Segmentation, Targeting, and Positioning

Segmentation Product positioning strategy Bases for segmentation Positioning Targeting Repositioning

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Approaches to Marketing

Southwest Airlines

Auto makers
MKTG 370

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)
Lars Perner, Instructor

SEGMENTATION, TARGETING, AND POSITIONING

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)

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Examples (2): Restaurant Diners

Low

Low

Convenience

High

E.g., --speed --location

Price Sensitivity

Fancy Restaurants --e.g., Ritz Carlton

High-end delivered food

Dennys

Local, unbranded fast food restaurants

McDonalds
Taco Bell
Lars Perner, Instructor

High
MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

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)
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor

MKTG 370

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

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Bases for Segmentation: Consumer Characteristics

Geographic

Demographics

Regional Area characteristics: The PRIZM system

Income willingness to spend! Occupation

Gender Age Ethnicity Household size

Marital status

Single, never married Married Divorced

Presence of children

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Bases for Segmentation: Behavior and Buying Situations

Benefits sought Behavior

Involvement Usage rates and status

Media preferences Preferred shopping outlets

80/20 rule20% of consumers may account for 80% of consumption

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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Some combined segments

Price sensitive, non-brand loyal colataste, 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.

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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Positioning Strategies

Head-on competition

Airlines (want to differentiate but have difficulty pulling it off in practice) Beef products
Burger King: Grilled instead of McDonalds fried burgers Halmark: When you care to send the very best Hertz (vs. Not exactly) Zachy Farms (chicken)
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor

Differentiation

MKTG 370

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Targeting: Selecting Segment(s) and Specializing

You cant be all things to all people ---> 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
Lunch; not dinner Good for children
SEGMENTATION, TARGETING, AND POSITIONING

Good sales; poor everyday values

MKTG 370

Lars Perner, Instructor

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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!
SEGMENTATION, TARGETING, AND POSITIONING

MKTG 370

Lars Perner, Instructor

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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

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

15

Evaluating Target Segments

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

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

16

Euphemisms in Positioning
Loss Prevention Associate Sales Counselor Pre-Owned or Previously Loved Vehicle Gaming

MKTG 370

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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