Chapter 3 Segmentation, Targeting, and Positioning.
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Transcript of Chapter 3 Segmentation, Targeting, and Positioning.
Segmentation, Segmentation,
Targeting, Targeting,
and Positioningand Positioning
Chapter 3
Segmentation,
Targeting,
and Positioning
Mass-marketing
A strategy that presumes there is one undifferentiated market and that one product will appeal to all consumers in that market.
Advantages Lower cost One advertising campaign is needed One marketing strategy is developed Usually only one standardized product is
developed
Disadvantage It only works if all consumers have the same
needs, wants, desires, and the same background, education and experience
Market matching strategy
Today, mass marketing has largely been replaced by a three-step market matching strategy
PositioningSegmentation
Market Matching Strategy
Market Matching
Targeting
Market Matching Strategy
Segmentation Act of dissecting the marketplace into submarkets
that require different marketing mixes Targeting Process of reviewing market segments and deciding
which one(s) to pursue Positioning Establishing a differentiating image for a product or
service in relation to its competition
Market segmentation
The process of dividing a market into distinct subsets (segments) of consumers with common needs or characteristics and selecting one or more to target with a distinct marketing mix
Segmentation Variables
Segmentation Variables
Geographic
Demographic Psychographic
BehavioralGeodemographic
Marketers may use a single variable Marketers may use two or more variables
Geographic Segmentation
Division of the market based on the location of the target market
People living in the same area have similar needs and wants that differ from those living in other areas
Climate Population density Taste Micromarketing
Demographic Segmentation
Partitioning of the market based on factors such as age gender marital status income occupation education ethnicity
Age
Product needs and interests often vary with consumers’ age
Age Effects
Occurrences due to chronological age
Cohort Effects
Based on the idea that people hold onto the interests they learned to appreciate growing up
Gender
Gender is frequently a distinguishing variable Changes in the family and growth of the dual-
income household have blurred some of the lines
Marital Status Marketers have identified specific marital
status groups, such as:
1. Singles
2. Divorced individuals
3. Single parents
4. Dual-income married couples They then market products specifically
designed for one or more groups
Income, Education & Occupation These three variables are often related and
therefore often used together as a measure of one’s social class.
Income is commonly used because marketers feel it is a strong indicator of ability to pay for a particular product or service
Income is often combined with other variables to narrow target markets: With age to identify the important affluent elderly With age and occupation to produce the yuppie
segment
Race and Ethnicity The size and purchasing power of minorities
make them an attractive target market The size of the market is growing
dramatically relative to the “majority” population
Targeting certain products (e.g., alcohol, tobacco) to such groups raises ethical issues
Tobacco and the African American Community Why is there a concern about targeting
African Americans? During the ’90s, youth smoking rates
increased sharply 12.6% in 1991 22.7% in 1997 80% increase
After Native Americans, African Americans have the highest rate of smokers of any ethnic group in the US
African American men have the highest rate of death from lung cancer of any ethnic group in the US 81% of African American men who smoke and
contract lung cancer die 51% of white men who smoke and contract lung
cancer die
Tobacco companies have clearly targeted African Americans Brown & Williamson’s Kool brand
used a cartoon character, the penguin Willie, that was popular with black teens
Has sponsored an annual jazz festival that attracts large black audiences
In 1998 cigarette advertisements represented 60% of ad space in black newspapers
Following the success of the movie “Malcolm X”, Star Tobacco Co. introduced a new brand called “X,” packaged in the black, red and green colors of the black nationalist movement Marketed in 20 states before pressure from the community forced
discontinuance of the brand
Geodemographic Segmentation
A hybrid segmentation scheme Based on notion that people who live close to one
another are likely to have similar financial means, tastes, preferences, lifestyles and consumption habits
Market research firms specialize in producing computer-generated geodemographic market “clusters” of consumers
They have clustered the nation’s >250,000 neighborhoods into lifestyle groupings based on postal zip codes
Marketers use the cluster data for mail campaigns, to select retail sites and merchandise mixes, to locate banks and restaurants, etc.
“You Are Where You Live”.
