Chapter 7 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers Case Study Procter & Gamble Sells multiple brands within the same product category for a variety of products Brands feature a different mix of benefits and appeal to different segments Has also identified different niches within certain segments Product modifications are useful; Tide offers seven different product formulations to serve different niches needs 7-2 Segmentation, Targeting, and Positioning Figure 7.1 Goal 1: Define the three steps of target marketing 7-3 1
Definition Market Segmentation: Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. 7-4 Segmenting Consumer Markets Geographical segmentation Demographic segmentation Most popular segmentation Psychographic segmentation Lifestyle, social class, and personality-based segmentation Behavioral segmentation 7-5 Geographic Segmentation Variables World region or country U.S. region State City Neighborhood City or metro size Density Climate 7-6 2
Geographic Segmentation This rate card shows leading magazines use geographic segmentation when charging advertisers. 7-7 Demographic Segmentation Variables Age Gender Family size Family life cycle Income Occupation Education Religion Race Generation Nationality 7-8 Demographic Segmentation Variables Nutrition bars are targeted to varying demographics including men, women and children 7-9 3
Behavioral Segmentation Variables Occasions Benefits User status User rates Loyalty status Readiness stage Attitude toward the product 7-10 Behavioral Segmentation Variables This fridge with a built in TV is targeted to the owner who watches television in the kitchen and has a design that faces the fridge 7-11 Discussion Question Based on the car examples on the following slide, how do car manufacturers use the following segments when marketing products? Geographic Demographic Psychographic Behavioral 7-12 4
Examples of Cars 7-13 Segmenting Business Markets Demographic segmentation Industry, company size, location Operating variables Technology, usage status, customer capabilities Purchasing approaches Situational factors Urgency, specific application, size of order Personal characteristics Buyer-seller similarity, attitudes toward risk, loyalty 7-14 Segmenting International Markets Geographic segmentation Location or region Economic factors Population income or level of economic development Political and legal factors Type/stability of government, monetary regulations, amount of bureaucracy, etc. Cultural factors Language, religion, values, attitudes, customs, behavioral patterns 7-15 5
Requirements for Effective Segmentation Measurable Size, purchasing power, and profile of segment Accessible Can be reached and served Substantial Large and profitable enough to serve Differentiable Respond differently Actionable Effective programs can be developed 7-16 Target Marketing Target Market Consists of a set of buyers who share common needs or characteristics that the company decides to serve 7-17 Target Marketing Evaluating Market Segments Segment size and growth Segment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliers Company objectives and resources 7-18 6
Kmart has been targeting the growing Hispanic Market Click on image for website 7-19 Target Marketing Strategies Figure 7.2 7-20 Choosing a Target Marketing Strategy Considerations include: Company resources The degree of product variability Product s life-cycle stage Market variability Competitors marketing strategies 7-21 7
Target Marketing Socially Responsible Targeting Some segments, especially children, are at special risk Many potential abuses on the Internet, including fraud Internet shoppers Controversy occurs when the methods used are questionable 7-22 Positioning Positioning: The place the product occupies in consumers minds relative to competing products Typically defined by consumers on the basis of important attributes Involves implanting the brand s unique benefits and differentiation in the customer mind Positioning maps that plot perceptions of brands are commonly used 7-23 Positioning Topics Identifying possible advantages Choosing the right advantage Choosing a positioning strategy Differentiation can be based on: Products Services Channels People Image 7-24 8
Positioning Topics Identifying possible advantages Choosing the right advantage Choosing a positioning strategy How many differences to promote? Unique selling proposition Several benefits Which differences to promote? Criteria include: Important Distinctive Superior Communicable Preemptive Affordable Profitable 7-25 Kohler is choosing to promote the distinctive features of its faucets 7-26 Positioning Topics Identifying possible advantages Choosing the right advantage Choosing a positioning strategy Value propositions represent the full positioning of the brand Possible value propositions: More for more More for the same More for less The same for less Less for much less 7-27 9
What segment is being targeted? What is the positioning? 7-28 Warehouse Clubs - Costco Less for Less Positioning Began in 1983 in Seattle, WA Current revenue of $42.5 billion Carry branded merchandise at discount prices Lowers cost through no frills retail outlets, buying direct from manufacturer and providing a private label Broad group of competitors including other warehouse stores, grocery stores, pet stores, electronic chains 7-29 Source: Datamonitor Warehouse Clubs - Costco Less for Less Positioning Do customers mind the no-frills environment? American Customer Satisfaction Index ranked Costco as the top specialty retailer in terms of customer satisfaction Costco growing internationally including warehouses in UK, Japan, Canada and Mexico 7-30 Source: Datamonitor 10
Developing a Positioning Statement Positioning statements summarize the company or brand positioning EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference) 7-31 Communicating the Positioning Companies must be certain to DELIVER their value propositions Positions must be monitored and adapted over time 7-32 11