Segmenting and Targeting Markets Positioning Products

1. Segmenting and Targeting MarketsPositioning Products Key Concepts

2. RELATIONSHIP AMONG SEGMENTATION, TARGETING, & POSITIONING THE BASIS OF DEVELOPING MARKETING STRATEGY

3. KEY CONCEPTS - STP • SEGMENTATION = The PROCESS OF DIVIDING A MARKET into meaningful, relatively similar, identifiable segments or groups. • TARGETING = SELECTING and FOCUSING on the most appropriate market segment or segments • POSITIONING = Developing a SPECIFIC MARKETING MIX to influence potential customers’ overall perception of a brand, product line, or organization in general.

4. A Market Is... people or organizations with needs or wants, and with the ability and the willingness to buy. A group of people that lacks any one of these characteristics is not a market.

5. Market People or organizations with needs or wants and the ability and willingness to buy. Market Segment ASUBGROUPof people or organizations sharing one or more characteristics that cause them to have similar product needs. Market Segmentation ThePROCESS OF DIVIDING A MARKET into meaningful, relatively similar, identifiable segments or groups. Market Segmentation

6. The Concept of Market Segmentation

7. Why Market Segmentation is Important? Explain the importance of market segmentation

8. Why Market Segmentation is Important • Markets have a variety of product needs and preferences • Marketers can better define customer needs • Decision makers can define objectives and allocate resources more accurately

9. Market segmentation More PRECISE definition of customers needs and wants More ACCURATE marketing objectives IMPROVED resource allocation BETTER marketing results The Importance of Market Segmentation

10. Successful Market Segmentation Usefulsegment? • Substantial • Identifiable and measurable • Accessible • Responsive Then, yes: Useful segmentation scheme

11. SELECT a market for study CHOOSE BASISfor segmen-tation Selectdescriptors PROFILEandANALYSEsegments SELECTtargetmarkets DESIGN, IMPLEMENTMAINTAINmarketingmix Steps in Segmenting Markets

12. SegmentationBases Bases for Segmenting Consumer Markets CHARACTERISTICS of individuals, groups, or organizations used to divide a total market into segments. (variables)

13. Geography Demographics Psychographics Benefits Sought Usage Rate Bases for Segmentation

14. Geography Demographics Psychographics Benefits Usage Rate • Region • Market size • Marketdensity • Climate • Age • Gender • Income • Race/ethnicity • Family life cycle • Personality • Motives • Lifestyle • Geodemo-graphics • Benefitssought • Former • Potential • 1st time • Light orirregular • Medium • Heavy Bases for Segmenting Consumer Markets

15. Geographic Segmentation • Region of the country or world • Market size • Market density • Climate

16. Benefits of Regional Segmentation • NEW WAYS TO GENERATE SALES in sluggish and competitive markets • SCANNER DATA allow assessment of best selling brands in region • REGIONAL BRANDS appeal to local preferences • QUICKER REATION to competition

17. Age Gender Income Ethnic background Family life cycle Demographic Segmentation

18. Movies Demographic Segmentation • Largest movie audience markets are: • under twenty-five (big in early summer) • over twenty-five • male (big in early summer) • female • and a racial category

19. Movies Segmentation • Largest movie audience markets are: • "Clearasil" (coming-of-age) • “Action” (fast-paced, spy, war, martial arts, ) • "genre" (teen-age horror) • "romantic comedy" (love story) • "ethnic" (black, Hispanic, Asian characters) • "franchise" (the carbon-copy sequel of another film) • "catastrophe” (volcano, comet/asteroid/monster) • The Holy Grail was a film like Titanic, which appealed to all five quadrants

20. Ethnic Segmentation • Largest ethnic markets are: • Hispanic Americans • African Americans • Asian Americans • Will comprise 1/3 of U.S. population by 2010 with buying power of $1 trillion annually

21. Family Life Cycle Age MaritalStatus Children

22. Family Life Cycle

23. Market segmentation on the basis of personality, motives, lifestyles, and geo-demographics. Psychographic Segmentation PsychographicSegmentation

24. Personality Motives Lifestyles Geodemographics Bases for Psychographic Segmentation

25. Lifestyle Segmentation • How time is spent • Importance of things around them • Beliefs • Socioeconomic characteristics

26. Geo-demographic Segmentation Geo-demographic Segmentation Segmenting potential customers into NEIGHBORHOOD LIFESTLE categories. COMBINES geographic, demographic, and lifestyle segmentation.

