Segmentation, Targeting, and Positioning

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Segmentation, Targeting, and Positioning

• Segmentation
• Product positioning strategy
• Bases for segmentation
• Positioning
• Targeting
• Repositioning

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Definition

• Segmentation Aggregating prospective buyers
  into groups that (1) have common needs and (2)
  will respond similarly to a marketing action.

Although not all these consumers are completely
alike, they share relatively similar needs and
wants
Marketing action involves efforts, resources,
and decisions--product, distribution, promotion,
and price
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Approaches to Marketing

• Undifferentiated Strategy (no intended difference
  from competitors no specific consumer group
  sought out)
• Concentrated Strategy (differentiation one
  consumer segment sought)
• Differentiated Strategy (same firm makes
  different versions for different segments)

Southwest Airlines
Auto makers
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Segments--Examples (1)

• Air Travel
• Business/Executive Inflexible relatively price
  insensitive (Small number of people, but travel
  often)
• Leisure Traveler/Student Relatively flexible
  very price sensitive (other methods of
  travel--e.g., bus, car, train--are feasible
  travel may not be essential) (Very large segment)
• Comfort Travelers Comfort (e.g., space, food)
  important willing to pay (Small segment)

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Examples (2) Restaurant Diners
E.g., --speed --location
High
Convenience
Low
Low
High-end delivered food
Fancy Restaurants --e.g., Ritz Carlton
Price Sensitivity
Dennys
McDonalds
Local, unbranded fast food restaurants
Taco Bell
High
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Notes on Segments

• Boundaries between product categories are
  blurred--soft drinks or non-alcoholic
  beverages?
• Any number of dimensions possible--but too many
  variables cut segment size
• Segments must
• differ meaningfully from others
• large enough to be profitable
• be serviceable (have need that can be met cost
  effectively)

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Criteria in Selecting Segments

• Potential for increased profit and ROI
• Similarity of needs of consumers within
• Differences of needs of members of different
  segments

• Feasibility of serving each specific segments
• Cost effectiveness of identifying members of each
  segment

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Bases for Segmentation Consumer Characteristics

• Geographic
• Regional
• Area characteristics The PRIZM system
• Income ? willingness to spend!
• Occupation

• Demographics
• Gender
• Age
• Ethnicity
• Household size
• Marital status
• Single, never married
• Married
• Divorced
• Presence of children

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Bases for Segmentation Behavior and Buying
Situations

• Benefits sought
• Behavior
• Involvement
• Usage rates and status
• 80/20 rule20 of consumers may account for 80
  of consumption

• Media preferences
• Preferred shopping outlets

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Combining variables

• Soft drink preferencessome segmentation
  variables
• Preferred taste Cola, lime, no taste, natural
  juice, ice tea
• Calorie/taste tradeoff taste more important,
  some importance of both, will sacrifice taste for
  low calories
• Usage occasion Multi-pack for home single
  can/bottle fountain drink
• Price sensitivity/brand loyalty Willingness to
  pay more for name brand or specialty soda

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Some combined segments

• Price sensitive, non-brand loyal cola-taste,
  full-flavor segment, multi-pack
• Price insensitive, cola taste, brand loyal, low
  calorie, multi-pack
• Price insensitive, natural juice, taste
  sensitive, single serving

Typical behaviors of these consumers.
Circumstances may involve occasional variations.
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Positioning Strategies

• Head-on competition
• Airlines (want to differentiate but have
  difficulty pulling it off in practice)
• Beef products
• Differentiation
• Burger King Grilled instead of McDonalds fried
  burgers
• Halmark When you care to send the very best
• Hertz (vs. Not exactly)
• Zachy Farms (chicken)

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Targeting Selecting Segment(s) and Specializing

• You cant be all things to all people ---gt
  choose one or more groups
• Focus narrows scope of competition, but demands
  are greater
• Repositioning Changing established position may
  be difficult -- e.g.,
• Sears
• McDonald

Good sales poor everyday values
Lunch not dinner Good for children
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Some Repositioning Campaigns

• Cadillac Its not your fathers car.
• Geritol Not too young for Geritol.
• Orange juice It isnt just for breakfast
  anymore.
• Chocolate milk for adults

NOTE Repositioning is difficult. It will take
a great deal of advertising support. There is no
guarantee that consumers will cooperate!
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Some Brands That Were Dropped Rather Than
Repositioned

• ValueJet ? AirTran
• Packard Bell ? e-Machines
• German Communist Party ? Party for Democratic
  Socialism

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Evaluating Target Segments

• Sales potential
• Competitive presence/ potential
• Cost of service
• Feasibility of service
• Impact on segments already served

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Euphemisms in Positioning

• Loss Prevention Associate
• Sales Counselor
• Pre-Owned or Previously Loved Vehicle
• Gaming