2. chapter 5 Market Segmentation, Targeting and Positioning

3. Ch. 5 Objectives Understand the concepts: market segmentation, and target marketing. positioning Learn the advantages and disadvantages of target marketing Discuss segmentation criteria, strategies, and seg. bases Understand typical positioning strategies

4. What is a market? Individuals or organizations who: –Are willing, able, and capable of purchasing a firm’s product –Segmentation is critical because demand is often heterogeneous

5. Market Segmentation/Targeting Market Segmentation is: The process of dividing up the total market into distinct subsets of customers with common needs or characteristics Targeting is: Selecting one or more segments that are appropriate

6. Target Marketing Advantages –Easier analysis of potential and actual consumers –Tailoring of products to market –Assessment of demand potential –Identify competing products –Increased sales effectiveness

7. Target Marketing Disadvantages –Increased marketing costs –More complex strategy to implement –Narrow segmentation can impact brand loyalty –Ethics and stereotyping issues –Can hinder a “Global” Brand Image –Faux segmentation may be viewed cynically See Excedrin Migraine:

9. Market Criteria Segmentable markets are: –Heterogeneous –Measurable –Substantial –Actionable Companies must be able to respond to preferences with an appropriate marketing mix –Accessible Market must be efficiently reachable

10. Segmentation Variables Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

11. Demographics Age Income Gender Occupation Education Ethnicity Family Life Cycle

12. Segmentation Variables Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

13. Geographics By region of country Micro-Beers do it Campbell’s Soup does it Frito-Lay does it:

14. Segmenting Consumer Markets Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

15. Psychographic Segmentation –Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)

16. Segmenting Consumer Markets Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

17. Benefits Sought Find (or create) a key benefit that the product satisfies Toothpaste Example:

18. Segmenting Consumer Markets Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

19. Situation Segmentation Time of Year / Week, Event etc.

20. Segmenting Consumer Markets Situation Segmentation Psychographic Segmentation Geographic Segmentation Behavior/Usage Segmentation Demographic Segmentation Benefits-Sought Segmentation

21. Light Users 80% Light Users 80% Heavy Users 20% Heavy Users 20% Behavior/Usage Segmentation Markets can be segmented by how often or how heavily consumers use a specific product –80/20 Principle - 80% of revenue generated by 20% of customers

22. Behavior/Usage Segmentation 80/20 true for many products For Beer it’s 88% to 16% Who are the heavy users?

23. Product Positioning

24. How to Position Brands: Positioning: “an image that a product projects in relation to competitive products and to the firm’s other products”

25. Show MGD clip(s) How is MGD differentiated? 1) Product Attribute It has something that others do not have Whatever attributes seem important to consumers Key attribute may in reality be bogus... 7 Ways to Position (differentiate) a product

26. Show Kia clip 2) By Competitor Show Similarity Show Difference 7 Ways to Position (differentiate) a product

27. 3) By Cultural Symbol (brand marks)

28. TV Ad.

29. 7 Ways to Position (differentiate) a product 4) By Price / Quality –Can be high or low (Generics) 5) By Product Class –Different type of product/service, but provides the same or better benefits Example: New AmTrak Acela service to NY

30. 6) By Use or Application Typically used to add uses of product and expands user base

31. 7 Ways to Position (differentiate) a product 7) By Product User Product is positioned for a particular group of users List some potential target markets for cellular phones:

32. Product Repositioning What is meant by Repositioning? Why might a company want to do it? (4X) Know any products that have been repositioned?

33. Mountain Dew (The most successful re-position in history) What is MD’s current image/target market?

34. Mountain Dew (The most successful re-position in history) Remember MD’s initial positioning? (1968-Early 1970’s)

35. Mountain Dew (The most successful re-position in history)

37. A rather unusual example of segmentation/positioning...