Marketing Real People Real Choices Ninth Edition Chapter

Marketing: Real People, Real Choices Ninth Edition Chapter 7 Segmentation, Target Marketing, and Positioning Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Learning Objectives 7. 1 Identify the steps in the target marketing process. 7. 2 Understand the need for market segmentation and the approaches available to do it. 7. 3 Explain how marketers evaluate segments and choose a targeting strategy. 7. 4 Recognize how marketers develop and implement a positioning strategy. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Real People, Real Choices: Levi Strauss • Which option should be pursued? § Option 1: Focus on the obvious – Levi’s is THE original blue jean. § Option 2: Look at a different definition of originality – Levi’s is as original as you are. § Option 3: Highlight people’s experiences – You wear other jeans but you live your life in Levi’s. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Target Marketing: Select and Enter a Market • In our modern, complex society, it is a mistake to assume everyone’s needs are the same. • Market fragmentation occurs when diverse interests and backgrounds of individuals create greater diversity in needs and wants. § Technological and cultural advances have fueled growing fragmentation of markets. § Consider the choice you made as a consumer of higher education … Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 1 Steps in the Target Marketing Process Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Step 1: Segmentation • Segmentation is the process of dividing a larger market into smaller pieces based on meaningful, shared characteristics. § Useful in both consumer and B 2 B contexts § Many different dimensions, or segmentation variables, that marketers can utilize Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 2 Segmenting Consumer Markets Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Age and Generational Marketing • Children • Teens and Tweens • Generation Z § Born after 1994 • Generation Y § aka Millennials or Echo Boomers § Born between 1979 and 1994 Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Age and Generational Marketing • Generation X (born between 1965 and 1978) § Has entrepreneurial reputation, views home as an expression of individuality • Baby-boomers (born between 1946 and 1964) § Key segment due to their size and earnings, willing to invest money, time, and energy to maintain youthful image • Mature consumers § Focus on lifestyle factors, such as mobility Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Gender • Many products appeal to one sex or the other § Metrosexual: A straight, urban male who is keenly interested in fashion, home design, gourmet cooking, and personal care. SHE beer specifically targets female brew drinkers. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Family Life Cycle • Family needs and expenditures change over time. § As families move through stages, different product categories ascend or descend in importance. § Even if importance is constant, needs within category may change (e. g. , furniture). What purchase categories would be of rising importance for young newlywed couples? Expectant parents? Empty nesters? Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Income and Social Class • Income § Strongly connected to buying power • Social Class § Upper class, middle class and lower class § Many consumers buy according to an image they’d like to portray, not their actual level. § For instance, “easy credit” may lead consumers to buy cars and homes they can’t truly afford. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Ethnicity • U. S. ethnic and cultural diversity is increasing. § African Americans, Hispanic Americans and Asian Americans are largest groups and growing. § Content marketing establishes thought leadership with specific groups. § Managers practice cultural diversity. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Demographics: Place of Residence • Geodemography § Combines demographics with geography § PRIZM provides detailed segment profiles by zip code based on geodemography and lifestyle. • Geotargeting § Geographically customized web advertising that feeds local ads to users. § Underscores much paid search advertising on Google and other search engines. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Psychographics • Uses psychological, sociological, and anthropological factors to categorize customers. § Shared “AIOs” § Best known system is VALS Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting by Behavior • Categorizes consumers based upon how they act toward, feel about, or use a product § § User status 80/20 rule Long tail concept Usage occasions Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmenting B 2 B Markets • Segmentation also useful for B 2 B firms! § Helps B 2 B companies understand needs and characteristics of potential customers • Firms can be categorized based on: § Organizational demographics § Production technologies used § User status Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Segmentation, Not Stereotyping • The idea of segmenting is to identify groups of customers with similar needs. § Allows marketing to be more efficient and more effective • There are many ways by which marketers may segment consumer and business markets. Imagine you have been hired by an off-campus college bookstore as a marketing consultant. What do you think would be the best approach for segmenting their market? Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Step 2: Targeting • The next step is targeting, in which marketers evaluate each potential segment and decide upon which groups of customers they will invest marketing resources. § Selected groups are known as target markets Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 3 Phases of Targeting Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Evaluation of Market Segments • A viable market segment should: § have members with similar wants and needs that are different from those in other segments. § be measureable in size and purchasing power. § be large enough to be profitable. § be reachable by marketing communications. § have needs the marketer can address. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Develop Segment Profiles • After segments are identified, marketers should develop profiles or descriptions of the typical customers within a segment. § Segment profiles might include demographic, location, lifestyle and product-usage characteristics. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 4 Choosing a Targeting Strategy Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Customized Targeting Strategy • Customized marketing strategy § Tailoring specific products to individual customers § Common in personal and professional services, and in industrial marketing § Mass customization is the extreme case, which involves modifying a basic product to meet the needs and tastes of an individual consumer. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Ethical/Sustainable Decisions in the Real World • Candy companies have received scrutiny for advertising directly to children. • A large number of candy companies have announced that they will no longer advertise directly to children. Should candy companies be allowed to advertise directly to children? Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Step 3: Positioning • Positioning is the process by which marketers develop a marketing strategy to influence how a particular market segment perceives a good or service in comparison to the competition. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 5 Steps in a Positioning Decision Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Positioning Statement • An expression of a product’s positioning that is internally developed and maintained in order to support the development of marketing communication that articulates the specific value offered by a product Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Modifying Positioning Strategies • Repositioning establishes a new position in response to market changes. § Commonly used to change the brand image § Repositioning can breathe life into “retro” brands. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Bringing a Product to Life: Brand Personality (1 of 2) • Positioning strategies often try to create a brand personality. § A distinctive image that captures a brand’s character and benefits. Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Bringing a Product to Life: Brand Personality (2 of 2) • Brand anthropomorphism § Assigning human characteristics and qualities to a brand § Pillsbury Doughboy is an example Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Figure 7. 6 Perceptual Map Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Positioned for Success • Successful brand positioning should align clearly with the company’s competitive advantage(s). § In turn, marketing mix elements should support a distinctive brand image and value proposition for the target market. Think of your favorite restaurant chain. How would you describe its brand personality? Why? Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.

Copyright © 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved.