market segmentation, targeting and positioning
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chapter 5
Market Segmentation, Targeting and Positioning
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
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
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
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
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:
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
Segmentation Variables
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Demographics
• Age • Income• Gender• Occupation• Education• Ethnicity• Family Life Cycle
Segmentation Variables
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Geographics
• By region of country• Micro-Beers do it• Campbell’s Soup does it• Frito-Lay does it:
Segmenting Consumer Markets
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Psychographic Segmentation
– Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)
Segmenting Consumer Markets
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Benefits Sought
• Find (or create) a key benefit that the product satisfies
• Toothpaste Example:
Segmenting Consumer Markets
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Situation Segmentation
• Time of Year / Week, Event etc.
Segmenting Consumer Markets
Situation Situation SegmentationSegmentation
Psychographic Psychographic SegmentationSegmentation
Geographic Geographic SegmentationSegmentation
Behavior/UsageBehavior/Usage SegmentationSegmentation
Demographic Demographic SegmentationSegmentation
Benefits-SoughtBenefits-Sought SegmentationSegmentation
Light Users80%
Heavy Users20%
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
Behavior/Usage Segmentation
80/20 true for many products• For Beer it’s 88% to 16%• Who are the heavy users?
ProductPositioning
How to Position Brands:
Positioning:
• “an image that a product projects in relation to competitive products and to the firm’s other products”
• 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
• Show Kia clip2) By Competitor• Show Similarity• Show Difference
7 Ways to Position (differentiate) a product
7 Ways to Position (differentiate) a product
3) By Cultural Symbol (brand marks)
TV Ad.
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
6) By Use or Application
Typically used to add uses of product and expands user base
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:
Product Repositioning
• What is meant by Repositioning?• Why might a company want to do it? (4X)• Know any products that have been
repositioned?
Mountain Dew(The most successful re-position in history)
• What is MD’s current image/target market?
Mountain Dew(The most successful re-position in history)
• Remember MD’s initial positioning? (1968-Early 1970’s)
Mountain Dew(The most successful re-position in history)
Mountain Dew(The most successful re-position in history)
A rather unusual example of segmentation/positioning...
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