Market Segmentation Targeting and Positioning chapter 8 Ch

Market Segmentation, Targeting and Positioning chapter 8

Ch. 8 Objectives • Understand the concepts: market segmentation, and target marketing. positioning • Learn the advantages and disadvantages of target marketing • Discuss segmentation criteria, strategies, and seg. bases • Understand typical positioning strategies

What is a market? • Individuals or organizations who: – Are willing, able, and capable of purchasing a firm’s product – Segmentation is critical because demand is often heterogeneous

Market Segmentation/Targeting Market Segmentation is: • The process of dividing up the total market into distinct subsets of customers with common needs or characteristics Targeting is: • Selecting one or more segments that are appropriate

Target Marketing • Advantages – – – Easier analysis of potential and actual consumers Tailoring of products to market Assessment of demand potential Identify competing products Increased sales effectiveness

Target Marketing • Disadvantages – Increased marketing costs – More complex strategy to implement – Narrow segmentation can impact brand loyalty – Ethics and stereotyping issues – Can hinder a “Global” Brand Image – Faux segmentation may be viewed cynically • See Excedrin Migraine:

Market Criteria • Segmentable markets are: – Heterogeneous – Measurable – Substantial – Actionable • Companies must be able to respond to preferences with an appropriate marketing mix – Accessible • Market must be efficiently reachable

Segmentation Variables Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Demographics • • Age Income Gender Occupation Education Ethnicity Family Life Cycle

Segmentation Variables Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Geographics • • By region of country Micro-Beers do it Campbell’s Soup does it Frito-Lay does it:

Segmenting Consumer Markets Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Psychographic Segmentation – Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)

Segmenting Consumer Markets Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Benefits Sought • Find (or create) a key benefit that the product satisfies • Toothpaste Example:

Segmenting Consumer Markets Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Situation Segmentation • Time of Year / Week, Event etc.

Segmenting Consumer Markets Demographic Segmentation Geographic Segmentation Situation Segmentation Psychographic Behavior/Usage Segmentation Benefits-Sought Segmentation

Behavior/Usage Segmentation • Markets can be segmented by how often or how heavily consumers use a specific product – 80/20 Principle - 80% of revenue generated by 20% of customers Light Users 80% Heavy Users 20%

Behavior/Usage Segmentation 80/20 true for many products • For Beer it’s 88% to 16% • Who are the heavy users?

Product Positioning

How to Position Brands: Positioning: • “an image that a product projects in relation to competitive products and to the firm’s other products”

7 Ways to Position (differentiate) a product • Show MGD clip(s) • How is MGD differentiated? 1) Product Attribute • It has something that others do not have • Whatever attributes seem important to consumers • Key attribute may in reality be bogus. . .

7 Ways to Position (differentiate) a product • Show Kia clip 2) By Competitor • Show Similarity • Show Difference

7 Ways to Position (differentiate) a product 3) By Cultural Symbol (brand marks)

TV Ad.

7 Ways to Position (differentiate) a product 4) By Price / Quality – Can be high or low (Generics) 5) By Product Class – Different type of product/service, but provides the same or better benefits • Example: New Am. Trak Acela service to NY

6) By Use or Application Typically used to add uses of product and expands user base

7 Ways to Position (differentiate) a product 7) By Product User • Product is positioned for a particular group of users • List some potential target markets for cellular phones:

Product Repositioning • What is meant by Repositioning? • Why might a company want to do it? (4 X) • Know any products that have been repositioned?

Mountain Dew (The most successful re-position in history) • What is MD’s current image/target market?

Mountain Dew (The most successful re-position in history) • Remember MD’s initial positioning? (1968 -Early 1970’s)

Mountain Dew (The most successful re-position in history)

Mountain Dew (The most successful re-position in history)

A rather unusual example of segmentation/positioning. . .