1. University of Washington EMBA Program Regional 20
Marketing Management
“Setting Objectives &
Marketing Strategy: Segmentation, Targeting and Positioning (STP)”
Instructor: Elizabeth Stearns

2. MARKETING MANAGEMENT Marketing Framework
Thrive
Survival
Profits
Competitors
Competitors
Many like to quote that 50% of the Fortune 500 companies in 1982 were not there in Consider the wisdom of managing to short term gains(shareholder demands) if you are shortchanging what made you successful (reduced costs-substitute components, reduced advertising-impact on the Brand image, proliferation of channels-reduced control of service and quality)
Customers
Professor Stearns, University of Washington

3. MARKETING MANAGEMENT Marketing Framework
Course Structure
The Marketing Framework/Concept
Analysis
5C’s Opportunity Analysis
Marketing
Research
Marketing Strategy & Customer Strategy
Goal Setting, Segmentation, Targeting, and Positioning
Implementation/Action Plans
Marketing Mix (4 P’s)
Professor Stearns, University of Washington
Page 10

4. Strategic Business Unit (SBU)
Hierarchy of Strategy
Corporate
Strategic Business Unit (SBU)
Product-Market

5. The Strategy Development and Implementation Process
Contention
Project Planning
Differing
Perspectives
Consensus
Execution
Program
Formulation
Marketing
Strategy
Formulation
Finance
Human Resources
R&D
Operations
Creativity
Coordination
Sales

6. Marketing Strategy & Objectives
Marketing Strategy: A game plan for achieving objectives
Typically a set of customer and competitor targets plus a positioning, a framing of the organization’s offer in the minds of customers
Objectives: Means of evaluating performance
Caveat: Consider that the position of your product in the Product Life Cycle may influence your strategy

7. MARKETING MANAGEMENT Marketing Framework
Setting Objectives
Purpose
To identify the results we wish to achieve in the market segments and provide a platform for measurement and evaluation.
Types of Marketing Objectives
Strategic: Qualitative and directional
Operational: Quantitative and time dependent (SMART)
Strategic objectives are fine, in fact they are useful for galvanizing the organization and guiding policy, but they require support or instantiation through operational objectives, the ones which are SMaRT
Professor Stearns, University of Washington

8. Select Dimensions for Operational Marketing Objectives
MARKETING MANAGEMENT Marketing Framework
Select Dimensions for Operational Marketing Objectives
We typically think of returns to our firms’ investments strictly on financial metrics. However, there are lots of ways to think about earning “returns” for our firm, and many of these measures relate more directly to customers and where they are at, what they are doing in terms of the performance indicators we choose.
Professor Stearns, University of Washington

11. A Note on Sources of Volume
Many objectives are “growth” oriented.
Where does growth come from?
Primary demand = “New” volume
New users into the market
Getting current users to use more
Get same users to use for a “new” purpose
Secondary demand = “Somebody else’s” volume
Take volume from competitors
Caveats
Beware of cannibalization—it’s not really growth
Stimulating secondary demand implies a competitive response

12. Using Objectives in Alternatives & Recommendations Choice
Write an operational marketing objective
Project all viable alternatives onto the dimension of the objective  use expected value of outcome
Measure the “attractiveness” of each alternative according to whether/the degree to which it satisfies your operational marketing objective
If only 1 alternative meets your objective—choose it
If 2 or more alternatives meet your objective…
Choose the one which performs best on the dimension underlying your objective
Move to “tiebreaker” criteria
Risk/variance in performance
Cost
“Fit”
Etc.

13. Objectives Statements
MARKETING MANAGEMENT Marketing Framework
Objectives Statements
Our primary objective in the loudspeaker market is to grow market share from 25% to 30% by stealing share from competitors in 2003 while maintaining margins at 23%. (What is wrong with this?)
Our task is to generate $70 million cash flow from mainframes in both 2003 and 2004, while maintaining dollar-denominated market share at 45%.
Primary objectives are most important
Secondary objectives are relevant and desirable, but tradeoffs for primary objectives are acceptable
Professor Stearns, University of Washington

