Segmentation targeting and positioning
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SEGMENTATION, TARGETING, AND POSITIONING. Segmentation Product positioning strategy Bases for segmentation Positioning Targeting Repositioning. SEGMENTATION, TARGETING, AND POSITIONING. SEGMENTATION IDENTIFYING MEANINGFULLY DIFFERENT GROUPS OF CUSTOMERS. TARGETING SELECTING WHICH

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SEGMENTATION, TARGETING, AND POSITIONING

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Segmentation targeting and positioning

SEGMENTATION, TARGETING, AND POSITIONING

  • Segmentation

  • Product positioning

  • strategy

  • Bases for segmentation

  • Positioning

  • Targeting

  • Repositioning


Segmentation targeting and positioning1

SEGMENTATION, TARGETING, AND POSITIONING

SEGMENTATION

IDENTIFYING

MEANINGFULLY

DIFFERENT GROUPS

OF CUSTOMERS

TARGETING

SELECTING WHICH

SEGMENT(S) TO

SERVE

PROUDCT

PRICE

POSITIONING

IMPLEMENTING

CHOSEN IMAGE AND

APPEAL TO CHOSEN

SEGMENT

PROMOTION

DISTRIBUTION


Learning objectives

Learning Objectives

  • Appreciate different unique needs and expectations of different customer groups

  • Appreciate tradeoffs among strategies of serving different segments

  • Understand methods for selecting and targeting customer groups

  • Understand bases for implementing target selection through positioning


Definitions

Definitions

Segmentation:

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

“The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.” (Text, p. 97)

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.


Approaches to marketing

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

Some auto

makers


Segments examples 1

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)


Examples 2 restaurant diners

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


Combining variables

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


Some combined segments

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.


Bases for segmentation

Bases for Segmentation

  • Geographic

  • Demographic

  • Psychographic

  • Benefit Desired

  • Usage Rate

  • Other Behavior


Geographic

Geographic

  • Regional differences

    • Climate and physical environment

    • Tastes

      • Campbell’s Soup

    • Lifestyle and values

      • Urban vs. rural areas


Demographics

Demographics

  • Age

  • Gender

  • Willingness to spend

    • More useful than income—income ≠ willingness to spend!

    • “Trading Up:” Consumers may “splurge” in certain, personally significant categories while buying more downscale in other categories

  • Ethnicity

  • Family lifecycle stage


Psychographics

Psychographics

  • Personality

    • Very difficult to measure

    • Limited empirical support

  • Motives

  • Lifestyle

    • Usually more practical than personality


Usage rate

Usage Rate

  • “80/20” rule—20% of consumers may account for 80% of consumption (in many product categories)

    • Note that larger consumption rate segments may be subject to heavy competition

    • Reasons for targeting smaller segments

      • Reduced competition

      • Opportunity for growth


Other behavioral bases for segmentation

Other Behavioral Bases for Segmentation

  • Involvement

    • Interest

    • Knowledge

    • Willingness to spend time on making product category decisions

  • “Dealproneness”

    • Coupon usage

    • Brand switching in response to price incentives

  • Outlet (store) choice

    • Specialty

    • Convenience store

    • “Category killer” (e.g., Fry’s, Best Buy, Circuit City)

    • Discount

    • Warehouse


Benefits sought

Benefits Sought

  • Based on

    • Differences in arbitrary tastes (e.g., cola vs. non-cola drink)

    • Ideal point

    • Tradeoffs(e.g., taste vs. calories)

    • Usage situation (e.g., coffee for camping (instant) vs. higher quality for home brewing)


Targeting selecting segment s and specializing

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.


Identifying targets

IDENTIFYING TARGETS

  • Customer information “enhancement”—information from different sources integrated (e.g., real estate records, purchase lists, magazine subscription, credit records)

  • “Merge-purge”

    • Customer lists from different sources are combined with removal of duplicates


Segmentation targeting and positioning

LISTS OF BUYERS FROM ONLINE/CATALOG MERCAHNTS

MERGE PROCESS

MAGAZINE SUBSCRIPTIONS

NAMES AND ADDRESSES FROM ALL SOURCES USED

SURFER DUDE

SURFER’S SUPPLY

SURFER CHICK

SURF CITY

EXTREME SURFING

REMOVE DUPLICATES

SURFGEAR

CALIFORNIA SURFER

GENERAL LISTS (E.G., PHONE BOOK LISTINGS)

ORGANIZATION MEMBERSHIPS

NON-REDUNDANT FINAL LIST

SORORITY SURFERS OF AMERICA

SELECT RESIDENCES W/IN 2 BLOCKS OF BEACH

CALIFORNIA SURFERS’ ASSOC.

PURGE PROCESS

GEORGIA SURFER SOCIETY


Segmentation targeting and positioning2

SEGMENTATION, TARGETING, AND POSITIONING

PROUDCT

PRICE

PREMIUM

PREMIUM

POSITIONING

IMPLEMENTING

CHOSEN IMAGE AND

APPEAL TO CHOSEN

SEGMENT

LOW PRICE

BASIC

VALUE

DURABLE

DISTRIBUTION

PROMOTION

INTENSIVE

PRESTIGE

SELECTIVE

FUN

EXCLUSIVE

POWERFUL


Stuck in the middle problem

“STUCK IN THE MIDDLE” PROBLEM

  • Brands that offer a clear benefit tend to do better

  • Clear orientation

    • Wal-Mart

    • Nordstrom’s

    • KFC

  • “Stuck in the middle”

    • Sears—Competition both from “above” and “below.”

  • Nevertheless, there are successful “middlelers:” Denny’s, Vons, Ralph’s


Positioning strategies

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

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

    • Hertz (vs. “Not exactly”)

    • Zachy Farms (chicken)


Repositioning

Repositioning

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

    • Sears

    • McDonald

Good sales;

poor everyday

values

Lunch; not dinner

Good for children


Multidimensional scaling

Multidimensional Scaling

  • Consumer product perception is identified along two or more “dimensions”

  • Methods:

    • A priori specification of dimensions  respondents make judgments

    • Respondent rating of relative similarity of brands/product categories  statistical model identifies unnamed dimensions  dimensions are inferred from characteristics of items at different points


Segmentation targeting and positioning

HIGH

Hershey’s

Toblerone

Dove Milk Chocolate

Ritter

Mr. Goodbar

M&M

HIGH

LOW

Snickers

Almond Joy

Kitkat

Mars

Reese’s

York

Smores

Heath

Butterfinger

Twix

LOW

Milky Way


Similarity ratings

Similarity Ratings

1=“Not at all similar” 7=“Extremely Similar”

Logically, all candy bars are “extremely similar” to themselves. The shaded regions are redundant—only the order is varied.


Some repositioning campaigns

Some Repositioning Campaigns

  • Geritol: “Not too young for Geritol.”

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

  • Microsoft  “hipper”

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


Some brands that were dropped rather than repositioned

Some Brands That Were Dropped Rather Than Repositioned

  • ValueJet  AirTran

  • Packard Bell  e-Machines

  • German Communist Party  Party for Democratic Socialism


Euphemisms in positioning

Euphemisms in Positioning

  • “Loss Prevention Associate”

  • “Sales Counselor”

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

  • “Gaming”


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