Download Segmentation, Targeting and Positioning

Market
Segmentation
Marketing & Advertising
Mr. Arbiter
Introduction
• As society gradually became less homogenous, mass
marketing became more the exception than the rule
in Western Marketing.
• Mass marketing can be thought of as the shotgun
approach, while target marketing is much more of a
surgical or strategic approach to building relationships
with customers.
Introduction
•The broad term, Target Marketing consists
of three distinct steps:
• Market segmentation
• Target marketing
• Market positioning
The Target Marketing Process
Market
Segmentation
Target
Marketing
• Identify bases for
segmenting the market
develop segment profiles
• Develop measures of
segment attractiveness
and select target
segments
Market
Positioning
• Develop positioning for
each segment and
develop a marketing mix
for each segment
Market Segmentation
•There is no single way to segment a
consumer market.
•Marketers use different segment variables
alone or in combination to find the best way
to view market structure.
Market Segmentation
• The major variable categories are:
• Geographic
• Demographic
• Psychographic
• Behavioral
Geographic Segmentation
Calls for dividing markets into different geographical units
such as:
•Nations
•Regions
•States
•Counties
•Cities
•Neighborhoods
•Climate
•Density
Geographic Segmentation Examples
• Campbell Soup
• Cajun Gumbo Soup in Louisiana and Mississippi
• Nacho Cheese Soup in Texas and California
• Starbucks
• More desserts and larger, more comfortable coffee shops in the South where
customers tend to come in later and stay longer.
• Parker Bros.
• Offers localized versions of it’s popular Monopoly game for New York, Las
Vegas, Chicago and San Diego
Hot
Question
How can segmentation aid in Marketing
Management?
Demographic
• Age (and lifecycle)
• Gender
• Family size
• Income
• Occupation
• Education
• Religion
• Race
• Generation
• Nationality
Demographic Segmentation Examples
• Age & Lifecycle
Demographic Segmentation Examples
• Gender
Proctor and Gamble was the first company to offer a brand of
deodorant that was specifically formulated for women.
Demographic Segmentation Examples
Income
High Income
Low Income
• Neiman Marcus
• Sachs Fifth Avenue
• Lord & Taylor
• American Express
• Blue Nile
• Cadillac
• Lincoln Continental
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Dollar General
Family Dollar
Dollar Tree
Walmart
K-Mart
Nissan
Toyota
Hyundai
Psychographic Segmentation
• Divides buyers into different groups based on:
• Social Class
• Lifestyle
• Personality
Psychographic Segmentation
• People in the same Demographic Group can have very
different Psychographic characteristics
• Young & Rubicam, the 10th largest advertising agency
in the world, created the 4C model for developing
Psychographic Lifestyle Profiles.
http://www.bing.com/videos/search?q=Market+Sevemntation+McDonalds+Video&FORM=HDRSC3#view=detail&m
id=24DAFC63490A1E8CC3D024DAFC63490A1E8CC3D0
VALS Profile of American
Consumers
• http://www.strategicbusinessinsight
s.com/vals/ustypes.shtml
Behavioral Segmentation
• Behavioral segmentation divides buyers into
groups based on their knowledge, attitudes, uses
or responses to a product.
• Many marketers believe that behavioral
variables are the best starting point for building
market segments.
Behavioral Segmentation
• Typical Behavioral factors will include:
• Occasions
• Benefits Sought
• User Status
• Usage Rates
• Loyalty Status
Behavioral Segmentation
• Occasions
• Buyers can be grouped according to occasions when they get the idea
to buy a particular product.
• One advertising campaign which was similar to “Got Milk” was called
the “Incredible Edible Egg.”
• It was designed to develop non-breakfast occasions to consume eggs.
• Other Occasions include:
• Thanksgiving
• Mother’s/Father’s Day
Behavioral Segmentation
• Benefits Sought Segmentation divides consumers into
the benefits they seek in a particular product (or
service).
• This model requires an understanding of the specific
benefits consumers seek in a particular product or
class of products.
Behavioral Segmentation
Benefits Sought Segmentation Examples
• Proctor & Gamble, a leading manufacturer of soap and detergent
products segments its products according to this model and develops
classes of detergents that consumers seek out in terms of the specific
benefits they offer.
• Champion Sportswear loosely segments products into the following
categories: “Fit & Polish”, “Serious Sports Competitors” & “ValueSeeking Moms.”
Behavioral Segmentation
• Typical Behavioral factors will include:
• Occasions
• Benefits Sought
• User Status
• Usage Rates
• Loyalty Status
Behavioral Segmentation
• Segmentation based on User Status
• Typical User Segmentation
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Nonusers
Ex-users
Potential users
First-time users
Regular users
• Blood Banks cannot only rely on regular donors. They have to
constantly market to potential donors to ensure a continued
blood supply.
• Significantly different marketing efforts are applied to regular
donors to ensure continuing donations.
Behavioral Segmentation
• Marketing to Potential Users
• Proctor & Gamble acquires the manes of parents-to-be and
showers them with product samples and ads for its Pampers and
other baby products.
• The goal is to hook these parents early in the product adoption
process to create regular users.
• P&G offers their customers access to Pampers.com. This site is a
venue for P&G to sell their products while giving parents access to
expert parenting advice.