14. Overview of STP Process
MARKETING MANAGEMENT Marketing Framework
Overview of STP Process
Identify Segmentation/segmentation bases and segment the market.
Develop profiles of the resulting Segments.
Segmentation
Evaluate the attractiveness of each Segment.
Select target Segment(s).
Targeting
At this point in the course we’ve done opportunity analysis, we’ve analyzed customers, competitors, the company, and its collaborators. We’ve discussed how we might organize these thoughts in terms of the external environment, the five C’s, Strengths & weaknesses, Opportunities & Threats.
This is the point where we start to say, “OK. Now we know what the world looks like. What should we do about it? What are we trying to achieve versus just describing the marketplace.”
Most preferable schema is benefit requirements mapped on to target audience descriptions which are accessible.
That’s the Nirvana that we can’t always get to. If we can’t get there, maybe we instead just work with some lesser descriptive forms. Maybe some places (I.e., in implementation) where it pays to look at the way people respond to what it is we are doing in the marketplace (e.g., price promotions, coupons, advertising, etc.) rather than only looking at the benefits they require.
Let’s think of a segmentation example. How about Nike in shoes or apparel? How does Nike segment the market?
Not clear, but it appears to be by sport/application/athletic activity.
basketball
running
hiking
turf
bowling
walking
snowboarding
all conditions gear (ACG)
etc.
Identify possible positioning concepts for each Segment.
Select, develop, and communicate the chosen positioning.
Positioning
Professor Stearns, University of Washington

15. Steps in Market Segmentation, Targeting,and Positioning
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
Market
Segmentation
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Targeting
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
concept
Market
Positioning
©2000 Prentice Hall

16. MARKETING MANAGEMENT Marketing Framework
Market Segmentation
MARKETING MANAGEMENT Marketing Framework
The process of grouping actual and potential customers in a market for the purpose of selecting targets for effort and designing marketing strategies and programs for them
Market Segment
A group of actual or potential customers with similar characteristics, who seek similar sets of benefits and attach the same importance to their satisfaction
Professor Stearns, University of Washington

17. Taxonomy at the Pump: Five Types of Gasoline Buyers
MARKETING MANAGEMENT Marketing Framework
Taxonomy at the Pump: Five Types of Gasoline Buyers
Road Warriors:
True Blues:
Generation F3
Homebodies:
Price Shoppers:
Generally
Usually men and
(for fuel, food and
Usually housewives
Generally aren't
higher-Income,
women with
fast): Upwardly
who shuttle their
loyal to either a
middle -aged men
moderate to high
mobile men and
children around
brand or a particular
who drive 25,000 to
incomes who are
women-half under
during the day and
station, and rarely
50,000 miles a year .
loyal to a brand and
25 years of age-who
use whatever
buy the premium line
. . buy premium with
sometimes to a
are constantly on the
gasoline station is
. . . frequently on
a credit card . . .
Notes:
particular station . . .
go drive a lot
based in town or
tight budgets . . .
purchase
frequently buy
and snack heavily
along their route of
efforts to woo them
sandwiches and
premium gasoline
from the
travel.
have been the basis
drinks from the
and pay cash.
convenience store.
of marketing
convenience store . .
strategies for years.
. will sometimes
wash their cars at
the carwash.
18% of buyers
16% of buyers
27% of buyers
21% of buyers
20% of buyers
® Mobil Oil Company
Process: Example
Professor Stearns, University of Washington

18. Usage-based Segmentation for an Established Product/Service
MARKETING MANAGEMENT Marketing Framework
Usage-based Segmentation for an Established Product/Service
IDENTIFYING SEGMENTS DESCRIBING SEGMENTS
BASES LEVELS STRATEGIC IMPACT DEMOGRAPHICS/ MEDIA VALUE
PSYCHOGRAPHICS TECHNOS $$
Use of product/service?
Brand used?
Level of use?
Occasion of use?
Motivation for use?
Nonuser
User
My Brand
Competitor’s
brand
Heavy
Moderate
Light
Time of day
Season
Self /Other
Functional/.
Psychic
Category versus
Brand Build
Loyalty versus
Switching
Value of a customer,
Efficiency
Image Focus versus
Attribute Focus,
Timing
Form of the value
equation
Describe levels in terms of $$$,
Demographics Psychographics,
Media Habits, Lifestage, Technos, etc.
Notes:
Process
Professor Stearns, University of Washington

19. Purpose of Forming Market Segments
MARKETING MANAGEMENT Marketing Framework
To form the closest possible match between customers’ needs or wants and priorities, and the firm’s offer, such that customer satisfaction is maximized and competitive advantage is created. As a result, unit volume and/or price increases, and profits are enhanced
Professor Stearns, University of Washington

20. Segmentation
Dividing up the market into groups of consumers who share similar needs (and who respond similarly to marketing mix variables)
Account for customers’ diverse needs and differing behaviors in its strategy
Design the marketing mix to more closely match customer needs
Improve efficiency and effectiveness of resource allocation

21. Effective Segmentation
Measurable
Effective Segmentation
Substantial
Size, purchasing power, profiles of segments can be measured.
Accessible
Segments must be large or profitable enough to serve.
Differential
Segments can be effectively reached and served.
Actionable
Segments must respond differently to different marketing mix elements & actions.
Must be able to attract and serve the segments.
©2000 Prentice Hall

