MT 219 Marketing Unit Four Segmentation and Targeting Products and Branding Note: This seminar will be recorded by the instructor.

Customer Driven Marketing Strategy Four stage process that segments, targets, differentiates and positions a product Segmentation- Basic Process: Heterogeneous Market  Segmentation  Homogeneous Sub-Markets Targeting- Selecting the best segments to focus on Differentiating- Create unique benefits for target segments Positioning- Placing product into customer’s minds compared to competition.

Target Market Segmentation 1.Identify appropriate strategy 2.Determine segmentation variables 3.Develop segment variables 4.Evaluate segments 5.Select specific segments

4 “Market Segmentation Process”

Geographic Variable Climate Terrain City size Urban/rural values Market Density Geo-demographic Segmentation Micromarketing

Demographic Variables – closely related to needs and measurable Age Gender Race Ethnicity Income Education Occupation Family size Family life cycle Religion Social class Sexual orientation

Psychographic Variables Social class Lifestyle -Achievers -Strivers -Survivors Personality -Compulsive -Romantic -Authoritarian -Enthusiastic

Behavioral Segmentation Variables Most Powerful Variables Underlies all other segmentation variables These relate most directly to consumer desires How the product benefits the consumer directly Examples- -Occasions -Loyalty -Usage rates

Which Segment Variables to Use? Marketers are not likely to use just one segment variable Market segments often combine multiple variables together to create a desirable target segment

Criteria for Effective Segmentation 1. Measurable- Must be quantifiable 2. Accessible- You must be able to reach them 3. Substantial- Must be large enough so company benefits 4. Differentiable- Segment must respond differently 5. Actionable- Company must be capable of marketing to identified segments

Major Segmentation Strategies Undifferentiated – Single product and single strategy for entire market – requires homogeneous market. Differentiated- Two or more segments each with its own marketing mix Concentrated – Single segment, one strategy Micromarketing- products tailored to individuals or smaller local areas

12 Undifferentiated Marketing Market Segments Technology Service P

13 Differentiated Marketing Market Segments A D B E C Technology Service

14 Concentrated Marketing Market Segments P Technology Service

15 Niche Marketing Market Segments Technology Service N N N

Positioning Where the product lives in the mind of the consumer as it relates to the competition Identify and select appropriate competitive advantages for the product Combine competitive advantages to develop an overall positioning strategy

17 Breath Mint Example Breath Mint Market: Tic Tac, Certs, Altoids, Dentyne Ice, BreathSavers, LifeSavers, Mentos, etc.

18 Breath Mint Example Tic Tac Market Segmentation Study

19 Breath Mint Benefit Segmentation Study - Circa Based on 2,500 In-depth Interviews Segment # 1Segment # 2Segment # 3Segment # 4 Segmentation Variable Other-OrientedSelf-OrientedPacificationTaste Experience Benefits Sought Experiential Taste change after eating, smoking, drinking coffee Tension relief, pick-me-up, passing of time, a wake-up. Mints are a good taste experience Functional Mask bad breath, want confidence breath does not smell Eliminate stale mouth, unpleasant taste / feeling in mouth Sweet candy taste - mild taste Financial Psycho-social Does not want to offend in social situations Category Beliefs Traditional breath mints are effective. Medicinal qualities are important. Mini-mints do eliminate "bad" taste, refresh and perk up mouth. Mini-mints are stronger and better. Chewing gums are the primary tension relief, perk-up product. Mints are a secondary product. Mints taste different. A sweet mild candy taste is good. Brand Preference Certs is the primary brand. Clorets is established # 2 in the segment Tic Tac is a very strong mint. Certs are not as strong. Chewing gums are preferred. Secondary products are flavored Lifesavers, Tic Tac. Lifesavers and other fruit flavored candy. Tic Tac is weak. Usage Rate Heaviest usage, 2 or more packs per week. Average, 1 to 2 packs / week.Lightest usage, 1 or less packs per week. Heaviest usage, 2 or more packs per week. Occasions of Use Before and during social situations. After eating, smoking, and drinking coffee Boring, tense, or endless situations. Driving, waiting, etc. Anytime, all the time. Whenever available. Media Habits Above average TV viewing. High word-of-mouth communication Average TV viewing.Average TV viewing. Above average radio listening Very heavy TV viewing. Personality / Life Style Socially insecure. High social contact. Dependent on social approval. Consumers with high self involvement. People whose daily life has or encounters routine situations. Hedonistic. Demographics Teenagers, salespersons, women. Adults More women.Students, adults with routine jobs, people that do a lot of driving. Primarily children 6 to 12. Some teenagers and adults.

