.

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Remind students that any strategy must be consistent with the firm’s mission statement and be based on the current assessments from SWOT analyses

Step 2: Segmentation Methods

Segmentation Method	Sample Segments
Geographic	Continent: North America, Asia, Europe, Africa Within U.S.: Pacific, mountain, central, south, mid-Atlantic, northeast
Demographic	Age, gender, income
Psychographic	Lifestyle, self-concept, self-values
Benefits	Convenience, economy, prestige
Behavioral	Occasion, loyalty

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Group activity: Divide the class into groups. Have them choose either a manufacturer or national retailer. Have them describe their segmentation method and then evaluate whether or not it is the best segmentation method for that firm.

Geographic Segmentation

©ImagineChina

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Geographic information software (GIS) aids in such segmentation. Many firms use regional brands of popular products. When Dunkin’ Donuts introduced soup to its menu, it included New England Clam Chowder which appealed to northeastern consumers, but franchisees in Texas objected to this choice. Understanding regional preferences can define a company’s success — or failure.

Ask students: How can firms successfully change a national brand into a international brand? This will tie to the previous chapter on global marketing – should they adapt to local tastes?

Demographic Segmentation

Most common segmentation strategy

U.S. Census Bureau Website

©Stockbyte/Getty Images

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This web link is to the U.S. Census Bureau. They provide one of the most important marketing research tools: Census data, which offer a rich, free source of information about various consumers that, suggests segmentation possibilities.

On the Census Bureau Website, walk students through the information available about the zip code in which your university is located.

Psychographic Segmentation

©Benetton Group SPA; Photo by: Oliviero Toscani

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Not just businesses segment their customers; segmentation also helps organizations that counsel drug addicts or other at-risk groups. Recall the discussion during the last presidential election about “hockey moms”—middle-class, educated, married women concerned about various threats to their children.

Group Activity: Divide students into groups. Have each choose a product/service they like. Have them describe users of that product/service in terms of psychographics

Psychographic

Self-values

Self-concept

Lifestyles

Geodemographic Segmentation

Claritas Website

Source: Reprinted with permission of The Nielsen Company.

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Click on the Claritas link and conduct the “You Are Where You Live” exercise with the zip codes of the students’ hometowns.

Ask students: Describe your neighborhood. How accurately does the site depict your hometown?

Benefit Segmentation

©image100/PunchStock

Michael Hevesy/Photodisc/Getty Images

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Group activity: Have students identify products that provide each type of benefit. How else might these products be segmented?

This activity provides a good opportunity to remind students that products exist in multiple segments, just as consumers do. Different motives lead different consumers to purchase the same product.

Behavioral Segmentation

Royalty-Free/CORBIS

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Firms encourage loyalty in various ways, such as airline mileage or hotel point reward programs.

Ask students: Are you a loyal buyer of any single product, to the extent that you refuse to purchase a substitute?

Students may refer to soft drinks, but true brand loyalty is extremely rare.

Occasion segmentation

Loyalty segmentation

What are the various segmentation methods?

check yourself



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Geographic, Demographic, Psychographic, Geodemographic, Benefits, and Behavioral.

Step 3: Evaluate Segment Attractiveness

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Marketers first must determine whether the segment is worth pursuing, using several descriptive criteria: Is the segment identifiable, substantial, reachable, responsive, and profitable.

SEGMENT ATTRACTIVENESS

Substantial

Reachable

Responsive

Profitable

Identifiable

Who is in their market?

Are the segments unique?

Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Ask students: When would these women all be in the same segment? When would they be in different segments?

These women would appear in the same segment if the segmentation variable were gender but in individual segments based on race or lifestyle. They also may be in different geographic or income segments, for example.

Substantial

Too small and it is insignificant

Too big and it might need it’s own store

©Jerry Arcieri/Corbis

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Just because a firm can find a market does not necessarily mean it represents a good market. But size in terms of number of people is not the only consideration; despite its small size, the market for the original Hummer was incredibly profitable, and therefore was substantial

Reachable

©Digital Vision/PunchStock

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The Internet has enabled more people to be reached more easily, but various areas around the world simply cannot be served because they aren’t accessible to marketing messages or because there isn’t adequate distribution.

