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Chapter 3. Segmentation, Targeting, and Positioning. Segmentation, Targeting, and Positioning. Mass-marketing. A strategy that presumes there is one undifferentiated market and that one product will appeal to all consumers in that market. Advantages Lower cost

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chapter 3

Chapter 3

Segmentation,

Targeting,

and Positioning

Segmentation,

Targeting,

and Positioning

mass marketing
Mass-marketing
  • A strategy that presumes there is one undifferentiated market and that one product will appeal to all consumers in that market.
slide3
Advantages
  • Lower cost
  • One advertising campaign is needed
  • One marketing strategy is developed
  • Usually only one standardized product is developed
slide4
Disadvantage
  • It only works if all consumers have the same needs, wants, desires, and the same background, education and experience
market matching strategy
Market matching strategy
  • Today, mass marketing has largely been replaced by a three-step market matching strategy
market matching strategy6

Segmentation

Targeting

Positioning

Market Matching Strategy

Market Matching

market matching strategy7
Market Matching Strategy
  • Segmentation
  • Act of dissecting the marketplace into submarkets that require different marketing mixes
  • Targeting
  • Process of reviewing market segments and deciding which one(s) to pursue
  • Positioning
  • Establishing a differentiating image for a product or service in relation to its competition
market segmentation
Market segmentation
  • The process of dividing a market into distinct subsets (segments) of consumers with common needs or characteristics and selecting one or more to target with a distinct marketing mix
segmentation variables

