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© 2006 Thomson/South-Western
© 2006 Thomson/South-Western
© 2006 Thomson/South-Western Chapter 6 Market Segmentation, Positioning, and the Value Proposition

Chapter 6

Market Segmentation, Positioning, and the Value Proposition

© 2006 Thomson/South-Western Chapter 6 Market Segmentation, Positioning, and the Value Proposition
1. 2. 3. 4. © 2006 Thomson/South-Western
1.
2.
3.
4.
© 2006 Thomson/South-Western
1. 2. 3. 4. © 2006 Thomson/South-Western STP Marketing and the Evolution of Marketing Strategy Target

STP Marketing and the Evolution of Marketing Strategy

Target Market: A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign.

Positioning: Designing and representing a brand in a way that is distinct in the consumer’s mind.

Positioning Strategy: Selecting key themes to communicate to a target market.

: Selecting key themes to communicate to a target market. Marketing Strategy : Evolves as a

Marketing Strategy: Evolves as a result of 1-3

Ch 6: Segmenting Markets 2

1. 2. © 2006 Thomson/South-Western
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© 2006 Thomson/South-Western

meaningful.

1. 2. © 2006 Thomson/South-Western meaningful. Beyond STP—Regular Assessment Reassess segmentation strategy : A

Beyond STP—Regular Assessment

Reassess segmentation strategy: A detailed examination of the current target segment to develop new and better ways of meeting its needs, or a need to change the target and reposition the brand to a new segment.

Pursue product differentiation strategy :

Product differentiation is a firm’s effort to emphasize or even create differences in brands to distinguish them from competitors. Advertising plays a critical role as part of the product differentiation strategy because the consumer will have to be convinced that the difference is

differentiation strategy because the consumer will have to be convinced that the difference is Ch 6:

Ch 6: Segmenting Markets 3

1. 2. 3. © 2006 Thomson/South-Western
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© 2006 Thomson/South-Western
1. 2. 3. © 2006 Thomson/South-Western The STP Marketing Process (Segmenting, Targeting, Positioning) Break the market

The STP Marketing Process

(Segmenting, Targeting, Positioning)

Break the market into smaller, more homogenous segments

Specifically target discrete market segments

Position the brand to appeal to the targeted segments

target discrete market segments Position the brand to appeal to the targeted segments Ch 6: Segmenting

Ch 6: Segmenting Markets 4

Identifying Target Segments: Market Segmentation Geography Demographics Psychographics Lifestyles Commitment Levels
Identifying Target Segments:
Market Segmentation
Geography
Demographics
Psychographics
Lifestyles
Commitment
Levels
Benefits
Usage Patterns
©
2006 Thomson/South-Western
Ch 6: Segmenting Markets 5
• © 2006 Thomson/South-Western
© 2006 Thomson/South-Western
• © 2006 Thomson/South-Western Segmenting by Usage and Commitment Advertising and promotion targeted to: – Heavy

Segmenting by Usage and Commitment

Advertising and promotion targeted to:

– Heavy users

– Nonusers

– Brand-loyal users

– Switchers/Variety seekers

– Emergent Consumers

users – Nonusers – Brand-loyal users – Switchers/Variety seekers – Emergent Consumers Ch 6: Segmenting Markets

Ch 6: Segmenting Markets 6

© 2006 Thomson/South-Western
© 2006 Thomson/South-Western
© 2006 Thomson/South-Western Demographic Segmentation 1. Age 2. Gender 3. Race 4. Marital Status 5. Income

Demographic Segmentation

© 2006 Thomson/South-Western Demographic Segmentation 1. Age 2. Gender 3. Race 4. Marital Status 5. Income