22. Targeting Key Questions(Review)
Selectivity: Which segments will we address?
Concession: Which segments will we leave to others?
Concentration: What is the relative degree of effort we will place on each segment we choose to pursue?
Select segments to pursue according to your possession of Differential/Customer Advantage

23. Positioning: The battle for your customer’s mind
Reis and Trout
Positioning: The battle for your customer’s mind

26. Positioning Maps/Perceptual Space

27. Simmons Data

28. Positioning and Perceptual Maps
What brands are perceived as similar to others?
Deals with issue of substitutability.
if customer’s brand is not available, what brand is most likely to be purchased?
Unique Position Or
Easy switching

29. Positioning and Perceptual Maps
What holes exist for repositioning an old, or new product introduction? (Point on map where no competitive brands exist)
Opportunity or not?
Ideal points = Preference maps
If customer could have any product they wished.

30. Positioning
…is the act of designing the company’s offering and image to occupy a distinctive place in the the target market’s mind.
©2000 Prentice Hall

32. MARKETING MANAGEMENT Marketing Framework
Positioning
Positioning: The act of framing the organization’s image and its offer in the target customer’s minds, so it occupies a distinct and valued place relative to competition.
The process we use to set ourselves apart from competitors in the minds of the customer.
Ideally we would like to have the customer form a favorable relationship with our offer that gets placed in long term memory.
Positioning is creating a bond, a connection between your product and the mind of the customer
Professor Stearns, University of Washington

33. Four D’s of Effective Positioning
MARKETING MANAGEMENT Marketing Framework
Four D’s of Effective Positioning
Successful positioning requires:
Defining what the brand is.
Differentiating the brand from other similar offers.
Deepening the brand’s connection to consumer’s goals.
Defending the position as competitors react.
Professor Stearns, University of Washington

35. Example: Competitor Targets 7UP
Direct Competitors in the same product form
The Generalized Set of Competitors in the same product form
Competitors in a different product form that satisfies the same basic need.

36. Think of your positioning statement as leading to a piece of advertising (define, differentiate, deepen, defend)
Does it help overcome the pitfalls of positioning:
- Underpositioning Customers cannot sense the difference.
Overpositioning Our offer projects too narrow an image.
Confusing Positioning
We make too many claims, or keep changing the claims over time.
- Doubtful Positioning
Consumers find our claims hard to believe.
Will it find a way into our customer’s mind and will it stay there?
Is it about your customer or is it about the product? (selling or marketing?)

42. Developing Positioning Statements
Customer Target: Person(s) in whose mind(s) we want to create the perception or image and whose behavior we hope to affect
Frame of Reference: Competitive offer(s) from whom we wish to differentiate ourselves in order to provide a reference point for the customer
Compelling Point of Difference: How our offer fits into the customer’s frame of reference better than competing alternatives—and reasons to believe that difference.

43. Developing Positioning Statements
MARKETING MANAGEMENT Marketing Framework
Developing Positioning Statements
Selecting Frames of Reference
Competitive
Direct competitors in the same product form
Generalized set of competitors in the same product form
Competitors in a different product form that satisfy the same basic benefit requirements
Benefit-based
Reference is customers’ goals and values
Positioning of Slice: what is Slice? It might be defined as a member of the fruit juice category and differentiated from other fruit juices by its more convenient distribution. Alternatively, it might be defined as a soft drink and differentiated from other soft drinks by its fruit juice content.
How about the Palm Pilot? How is it positioned? As a personal digital assistant, a personal organizer. It is differentiated from other organizers by its ease of use, particularly with respect to synchronizing information with the user’s desktop or notebook computer. But it could also be positioned relative to a human administrative assistant, to your secretary.
Alternative ways of defining the frame of reference
Attribute based (faster, superior specs, more powerful, more features, engineering)
Focus on benefits (economic, functional, psychological)
By use/use occasion (“soup is good food”, cereals as snack food, Gatorade not just for athletes)
By user/lifestyle (Nike and Michael Jordan, Pepsi generation)
By product class (margarine & butter)
Against competition (e.g., Avis vs. Hertz)
Country or geographic area (Napa valley, Idaho potatoes)
Can have
Competition-based positioning—often to stimulate secondary demand
Goal-based positioning—often used by market leader to stimulate primary demand
here the frame of reference changes to customers’ goals and values
A deepening of competition-based positioning. McDonald’s advertising illustrates the evolution of goal-based positioning. McDonald’s laddered up from cleanliness of its facility and the good taste of its food to a place that was good for kids to a trusted place in the community. These positions provided the foundation for an ad, “Blind Date” which highlighted McDonald’s brand essence. In the advertisement, a young man meets a blind date at her front door. He immediately attempts to manage her expectations by clarifying who he is and who he is not. He indicates that he is not a doctor, lawyer, banker, or CPA, but rather he is a clerk in a record store. He states that they will not be dining at a place that calls itself a bistro, casa, or maison, nor will they attend a play, the opera, the symphony, or the ballet. Instead, he proposes McDonald’s and a movie.
In the ad, the points of complimentarity between the actor’s occupation, his common guy car, and entertainment preferences imply McDonald’s brand essence as a down to earth place and the bedrock of the community. Presumably, this brand essence shares a point of commonality with consumers’ goals of enjoying an unpretentious meal.
Laddering the brand positioning (through successive waves of ads) enhances the abstract benefit claim by providing a foundation for believing the brand’s assertions.
Professor Stearns, University of Washington

