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Segmentation, Targeting, and Positioning Segmentation Product positioning strategy Bases for segmentation Positioning Targeting Repositioning Definition

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Segmentation targeting and positioning l.jpg
Segmentation, Targeting, and Positioning

  • Segmentation

  • Product positioning strategy

  • Bases for segmentation

  • Positioning

  • Targeting

  • Repositioning


Definition l.jpg
Definition

Segmentation: “Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”

Although not all these consumers are completely alike, they share relatively similar needs and wants

Marketing action: involves efforts, resources, and decisions--product, distribution, promotion,

and price


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Approaches to Marketing

  • Undifferentiated Strategy (no intended difference from competitors; no specific consumer group sought out)

  • Concentrated Strategy (differentiation; one consumer segment sought)

  • Differentiated Strategy (same firm makes different versions for different segments)

Southwest

Airlines

Auto

makers


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Segments--Examples (1)

  • Air Travel

    • Business/Executive: Inflexible; relatively price insensitive (Small number of people, but travel often)

    • Leisure Traveler/Student: Relatively flexible; very price sensitive (other methods of travel--e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment)

    • Comfort Travelers: Comfort (e.g., space, food) important; willing to pay (Small segment)


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Examples (2): Restaurant Diners

E.g.,

--speed

--location

High

  • Convenience

Low

Low

High-end

delivered food

Fancy Restaurants

--e.g., Ritz Carlton

Price Sensitivity

Denny’s

McDonald’s

Local, “unbranded”

fast food restaurants

Taco Bell

High


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Notes on Segments

  • Boundaries between product categories are blurred--”soft drinks” or “non-alcoholic beverages?”

  • Any number of “dimensions” possible--but too many variables cut segment size

  • Segments must

    • differ meaningfully from others

    • large enough to be profitable

    • be serviceable (have need that can be met cost effectively)


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Potential for increased profit and ROI

Similarity of needs of consumers within

Differences of needs of members of different segments

Feasibility of serving each specific segments

Cost effectiveness of identifying members of each segment

Criteria in Selecting Segments


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Geographic

Regional

Area characteristics: The PRIZM system

Income ≠ willingness to spend!

Occupation

Demographics

Gender

Age

Ethnicity

Household size

Marital status

Single, never married

Married

Divorced

Presence of children

Bases for Segmentation: Consumer Characteristics


Bases for segmentation behavior and buying situations l.jpg

Benefits sought

Behavior

Involvement

Usage rates and status

“80/20” rule—20% of consumers may account for 80% of consumption

Media preferences

Preferred shopping outlets

Bases for Segmentation: Behavior and Buying Situations


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Combining variables…

  • Soft drink preferences—some segmentation variables

    • Preferred taste: Cola, lime, no taste, natural juice, ice tea

    • Calorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low calories

    • Usage occasion: Multi-pack for home; single can/bottle; fountain drink

    • Price sensitivity/brand loyalty: Willingness to pay more for name brand or specialty soda


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Some combined segments…

  • Price sensitive, non-brand loyal cola-taste, full-flavor segment, multi-pack

  • Price insensitive, cola taste, brand loyal, low calorie, multi-pack

  • Price insensitive, natural juice, taste sensitive, single serving

Typical behaviors of these consumers. Circumstances may involve occasional variations.


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Positioning Strategies

  • “Head-on” competition

    • Airlines (want to differentiate but have difficulty pulling it off in practice)

    • Beef products

  • Differentiation

    • Burger King: Grilled instead of McDonald’s fried burgers

    • Halmark: “When you care to send the very best…”

    • Hertz (vs. “Not exactly”)

    • Zachy Farms (chicken)


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Targeting: Selecting Segment(s) and Specializing

  • “You can’t be all things to all people” ---> choose one or more groups

  • Focus narrows scope of competition, but demands are greater

  • Repositioning: Changing established position may be difficult -- e.g.,

    • Sears

    • McDonald

Good sales;

poor everyday

values

Lunch; not dinner

Good for children


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Some Repositioning Campaigns

  • Cadillac: “It’s not your father’s car.”

  • Geritol: “Not too young for Geritol.”

  • Orange juice: “It isn’t just for breakfast anymore.”

  • Chocolate milk for adults

NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!


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Some Brands That Were Dropped Rather Than Repositioned

  • ValueJet  AirTran

  • Packard Bell  e-Machines

  • German Communist Party  Party for Democratic Socialism


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Evaluating Target Segments

  • Sales potential

  • Competitive presence/ potential

  • Cost of service

  • Feasibility of service

  • Impact on segments already served


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Euphemisms in Positioning

  • “Loss Prevention Associate”

  • “Sales Counselor”

  • “Pre-Owned” or “Previously Loved” Vehicle

  • “Gaming”


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