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Segmentation, Targeting, and Positioning

Segmentation, Targeting, and Positioning. Segmentation Product positioning strategy Bases for segmentation Positioning Targeting Repositioning. Definition.

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Segmentation, Targeting, and Positioning

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  1. Segmentation, Targeting, and Positioning • Segmentation • Product positioning strategy • Bases for segmentation • Positioning • Targeting • Repositioning

  2. Definition Segmentation: “Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.” 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

  3. Approaches to Marketing • Undifferentiated 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) Southwest Airlines Auto makers

  4. 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)

  5. Examples (2): Restaurant Diners E.g., --speed --location High • Convenience Low Low High-end delivered food Fancy Restaurants --e.g., Ritz Carlton Price Sensitivity Denny’s McDonald’s Local, “unbranded” fast food restaurants Taco Bell High

  6. Notes on Segments • Boundaries between product categories are blurred--”soft drinks” or “non-alcoholic beverages?” • Any number of “dimensions” possible--but too many variables cut segment size • Segments must • differ meaningfully from others • large enough to be profitable • be serviceable (have need that can be met cost effectively)

  7. Potential for increased profit and ROI Similarity of needs of consumers within Differences of needs of members of different segments Feasibility of serving each specific segments Cost effectiveness of identifying members of each segment Criteria in Selecting Segments

  8. Geographic Regional Area characteristics: The PRIZM system Income ≠ willingness to spend! Occupation Demographics Gender Age Ethnicity Household size Marital status Single, never married Married Divorced Presence of children Bases for Segmentation: Consumer Characteristics

  9. Benefits sought Behavior Involvement Usage rates and status “80/20” rule—20% of consumers may account for 80% of consumption Media preferences Preferred shopping outlets Bases for Segmentation: Behavior and Buying Situations

  10. Combining variables… • Soft drink preferences—some segmentation variables • Preferred taste: Cola, lime, no taste, natural juice, ice tea • Calorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low calories • Usage occasion: Multi-pack for home; single can/bottle; fountain drink • Price sensitivity/brand loyalty: Willingness to pay more for name brand or specialty soda

  11. Some combined segments… • Price sensitive, non-brand loyal cola-taste, full-flavor segment, multi-pack • Price insensitive, cola taste, brand loyal, low calorie, multi-pack • Price insensitive, natural juice, taste sensitive, single serving Typical behaviors of these consumers. Circumstances may involve occasional variations.

  12. Positioning Strategies • “Head-on” competition • Airlines (want to differentiate but have difficulty pulling it off in practice) • Beef products • Differentiation • Burger King: Grilled instead of McDonald’s fried burgers • Halmark: “When you care to send the very best…” • Hertz (vs. “Not exactly”) • Zachy Farms (chicken)

  13. 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 • Repositioning: Changing established position may be difficult -- e.g., • Sears • McDonald Good sales; poor everyday values Lunch; not dinner Good for children

  14. Some Repositioning Campaigns • Cadillac: “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!

  15. Some Brands That Were Dropped Rather Than Repositioned • ValueJet  AirTran • Packard Bell  e-Machines • German Communist Party  Party for Democratic Socialism

  16. Evaluating Target Segments • Sales potential • Competitive presence/ potential • Cost of service • Feasibility of service • Impact on segments already served

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

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