C HAPTER 7 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right...

CCHAPTER HAPTER 77

Segmentation, Targeting, Segmentation, Targeting, and Positioning:and Positioning: Building the Right Building the Right

Relationships with the Relationships with the Right CustomersRight Customers

Copyright 2007, Prentice-Hall Inc. 6-2

Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

List and discuss the major bases for segmenting consumer and business markets.

Explain how companies identify attractive market segments and choose a target marketing strategy.

Discuss how companies position their products for maximum competitive advantage in the marketplace.

Roadmap: Previewing the Concepts


Strategy Sells multiple brands

within the same product category for detergents, soaps, and other goods.

Each brand features a different mix of benefits and appeals to a different segment.

Product modifications appeal to different niches within certain segments.

The Payoff P&G generates revenues

of $4+ billion in U.S. laundry detergent market.

Tide has 34% share of powder and 24% share of liquid market segments.

Combined, all P&G brands account for 75% share of powder and 55% share of liquid detergent markets.

P&GP&G – Segments the Market – Segments the Market


Figure 6-1Steps in Segmentation, Targeting,

and Positioning


Market Segmentation

Geographic, demographic, psychographic, and behavioral variables are used in segmentation.

There is no single way to segment a market.

Often best to combine more than one variable in order to identify smaller, better-defined target groups.


Geographic Variables

Geographic segmentation divides a market into different geographic units.

Variables and breakdowns include:– World Region or Country: North America,

Western Europe, Pacific Rim, Mexico, etc.– Country Region: Pacific, Mountain, etc. – City or Metro Size: defined numerically– Density: rural, suburban, urban– Climate: northern, southern


Demographic Variables

Differences in age, gender, family size, family life cycle, income, occupation, education, race, and religion can be used to segment markets.– Frequently used in segmentation.– Easier to measure than most other types

of variables.


Demographic Targeting by Age

Crest targets adults with the ad and product on the left, and children with the ad and product on right.

Marketing in Action


Psychographic Variables

Psychographic Psychographic segmentation divides a segmentation divides a

market into different market into different groups based on social groups based on social

class, lifestyle, or class, lifestyle, or personality personality

characteristics.characteristics.People in the same demographic classification

often have very different lifestyles.


Lifestyle Market AnalystUsing the Lifestyle Market Analyst, marketers can identify other interests that appeal to those consumers who enjoy a particular lifestyle, as well as the demographics of those consumers.

Market profiles of each DMA provide lifestyle information as well.

Marketing in Action

http://www.srds.com/frontMatter/ips/lifestyle/sample.html


Behavioral Variables

Segmentation by Occasion– Special promotions

& labels for holidays.– Special products for

special occasions.

Benefits Sought– Different segments

desire different benefits from products.

User Status – Nonusers, ex-users,

potential users, first-time users, regular users.

Usage Rate – Light, medium,

heavy.

Loyalty Status – Brands, stores,

companies.


Let’s Talk!

Nestle has implemented an occasion segmentation strategy during the Christmas season by marketing special flavors of Coffeemate that complement the holidays.

What other brands COULD develop their own special products or packaging for holidays or other occasions?


Marketing in Action

Citicards’ various products offer different benefits:

– rewards – establishing credit – small business

benefits – no frills value

Segmenting by Benefits Sought

https://www.citibank.com/us/cards/index.jsp


Geodemographic Segmentation

Geodemographic:– Claritas, Inc.– Potential Rating Index for Zip Markets

(PRIZM)– Based on U.S. Census data– Profiles on 260,000 U.S. neighborhoods– 62 clusters or types


Marketing in Action

2. Select, “Who we are. Redefining our demographics” underneath the “Beyond Words” heading.

3. Screen at left will appear and tutorial will load and run automatically.

PRYSM Interactive Tutorial

http://www.usatoday.com/news/nation/2003-12-16-who-we-are-examples_x.htm

1. Click the link below:


Marketing in Action

Lookup your zip code and learn more about the PRYSM clusters describing people where you live!

http://www.claritas.com/MyBestSegments/Default.jsp

PRYSM Zip Code Lookup


Segmenting Business Markets

Consumer and business markets use many of the same variables for segmentation.

Business marketers can also use:– Operating Characteristics– Purchasing Approaches– Situational Factors– Personal Characteristics

This American Express ad targets small businesses.


Segmenting International Markets

Factors used:– Geographic location– Economic factors– Political and legal

factors– Cultural factors

Intermarket segmentation:– Segments of consumers who have similar needs

and buying behavior even though they are located in different countries.


Marketing in Action

Intermarket Segmentation

Teens show surprising similarity no matter where in the world they live. For instance, this teen could live almost anywhere. Thus, many companies target teenagers with worldwide marketing campaigns.


