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BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1
SEGMENTATION, TARGETING, AND POSITIONING
SegmentationProduct positioning
strategyBases for
segmentationPositioningTargetingRepositioning
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 2
SEGMENTATION, TARGETING, AND POSITIONING
TARGETINGSELECTING WHICH
SEGMENT(S) TOSERVE
POSITIONINGIMPLEMENTING
CHOSEN IMAGE ANDAPPEAL TO CHOSEN
SEGMENT
SEGMENTATIONIDENTIFYING
MEANINGFULLYDIFFERENT GROUPS
OF CUSTOMERS PROUDCT
PROMOTION
PRICE
DISTRIBUTION
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 3
DefinitionsSegmentation: “Aggregating prospective
buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”
“The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.” (Text, p. 97)
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.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 4
Approaches to MarketingUndifferentiated 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)Auto
makers
SouthwestAirlines
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 5
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)
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 6
High
Low
Pric
e Se
nsiti
vity
ConvenienceLow High
Taco Bell
McDonald’s
Fancy Restaurants--e.g., Ritz Carlton
High-end delivered food
Denny’sLocal, “unbranded”fast food restaurants
E.g.,--speed--location
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 7
Combining variables…
Soft drink preferences—some segmentation variablesPreferred taste: Cola, lime, no taste, natural juice, ice teaCalorie/taste tradeoff: taste more important, some
importance of both, will sacrifice taste for low caloriesUsage occasion: Multi-pack for home; single can/bottle;
fountain drinkPrice sensitivity/brand loyalty: Willingness to pay more for
name brand or specialty soda
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 8
Some combined segments…Price sensitive, non-brand loyal cola-taste, full-flavor
segment, multi-packPrice insensitive, cola taste, brand loyal, low calorie,
multi-packPrice insensitive, natural juice, taste sensitive, single
serving
Typical behaviors of these consumers. Circumstances may involve occasional variations.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 9
Bases for SegmentationGeographicDemographicPsychographicBenefit DesiredUsage RateOther Behavior
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 10
•GeographicRegional differences
Climate and physical environmentTastes
Campbell’s SoupLifestyle and values
Urban vs.rural areas
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 11
Demographics
AgeGenderWillingness to spend
More useful than income—income ≠ willingness to spend!
“Trading Up:” Consumers may “splurge” in certain, personally significant categories while buying more downscale in other categories
EthnicityFamily lifecycle stage
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 12
PsychographicsPersonality
Very difficult to measureLimited empirical support
MotivesLifestyle
Usually more practical than personalityGeodemographics
Characteristics of residents of limited areas—e.g., PRIZM
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 13
The PRIZM System
60 consumer measures within zip code area
36,000 zip code areasStatistical methods used to
find areas containing relatively consumers ---> 60 segments
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 14
Usage Rate“80/20” rule—20% of consumers may account for 80% of
consumption (in many product categories)Note that larger consumption rate segments may be
subject to heavy competitionReasons for targeting smaller segments
Reduced competition Opportunity for growth
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 15
Other Behavioral Bases for SegmentationInvolvement
InterestKnowledgeWillingness to spend time on making product category decisions
“Dealproneness”Coupon usageBrand switching in response to price incentives
Outlet (store) choiceSpecialtyConvenience store“Category killer” (e.g., Fry’s, Best Buy, Circuit City)DiscountWarehouse
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 16
Benefits SoughtBased on
differences in arbitrary tastes (e.g., cola vs. non-cola drink)
ideal pointtradeoffs (e.g., taste vs.
calories)usage situation (e.g., coffee
for camping (instant) vs. higher quality for home brewing)
A consumer insearch of benefits.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 17
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
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 18
IDENTIFYING TARGETSCustomer information “enhancement”—information
from different sources integrated (e.g., real estate records, purchase lists, magazine subscription, credit records)
“Merge-purge”Customer lists from different sources are combined with
removal of duplicates
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 19
SEGMENTATION, TARGETING, AND POSITIONING
POSITIONINGIMPLEMENTING
CHOSEN IMAGE ANDAPPEAL TO CHOSEN
SEGMENT
PROUDCT
PROMOTION
PRICE
DISTRIBUTION
PREMIUM
BASIC
DURABLE
PRESTIGE
FUN
POWERFUL
PREMIUM
LOW PRICE
VALUE
INTENSIVE
SELECTIVE
EXCLUSIVE
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 20
“STUCK IN THE MIDDLE” PROBLEMBrands that offer a clear benefit tend to do betterClear orientation
Wal-MartNordstrom’sKFC
“Stuck in the middle”Sears
Successful “middelers:” Denny’s, Vons, Ralph’s
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 21
Positioning Strategies“Head-on” competition
Airlines (want to differentiate but have difficulty pulling it off in practice)
Beef productsDifferentiation
Burger King: Grilled instead of McDonald’s fried burgersHalmark: “When you care to send the very best…”Hertz (vs. “Not exactly”)Zachy Farms (chicken)
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 22
The Three Value Disciplines
Many successful firms are distinguished by excelling in one of three “value disciplines” (Treacy and Wiersema, 1993)Operational excellence (high efficiency)
—e.g., Wal-Mart, Southwest AirlinesCustomer intimacy (high service to
customers)—e.g., Nordstrom’s, IBMTechnological excellence (constant
innovation of “state of the art”)—e.g., Intel
All firms must meet acceptable levels on the other two dimensions
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 23
RepositioningRepositioning: Changing established position may be
difficult -- e.g., Sears McDonald
Good sales;poor everydayvalues
Lunch; not dinnerGood for children
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 24
Multidimensional ScalingConsumer product perception is identified along two or
more “dimensions”Methods:
A priori specification of dimensions respondents make judgments
Respondent rating of relative similarity of brands/product categories statistical model identifies unnamed dimensions dimensions are inferred from characteristics of items at different points
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 25
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 26
Snickers
Reese’s
Mr. Goodbar
Toblerone
Twix
Smores
Almond Joy
Butterfinger
M&M
Kitkat
York
HIGH
HIGHLOW
LOW
Mars
Milky Way
Hershey’s
Heath
Ritter
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 27
Some Repositioning CampaignsCadillac: “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!
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 28
Some Brands That Were Dropped Rather Than RepositionedValueJet AirTranPackard Bell e-MachinesGerman Communist Party Party for Democratic
Socialism
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING MK, Instructor 29
Euphemisms in Positioning“Loss Prevention Associate”“Sales Counselor”“Pre-Owned” or “Previously Loved” Vehicle“Gaming”