Geographic

Geodemographic

Behavioral

Demographic

Psychographic

Segmentation Variables

Segmentation Variables

slide10
Marketers may use a single variable
  • Marketers may use two or more variables
geographic segmentation
Geographic Segmentation
  • Division of the market based on the location of the target market
  • People living in the same area have similar needs and wants that differ from those living in other areas
  • Climate
  • Population density
  • Taste
  • Micromarketing
demographic segmentation
Demographic Segmentation
  • Partitioning of the market based on factors such as
    • age
    • gender
    • marital status
    • income
    • occupation
    • education
    • ethnicity
slide13
Age
  • Product needs and interests often vary with consumers’ age
age effects
Age Effects
  • Occurrences due to chronological age
cohort effects
Cohort Effects
  • Based on the idea that people hold onto the interests they learned to appreciate growing up
gender
Gender
  • Gender is frequently a distinguishing variable
  • Changes in the family and growth of the dual-income household have blurred some of the lines
marital status
Marital Status
  • Marketers have identified specific marital status groups, such as:
  • Singles
  • Divorced individuals
  • Single parents
  • Dual-income married couples
  • They then market products specifically designed for one or more groups
income education occupation
Income, Education & Occupation
  • These three variables are often related and therefore often used together as a measure of one’s social class.
  • Income is commonly used because marketers feel it is a strong indicator of ability to pay for a particular product or service
  • Income is often combined with other variables to narrow target markets:
    • With age to identify the important affluent elderly
    • With age and occupation to produce the yuppie segment
race and ethnicity
Race and Ethnicity
  • The size and purchasing power of minorities make them an attractive target market
  • The size of the market is growing dramatically relative to the “majority” population
  • Targeting certain products (e.g., alcohol, tobacco) to such groups raises ethical issues
tobacco and the african american community
Tobacco and the African American Community
  • Why is there a concern about targeting African Americans?
  • During the ’90s, youth smoking rates increased sharply
    • 12.6% in 1991
    • 22.7% in 1997
    • 80% increase
slide21
After Native Americans, African Americans have the highest rate of smokers of any ethnic group in the US
  • African American men have the highest rate of death from lung cancer of any ethnic group in the US
    • 81% of African American men who smoke and contract lung cancer die
    • 51% of white men who smoke and contract lung cancer die
slide22
Tobacco companies have clearly targeted African Americans
  • Brown & Williamson’s Kool brand
    • used a cartoon character, the penguin Willie, that was popular with black teens
    • Has sponsored an annual jazz festival that attracts large black audiences
  • In 1998 cigarette advertisements represented 60% of ad space in black newspapers
  • Following the success of the movie “Malcolm X”, Star Tobacco Co. introduced a new brand called “X,” packaged in the black, red and green colors of the black nationalist movement
    • Marketed in 20 states before pressure from the community forced discontinuance of the brand
geodemographic segmentation
Geodemographic Segmentation
  • A hybrid segmentation scheme
  • Based on notion that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles and consumption habits
slide24
Market research firms specialize in producing computer-generated geodemographic market “clusters” of consumers
  • They have clustered the nation’s >250,000 neighborhoods into lifestyle groupings based on postal zip codes
  • Marketers use the cluster data for mail campaigns, to select retail sites and merchandise mixes, to locate banks and restaurants, etc.
  • “You Are Where You Live”.
psychographic segmentation
Psychographic Segmentation
  • Partitioning of the market based on lifestyle and personality characteristics
  • Marketers use it to further refine a target market
  • Its appeal lies in the vivid and practical profiles of consumer segments that it can produce
  • Accomplished by using AIO inventories
aio inventories
AIO Inventories
  • AIO research seeks consumers’ responses to a large number of statements that measure
  • Activities
  • Interests
  • Opinions
examples of the use of psychographic segmentation reflected in marketing messages
Examples of the use of psychographic segmentation reflected in marketing messages
  • Kellogg’s targets health-conscious consumers with brands such as Special K and Product 19
  • Old Spice is targeting the active sports lifestyle with High Endurance deodorant
behavioral segmentation
Behavioral Segmentation
  • Partitioning of the market based on attitudes toward or reactions to a product and to its promotional appeals
slide29
Behavioral segmentation can be done on the basis of:
  • Usage rate
  • Benefits sought from a product
  • Loyalty to a brand or a store
1 usage rate
1. Usage Rate
  • Differentiates between
    • heavy users
    • medium users
    • light users
    • nonusers
  • In general, a relatively small number of heavy users account for a disproportionately large percentage of product usage
  • Targeting those heavy users is a common marketing strategy
2 benefit segmentation
2. Benefit Segmentation
  • Marketers constantly attempt to identify the single most important benefit of their product that will be the most meaningful to consumers
  • Changing lifestyles play a major role in determining the product benefits that are important to consumers and also provide marketers with opportunities for new products and services
3 brand and store loyalty
3. Brand and Store Loyalty
  • The tendency of some consumers to repeatedly select the same brand within a given product category
  • A parallel tendency of some consumers to repeatedly patronize a particular retail establishment
slide33
Marketers often try to identify the characteristics of their brand-loyal customers so they can target consumers with similar characteristics in the larger population
  • Marketers also target consumers who show no brand loyalty as a means of penetrating a larger market
  • Marketers reward brand loyalty by offering special benefits to frequent customers
choosing market segments to target
Choosing Market Segments to Target
  • Once an organization has identified its most promising market segments, it must decide whether to target one segment or several segments
  • Each targeted segment will then receive a specially designed marketing mix — i.e., a specially tailored product, price, distribution network and/or promotional campaign
market targeting strategies
Market Targeting Strategies

There are three basic types of strategies:

  • Undifferentiated
  • Multisegment (Differentiated)
  • Concentration (Niche)
1 undifferentiated strategy
1. Undifferentiated Strategy
  • A strategy that ignores differences between groups within a market and offers a single marketing mix to the entire market
  • It works when a product is new to the market and there is minimal or no competition
advantages and disadvantages
Advantages and Disadvantages
  • Economies in production and marketing
  • Vulnerability to competitors offering more differentiated products and services to market subsegments
2 multisegment differentiated strategy
2. Multisegment/Differentiated Strategy
  • Targeting two or more segments with different marketing mixes for each
advantages and disadvantages39
Advantages and disadvantages
  • Minimizes risks, as losses in one segment can be made up for in others
  • Unique product features allow for higher prices
  • Increased costs for differentiated products and marketing
slide41
Greater knowledge of customers’ needs
  • Economies of scale
  • Entry of a strong competitor
  • Change in size or tastes of the segment
positioning
Positioning
  • Deciding how the firm wants the company and its brands to be perceived and evaluated by target markets
  • Differentiating the product from other products of the firm or its competition
slide43
Positioning complements and is an integral part of the company’s segmentation strategy and selection of target markets
  • The same product can be positioned differently to different market segments
  • The result of successful positioning is a distinctive brand image on which consumers rely in making product choices
perceptual mapping
Perceptual Mapping
  • A spatial picture of how consumers view products or brands within a market
  • Allows marketers to determine how their product appears in relation to competitive brands
  • Enables them to see gaps in in positioning of all brands in the product class to identify areas in which consumer needs are not being met
slide45

More

  • Tylenol
  • Extra-Strength Tylenol
  • Bufferin
  • Nuprin
  • Motrin
  • Advil
  • Anacin
  • Bayer
  • Excedrin
  • Private Label Aspirin
  • Aleve

Actron

  • Orudis

Less

More

A visual profile of how consumers perceive a number of pain relievers on the two dimensions of effectiveness vs. gentleness.

