Market Segmentation, Target Marketing, and Positioning

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APPLIED MARKETING MANAGEMENT
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Segmenting, Targeting and Positioning
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Presentation Overview

• Marketing Strategy, the Unifying Part of a
  Marketing Program, entails
• Defining Markets
• Segmenting Markets
• Targeting Market Segments
• Positioning within Targeted Segments

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Defining Product-Markets

• This is the point of interface between
  Business-Unit and Marketing Strategies.
• The scope component of B-U strategy addresses the
  issue of which P-Ms to compete in, thus
  defining the market.
• The scope component of Marketing strategy
  addresses the issue of how to compete in a given
  P-M, moving on to the segmenting process.

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Defining Product-Markets Establishing Boundaries

• Broadest The market is the industry.
• Narrowest The market is one user.
• Useful Set of current and potential users of the
  need/want satisfaction you plan to offer.

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Defining Product-MarketsAdopter of Innovation
Categories
Laggards
Innovators
Late majority 34
Early majority 34
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Early adopters 13.5
2.5

• Risk takers
• Young
• Well
• educated
• Mobile
• Sophisticated

• Socially
• Visible
• Young
• Mobile
• Broader
• social net
• than
• innovators

• Cautious
• Require much
• information
• before
• purchasing

• Suspicious of
• new ideas
• Older
• Look to
• preceding
• groups for
• information

• Very suspicious
• Lower social
• class
• Hard to reach

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Defining Product-Markets Generalized Product
Life Cycle
Life cycle extension
Product category sales (real dollars)
Profit/unit
Sales
Introduction
Maturity
Decline or extension
Profit per unit (real dollars)
Competitive turbulence
Growth
Time (years)
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Defining Product-Markets PLC Issues

• Level of Analysis
• Industry (Soft drinks).
• Product Class (Juice drinks).
• Product Type (Apple juice).
• Brand (Minute Maid apple juice).
• Where do Prospectors, Analyzers and Defenders
  compete?
• Why does the AIC usually end before its PLC?
• What does it mean if the AIC and PLC curves start
  and stop at the same time?

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Defining Product-Markets Market Evolution
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Market Segmentation Defined

• Market segmentation is the process of dividing a
  P-M into distinct subsets of users with similar
  needs, circumstances and/or characteristics that
  lead them to respond in a similar way to a
  particular product offering.

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Main Segmentation Criteria

• SizeIs the segment big enough to be profitable?
• StabilityIs there enough time to enter and make
  a profit?
• AccessibilityCan we communicate with the people
  in this segment as it is defined?
• Differential ResponseHow do we need to change
  the marketing mix to participate in each segment?
• (text adds identifiable, measurable and viable
  which are assumed here).

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Key to Effective SegmentationDifferential
Response

• Differential Response is reflected in the
  characteristics of the market used to create the
  segmentation scheme where
• Groups of users within a level of a given
  characteristic respond similarly to a particular
  marketing mix, AND
• Groups of users at other levels of the same
  characteristic respond differently.

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Typical Bases for SegmentingBusiness Markets

• Type of Organization
• Organizational Characteristics
• Benefits Sought or Buying Processes
• Personal and Psychological
• Relationship Intensity

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Typical Bases for Segmenting Consumer markets

• Demographics External characteristics of a
  population, e.g., age, gender, income
• Psychographics Internal indicators of a
  population, e.g., activities, interests, opinions
• Benefits Sought Motivation for purchase, e.g.,
  new, replacement, improvement
• Usage Situation Where is the need being
  fulfilled, e.g., home, vacation, work

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Benefit Segmentation ofthe Snack Food Market
Exhibit 6.4
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Segmentation MethodsData Visualization
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Segmentation Methods Fords Generational
Segments

• For 1997 Model Year
• Redesign F-150, best selling vehicle in US.
• Dont mess up like we did on the 1996 Taurus.
• Provide a foundation for a large SUV (Expedition).

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Basement-Designer, James Bulin

• Forget benchmarking (Dodge Ram) in favor of
  automotive anthropology--20th century values.
• We developed a way of crawling inside the heads
  and hearts of tomorrows customers.
• The growing up experience of each generation
  establishes the rules they live by.
• Generational research identifies macro-level
  changes in consumers desires and tastes.
• These elements set the values of those growing up
  during an era and shape their purchasing behavior.

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Bulins Generational Segments
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Generational Segments Work

• 1999 F-150 sales hit record 869,000 units, double
  those of the Dodge Ram.
• 1998 Bulin leaves to create the Bulin Group, a
  marketing consultancy
• They use generational research methods to,
  understand the emotional elements in individuals
  that drive purchase decisions, then tailor
  products that pull at those heartstrings.

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Targeting Market Segments

• After Segmentation Decision
• Consider each segment in terms of its
  attractiveness and your firms ability to compete
• Decide which segment(s) to target with a unique
  marketing mix

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Comp. Position-Mkt. Attract. Matrix
MARKET ATTRACTIVENESS
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Targeting Applied VW

• VW moves up-market by targeting well-heeled
  buyers of luxury cars.
• The New 70,000 D-type.
• Battling BMW, Buys Bentley.

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Targeting Applied eMachines

• Reconsidered the market for desktop computers
• Segmented along key dimensions Usage situation
  and Technological sophistication
• Identified previously ignored segment, occasional
  home user, minimal sophistication.
• What was their definition of attractiveness?

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Positioning

• Positioning refers to both the place a product or
  brand occupies in customers minds relative to
  their needs and competing products or brands, and
  to the marketers decision making intended to
  create such a positioning.

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Positioning Process

• ID competitors serving target market
• Determine Determinant Attributes
• Sample for perceptions of attributes brands and
  plot in targets product space
• ID desirable place(s)
• Map perceived attributes to MMix elements
• Solidify with a positioning statement

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Positioning Non-RX Pain Relievers in the Headache
Segment

• ID Main Competitors
• Determine Determinant Attributes
• Sample for perceptions of brands and plot
• ID Desirable Place(s)
• Map perceived attributes to Marketing Mix
  elements that can create that perception

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Perceptual Map of Non-RX Pain Relievers (Headache
Segment)
Harsh
Excedrin PM
Excedrin
Anacin
Bayer
ES Tylenol
Weak
Strong
Anacin 3
Panadol
Tylenol
Gentle
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Repositioning Always Difficult

• Oldsmobiles Woes, GMs oldest division, Until
  the oil embargo, a luxury-performance leader.
• In the 80s, perceived as a Grandpa car.
• Enter the Silhouette, Spokesman Spock, and the
  its not your fathers Oldsmobile tag.
• 1990s Enter 37-year old Karen Francis the
  Intrigue, Alero, Aurora and promotions in Drew
  Carey, Hard Rock Café Rockfest and X-Files.
• 2003 was Oldsmobile's final year.

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Positioning Statement

• The mental image you want the target market to
  have of your product relative to competitors
  offerings.
• For targeted segment using/owning your
  product is most important claim because most
  significant support.
• For lazy pizza eaters, getting Dominos pizza
  delivered is the fastest way to tame your
  hunger because we deliver in 30 minutes or its
  free.