44. Developing Positioning Statements
MARKETING MANAGEMENT Marketing Framework
Developing Positioning Statements
Point of Difference
Core Strategy: The benefits we intend to emphasize in our communications to our core customer targets (how we get customers to buy from us rather than competitors)
Exploit Differential Advantage
Communicate key benefit in a clear, concise statement
Professor Stearns, University of Washington

45. Developing Positioning Statements
MARKETING MANAGEMENT Marketing Framework
Developing Positioning Statements
Customer Target: Person(s) in whose mind(s) we want to create the perception or image and whose behavior we hope to affect
Frame of Reference: Competitive offer(s) or counterfactuals from whom we wish to differentiate ourselves in order to provide a reference point for the customer
Compelling Point of Difference: How our offer fits into the customer’s frame of reference better than competing alternatives—and reasons to believe that difference.
To _____ (customer target description)
…my organization is the _____ (frame of reference)
…that ____ (point of difference) because ____ (reason to believe dif.)
better than ____. (competitive target)
Good positioning statements typically have three components. 1. 2.
3. me too & secondary brands often claim equality on the key category benefit and superiority on a second feature as a point of difference; often the fact that this equal yet still superior framework is used makes the argument less than compelling to consumers.
Who is the technological leader in notebooks? What do they offer?
What does Winbook do? What do they say?
WE CAN DO EVERYTHING THAT THEY DO; WE OFFER STATE OF THE ART TECHNOLOGY BUT AT A LOWER PRICE
Professor Stearns, University of Washington

46. Positioning: Asics Gel MC Plus
MARKETING MANAGEMENT Marketing Framework
Positioning: Asics Gel MC Plus
Positioning Statement: To Michele, the recreational marathoner who risks injury when she trains on uneven surfaces, Asics MotionControl Plus puts you back in control because it prevents overpronation better than any other training shoe.
Tag-line: You can’t control the road, but you can control the way your foot reacts to it with Asics Gel MC Plus.
Professor Stearns, University of Washington

47. Positioning: Asics Gel Kayano
MARKETING MANAGEMENT Marketing Framework
Positioning: Asics Gel Kayano
Positioning Statement: To Marc, the recreational runner who places a premium on enjoying the running experience, the Asics Gel Kayano provides better cushioning than any other shoe on every stride he takes through the Impact Guidance System.
Tag-line: Heel-to-toe comfort for a smooth ride.
Professor Stearns, University of Washington

48. Positioning: Reebok Boston Road
MARKETING MANAGEMENT Marketing Framework
Positioning: Reebok Boston Road
Positioning Statement: To Marc, the recreational runner who places a premium on enjoying the running experience, the Brooks Boston Road provides better cushioning than any other shoe on every stride he takes through DMX technology.
Tag-line: Enjoy the sunrise in complete comfort.
Professor Stearns, University of Washington

49. Whom does Marc believe?

50. Positioning: New Balance
MARKETING MANAGEMENT Marketing Framework
Positioning: New Balance
Positioning Statement: For Suzanne, the working professional, New Balance shoes let you leave behind the daily office grind and discover the natural, simple beauty in life.
Tag-line: Your computer has a key labeled “escape.” Does your life have one too?
Professor Stearns, University of Washington

51. Positioning: Common Errors
Underpositioning
Customers cannot sense the difference.
Overpositioning
Our offer projects too narrow an image.
Confusing Positioning
We make too many claims, or keep changing the claims over time.
Doubtful Positioning
Consumers find our claims hard to believe.

52. Now, how about a little Pizza! Contadina!
Thank you!
Now, how about a little Pizza!
Contadina!