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Segmentation and Differentiation. Chapter 9. Segmentation. Target marketing requires: Identify and profile distinct groups of buyers who might require separate marketing mixes Select one or more segments to enter Establish and communicate the product’s key benefits to the market.
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Segmentation and Differentiation Chapter 9
Segmentation • Target marketing requires: • Identify and profile distinct groups of buyers who might require separate marketing mixes • Select one or more segments to enter • Establish and communicate the product’s key benefits to the market
What is a Target Market? • Group of people which a firm designs, implements and maintains a marketing mix intended to meet the needs of the group. • Options include: • Undifferentiated strategy • Concentrated strategy • Multisegment strategy
Market Segments • Segments v. sectors • Segment: subgroup of people sharing 1+ characteristics that cause them to have similar product needs • Market segmentation: process of dividing a market into a meaningful relatively similar groups.
Criteria for segmentation • Measurable • Substantial • Accessible • Responsiveness/Actionable • Differentiable
Bases for Segmentation • Geography: region, market size, climate etc. • Demographics: age, gender, income, ethnic background, family life cycle • Psychographic: personality, motives, lifestyles, values • Benefit: what consumers get out of it; occasions, benefits, user status, usage rate, loyalty • Usage rate: 80/20 rule, new users, medium users etc.
Group activity • Candy segmentation exercise
Making your Product Stand Out: Positioning and the Art of Differentiation Based in part on Differentiate or Die: Survival in Our Era of Killer Competition Jack Trout
It’s all in your head… • Differentiation takes place in the mind. • Minds are limited and can’t cope with a lot of information • Minds hate confusion and love simplicity • Minds are insecure and buy what others buy • Minds can lose focus • MINDS DON’T CHANGE?? Do they???
USPUnique Selling Proposition • Each ad must make a proposition to the consumer. Not just words, not just product puffery, not just show window advertising. “Buy this product and you will get this specific benefit” • The proposition must be one that the competition cannot copy • The proposition must be so strong that it can move millions
The Art of Positioning • Process that influences potential customers’ overall perception of a brand, product line or organization in general; the place in the mind relative to the competition • Perceptual map – means of displaying or graphing, in two or more dimensions, the location of products, brands or groups of products in consumers’ minds.
How to Do it… • Make Sense in the Context • Find the Differentiating Idea • Have the Credentials • Communicate your Difference • It helps to be RICH!! • Potential Errors: • Underpositioning-Crystal Pepsi • Overpositioning- Tiffany’s • Confused Positioning – NeXT computer • Doubtful Positioning- Cadillac Cimarron
What are the Possibilities? POSITION ON… • Attribute • Benefit • Use or Application • User • Competitor • Product Category • Quality or price • Repositioning
Bad Differentiators… • Quality and Customer Orientation • It is a GIVEN! • 1983 – American Airlines launched a Aadvantage program • Price • How low can you go? • Exceptions: Wal Mart, Dell – based on something else after price • Competitors can get around it • Unless it is high price (Rolex) • Creativity • The A.E.s v. the Creatives • Coca Cola and Mean Joe Green; Polar bears • Breadth of Line • Category killers can get too big
Good Differentiators… • Being First • Most firsts stay first (Coke, Xerox, Advil • Becomes the “generic advantage” • Not a guarantee of success & can be bad idea (smokeless cigarettes) • Attribute ownership • Own what is most important to customer (Crest) • Leadership • Let everyone know it • Heritage • Based on time, location, family, character
Good Differentiators… • Market specialty • Be the expert! • Preference • Can be legitimate, ethical, emulation (fit) • How the product is made • Technology, special ingredient (DiGiorno Pizza, Papa John’s), handcrafted, packaging • Being the latest • Intel (makes itself obsolete); ulcer meds; technology • Don’t solve a nonexistent problem; must be better; don’t mess with tradition • Hotness • Tastes, trends, PR
Repositioning • Changing customers’ perception of a brand in relation to competing brands. • Why do it? • Changing demographics • Declining sales • Changes in social environment
SUVs What are the Differentiators in this Category?