Segmentation, Targeting, and Positioning

1. Segmentation, Targeting, and Positioning

2. Chapter Objectives After reading this chapter you should be able to: • Appreciate the importance of market segmentation for specific consumer groups and realize that the targeting decision is the initial and most fundamental of all marcomdecisions. • Understand the role of behavior segmentation in targeting consumer groups. • Describe the nature of psychographic segmentation. • Appreciate major demographic developments such as changes in the age structure of the population and ethnic population growth.

3. Chapter Objectives (cont’d) • Explain the meaning of geodemographics and understand the role for this form of targeting. • Recognize that any single characteristic of consumers—whether their age, ethnicity, or income level—likely is not solely sufficient for sophisticated marcomtargeting. • Appreciate the concept and practice of brand positioning.

4. Positioning McDonald’s versus Starbucks

5. Major Steps in the Market Segmentation Process Following a consideration of customer needs and benefits sought, the following are the major steps in the market segmentation process: • Market segmentation: • Identify bases (e.g., behavior, demographics) to segment the market • Develop profiles of resulting segments • Market targeting: • Develop measures of segment attractiveness • Select the target segment(s) • Market positioning: • Develop positioning for each target segment • Develop marketing mix for each target segment

6. Measurable ConsumerCharacteristics Behavior Segmentation Demographics Psychographics Geodemographics Segmentation Bases

7. Figure 5.1: Classification of Four General Targeting Characteristics

8. Behavior Segmentation Issues • Behavior Segmentation • Describe how people behave with respect to a particular product category or class of related products • Assume that the best predictor of future behavior is past behavior • Online Behavioral Targeting • Tracks the online site-selection behavior of users so as to enable advertisers to serve targeted ads • Privacy Concerns • Technological advances increase the ability to serve consumers at the risk of invading their privacy

9. Figure 5.2: An Illustration of the Online Ad Process

10. Psychographic Segmentation • Psychographics • Describe aspects of consumers’ psychological make-ups and lifestyles as they relate to buying behavior in a particular product category • Attitudes • Values • Motivations

11. Types of Psychographic Profiles • Customized Psychographic Profiles • Are typically customized to the client’s specific product category • Contain questionnaire items related to the unique characteristics of the product category • General Purpose Psychographic Profiles • Can be purchased as “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service

12. Illustrative Statements Used In a Customized Banking-Related Psychographic Study

13. Psychographic Segments of Banking Behaviors Worried Traditionalists Bank Loyalists Secured Investors Thrifty Bankers Psychographic Study of Consumers’ Banking Practices

14. MindBase Segments

15. MindBaseSegments (Table 15.2 cont’d)

16. Figure 5.2: The 8 VALS Segments

17. VALS Psychographic Segments

18. VALS Psychographic Segments

19. Geodemographic Segmentation • Geodemographics • Consumers who reside within geographic clusters such as zip codes or neighborhoods and also share demographic and lifestyle similarities • Typical Clusters (PRIZM NE) • Bohemian Mix • White Picket Fences • Suburban Pioneers

20. Major Demographic Aspects Age structure of the population Change in household composition Ethnic population developments Demographic Segmentation

21. Demographic Trends • World Population Growth • 6.95 billion (2012) to 8 billion (2025) to 9.5 billion (2050) • Changing Age Structure in United States • Median age will increase to 38 by 2025 • More middle-aged Baby Boomers • Fewer children, teenagers, and young adults due to decreased birthrates

22. World’s 25 Largest Countries as of 2011

23. Population of the United States by Age Group, as of 2010

24. Demographic Segments by Age Group • Preschoolers (5 years or younger) • Elementary-school-age children (6-11 years) • Tweens (8-12 years) • Teenagers (13-19 years) • Millennial Generation or Generation Y • Highly conformist, narcissistic, and fickle consumers • Young adults (20-34 years) • Generation X (Baby Busters) • Yup & Comers, Bystanders, Playboys, and Drifters

25. Figure 5.4: An Appeal to Preschoolers’Parents

26. Figure 5.5: An Appeal to Teenagers

27. Demographic Segments: Age • Middle-Aged (35-54 years) • Younger baby boomers and older Gen Xers • Target category for luxury goods and youth • Mature Consumers (55 years or older) • Are 25% of the total U.S. population • Have highest discretionary income and most assets • Census Bureau classification: Olders (55 to 64); Elders (65 to 74); and the Very Old (75 and over) • Descriptive groups: Healthy Hermits, Ailing Outgoers, Frail Recluses, and Healthy Indulgers

28. The Ever-Changing American Household • Household Defined • An independent housing entity, either rental property or owned property. • U.S. Households • Growing in number, shrinking in size, and changing in character. • Married couples with children younger than 18 now represent less than one-third of all households. • Single-person and unrelated-person households are a growing market.

29. Ethnic Population Developments • Changes in the U.S. Melting Pot • More diversity in the overall population • Growth in all ethnic groups • Implication for Marketers • Need to devise marcom strategies to meet ethnic groups’ unique wants/needs

30. Ethnic Groups’ Population Representation in the United States, 2000–2050 (in millions)

31. Ethnic Population Developments • African Americans • Are of an average age that is considerably younger than that for Caucasians • Are geographically-concentrated, with three-fourths of all African-Americans living in 16 states • Tend to purchase prestige and name-brand products in greater proportion than do Caucasians • Have spending power that totals nearly $1.1 trillion annually

32. Figure 5.6: African-American Models Appeal to African American Consumers

33. Ethnic Population Developments (cont’d) • Hispanic Americans (Latinos) • Are the largest U.S. minority population segment • Are not a single unified market • Are underserved by current marketing efforts • Are responsive to advertising in their dominant language

34. Top 10 U.S. Hispanic Markets (estimates as of 2010)

35. Ethnic Population Developments (cont’d) • Asian-Americans • Represent many nationalities • Are the newest “hot” ethnic market • Are better educated than average • Have higher incomes than average • Occupy more prestigious jobs • Speak a variety of languages • Are heavy users of the Internet • Respond to marketing programs that reflect their values and lifestyles

36. Market Targeting The 5 Criteria for Effective Segmentation: • Measurable • Substantial • Accessible • Differentiable • Actionable Target Market Selection Strategies: • Undifferentiated marketing • Differentiated marketing • Concentrated marketing

37. Figure 5.7: A Framework for Brand Positioning

38. Appealing to Consumer Needs Functional Needs Symbolic Needs Experiential Needs Benefit Positioning

39. Categories of Appeals to Consumer Needs

40. Figure 5.8: Croc Advertisement Illustrating Appeal to Functional Needs

41. Figure 5.9: Dove Advertisement Illustrating Appeal to Experiential Needs

42. Attribute Positioning Product-Related Non-Product Related:Usage and User Imagery Attribute Positioning

43. Figure 5.10: Highlander Advertisement Illustrating Product-Related Attribute Positioning

44. Figure 5.11: Ralph Lauren Advertisement Illustrating User Imagery Positioning