• www.pampers.com
Behavioral Segmentation
• Typical Behavioral factors will include:
• Occasions
• Benefits Sought
• User Status
• Usage Rates
• Loyalty Status
Behavioral Segmentation
• USAGE RATES
• Light users
• Medium users
• Heavy users
• Importance of understanding this segment-In the fast food industry,
heavy users make up just 20% of the patrons that visit fast food stores
however they consume approximately 60% of all food served.
• Typically, while fast food chains rely on heavy users, a significant
percentage of marketing dollars are spend on light users.
Behavioral Segmentation
• Typical Behavioral factors will include:
• Occasions
• Benefits Sought
• User Status
• Usage Rates
• Loyalty Status
Behavioral Segmentation
Loyalty Status
• A market can also be segmented based on loyalty.
• Customers can be loyal to a:
• Brand-Tide Laundry Detergent
• Store-Walmart
• Company-Ford
• Apple has a cult-like following.
• IOS vs. Android
• OSX vs. Windows
Behavioral Segmentation
• LOYALTY STATUS
Macolyte-One who is fanatically devoted to Apple products.
www.urbandictionary.com
• Other products, companies and ideas have developed loyal users such
as:
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Volkswagen
Jeep
Lexus
New York Times
Democrats/Republicans
Coke/Pepsi
Brief Review and Refocus
•Why do companies segment their
markets?
Companies segment their markets to improve their
competitiveness and profitability in fundamental ways:
• By focusing product
development,
marketing, and
service resources
on segments with
the most potential,
companies literally
can multiply their
marketing and
service efficiency.
Companies segment their markets to improve their
competitiveness and profitability in fundamental ways:
• By developing products, services, and
marketing messages that address those
segments’ specific needs, they can greatly
improve their share of the most desirable
business.
• At the same time, by focusing on the needs
of the most desirable customers, companies
can improve retention of those customers.
Using Multiple Segmentation Bases
• Marketers rarely use one or only a few segmentation variables.
• They typically use multiple segmentation bases in an effort to better
define their target groups.
• For example, a bank might not only identify a group of wealthy retired
adults, but may profile several other segments based on their income,
assets and risk tolerance.
• The same bank may choose to segment it’s potential customers by
housing and lifestyle variables.
Nielsen Prizm Segmentation System
• The Nielsen Prizm Segmentation model breaks markets down into 66
individual segments based on a combination of segmentation variables
such as age, income, life-style and geographics.
• Here’s an example:
05 Country Squires
Upscale Middle Age w/ Kids
The wealthiest residents in exurban America live in Country Squires, an oasis for
affluent Baby Boomers who've fled the city for the charms of small-town living. In
their bucolic communities noted for their recently built homes on sprawling
properties, the families of executives live in six-figure comfort. Country Squires
enjoy country club sports like golf, tennis, and swimming, as well as skiing, boating,
and biking.
Traits of the “Country Squire”
• Demographics Traits
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Urbanicity: Town/Rural
Income: Upscale
Income Producing Assets: High
Age Ranges: 35-54
Presence of Kids: HH w/ Kids
Homeownership: Mostly Owners
Employment Levels: Management
Education Levels: Graduate Plus
Ethnic Diversity: White, Asian, Mix
• Lifestyle & Media Traits
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Order from amazon.com
Vacation at ski resorts
Read Shape
Watch The Biggest Loser”
Chevy Suburban Flex Fuel
A look at Neilsen Prizm
• http://www.claritas.com/MyBestSegments/Default.jsp?ID=30&menu
Option=segmentexplorer&pageName=Segment%2BExplorer
Requirements for Effective Segmentation
• Measurable
• Accessible
• Substantial
• Differentiatable
• Actionable
Requirements for Effective Segmentation
• Measurable
• The following variables need to be measurable for effective
segmentation:
• Size
• Purchasing power
• Profiles
• Certain segmentation variables are difficult to measure or use, for
example there are approximately 32,500,000 left-handed Americans.
• This is relatively certain statistical measure, but we don’t know who
they are.
Requirements for Effective Segmentation
• Accessible
• The market segments can be effectively reached and effectively
served.
• Suppose a fragrance company finds that heavy users of its brand are
single men and women who stay out late and socializes a lot.
• If that group does not live or shop in certain places or are exposed to
certain media, then members can be difficult to reach.
Requirements for Effective Segmentation
• Substantial
• The market segments identified are large enough or profitable
enough to serve.
• A segment should be a large homogeneous group worth perusing
with a tailored marketing plan.
• For example, car manufacturers would not find it profitable to build
cars for or market to men under five feet tall or over seven feet tall.
Requirements for Effective Segmentation
• Differentiable
• The segments must be conceptually distinguishable and respond
differently to different marketing mix elements.
• If for example, married and unmarried women respond similarly to a
sales promotion on perfume, they don’t constitute separate
segments.
Requirements for Effective Segmentation
• Actionable
• Effective and attractive programs can be designed for attracting and
serving the segments identified.
• A small airline identified several market segments that were likely to
be reachable. Unfortunately, the airline did not have the staff or
financial resources to reach the segment.
• A careful cost/benefit analysis should be completed before
attempting to market to a particular segment to ensure that the
marketing dollars are well-spent.
The Marketing Concept
Knowing the needs and
wants of a target market
and delivering these
needs and wants better
than the competition.
Sample Essay Question
In a fully developed essay, explain the process of
market segmentation. Your explanation should
include the various segmentation variables and
their usefulness. You should also include examples
of products that might fit certain segmentation
variables. In order to be successful, your essay
must touch upon demographic, psychographic, and
behavioral variables. You should also explain why
segmentation is used for purposes of target
marketing.