chapter04 segmentation.ppt

BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1

SEGMENTATION, TARGETING, AND POSITIONING

SegmentationProduct positioning

strategyBases for

segmentationPositioningTargetingRepositioning

BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 2


TARGETINGSELECTING WHICH

SEGMENT(S) TOSERVE

POSITIONINGIMPLEMENTING

CHOSEN IMAGE ANDAPPEAL TO CHOSEN

SEGMENT

SEGMENTATIONIDENTIFYING

MEANINGFULLYDIFFERENT GROUPS

OF CUSTOMERS PROUDCT

PROMOTION

PRICE

DISTRIBUTION


DefinitionsSegmentation: “Aggregating prospective

buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”

“The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.” (Text, p. 97)

Although not all these consumers are completely alike, they share relatively similar needs and wants.

Marketing action involves: efforts, resources, and decisions--product, distribution, promotion, and price.


Approaches to MarketingUndifferentiated Strategy (no

intended difference from competitors; no specific consumer group sought out)

Concentrated Strategy (differentiation; one consumer segment sought)

Differentiated Strategy (same firm makes different versions for different segments)Auto

makers

SouthwestAirlines


Segments--Examples (1)Air Travel

Business/Executive: Inflexible; relatively price insensitive (Small number of people, but travel often)

Leisure Traveler/Student: Relatively flexible; very price sensitive (other methods of travel--e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment)

Comfort Travelers: Comfort (e.g., space, food) important; willing to pay (Small segment)


High

Low

Pric

e Se

nsiti

vity

ConvenienceLow High

Taco Bell

McDonald’s

Fancy Restaurants--e.g., Ritz Carlton

High-end delivered food

Denny’sLocal, “unbranded”fast food restaurants

E.g.,--speed--location


Combining variables…

Soft drink preferences—some segmentation variablesPreferred taste: Cola, lime, no taste, natural juice, ice teaCalorie/taste tradeoff: taste more important, some

importance of both, will sacrifice taste for low caloriesUsage occasion: Multi-pack for home; single can/bottle;

fountain drinkPrice sensitivity/brand loyalty: Willingness to pay more for

name brand or specialty soda


Some combined segments…Price sensitive, non-brand loyal cola-taste, full-flavor

segment, multi-packPrice insensitive, cola taste, brand loyal, low calorie,

multi-packPrice insensitive, natural juice, taste sensitive, single

serving

Typical behaviors of these consumers. Circumstances may involve occasional variations.


Bases for SegmentationGeographicDemographicPsychographicBenefit DesiredUsage RateOther Behavior


•GeographicRegional differences

Climate and physical environmentTastes

Campbell’s SoupLifestyle and values

Urban vs.rural areas


Demographics

AgeGenderWillingness to spend

More useful than income—income ≠ willingness to spend!

“Trading Up:” Consumers may “splurge” in certain, personally significant categories while buying more downscale in other categories

EthnicityFamily lifecycle stage


PsychographicsPersonality

Very difficult to measureLimited empirical support

MotivesLifestyle

Usually more practical than personalityGeodemographics

Characteristics of residents of limited areas—e.g., PRIZM


The PRIZM System

60 consumer measures within zip code area

36,000 zip code areasStatistical methods used to

find areas containing relatively consumers ---> 60 segments


Usage Rate“80/20” rule—20% of consumers may account for 80% of

consumption (in many product categories)Note that larger consumption rate segments may be

subject to heavy competitionReasons for targeting smaller segments

Reduced competition Opportunity for growth


Other Behavioral Bases for SegmentationInvolvement

InterestKnowledgeWillingness to spend time on making product category decisions

“Dealproneness”Coupon usageBrand switching in response to price incentives

Outlet (store) choiceSpecialtyConvenience store“Category killer” (e.g., Fry’s, Best Buy, Circuit City)DiscountWarehouse


Benefits SoughtBased on

differences in arbitrary tastes (e.g., cola vs. non-cola drink)

ideal pointtradeoffs (e.g., taste vs.

calories)usage situation (e.g., coffee

for camping (instant) vs. higher quality for home brewing)

A consumer insearch of benefits.


Targeting: Selecting Segment(s) and Specializing

“You can’t be all things to all people” ---> choose one or more groups

Focus narrows scope of competition, but demands are greater


IDENTIFYING TARGETSCustomer information “enhancement”—information

from different sources integrated (e.g., real estate records, purchase lists, magazine subscription, credit records)

“Merge-purge”Customer lists from different sources are combined with

removal of duplicates



POSITIONINGIMPLEMENTING

CHOSEN IMAGE ANDAPPEAL TO CHOSEN

SEGMENT

PROUDCT

PROMOTION

PRICE

DISTRIBUTION

PREMIUM

BASIC

DURABLE

PRESTIGE

FUN

POWERFUL

PREMIUM

LOW PRICE

VALUE

INTENSIVE

SELECTIVE

EXCLUSIVE


“STUCK IN THE MIDDLE” PROBLEMBrands that offer a clear benefit tend to do betterClear orientation

Wal-MartNordstrom’sKFC

“Stuck in the middle”Sears

Successful “middelers:” Denny’s, Vons, Ralph’s


Positioning Strategies“Head-on” competition

Airlines (want to differentiate but have difficulty pulling it off in practice)

Beef productsDifferentiation

Burger King: Grilled instead of McDonald’s fried burgersHalmark: “When you care to send the very best…”Hertz (vs. “Not exactly”)Zachy Farms (chicken)


The Three Value Disciplines

Many successful firms are distinguished by excelling in one of three “value disciplines” (Treacy and Wiersema, 1993)Operational excellence (high efficiency)

—e.g., Wal-Mart, Southwest AirlinesCustomer intimacy (high service to

customers)—e.g., Nordstrom’s, IBMTechnological excellence (constant

innovation of “state of the art”)—e.g., Intel

All firms must meet acceptable levels on the other two dimensions


RepositioningRepositioning: Changing established position may be

difficult -- e.g., Sears McDonald

Good sales;poor everydayvalues

Lunch; not dinnerGood for children


Multidimensional ScalingConsumer product perception is identified along two or

more “dimensions”Methods:

A priori specification of dimensions respondents make judgments

Respondent rating of relative similarity of brands/product categories statistical model identifies unnamed dimensions dimensions are inferred from characteristics of items at different points


Snickers

Reese’s

Mr. Goodbar

Toblerone

Twix

Smores

Almond Joy

Butterfinger

M&M

Kitkat

York

HIGH

HIGHLOW

LOW

Mars

Milky Way

Hershey’s

Heath

Ritter


Some Repositioning CampaignsCadillac: “It’s not your father’s car.”Geritol: “Not too young for Geritol.”Orange juice: “It isn’t just for breakfast anymore.”Chocolate milk for adults

NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!


Some Brands That Were Dropped Rather Than RepositionedValueJet AirTranPackard Bell e-MachinesGerman Communist Party Party for Democratic

Socialism


Euphemisms in Positioning“Loss Prevention Associate”“Sales Counselor”“Pre-Owned” or “Previously Loved” Vehicle“Gaming”

chapter04 segmentation.ppt

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