Requirements for Effective Segmentation

Measurable Accessible Substantial Differentiable Actionable

“Lefties” are hard to identify and measure, thus few firms tailor their offers to this group. “Anything Left Handed” is an exception.


Segment Size and Growth– Analyze current segment sales, growth rates,

and expected profitability.

Segment Structural Attractiveness– Consider competition, existence of substitute

products, and the power of buyers & suppliers.

Company Objectives and Resources– Examine company skills & resources needed to

succeed in that segment.– Offer superior value & gain advantages over

competitors.

Evaluating Market Segments


Figure 6-2Target Marketing Strategies


Undifferentiated (mass) marketing– Ignores segmentation opportunities

Such products rarely succeed for long in the American marketplace.

Differentiated (segmented) marketing– Targets several segments and designs

separate offers for each. Coca-Cola, Procter & Gamble (soaps and

detergents), and Toyota are a few examples.

Target Marketing Strategies


Target Marketing Strategies

Concentrated (niche) marketing– Targets one or a

couple small segments

– Niches have very specialized interests


Marketing in Action

Small businesses can reap large returns from niche marketing. This profitable Web site offers access to artistic e-cards on a subscription basis.

Concentrated Marketing

www.jacquielawson.com/


Tailoring products and marketing programs to suit the tastes of specific individuals and locations.– Local Marketing: Tailoring brands and

promotions to the needs and wants of local customer groups—cities, neighborhoods, specific stores.

– Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

Micromarketing


Choosing a Targeting Strategy

Factors to consider:– Company resources– Product variability– Product’s life-cycle

stage– Market variability– Competitors’

marketing strategies


Smart targeting helps both companies and consumers.

Target marketing sometimes generates controversy and concern.– Vulnerable and disadvantaged can be targeted.– Cereal, cigarette, beer, and fast-food marketers

have received criticism. – Internet has raised fresh concerns about

potential targeting abuses.

Socially Responsible Targeting


A product’s position is the way the product is defined by consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products.– Perceptual position maps can help define

a brand’s position relative to competitors.

Product Positioning


Marketing in Action

eBay’s positioning is simple: No matter what “it” is, you can find “it” on eBay!

The “it” print and TV ads reflect different types and categories of goods, reinforcing this position.

Positioning

www.ebay.com


Figure 6-3Positioning Map: Large Luxury SUVs


Identify a set of possible competitive advantages on which to build a position.

Choose the right competitive advantages.

Select an overall positioning strategy.

Choosing a Positioning Strategy


Key to winning target customers is to understand their needs better than competitors do and to deliver more value.

Competitive advantage – extent to which a company can position itself as providing superior value.– Achieved via differentiation.

Identifying Possible Competitive Advantages


Sources of Competitive Advantages

Differentiation can be achieved by means of:– Products– Services – Image– People

Which form of differentiation is promoted in the ad at right?


Underpositioning:– Failing to really position the company at

all. Overpositioning:

– Giving buyers too narrow a picture of the company.

Confused Positioning:– Leaving buyers with a confused image of

a company.

Positioning Errors


Choosing the Right Competitive Advantages

Not all brand differences are meaningful and worthwhile, nor do all differences make a good differentiator.

Each difference has the potential to create company COSTS as well as consumer value.

The best competitive advantages are those that meet seven key criteria.– Important– Distinctive– Superior– Communicable– Preemptive– Affordable– Profitable


Marketing in Action

Positioning and Pampers

www.pg.com

Procter & Gamble markets Pampers and hundreds of other brands. Review this video snippet to learn more about the P&G method of positioning.

Video Snippet


Figure 6-4Possible Value Propositions


Marketing in Action

Diaka Vodka is positioned as the world's most expensive vodka, due to its unique diamond filtration process.

Nearly one hundred diamonds of up to one carat in size are used to filter the spirit, resulting in a Vodka with unsurpassed clarity and smoothness.

What value proposition would you expect Diaka’s advertising to promote?

Value Propositions


Marketing in Action

To (target segment and need) our (brand) is a (concept) that (point-of-difference).

Positioning Statements

“To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to day, people, and resources while on the go, more easily and reliably than the competing technologies.”


Company must take strong steps to deliver and communicate the desired position to target consumers.

The marketing mix efforts must support the positioning strategy.

Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.

Communicating and Delivering the Chosen Position


Take a look at the ad shown at right.

How is the brand being positioned?

What is its value proposition?

Let’s Talk!


Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

List and discuss the major bases for segmenting consumer and business markets.

Explain how companies identify attractive market segments and choose a target marketing strategy.

Discuss how companies position their products for maximum competitive advantage in the marketplace.

Rest Area: Reviewing the Concepts

C HAPTER 7 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right...

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