Effectiveness

Gentleness to Stomach

repositioning
Repositioning
  • Marketers may be forced to reposition products due to competition or a changing environment
slide47
Modifying an existing brand
  • Targeting it to a new market segment
  • Emphasizing new product uses and benefits
  • Stressing different features with the intention of boosting sales
slide48

Selected Psychographic/Demographic Characteristics of the PC Magazine Subscriber

Source: 1997 Lifestyles Study, PC Magazine Subscriber Study, Ziff-Davis, Inc., June 1997.

DEMOGRAPHICS Percent

PSYCHOGRAPHICS Percent

SEX (BASE 990)

Men 86

Women 13

USE A COMPUTER 100

At home 96

At work 89

On vacation/traveling 46

AGE

Under 25 5

25 - 34 18

35 - 44 29

45 - 54 31

55 - 64 12

65 or older 5

Mean age 44.1

SELECTED USE OF COMPUTER

Word Processing 96

Connect to Internet 86

E-mail 84

For work 80

Accounting/record keeping 75

Reference 68

Recreation/games 66

slide49

DEMOGRAPHICS Percent

PSYCHOGRAPHICS Percent

EDUCATION

Some college or less 27

Graduate college 27

Education beyond

college graduate 46

PORTABLE DEVICES USED WHEN TRAVELING ON BUSINESS

Laptop/notebook

computer 57

Cellular phone 47

Beeper or pager 30

Personal Digital Assistant/

electronic organizer 14

EMPLOYMENT STATUS

Employed by someone else 68

Self-employed 21

Other 11

slide50

DEMOGRAPHICS Percent

PSYCHOGRAPHICS Percent

OCCUPATION/BUSINESS DEPT.

Computer related-

professional 22

Senior or corporate

management 16

Engineering-related

professional 13

Administrative/

manufacturing,

accounting, finance,

purchasing, advertising,

marketing, sales 26

Others 23

TRAVEL FOR BUSINESS/PLEASURE

Business Travel

5 or more days per month 31

5 or more nights away

from home per month 17

Pleasure/Vacation Travel

15 or more days per year 37

Mean number of days

per year 15.5

MEMBER OF

FREQUENT FLYER PROGRAMS 90

slide51

DEMOGRAPHICS Percent

PSYCHOGRAPHICS Percent

INCOME

Under $30,000 7

$30,000 - $49,999 15

$50,000 - $74,999 24

$75,000 - $99,999 19

$100,000 or more 24

Mean income $87,700

FINANCIAL SERVICES

Currently own

Mutual funds 48

Stocks 44

Bonds 24

Life insurance/annuities 44

Currently use

Brokerage services 36

On-line investment

services 16

Retirement/financial

planning 41

PRIMARY RESIDENCE

Own 74

Rent 18

Other 3

No answer 5

slide52

RESPONSE OF SELECTED CONSUMER PSYCHOGRAPHIC STATEMENTS Percent

SELECTED SPORTS/ACTIVITES PLAYED/PARTICIPATED IN PAST YEAR Percent

Research before choose

brand of new product

to buy 41

Other people ask my opinion

about which computer

products to buy 41

Usually buy products based

on quality, not price 26

Prefer products that are

latest in new technology 26

Among group I am one of

first to try new product 19

Walking/running/jogging 63

Exercise/fitness/weight

training 44

Bicycling 7

Swimming 37

Golf 27

Fishing 23

Boating/sailing 19

Skiing 19

Tennis 14

slide53

HOBBIES/OTHER ACTIVITIES PARTICIPATED IN Percent

Listen to music 77

Reading 61

Going to movies 60

Surfing the Internet 50

Games-videos on

computer 48

Gardening 32

Going to the theater 32

Cooking 30

Photography 30

Collecting stamps/coins 11

Sewing needlecraft 6