27. The process of grouping customers into market segments according to the benefits they seek from the product. Benefit Segmentation Benefit Segmentation

28. Usage-RateSegmentation Dividing a market by the AMOUNT of product bought or consumed. 80/20Principle A principle holding that 20 percent of all customers generate 80 percent of the demand. Benefit Segmentation

29. Verizon, Sprint Nextel and others allow consumers with standard contracts to access the Internet via cellular high-speed services. Some customers’ service is being cancelled because they are using excessive network capacity. Sprint and Cingular Wireless charge based on usage: the amount of data bits they wirelessly transfer each month. Example of Usage-Rate SOURCE: Amol Sharma and Dionne Searcey, “Cell Carriers to Web Customers: Use Us, but Not too Much,” Wall Street Journal, May 11, 2006, B1.

30. Segmenting Business Markets • How segmenting business markets is different from segmenting consumer markets

31. Company Characteristics Producers Resellers Governments Institutions Buying Process Segmenting Business Markets

32. Producers Resellers Government Institutions Bases for Segmenting Business Markets Company Characteristics Buying Processes

33. Company Characteristics Bases for Segmenting Business Markets • Geographic location • Type of company • Company size • Volume of purchase • Product use

34. Satisficers Business customers who place an order with the first familiar supplier to satisfy product and delivery requirements. Optimizers Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one. Buyer Characteristics

35. Demographic characteristics Decision style Tolerance for risk Confidence level Job responsibilities Buyer Characteristics

36. Strategies for Selecting Target Markets • How to select target markets

37. Strategies for Selecting Target Markets TargetMarket AGROUP of people or organizations for which an organization designs, implements, and maintains a MARKETING MIX INTENDED TO MEET THE NEEDS of that group, resulting in mutually satisfying exchanges.

38. Undifferentiated Strategy Concentrated Strategy Multisegment Strategy Strategies for Selecting Target Markets

39. UndifferentiatedTargetingStrategy A marketing approach that views the market asONE BIG MARKETwith no individual segments and thus REQUIRES A SINGLEmarketing mix. Undifferentiated Targeting Strategy

40. Undifferentiated Strategy Undifferentiated Targeting Strategy Advantage: • Potential savings on production and marketing costs Disadvantages: • Unimaginative product offerings • Company more susceptible to competition

41. Concentrated Targeting Strategy ConcentratedTargeting Strategy A strategy used to select ONE SEGMENT of a market for targeting marketing efforts. NicheOne segment of a market.

42. Concentrated Strategy Concentrated Targeting Strategy Advantage: • Concentration of resources • Meets narrowly defined segment • Small firms can compete • Strong positioning Disadvantages: • Segments too small, or changing • Large competitors may market to niche segment

43. Multisegment TargetingStrategy MultisegmentTargeting Strategy A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

44. Multisegment Strategy MultisegmentTargeting Strategy Advantage: • Greater financial success • Economies of scale Disadvantages: • High costs • Cannibalization

45. Multisegment Strategy Costs of Multisegment Targeting • Product design costs • Production costs • Promotion costs • Inventory costs • Marketing research costs • Management costs • Cannibalization

46. Situation that occurs when sales of a new product cut into sales of a firm’s existing products. Cannibalization Cannibalization

47. Positioning & Positioning Strategies • How and why firms implement positioning strategies and how product differentiation plays a role

48. Positioning Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.

49. Brand Positioning MarketShare Tide Tough, powerful cleaning 31.1% Cheer Tough cleaning, color protection 8.2% Bold Detergent plus fabric softener 2.9% Gain Sunshine scent and odor-removing formula 2.6% Era Stain treatment and stain removal 2.2% Dash Value brand 1.8% Oxydol Bleach-boosted formula, whitening 1.4% Solo Detergent and fabric softener in liquid form 1.2% Dreft Outstanding cleaning for baby clothes, safe 1.0% LO9 Ivory Snow Fabric & skin safety on baby clothes 0.7% Ariel Tough cleaner, aimed at Hispanic market 0.1% Positioning of Procter & Gamble Detergents

50. Effective Positioning • Assess the positions occupied by competing products • Determine the dimensions underlying these positions • Choose a market position where marketing efforts will have the greatest impact