Segmentation, Targeting and Positioning Chapter 7

Getting it right?

Designing a Customer-Driven Marketing Strategy

Finding Market Opportunities This slide relates to material on pp. 62-63. : Indicates place where slide “builds” to include the corresponding point. Finding Market Opportunities “needs” all customers have mobility similar needs dissimilar products human transport generic markets product- market product- market product- market similar needs similar products bikes | cars | trucks increasingly- homogeneous “needs” : narrow market job | recreation : :

Finding Market Opportunities This slide relates to material on pp. 62-63. : Indicates place where slide “builds” to include the corresponding point. Finding Market Opportunities disaggregating “needs” all customers have generic markets product- market transportation riders exercisers off-road adventurers environmentalists socializers : narrow market narrow market : :

Finding Market Opportunities This slide relates to material on pp. 64-65. : Indicates place where slide “builds” to include the corresponding point. disaggregating re-aggregating : : status dependability

Newer Techniques data mining CRM (Customer Relationship Management) This slide relates to material on pp. 76-77. : Indicates place where slide “builds” to include the corresponding point. Newer Techniques data mining http://www.anderson.ucla.edu/faculty/jason.frand/teacher/technologies/palace/datamining.htm CRM (Customer Relationship Management) http://www.maximizer.com/ shopping behaviour analysis http://www.sbxl.com/ Summary Overview Computer-aided methods afford marketers additional help in segmenting markets. The ability of the computer to record, sort, recombine, and analyze a great many variables relating to consumer behaviour at the same time allows marketers to develop much more sophisticated market segments. Key Issues Among the techniques are as follows: Clustering techniques: try to find similar patterns within sets of data. Customer databases: Past customer behaviour is often the source of information. Database sorting is especially helpful in providing services. Discussion Question: How do you provide information to marketers that are attempting to meet your needs? Customer relationship management (CRM): Sophisticated modeling techniques can predict the types of products or services an individual customer might want, based on the information stored in the database. Anticipation of emerging needs helps a marketer to maintain a long-term relationship with customers. : : :

Market Segmentation Key consumer variables: Dividing a market into groups with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes Key consumer variables: Geographic Demographic Psychographic Behavioral Geo – dividing mkt into diff units (regions, countries) Demo – based on age, gender, family size, life cycle, HHI, occupation, edu, eht or cult grp & generation Psycho – soc class, lifestyle or personality characteristics Behav – based on knowledge, attitudes, uses or responses to prod

Market Segmentation Behavioral segmentation Use multiple segmentation bases to identify smaller, better-defined target groups Start with a single base and then expand to other bases Multivariable segmentation systems such as PRIZM NE (New Evolution) are becoming more common Behav seg - Dividing buyers into groups based on consumer knowledge, attitudes, uses, or responses to a product Occasions: Helps firms build up product usage Benefits sought: Different segments desire different benefits from products User status: Non-users, ex-users, potential users, first-time users, regular users Usage rate: Light, medium, heavy Loyalty status: Brands, stores, companies Divide into groups by degree of loyalty

Segmenting International Markets Factors used: Geographic location Economic factors Political and legal factors Cultural factors Intermarket segmentation: Segmenting consumers who have similar needs and buying behavior even though they are located in different countries

Effective Segmentation Measurable Accessible Substantial Differentiable Actionable Measurable – eg. left handers 7% Accessible – fragrance comp – single men & woman who stay out late and socialize a lot Substan – car for people 7ft tall Diff – married or unmarried respnd the same Actionable – sml airline staff to sml to segment mkts

Market Targeting Market targeting involves: Evaluating marketing segments Consider segment size and growth, segment structural attractiveness, and company objectives and resources Selecting target market segments Alternatives range from undifferentiated marketing to micromarketing Being socially responsible

Selecting Target Market Segments Targeting strategies include: Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual marketing) Undifferentiated – ignores seg opport Differentiated – target seceral seg & design for each VF corp (Wrangler to North face) Niche – 1 or 2 sml seg Sabian cymbals

Choosing a Targeting Strategy Factors to consider: Company resources Product variability Product’s life-cycle stage Market variability Competitors’ marketing strategies LO 3: Explain how companies identify attractive market segments and choose a market-targeting strategy

Ethical Issues in Targeting This slide relates to material on pp. 71. : Indicates place where slide “builds” to include the corresponding point. exploitation “desires” needs wants cravings harm emotional financial other? Socially responsible Ethical issues--some critics argue that target marketing: exploits consumers; makes them want things they don’t need; may even cause physical, emotional, or financial harm. Discussion Question: What types of companies are criticized the most for exploiting particular target markets? Success in international marketing requires even more segmenting, because there are so many countries, languages, and unique cultures. However, segmenting international markets adds just one step to the whole process of segmentation. First, marketers must segment by country or region, and then proceed with the same basic segmentation approaches already discuss : :

Differentiation and Positioning Product’s position: Important attributes defined by consumers The place the product occupies in consumers’ minds relative to competing products “Product are created in a factory, but brands are created in the mind” Blackberry positioned as a personal productivity aid iPhone as high tech w. high style NOT nokia

This slide relates to material on pp. 77-82. : Indicates place where slide “builds” to include the corresponding point. Positioning High moisturizing low moisturizing 2 1 4 5 7 3 8 6 Jergens Zest Dove Olay Safeguard Summary Overview This diagram shows the output of a computer program that does positioning analysis. Key Issues Two attributes of soap that account for the greatest difference in consumer perceptions: degree to which the soap is a deodorant soap. degree to which the soap is a moisturizing soap; The closer that any two dots are to each other, the more similar those brands are in the minds of consumers. Each segment may have its own preferences. The circles refer to the size of market attracted to a combination of attributes. Discussion Question: What is the largest segment in the diagram? What brands serve that segment best? Positioning may also lead to combining instead of segmenting, if a firm can successfully appeal to several segments with the same product. Therefore, positioning studies can be part of a broader analysis because they: identify important attributes of the product offerings in a market; identify what offerings are likely to appeal to segments; provide a basis for changing the marketing mix, should a marketer decide to reposition a product. Coast Lux nondeodorant deodorant : Dial : Lifebuoy : Ivory :

Differentiation and Positioning Competitive advantage: gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices

Differentiation and Positioning Identifying possible value differences and competitive advantages: Key to winning - understand their needs better than competitors do and to deliver more value Examine the entire customer experience

Differentiation and Positioning Types of differentiation: Product: Features, performance, style, design Services: Speedy, convenient or careful delivery Channels: Coverage, expertise, performance People: Training staff better than the competitors Image: Convey distinctive benefits and positioning Prod – maple leaf foods Serv – Lexus Chan – Amazon People – Westjet – sense of humor Image – Ritz - Carlton

Differentiation and Positioning Worthwhile differences to promote: Important Distinctive Superior Communicable Preemptive Affordable Profitable Important: The difference delivers a highly valued benefit to target buyers. Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior: The difference is superior to other ways that customers might obtain the same benefit. Communicable: The difference is communicable and visible to buyers. Preemptive: Competitors cannot easily copy the difference. Affordable: Buyers can afford to pay for the difference. Profitable: The company can introduce the difference profitably.

Differentiation and Positioning Value proposition is the mix of benefits on which the brand is differentiated and positioned: More for more: More benefits for a higher price. – mont blanc, LG, four seasons, gourmet coffee Starbucks, McDs? More for same: More benefits for the same price. – Lexus “perhaps 4 the 1st time in hist trading a $72000 car for a $36000 would be considered trading up More for less: More benefits for a lower price. –Same for less: Same benefits for a lower price. – Walmart Best Buy Less for much less: Fewer benefits for a much lower price. – Giant tiger, Southwest airlines

Differentiation and Positioning Developing a positioning statement: Format: “To (target segment and need) our (brand) is (a concept) that (point of difference).” Example: “To busy, mobile professionals who need to always be in the loop, BlackBerry is a wireless connectivity solution that gives you an easier, more reliable way to stay connected to data, people, and resources while on the go.” Delissio pizza “It’s not delivery, it’s delissio!”

Communicating and Delivering the Position All marketing-mix efforts must support the positioning strategy Companies must monitor and adapt the position over time Required to match changes in consumer needs and competitors’ strategies