20 Segment # 1Segment # 2Segment # 3Segment # 4 Segmentation Variable Other-OrientedSelf-OrientedPacificationTaste Experience Benefits Sought Experiential Taste change after eating, smoking, drinking coffee Tension relief, pick-me-up, passing of time, a wake-up. Mints are a good taste experience Functional Mask bad breath, want confidence breath does not smell Eliminate stale mouth, unpleasant taste / feeling Sweet candy taste - mild taste Financial Psycho-social Does not want to offend in social situations Category Beliefs Traditional breath mints are effective. Medicinal qualities are important. Mini-mints do eliminate "bad" taste, refresh and perk up mouth. Mini-mints are stronger and better. Chewing gums are the primary tension relief, perk-up product. Mints are a secondary product. Mints taste different. A sweet mild candy taste is good. Brand Preference Certs is the primary brand. Clorets is established # 2 Tic Tac is a very strong mint. Certs are not as strong Chewing gums are preferred. Mints are secondary products Lifesavers and other fruit flavored candy. Tic Tac is weak.

What is a Product? Anything that is offered to a market to fulfill a need or want good service idea place person

Classifying Consumer Products Convenience – relatively inexpensive, frequently purchased items with many substitutes. Don’t confuse with a convenience store. Shopping – items for which buyers are willing to spend considerable effort to compare and purchase. Don’t confuse with what you buy when just shopping Specialty - products with unique characteristics for which consumers are willing to expend effort Unsought – items people do not know of or do not think about buying. Many times due to emergency needs. Also, many impulse items.

Services Intangible products involving a deed, performance, or effort that cannot be physically possessed -Haircuts -Concerts -Tax preparation -Annual doctors’ physicals

Nature of Services Intangibility Inseparability Variability Perishability Let’s look at these individually

Issues related to service intangibility Difficult for customers to evaluate No physical possession Difficult to advertise and display Pricing is problematical and subjective Service process not always protected by patents

Issues related to service inseparability Does not allow for mass production Customer participation required Other customers can affect process Difficult to distribute

Issues related to variability Quality difficult to control Standardization is a problem Services vary from provider to provider Services can vary from the same provider Reputation is crucial Franchises try to emphasize service homogeneity Reason for grading rubrics

Issues related to service perishability Services cannot be stored or inventoried Unused capacity is lost forever Demand may be time sensitive Balancing supply and demand is difficult

Factors Leading to Customer Switching Behavior Pricing Inconvenience Core Service Failure Service Encounter Failures Response to Service Failure Competition Ethical Problems Involuntary Switching

Branding- Brand Equity The marketing and financial value associated with a brand’s strength in a market brand name awareness brand loyalty perceived brand quality brand associations

Selecting a Brand Name Easy to pronounce, spell and remember Trademarkable Distinctive Conveys brand benefits Travels globally- Big concern today

Types of Brands National (Manufacturer’s) brands Store (Private) brands Licensing

Brand Development Line extensions- new forms, sizes, fragrances, etc are created in existing product line Brand extensions – use of existing brand on a new category, such as extending from a rock singer into acting Multibrands- use of different brand names by one company. Nestle or Proctor and Gamble New Brands- Creating entirely new brands

Any Questions? Thank you for attending! See you next week!