BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 1
SEGMENTATION, TARGETING, AND POSITIONING
• Segmentation• Product positioning• strategy• Bases for
segmentation• Positioning• Targeting• Repositioning
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 2
SEGMENTATION, TARGETING, AND POSITIONING
TARGETINGSELECTING WHICH
SEGMENT(S) TOSERVE
POSITIONINGIMPLEMENTING
CHOSEN IMAGE ANDAPPEAL TO CHOSEN
SEGMENT
SEGMENTATIONIDENTIFYING
MEANINGFULLYDIFFERENT GROUPS
OF CUSTOMERS PROUDCT
DISTRIBUTION
PRICE
PROMOTION
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 3
Learning Objectives
• Appreciate different unique needs and expectations of different customer groups
• Appreciate tradeoffs among strategies of serving different segments
• Understand methods for selecting and targeting customer groups
• Understand bases for implementing target selection through positioning
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 4
Definitions
Segmentation:
“Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”
“The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.” (Text, p. 97)
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.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 5
Approaches to MarketingUndifferentiated 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)
Some auto makers
SouthwestAirlines
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 6
Segments--Examples (1)
Air TravelBusiness/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)
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 7
Examples (2): Restaurant Diners
High
Low
Pri
ce S
ensi
tivi
ty
ConvenienceLow High
Taco Bell
McDonald’s
Fancy Restaurants--e.g., Ritz Carlton
High-end delivered food
Denny’s
Local, “unbranded”fast food restaurants
E.g.,--speed--location
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 8
Combining variables…
Soft drink preferences—some segmentation variablesPreferred taste: Cola, lime, no taste, natural juice, ice teaCalorie/taste tradeoff: taste more important, some importance
of both, will sacrifice taste for low caloriesUsage occasion: Multi-pack for home; single can/bottle;
fountain drinkPrice sensitivity/brand loyalty: Willingness to pay more for
name brand or specialty soda
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 9
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.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 10
Bases for Segmentation
GeographicDemographicPsychographicBenefit DesiredUsage RateOther Behavior
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 11
•Geographic
Regional differencesClimate and physical
environmentTastes
Campbell’s Soup
Lifestyle and valuesUrban vs. rural areas
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 12
Demographics
AgeGenderWillingness to spend
More useful than income—income ≠ willingness to spend!
“Trading Up:” Consumers may “splurge” in certain, personally significant categories while buying more downscale in other categories
EthnicityFamily lifecycle stage
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 13
PsychographicsPersonality
Very difficult to measureLimited empirical support
MotivesLifestyle
Usually more practical than personality
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 14
Usage Rate
“80/20” rule—20% of consumers may account for 80% of consumption (in many product categories)Note that larger consumption rate
segments may be subject to heavy competition
Reasons for targeting smaller segments
Reduced competitionOpportunity for growth
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 15
Other Behavioral Bases for Segmentation
InvolvementInterestKnowledgeWillingness to spend time on
making product category decisions“Dealproneness”
Coupon usageBrand switching in response to
price incentivesOutlet (store) choice
SpecialtyConvenience store“Category killer” (e.g., Fry’s, Best
Buy, Circuit City)DiscountWarehouse
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 16
Benefits Sought
Based onDifferences in
arbitrary tastes (e.g., cola vs. non-cola drink)
Ideal pointTradeoffs (e.g.,
taste vs. calories)Usage situation
(e.g., coffee for camping (instant) vs. higher quality for home brewing)
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 17
Targeting: Selecting Segment(s) and Specializing
“You can’t be all things to all people” ---> choose one or more groups.
Focus narrows scope of competition, but demands are greater.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 18
IDENTIFYING TARGETS
Customer information “enhancement”—information from different sources integrated (e.g., real estate records, purchase lists, magazine subscription, credit records)
“Merge-purge”Customer lists from
different sources are combined with removal of duplicates
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 19
NON-REDUNDANT FINAL
LIST
NAMES AND ADDRESSES FROM ALL
SOURCES USEDSURFER CHICK
SURFER DUDE
EXTREME SURFINGCALIFORN
IA SURFER
SURFER’S SUPPLY
SURF CITY
SURFGEAR
GENERAL LISTS (E.G., PHONE BOOK
LISTINGS)
SELECT RESIDENCES
W/IN 2 BLOCKS OF
BEACH
LISTS OF BUYERS FROM
ONLINE/CATALOG MERCAHNTS
MAGAZINE SUBSCRIPTI
ONS
MERGE PROCESS
PURGE PROCESS
REMOVE DUPLICAT
ES
CALIFORNIA SURFERS’ ASSOC.
GEORGIA SURFER SOCIETY
ORGANIZATION
MEMBERSHIPS
SORORITY SURFERS OF
AMERICA
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 20
SEGMENTATION, TARGETING, AND POSITIONING
POSITIONINGIMPLEMENTING
CHOSEN IMAGE ANDAPPEAL TO CHOSEN
SEGMENT
PROUDCT
PROMOTION
PRICE
DISTRIBUTION
PREMIUM
BASIC
DURABLE
PRESTIGE
FUN
POWERFUL
PREMIUM
LOW PRICE
VALUE
INTENSIVE
SELECTIVE
EXCLUSIVE
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 21
“STUCK IN THE MIDDLE” PROBLEM
Brands that offer a clear benefit tend to do better
Clear orientationWal-MartNordstrom’sKFC
“Stuck in the middle”Sears—Competition both from
“above” and “below.”Nevertheless, there are
successful “middlelers:” Denny’s, Vons, Ralph’s
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 22
Positioning Strategies
“Head-on” competitionAirlines (want to differentiate but have
difficulty pulling it off in practice)Beef products
DifferentiationBurger King: Grilled instead of
McDonald’s fried burgersHallmark: “When you care to send the
very best…”Hertz (vs. “Not exactly”)Zachy Farms (chicken)
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 23
Repositioning
Repositioning: Changing established position may be difficult -- e.g., Sears McDonald
Good sales;poor everydayvalues
Lunch; not dinnerGood for children
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 24
Multidimensional Scaling
Consumer product perception is identified along two or more “dimensions”
Methods:A priori specification of
dimensions respondents make judgments
Respondent rating of relative similarity of brands/product categories statistical model identifies unnamed dimensions dimensions are inferred from characteristics of items at different points
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 26
Snickers
Reese’s
Mr. Goodbar
Toblerone
Twix
Smores
Almond Joy
Butterfinger
M&M
Kitkat
York
HIGH
HIGHLOW
LOW
Mars
Milky Way
Hershey’s
Heath
RitterDove Milk Chocolate
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 27
Similarity Ratings
Snickers M&M Almond Joy Mr. Goodbar
Snickers 7M&M 5 7Almond Joy 6 6 7Mr. Goodbar 3 2 3 7
1=“Not at all similar” 7=“Extremely Similar”
Logically, all candy bars are “extremely similar” to themselves. The shaded regions are redundant—only the order is varied.
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 28
Some Repositioning Campaigns
Geritol: “Not too young for Geritol.”
Orange juice: “It isn’t just for breakfast anymore.”
Microsoft “hipper”
NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!
BUAD 307 SEGMENTATION, TARGETING, AND POSITIONING Lars Perner, Instructor 29
Some Brands That Were Dropped Rather Than Repositioned
ValueJet AirTranPackard Bell e-MachinesGerman Communist Party Party for Democratic
Socialism
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