1. Age

2. Gender

3. Race

4. Marital Status

5. Income

6. Education

6. Education
6. Education

7. Occupation

Ch 6: Segmenting Markets 7

How would you describe the demographic segment targeted by this advertising campaign? © 2006 Thomson/South-Western
How would you
describe the
demographic segment
targeted by this
advertising campaign?
© 2006 Thomson/South-Western
How about this ad? What is the target demographic for this ad campaign? © 2006
How about this ad?
What is the target
demographic for this
ad campaign?
© 2006 Thomson/South-Western
Geographic Segmentation © 2006 Thomson/South-Western Ch 6: Segmenting Markets 10
Geographic Segmentation
©
2006 Thomson/South-Western
Ch 6: Segmenting Markets 10
Opinions © 2006 Thomson/South-Western
Opinions
© 2006 Thomson/South-Western
Opinions © 2006 Thomson/South-Western Psychographics and Lifestyle Segmentation Lifestyle Interests Activities Lifestyle

Psychographics and Lifestyle Segmentation

Lifestyle
Lifestyle
Interests
Interests
Activities
Activities

Lifestyle segmentation provides insight into consumer’s motivations

Ch 6: Segmenting Markets 11

Benefit Segmentation Passenger Prestige? Safety? Fuel Economy? © 2006 Thomson/South-Western Ch 6: Segmenting
Benefit
Segmentation
Passenger
Prestige?
Safety?
Fuel Economy?
©
2006 Thomson/South-Western
Ch 6: Segmenting Markets 12
© 2006 Thomson/South-Western
© 2006 Thomson/South-Western
© 2006 Thomson/South-Western Business to Business Markets Markets segmented by: • Usage rates • Geographic location

Business to Business Markets Markets segmented by:

• Usage rates • Geographic location • SIC (Standard Industrial Classification) Code • Stage in
• Usage rates
• Geographic location
• SIC (Standard Industrial
Classification) Code
• Stage in the purchase process: first
time vs. experienced buyers
• Benefits desired

Ch 6: Segmenting Markets 13

Prioritizing Target Segments Examine your ability to deliver value to the segments and costs of
Prioritizing Target Segments
Examine your ability to deliver value to
the segments and costs of new
capabilities—distinct competencies of
the firm
Research segment size, growth
potential and usage frequency
Assay the competitive environment
Find a niche you can scratch
©
2006 Thomson/South-Western
Ch 6: Segmenting Markets 14
• • • © 2006 Thomson/South-Western
© 2006 Thomson/South-Western
• • • © 2006 Thomson/South-Western Effective Positioning…. …is based on substance of the brand’s values

Effective Positioning….

…is based on substance of the brand’s values

…is consistent over time

…is both simple AND distinctive

substance of the brand’s values …is consistent over time …is both simple AND distinctive Ch 6:

Ch 6: Segmenting Markets 15

• • • © 2006 Thomson/South-Western
© 2006 Thomson/South-Western
• • • © 2006 Thomson/South-Western Fundamental Positioning Themes Benefit Positioning User Positioning

Fundamental Positioning Themes

Benefit Positioning

User Positioning

Competitive Positioning

Fundamental Positioning Themes Benefit Positioning User Positioning Competitive Positioning Ch 6: Segmenting Markets 16

Ch 6: Segmenting Markets 16

Do you think this ad for Pepsi is emphasizing benefit, user or competitive positioning? ©
Do you think this ad for
Pepsi is emphasizing
benefit, user or
competitive positioning?
© 2006 Thomson/South-Western
• • © 2006 Thomson/South-Western
© 2006 Thomson/South-Western
• • © 2006 Thomson/South-Western Repositioning Used to revive an ailing brand or fix a lackluster

Repositioning

Used to revive an ailing brand or fix a lackluster new market entry

The challenge: Changing perceptions of a brand forged over years of advertising.

market entry The challenge: Changing perceptions of a brand forged over years of advertising. Ch 6:

Ch 6: Segmenting Markets 18

Capturing the Value Proposition Functional VV Emotional AA LL Self-expressive RReellaattiivvee PPrriiccee UU
Capturing the Value Proposition Functional VV Emotional AA LL Self-expressive RReellaattiivvee PPrriiccee UU
Capturing the Value Proposition
Functional
VV
Emotional
AA
LL
Self-expressive
RReellaattiivvee PPrriiccee
UU
BBeenneeffiittss
EE
© 2006 Thomson/South-Western

Ch 6: Segmenting Markets 19