Market Segmentation and Product Positioning

1. Market Segmentationand Product Positioning

2. Exercise If Starbucks Via was a person, what would that person be like? Describe his/her characteristics and interests. What does this tell you? • Are your descriptions consistent with the way Starbucks Via is being promoted (and positioned)?MacBeth and Kyle love Via! • Far Out Via Coffee

3. What is Market Segmentation? • Market segmentation is the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) of individuals for the firm to serve • Why Segment? • Fragmentation: Different groups have different needs/wants • Allows marketers to establish appropriate marketing mix for a given segment

4. Five Tasks In Market Segmentation:

5. (1) Analyze Consumer-Product Relations Analyzing C-P Relations involves figuring out how affect, cognition and behavior are relevant to how consumers experience a product Three Approaches • Brainstorming to figure out what types of consumers are most likely to buy product and how they differ from other groups of customers • Focus groups can be used to identify what customers want, their values, etc. • Secondary research can be used to gain additional information on key market segments

6. Five Tasks In Market Segmentation:

7. (2) Investigate Segmentation Bases • Four common segmentation bases • Benefit • Psychographic • Person/situation • Geodemographic

8. Benefit Segmentation • Divide the market up on the basis of the benefits they seek from a product. • An example: toothpaste

9. Psychographic Segmentation • Psychographics • Uses psychological, sociological, anthropological factors to develop segments • Personality (sensation seeking) • Motives (status) • Lifestyles (HOGs) • VALS2 (Values + Lifestyles) System • Based on psychological characteristics that relate to consumer behavior • Can Identify Prevalence of 8 Types by Zip Code

10. Innovators Thinkers Achievers Experiencers Believers Strivers Makers Survivors Values and Lifestyles (VALS) System High Resources High Innovation Achivem. Self Expr. Ideals VALS Web Site Low Resources Low Innovation

11. VALS Types – Part 1

12. VALS Types – Part 2

13. Person/Situation Segmentation • Divide market up on the basis of the benefits certain types of individuals (person) desire in certain situations (situation) • Different strokes, for different folks…in different situations • An Example: Old Spice

14. Person/Situation Segmentation (Steps) Home Sports Kids Adults • Figure out if there are different usage situations that influence which attributes are important • Assess perceptions of different segments about product in different situations • Create “user” x “usage” matrix • (cont. on next slide)…

15. Person/Situation Segmentation (Steps) • Rank cells in terms of market share • Identify important benefits sought in each cell of matrix • Figure out where your competitors are located in the matrix • Position your product in matrix and figure out how well you are meeting the need relative to your competitor • Identify opportunities based on segment size, needs, and competitive advantage of your offering

16. Demographic Segmentation • Demographic Segmentation • Age, sex,, income, education, family size, occupation, marital status • Sociocultural Segmentation • Culture, religion, race, social class • Generational Segmentation • Kids, tweens, teens, Gen X, Gen Y, Gen Z, Boomers

17. Geodemographic Segmentation • Geodemography • Combination of geographic and demographic information • Creates classifications of actual, addressable, mappable neighborhoods where consumers live and shop • PRIZM NE system by Claritas • Assumes consumers in certain neighborhoods are similar in many respects and that the best prospects are those who actually use a product or other consumes like them • 66 clusters: (one example) 

18. Sample Claritas (PRIZM) Cluster More Clusters YOUNG INFLUENTIALS (22) Once known as the home of the nation's yuppies, Young Influentials reflects the fading glow of acquisitive yuppiedom. Today, the segment is a common address for younger, middle-class singles and couples who are more preoccupied with balancing work and leisure pursuits. Having recently left college dorms, they now live in apartment complexes surrounded by ball fields, health clubs, and casual-dining restaurants.

19. Five Tasks In Market Segmentation:

20. (3) Positioning Four Steps in Positioning • Evaluate (direct and indirect) competition • Create product/service with competitive advantage • Attribute (Komperdell Gloves – Seamless Technology) • Use or application (A Snapple A Day) • Product user (Zales – three store concepts) • Product class (Position margarine as butter) • Competitor (Burger King vs. McDonalds) • Price/quality (Target – an upscale discounter) • Emotion (Nike - Just Do It!)

21. (3) Positioning Four Steps in Positioning • Evaluate (direct and indirect) competition • Create product/service with competitive advantage • Develop marketing mix to appeal to target segment • Measure response and adapt strategy if needed • May need to reposition product/service • Repositioning may involve bringing old brand back to life (retro brand).

22. Creating the Brand Personality • Brand Personality • A distinctive image that captures a product’s or service’s essence (character, benefits) • Where does my brand stand? • Ask customers what characteristics are important • Measure your brand and competition on those dimensions • Plot and evaluate your brand’s location in a perceptual map

23. Describe These Brand Personalities Volvo Wagon Lamborghini

24. Perceptual Map Porsche Lincoln BMW Mercedes Position Ford Toyota Plymouth VW Positioning Bases Classy/Distinctive Conservative Sporty Practical/Affordable

25. Five Tasks In Market Segmentation:

26. (4) Select Segmentation Strategy • Four basic segmentation strategy alternatives • Do not to enter the market • Be a mass marketer instead of segmenting • Market to only one segment • Market more than one segment and design a separate marketing strategy for each

27. Criteria for Successful Segmentation • Sustainable • Large enough to justify its own marketing mix • Identifiable and Measurable • If not, can not determine whether it’s sustainable • Accessible • Must be able to reach segment with marketing mix • Responsive • The segment responds differently than another segment • If not, no need to develop unique marketing mix

28. Five Tasks In Market Segmentation:

29. (5) Design the Marketing Mix • Marketing Mix • Product • Price • Promotion • Place • Closely linked with the segmentation strategy

30. Wrapping UpAn Application to Sports Marketing

31. Some of My Favorite Products

32. What Do All TheseProducts Do For Me?“Means End Chain” Product Attributes Functional Consequences Psychological Consequences Personal Values