steps in developing a positioning strategy
TRANSCRIPT
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Ch. 7 Target Marketing Strategy: Selecting and Entering a Market
Market fragmentation: – The creation of many consumer groups due to
the diversity of their needs and wants Target marketing strategy:
– Dividing the total market into different segments based on customer characteristics, selecting one or more segments, and developing products to meet those segments’ needs
– Also known as STP (segmentation, targeting, and positioning)
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Figure 7.1 Steps in the Target Marketing Process: STP
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Goals of Segmentation (in class)
Why? – Effectiveness – Efficiency
What makes a good segmentation outcome? – p. 213, “Without real differences in consumer needs,
firms might as well use a mass-marketing strategy.”– Differentiate groups based on what and why
consumer buy
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Steps in the Target Marketing ProcessStep 1: Segmentation Segmentation:
– The process of dividing a larger market into smaller pieces based on one or more meaningful shared characteristics
Segmentation variables (“bases”): – Dimensions that divide the total market into fairly
homogeneous groups, each with different needs and preferences
– Segmentation variables include:• Demographics—size, age, gender, ethnic group, income,
education, occupation, family structure• Psychographics—psychological, values and lifestyles, and
AIO factors• Behavior-based variables – usage rate, usage occasion,
product benefits
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Demographic Dimensions
Age Gender Occupation Family structure Income and social class Race and ethnicity Geography
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Segmenting by Demographics: Age: Generational Marketing Children Tweens Teens Generation Y: born between 1977 and 1994 Generation X: born between 1965 and 1976 Baby boomers: born between 1946 and 1964 Older consumers
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Segmenting by Demographics: Gender Many products appeal to one sex or
the other– Metrosexual
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Segmenting by Demographics (cont’d)
Family Structure Income Social Class Race and Ethnicity
– African Americans– Asian Americans– Hispanic Americans
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Segmenting by Geography
Geodemography: – combines Geography with demographics
(*and psychographics*)– www.claritas.com
Geocoding: – Customizes Web advertising so people who
log on in different places see ad banners for local businesses
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Segmenting by Place of Residence
Geodemography: – Combines geography with demographics
Geocoding: – Customizes Web advertising so people who
log on in different places see ad banners for local businesses
Learn more about PRYSM
Visit ReachLocal.com
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Missoula, MT 59802's
most common PRIZM NE Segments are: 47City Startups 56Crossroads Villagers 53Mobility Blues 44New Beginnings 60Park Bench Seniors
http://www.claritas.com/MyBestSegments/Default.jsp?ID=20&id1=1027&id3=59802
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Segmenting by Psychographics
Psychographics: – Segments formed on the basis of values and
lifestyles (VALs) and shared activities, interests, and opinions (AIOs).
– www.sric-bi.com – Lohas
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Segmenting by Behavior Segments consumers based on how
they act toward, feel about, or use a specific product category– 80/20 rule: 20 percent of purchasers account
for 80 percent of a product’s sales• Heavy, medium, and light users and nonusers
of a product• (versus *BOP and long tail markets)
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80/20 rule versus:
Long tail concept:– Firms CAN make money selling small
amounts of items IF they sell enough different items
Base-of-pyramid markets*– “20/80” rule?
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Mature Markets> $20,000 *
Emerging Markets$3,260 – $20,000
Survival Markets <$3,260
(population)
*Individual annual income
Source: WRI
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Segmenting by Behavior (Cont.) User status:
– Heavy, medium, and light users and nonusers of a product
Usage occasions– Segments on the basis of different occasions when
customers buy or use various products • Shoes, watches
Benefit segmentation (not explicit in text)– Segments on the basis of the specific benefits different
customers desire when purchasing in a product category:
• OJ example, p. 211: added vitamins/calcium vs. pulp vs. no sugar
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Segmenting Business-to-Business Markets
North American Industry Classification System (NAICS)
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Steps in the Target Marketing Process Step 2: Targeting
Targeting:– Marketers evaluate the attractiveness of each
potential segment and decide in which segment(s) they will invest resources to try to turn them into customers
– The customer group(s) selected are referred to as the target market
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Developing Segment Profiles
A profile is a description of the “typical” customer in a segment.– Might include information on demographics,
location, lifestyle, and product-usage frequency
Why is it important?
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Evaluation of Market Segments A viable target segment should:
– Have members with similar product needs/wants
– Be measurable in size and purchasing power– Be large enough to be profitable – Be reachable by marketing communications– Be one that the marketer’s company has the
strengths and capabilities to adequately serve well
Also consider:* growth rates by segment * competition by segment
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Figure 7.3 Select a Target Marketing Strategy
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Choosing a Targeting Strategy
Undifferentiated targeting strategy – Appealing to the total market without regard to
specific segments– “Mass marketing”– Commodities, often non-profit/”social” marketing
causes, small marketing budget, little research Differentiated targeting strategy
– Developing one or more products for each of several customer groups
– Developing different advertising strategies (message/media) for different customer groups (but offering the same product)
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Choosing a Targeting Strategy Concentrated (“niche) target marketing
strategy – Offering one or more products to a single segment
Custom marketing strategy – Tailoring specific products to individual customers– Common in personal and professional services, and in
industrial marketing– Mass customization
• Modifying a basic good or service that is “mass produced” to meet the specific needs of an individual
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Step 3: Positioning What is positioning?
– Developing the (a) image of the product (b) in the mind of the customer (c) relative to competition on
(d) important attributes (either objective or subjective) Brand personality
– A distinctive image that captures the brand’s character and benefits
Reposition: – Create a different market position to respond to
marketplace changes• Retro brands
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Steps in Developing a Positioning Strategy
Analyze competitors’ positions Offer a good or service with a
competitive advantage Finalize the marketing mix by matching
mix elements to the selected segment Evaluate target market’s responses
and modify strategies as needed
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Positioning Tool: Perceptual map* A research technique marketers use to
identify where products/brands are “located” in consumers’ minds
Statistical method: – multi-dimensional scaling – Pair-wise similarity judgments
A 2-dimensional “product” space – the dimensions are attributes of the product
• objective or subjective – Products are the evoked set
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Customer Relationship Management Customer relationship management (CRM):
– A systematic tracking of consumers’ preferences and behaviors over time in order to tailor the value proposition as closely as possible to each individual’s unique wants and needs
Views customers as relationship partners, with each partner learning from the other every time they interact
Sees marketing as a process of building long-term relationships with customers – to keep them satisfied and coming back.
CRM facilitates one-to-one marketing
Philadelphia 76ers Video
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Four Steps in One-to-One Marketing
Identify customers and get to know them in as much detail as possible
Differentiate customers by their needs and value to the company
Interact with customers; find ways to improve cost efficiency and the effectiveness of the interaction
Customize some aspect of the products you offer each customer
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CRM: A New Perspective on an Old Problem CRM systems use computers,
software, databases, and the Internet to capture information at each touchpoint– Touchpoints are any direct interface between
customers and a company (online, by phone, in person, etc.)
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Characteristics of CRM Share of customer (vs. share of market):
focus on retention and loyalty (vs. acquisition of new customers)
Lifetime value of the customer- Customer equity
Focus on high-value customers– Tiers/categories
Personalize/customize – one-to-one marketing.