Psychographic Segmentation
Partitioning of the market based on lifestyle and personality characteristics
Marketers use it to further refine a target market
Its appeal lies in the vivid and practical profiles of consumer segments that it can produce
Accomplished by using AIO inventories
AIO Inventories AIO research seeks consumers’ responses to
a large number of statements that measure Activities Interests Opinions
Examples of the use of psychographic segmentation reflected in marketing messages Kellogg’s targets health-conscious
consumers with brands such as Special K and Product 19
Old Spice is targeting the active sports lifestyle with High Endurance deodorant
Behavioral Segmentation
Partitioning of the market based on attitudes toward or reactions to a product and to its promotional appeals
Behavioral segmentation can be done on the basis of:
1. Usage rate
2. Benefits sought from a product
3. Loyalty to a brand or a store
1. Usage Rate Differentiates between
heavy users medium users light users nonusers
In general, a relatively small number of heavy users account for a disproportionately large percentage of product usage
Targeting those heavy users is a common marketing strategy
2. Benefit Segmentation Marketers constantly attempt to identify the
single most important benefit of their product that will be the most meaningful to consumers
Changing lifestyles play a major role in determining the product benefits that are important to consumers and also provide marketers with opportunities for new products and services
3. Brand and Store Loyalty The tendency of some consumers to
repeatedly select the same brand within a given product category
A parallel tendency of some consumers to repeatedly patronize a particular retail establishment
Marketers often try to identify the characteristics of their brand-loyal customers so they can target consumers with similar characteristics in the larger population
Marketers also target consumers who show no brand loyalty as a means of penetrating a larger market
Marketers reward brand loyalty by offering special benefits to frequent customers
Choosing Market Segments to Target Once an organization has identified its most
promising market segments, it must decide whether to target one segment or several segments
Each targeted segment will then receive a specially designed marketing mix — i.e., a specially tailored product, price, distribution network and/or promotional campaign
Market Targeting Strategies
There are three basic types of strategies:
1. Undifferentiated
2. Multisegment (Differentiated)
3. Concentration (Niche)
1. Undifferentiated Strategy
A strategy that ignores differences between groups within a market and offers a single marketing mix to the entire market
It works when a product is new to the market and there is minimal or no competition
Advantages and Disadvantages Economies in production and marketing
Vulnerability to competitors offering more differentiated products and services to market subsegments
2. Multisegment/Differentiated Strategy Targeting two or more segments with
different marketing mixes for each
Advantages and disadvantages Minimizes risks, as losses in one segment
can be made up for in others Unique product features allow for higher
prices
Increased costs for differentiated products and marketing
3. Concentration/Niche Marketing Strategy
Focus on one sub-market
Greater knowledge of customers’ needs Economies of scale
Entry of a strong competitor Change in size or tastes of the segment
Positioning
Deciding how the firm wants the company and its brands to be perceived and evaluated by target markets
Differentiating the product from other products of the firm or its competition
Positioning complements and is an integral part of the company’s segmentation strategy and selection of target markets
The same product can be positioned differently to different market segments
The result of successful positioning is a distinctive brand image on which consumers rely in making product choices
Perceptual Mapping
A spatial picture of how consumers view products or brands within a market
Allows marketers to determine how their product appears in relation to competitive brands
Enables them to see gaps in in positioning of all brands in the product class to identify areas in which consumer needs are not being met
A visual profile of how consumers perceive a number of pain relievers on the two dimensions of effectiveness vs. gentleness.
Eff
ect
ive
ne
ss Tylenol
Extra-Strength Tylenol
Bufferin
NuprinMotrin AdvilAnacin
BayerExcedrinPrivate Label Aspirin Aleve
OrudisActron
Gentleness to Stomach MoreLess
More
Repositioning
Marketers may be forced to reposition products due to competition or a changing environment
Modifying an existing brand Targeting it to a new market segment Emphasizing new product uses and benefits Stressing different features with the intention
of boosting sales
Selected Psychographic/Demographic Characteristics of the PC Magazine Subscriber
Source: 1997 Lifestyles Study, PC Magazine Subscriber Study, Ziff-Davis, Inc., June 1997.
DEMOGRAPHICSDEMOGRAPHICS PercentPercent
SEX (BASE 990)Men 86Women 13
PSYCHOGRAPHICSPSYCHOGRAPHICS PercentPercent
USE A COMPUTER 100At home 96At work 89On vacation/traveling 46AGE
Under 25 525 - 34 1835 - 44 2945 - 54 3155 - 64 1265 or older 5Mean age 44.1
SELECTED USE OF COMPUTERWord Processing 96Connect to Internet 86E-mail 84For work 80Accounting/record keeping 75Reference 68Recreation/games 66
DEMOGRAPHICSDEMOGRAPHICS PercentPercent PSYCHOGRAPHICSPSYCHOGRAPHICS PercentPercent
EDUCATIONSome college or less 27Graduate college 27Education beyond college graduate 46
EMPLOYMENT STATUSEmployed by someone else 68Self-employed 21Other 11
PORTABLE DEVICES USED WHEN TRAVELING ON BUSINESSLaptop/notebook computer 57Cellular phone 47Beeper or pager 30Personal Digital Assistant/ electronic organizer 14
DEMOGRAPHICSDEMOGRAPHICS PercentPercent PSYCHOGRAPHICSPSYCHOGRAPHICS PercentPercent
OCCUPATION/BUSINESS DEPT.Computer related- professional 22Senior or corporate management 16Engineering-related professional 13Administrative/ manufacturing, accounting, finance, purchasing, advertising, marketing, sales 26Others 23
TRAVEL FOR BUSINESS/PLEASUREBusiness Travel5 or more days per month 315 or more nights away from home per month 17Pleasure/Vacation Travel15 or more days per year 37Mean number of days per year 15.5
MEMBER OF FREQUENT FLYER PROGRAMS 90
DEMOGRAPHICS Percent PSYCHOGRAPHICS Percent
INCOMEUnder $30,000 7$30,000 - $49,999 15$50,000 - $74,999 24$75,000 - $99,999 19$100,000 or more 24Mean income $87,700
PRIMARY RESIDENCEOwn 74Rent 18Other 3No answer 5
FINANCIAL SERVICESCurrently ownMutual funds 48Stocks 44Bonds 24Life insurance/annuities 44Currently useBrokerage services 36On-line investment services 16Retirement/financial planning 41
RESPONSE OF SELECTED CONSUMER PSYCHOGRAPHIC STATEMENTS Percent
Research before choose brand of new product to buy 41Other people ask my opinion about which computer products to buy 41Usually buy products based on quality, not price 26Prefer products that are latest in new technology 26Among group I am one of first to try new product 19
Walking/running/jogging 63Exercise/fitness/weight training 44Bicycling 7Swimming 37Golf 27Fishing 23Boating/sailing 19Skiing 19Tennis 14
SELECTED SPORTS/ACTIVITES PLAYED/PARTICIPATED IN PAST YEAR Percent
Listen to music 77Reading 61Going to movies 60Surfing the Internet 50Games-videos on computer 48Gardening 32Going to the theater 32Cooking 30Photography 30Collecting stamps/coins 11Sewing needlecraft 6
HOBBIES/OTHER ACTIVITIES PARTICIPATED IN Percent