Market Segmentation and Product Positioning 1

Exercise If Starbucks Via was a person, what would that person be like? Describe his/her characteristics and interests. What does this tell you? Are your descriptions consistent with the way Starbucks Via is being promoted (and positioned)? MacBeth and Kyle love Via! Far Out Via Coffee

What is Market Segmentation? Market segmentation is the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) of individuals for the firm to serve Why Segment? Fragmentation: Different groups have different needs/wants Allows marketers to establish appropriate marketing mix for a given segment 3

Five Tasks In Market Segmentation:

(1) Analyze Consumer-Product Relations Analyzing C-P Relations involves figuring out how affect, cognition and behavior are relevant to how consumers experience a product Three Approaches Brainstorming to figure out what types of consumers are most likely to buy product and how they differ from other groups of customers Focus groups can be used to identify what customers want, their values, etc. Secondary research can be used to gain additional information on key market segments 5

Five Tasks In Market Segmentation:

(2) Investigate Segmentation Bases Four common segmentation bases Benefit Psychographic Person/situation Geodemographic 7

Benefit Segmentation Divide the market up on the basis of the benefits they seek from a product. An example: toothpaste 8

Psychographic Segmentation Uses psychological, sociological, anthropological factors to develop segments Personality (sensation seeking) Motives (status) Lifestyles (HOGs) VALS2 (Values + Lifestyles) System Based on psychological characteristics that relate to consumer behavior Can Identify Prevalence of 8 Types by Zip Code 9

Values and Lifestyles (VALS) System Innovators High Resources High Innovation Ideals Achivem. Self Expr. Thinkers Achievers Experiencers Believers Strivers Makers Survivors VALS Web Site Low Resources Low Innovation 10

VALS Types – Part 1

VALS Types – Part 2

Person/Situation Segmentation Divide market up on the basis of the benefits certain types of individuals (person) desire in certain situations (situation) Different strokes, for different folks…in different situations An Example: Old Spice 13

Person/Situation Segmentation (Steps) Figure out if there are different usage situations that influence which attributes are important Assess perceptions of different segments about product in different situations Create “user” x “usage” matrix (cont. on next slide)… Kids Adults Home Sports 14

Person/Situation Segmentation (Steps) Rank cells in terms of market share Identify important benefits sought in each cell of matrix Figure out where your competitors are located in the matrix Position your product in matrix and figure out how well you are meeting the need relative to your competitor Identify opportunities based on segment size, needs, and competitive advantage of your offering 15

Demographic Segmentation Age, sex,, income, education, family size, occupation, marital status Sociocultural Segmentation Culture, religion, race, social class Generational Segmentation Kids, tweens, teens, Gen X, Gen Y, Gen Z, Boomers

Geodemographic Segmentation Geodemography Combination of geographic and demographic information Creates classifications of actual, addressable, mappable neighborhoods where consumers live and shop PRIZM NE system by Claritas Assumes consumers in certain neighborhoods are similar in many respects and that the best prospects are those who actually use a product or other consumes like them 66 clusters: (one example) 

Sample Claritas (PRIZM) Cluster More Clusters YOUNG INFLUENTIALS (22) Once known as the home of the nation's yuppies, Young Influentials reflects the fading glow of acquisitive yuppiedom. Today, the segment is a common address for younger, middle-class singles and couples who are more preoccupied with balancing work and leisure pursuits. Having recently left college dorms, they now live in apartment complexes surrounded by ball fields, health clubs, and casual-dining restaurants. 18

Five Tasks In Market Segmentation:

(3) Positioning Four Steps in Positioning Evaluate (direct and indirect) competition Create product/service with competitive advantage Attribute (Komperdell Gloves – Seamless Technology) Use or application (A Snapple A Day) Product user (Zales – three store concepts) Product class (Position margarine as butter) Competitor (Burger King vs. McDonalds) Price/quality (Target – an upscale discounter) Emotion (Nike - Just Do It!) 20

(3) Positioning Four Steps in Positioning Evaluate (direct and indirect) competition Create product/service with competitive advantage Develop marketing mix to appeal to target segment Measure response and adapt strategy if needed May need to reposition product/service Repositioning may involve bringing old brand back to life (retro brand). 21

Creating the Brand Personality A distinctive image that captures a product’s or service’s essence (character, benefits) Where does my brand stand? Ask customers what characteristics are important Measure your brand and competition on those dimensions Plot and evaluate your brand’s location in a perceptual map 22

Describe These Brand Personalities Volvo Wagon Lamborghini 23

Perceptual Map Classy/Distinctive Porsche BMW Lincoln Mercedes Position Conservative Sporty Ford Plymouth Toyota VW Positioning Bases Practical/Affordable 24

Five Tasks In Market Segmentation:

(4) Select Segmentation Strategy Four basic segmentation strategy alternatives Do not to enter the market Be a mass marketer instead of segmenting Market to only one segment Market more than one segment and design a separate marketing strategy for each

Criteria for Successful Segmentation Sustainable Large enough to justify its own marketing mix Identifiable and Measurable If not, can not determine whether it’s sustainable Accessible Must be able to reach segment with marketing mix Responsive The segment responds differently than another segment If not, no need to develop unique marketing mix 27

Five Tasks In Market Segmentation:

(5) Design the Marketing Mix Product Price Promotion Place Closely linked with the segmentation strategy

Wrapping Up An Application to Sports Marketing

Some of My Favorite Products

What Do All These Products Do For Me? “Means End Chain” Attributes Functional Consequences Psychological Consequences Personal Values