Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

1. 6 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

2. ROAD MAP: Previewing the Concepts • 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.

3. Steps in Market Segmentation, Targeting, and Positioning

4. Market Segmentation Marriott offers various brands of lodging in order to meet the needs of particular customer segments. Click the picture above to play video

5. Market Segmentation Geographic World Region or Country Region of Country City or Metro Size Density or Climate

6. Market Segmentation Demographic • Age, gender, family size, income, occupation, etc. • The most popular bases for segmenting customer groups. • Easier to measure than most other types of variables.

7. Market Segmentation Age and Life-Cycle Stage • P&G has different toothpastes for different age groups. • Click to See Crest Products for Adults and Kids • Avoid stereotypes in promotions. • Promote positive messages.

8. Age and Life-Cycle Segmentation P&G targets kids with Crest Kid’s Cavity Protection toothpaste. It’s gentle on tooth enamel and has “fun- filled sparkles and sparkle fun flavor just for kids.”

9. Market Segmentation Gender • Women make 90% of home improvement decisions. • Women influence 80% of all household consumer purchases.

10. Market Segmentation Income • Identifies and targets the affluent for luxury goods. • People with low annual incomes can be a lucrative market. • Some manufacturers have different grades of products for different markets.

11. Market Segmentation Psychographic Social Class Lifestyle Personality

12. Psychographic Segmentation When Honda markets its Reflex and Elite scooters, it appeals to the rebellious, independent kid in all of us.

13. Market Segmentation Behavioral • Occasions: • Special promotions and labels for holidays. • (e.g., Hershey Kisses) • Special products for special occasions. • (e.g., Kodak disposable cameras)

14. Market Segmentation Behavioral • Benefits Sought: • Different segments desire different benefits from products. • (e.g., P&G’s multiple brands of laundry detergents to satisfy different needs in the product category) • Click to see all of P&G's detergent offerings

15. Market Segmentation Behavioral • User Status: • Nonusers, ex-users • Potential users • First-time users • Regular users • Usage Rate: • Light • Medium • Heavy

16. Market Segmentation Behavioral • Loyalty Status: • Brands • Stores • Companies

17. Market Segmentation • Best to use multiple approaches in order to identify smaller, better-defined target groups. • Start with a single base and then expand to other bases.

18. Geodemographic Segmentation • 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

19. Description of PRIZM Cluster BLUE BLOOD ESTATES Blue Blood Estates are America’s wealthiest socioeconomic neighborhoods, populated by upper-class, established managers, professionals, and heirs to “old money.” They are accustomed to privilege and living in luxurious surroundings. One in 10 millionaires can be found in Blue Blood Estates, and there is a considerate drop from these heights to the next highest level of affluence.

20. PRIZM Application In marketing its Suave shampoo, Helene Curtis uses PRIZM to identify neighborhoods with high concentrations of working women. Such women respond best to advertising messages that with Suave, “looking great doesn’t have to cost a fortune.”

21. Interactive Student Assignment • Choose a partner and make a list of the market segments to which you belong. What segmentation variables did you take into consideration when you placed yourself into those segments?

22. Segmenting Business Markets Operating Characteristics Purchasing Approaches • Consumer and business markets use many of the same variables for segmentation. • Business marketers can also use: Situational Factors Personal Characteristics

23. Segmenting International Markets Factors Used: Geographic Location Economic Factors Political and Legal Factors Cultural Factors Intermarket Segmentation

24. 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.

25. Measurable Accessible Requirements for Effective Segmentation Substantial Differentiable Actionable

26. Evaluating Market Segments • Segment Size and Growth • Analyze current segment sales, growth rates, and expected profitability. • Segment Structural Attractiveness • Consider effects of: competitors, 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 and gain advantages over competitors.

27. Target Marketing Strategies

28. Undifferentiated Marketing • Focus is on common (not different) needs of consumers. • Product and marketing program are geared to the largest number of buyers. • Uses mass advertising and distribution.

29. Differentiated Marketing • Firm targets several market segments and designs separate offers for each. • The goal is to have higher sales and a stronger position with each market segment. • This approach increases the costs of doing business.

30. Concentrated Marketing • The focus is acquiring a large share of one or a few segments of niches. • Generally, there are fewer competitors. • The Internet is ideal for targeting small niche markets. • There is some risk in focusing on only one market.

31. Micromarketing • 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.

32. Choosing a Market Coverage Strategy Factors to Consider: Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies

33. Socially Responsible Target Marketing • 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.

34. Positioning for Competitive Advantage • Product’s position is the way the product is defined by consumers on important attributes. • The place the product occupies in consumers’ minds relative to competing products.

35. Positioning At Olive Garden Restaurants, “When You’re Here, You’re Family.”

36. Positioning Map Positioning map for large luxury SUVs

37. Choosing a Positioning Strategy #1 Identify a set of possible competitive advantages on which to build a position #2 Choose the right competitive advantages #3 Select an overall positioning strategy Must effectively communicate and deliver position to market

38. Identifying Possible Competitive Advantages • 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.

39. Product Differentiation (e.g., consistency, durability, reliability, repairability) Services Differentiation (e.g., speed, convenience, careful delivery) Channel Differentiation People Differentiation (e.g., hiring, training better people than competitors) Image Differentiation (e.g., convey benefits and positioning) Identifying Possible Competitive Advantages

40. Positioning Errors • 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.

41. Important Choosing Right Competitive Advantages Profitable Distinctive Affordable Superior Unique Selling Proposition Communicable Preemptive

42. Which Differences to Promote? Unilever positioned its bestselling Lever 2000 soap on three benefits in one: cleansing, deodorizing, and moisturizing benefits. It’s good “for all of your 2000 parts.”

43. Value Proposition “Much more for much more” value proposition: Häagen-Dazs offers its super-premium ice cream at a price never before charged.

44. Rest Stop: Reviewing the Concepts • 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.