UNDERSTANDING the MARKET ENVIRONMENT: SEGMENTING, TARGETING and POSITIONING

1. UNDERSTANDING the MARKET ENVIRONMENT: SEGMENTING, TARGETING and POSITIONING

2. China is an attractive target market for many companies because of its huge population --- Kotler et al.2006

3. Segmentation : breaking down of a diverse, heterogeneous markets Positioning: Act of assigning & representing a brand STP Target Segment: Focus to sub group

4. Break the market into smaller, more homogeneous segments • Specifically target the discrete market segments • Position the product or service to appeal to the targeted segments.

5. Overview: Segmentation, Targeting & Positioning

6. The Value of STP Marketing. WHY?? • Precise Specification of Marketing Objectives • Better Understanding of Needs and Motives of Target Market • Better Understanding of Customers and Non customers • More Efficient Allocation of Resources • Ability to Assess Strengths and Weaknesses • Ability to Identify Messages to be Used Across All Promotional Tools • Better IMC Management of Promotional Effort • Ability to Respond More Quickly to Changes in the Environment

7. Beyond STP Marketing. AFTER?? • STP Decisions are Continuously Evolving Due to the Dynamic Nature of Markets • To Maintain the Profitability of Brands, Segmentation Decisions Must be Reassessed Regularly • Product Differentiation Infuses STP Decisions with Vitality 4.4

8. Market Segmentation - Principles • Segmentation Variables • Geographic • Demographic • Psychographic • Behavioral • Other (anything!) • No single best way to segment a market. • Often best to combine variables and identify smaller, better-defined target groups.

10. Demographic Segmentation • Segmentation Based on Physical Descriptors of Individuals • Age • Gender • Ethnic Background • Education • Marital Status • Occupation Are you a DINK? What are you?

11. Demographic Segmentation • Use Differences in: • age, gender, family size, family life cycle, income, occupation, education, race, and religion • Most frequently used segmentation variable • Ease of measurement and high availability. • Usually the worst variable to use.

12. Brands in Common Product Categories Can Be Targeted to Audiences Based on Ethnic Background 4.6

13. What is the Basis for Segmentation in this Message? 4.7

14. Geographic Segmentation • Divide markets into different geographic units. • Examples: • World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc. • Country Region: Pacific, Mountain, East Coast, etc. • City or Metro Size: New York, San Francisco • Population Density: rural, suburban, urban • Climate: northern, southern, tropical, semi-tropical

15. Climate & Topographical Features • Food Preferences & Preparation Habits • Entertainment Preferences • Recreational Activities 4.8

16. Occasion Special promotions & labels for holidays. Special products for special occasions. Benefits Sought Different segments desire different benefits from the same products. Loyalty Status Nonusers, ex-users, potential users, first-time users, regular users. Usage Rate Light, medium, heavy. Behavioral Segmentation

17. Loyalty Status Segmentation Hard-core Split loyals Shifting loyals Switchers

18. WHO you are? WHAT you buy? HOW you use? Do you need to spend > $ RM? • Usage Patterns & Commitment Levels • Heavy Users • Nonusers • Brand Loyal Users • Switchers or Variety Seekers • Emergent Customers • Psychographic & Lifestyle Segmentation • AIO’s • Benefit Segmentation e.g. nonsmokers Difficult to convert First time buyer Target segment identified by various benefit packages

19. Psychographic Segmentation • Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic classification often have very different lifestyles and personalities.

20. Psychographics and Lifestyle segmentation AOI Lifestyles segmentation provides insight into consumer’s motivations. Club Med, Bintan, Banyan Tree, etc Benefit Segmentation Divide market based on different benefits that consumer seeks. e.g. Honda --- Prestige?, Passenger Safety? Fuel Economy?

21. A Classic Example of Benefit Segmentation 4.10

22. Positioning The place a product occupies in consumers’ minds relative to competing products.

23. Positioning Example eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

24. Positioning Example To (target segment and need) our (brand) is a (concept) that (point-of-difference). “To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”

25. Formulating a Positioning Strategyfor a Brand ESSENTIALS OF EFFECTIVE BRAND POSITIONING STRATEGIES • Substantive Value • Consistency • Simplicity & Distinctiveness FUNDAMENTAL BRAND POSITIONING THEMES • Benefit Positioning • User Positioning • Competitive Positioning REPOSITIONING BRANDS