Ask students: What types of media influence the way they shop? The answer may lead to an interesting discussion about how difficult it is to reach Generation Y customers either because they don’t participate in traditional media such as newspapers or because they are skeptical about being influenced by commercial messages.

Know the product exists

Understand what it can do

Recognize how to buy

Responsive

Customers must:

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Group activity: Nike is very successful at selling sports related goods. Would consumers accept personal care products from Nike? Why or why not? Develop a list of potential products for Nike.

Ask students: Are any of the following acceptable: cologne, deodorant, toothpaste, or hair gel. Why or why not? What about Nike towels, sheets, or pajamas? What differences can you identify between these two types of product categories? Students are likely to say they will not understand the value proposition and the company’s expertise. Yet other students might say that they will believe in personal care product because Nike offers superior products.

React positively to firm’s offering

Move toward the firms products/services

Accept the firm’s value proposition

Profitable

	Homeowners	Businesses
Segment size	75,000	1,000
Segment adoption percentage	1%	20%
Purchase behavior Purchase price Frequency of purchase	$100 12 times	$500 20 times
Profit margin percentage	60%	80%
Fixed costs	$400,000	$1,000,000
Segment profit	$140,000	$600,000

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A hot segment today may not last long enough to make it worth investment. Many firms are investigating when and how much to invest in the Millennial/GenY generational cohort. Firms in financial services and housing understand that it provides a new potential market, but the debt levels this segment carries makes it difficult to target effectively.

Step 4: Selecting a Target Market

Conde Nast has more than 20 niche magazines focused on different aspects of life.

©M Hruby

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Hallmark looks at geographic segmentation when building new stores. They also use benefit segmentation for their online cards. In general, a company matches their competencies with the attractiveness of target markets.

Segmentation Strategy

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Ask students: What is an example of a mass market product? Answer: There are very few mass market products. Even commodity goods such as flour are now differentiated.

Ask students: What are examples of products that use differentiated, concentrated, and micromarketing segmentation strategies?

Differentiated = Coca Cola

Concentrated = Helena Rubenstein or Clinique

Microtargeting = Financial Services Providers

Targeting Strategies

Differentiated

Concentrated

Micromarketing or one-to-one

Undifferentiated or mass marketing

Step 5: Develop Positioning Strategy

Photo by Tiffany Rose/WireImage/Getty Images

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Positioning strategies generally focus on either how the product or service affects the consumer or how it is better than competitors’ products and services.

When positioning against competitors, the objective is to play up how the brand being marketed provides the desired benefits better than do those of competitors.

Firms thus position their products and services according to value, salient attributes, and symbols, and against competition.

Salient Attributes

Positioning Methods

Symbol

Competition

Value

Positioning Steps

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This slide provides the steps necessary to develop the positioning map on the next slide. Switch back and forth on these two slides to explain the positioning map.

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify the market’s ideal points and size.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

3. Identify competitors’ positions.

Perceptual Maps

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This perceptual map was created by the process on the previous page. It was for Gatorade which was seeking a positioning of healthy and sweet taste.

What is a perceptual map?

Identify the six positioning steps.

check yourself

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A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind.

Determine consumers’ perceptions and evaluations of the product or service in relation to competitors’, identify competitors’ positions, determine consumer preferences, select the position, monitor the positioning strategy.

Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

Glossary

Return to slide

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Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

Glossary

Return to slide

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Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Glossary

Return to slide

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Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Geographic segmentation organizes customers into groups on the basis of where they live.

Glossary

Return to slide

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Geographic segmentation organizes customers into groups on the basis of where they live.

Behavioral segmentation divides customers into groups based on how they use the product or service.

Glossary

Return to slide

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Behavioral segmentation divides customers into groups based on how they use the product or service.

Psychographic segmentation, or psychographics, allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices.

Glossary

Return to slide

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The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.

Glossary

Return to slide

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The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.