CHAPTER 7: SEGMENTING, TARGETING, POSITIONING

The S-T-P Process

STRATEGY OBJECTIVES SEGMENTATION BASIS EVALUATE SEGMNT ATTRACTIVENESS SELECT TARGET MKT POSITION STRATEGY

Marketing Strategy Planning Process Customers Segment & Targeting Product Company SWOT 4 P’s Competitors Positioning & Differentiation Price STEP 1: ESTABLISH OVERALL STRATEGY/OBJECTIVES Segment strategy must be consistent w/ and derived from the firm’s mission/objectives SWOT STEP 2: SEGMENTATION BASIS

GEOGRAPHIC Segmentation DEMOGRAPHIC Segmentation organizes customers into groups on basis of where they live - grocery stores Segment: - Continent (N.A, Africa, Euro, Asia) - Country, region (West Coast, Prairies) - Province, city, urban, suburban, rural, climate

grouping of consumers according to easily measured objective characteristics - car makers income levels - kelloggs age - pizza hut tv ads best time to show ads to kids Segment: Age, gender, income, education, race, marital status, fam life cycle, ethnic, background -general cohort (baby boomers etc), home ownership

PSYCHOGRAPHIC Segmentation BEHAVIOURAL Segmentation *harder to identify pot. consumers how consumers describe themselves, characteristics that help them choose how they occupy their time (behavior) ,what underlying psychological reasons determine those choices self values – goals for life, overriding desires that drive how one lives their life self concept – image of self lifestyles – way a person lives to achieve goals VALS – tool classifying consumers into segments Segment: - lifestyle (innovators, makers, thinkers, achievers, strivers,

survivors) – VALS - personality (liberal, conservative, outgoing, health, fitness

conscious) – self concept - social class

based on benefits they derive from prod/serve their usage rate, user status, loyalty benefit segmentation loyalty segmentation Segment: - Benefits sought (convenience, economy, prestige, quality,

speed, service) - Usage(heavy, moderate, light, non-user, ex-user, pot. User,

first-time user) - loyalty

Multiple Segmentation Methods GEODEMOGRAPHIC SEGMENTATION Geo/demo lifestyle characteristics retailers

PYSTE Cluster profiles All neighborhoods in Canada into 60 lifestyle clusters w/ specific locations (urban lower middle - Urban Bohemia suburban affluent – Asian Heights)

STEP 3: EVALUATE SEGMENTATION ATTRACTIVENESS Identifiable - Determine who is w/in mkt to design product to meet

their needs - Gap familiesGap KidsBaby GapGap Body - Old Navy(too expensive)Banana Republic (fashion

forward)

Reachable - Persuasive communication and prod. distribution - Know prod exists understand what it can dorecognize

how to buy - La Senza lingerie .com - La Senza Girl/Spirit/Express/International

Sustainable/Profitable - Measure size and growth potential - If mkt too small/buying power is insignificant no profit - Gapintimatesturned big into Gap Body

Segment Profitablity = (seg. size x seg. adoption % x purc. bahviour x prof. margin %) – fixed costs Seg. Size - # ppl in segment Seg. Adoption % - of customers in seg. who r likely to adopt Purch, Bahviour – purch price x #times customer would buy Prof. Margin % - (selling price – vcosts)/selling price Fixed Costs – ads, rent, utilities, insurance, admin, salaries

Responsive - Customers act similarly positively to firm’s offering - Accept firms value proposition - New ideas - E.g La Senza considering opening a segment for formal

dress wear, but other competitors are too high, and they have reputation for lingerie, it would be a bad idea to go ahead with the new line

STEP 4: SELECT TARGET MARKET

Undifferentiated Segmentation Strategy/Mass Mkting Provide same benefits to everyone w/ no need to develop separate strategies for diff groups - Gasonline – everyone needs it low/medium/high

octane users - Esso Extra points/Aeroplan Miles redeemed for gas,

washes, snacks, travel rewards

Differentiated Segmentation Strategy A firm targets several mkt segments w/ diff offering for each - La Senza/Girl/Express - Confident, fashion forward 18-35/younger girls/everyday

trend forward styles

Niche Segmentation Strategy Selecting singe, primary, tgt mkt and focus all energies on providing product to fit that market’s needs - Cora’s breakfast/lunch only, open til 3 - Gennum Corpmicrocircuitry heading aids

Micromarketing (one-to-one) extreme, tailored to suit individual customer’s wants/needs - Build-A-Bear, Dell, Land’s End, Mariposa Bikes - Mass customization interacting one-to-one basis w/ many

ppl to created custom made products STEP 5: IDENTIFY/DEVELOP POSITIONING STRATEGY positioning - the place a product occupies in consumer’s minds relative to competing products Value

– relationship of price to quality, may open up avenues to attract new customer segments that they previously neglected

– P&G, 80% can’t afford their prodcompetitors Unilever & Colgate Suave Shampoo, Alberto VO5 – Dropped prices

Product Attributes

– innovation, quality, performance, reliability, design Benefits/Symbolism

– psychological meaning of the brand to consumers – JACOB comfort, casual, modern – JACOB Lingerie femininity, euro elegance, unparalleled comfort – Meanings of these brands are often reasons why consumers buy

Competition – head to head strategy against specific competitor/entire product classification w/in target market – price wars

– differentiation strategy by going after less competitive smaller mkt niche Mkt Leadership

– leadership w/in an industry (position of a firm w/in industry)

Positioning using Perceptual Mapping Perceptual map displays in two or more dimensions, the position of prod or brands in the consumer’s mind Ideal point position at which a particc mkt segment ‘s ideal product would lie on a perceptual map

determine consumer’s perceptions/eval of prod in relation to competitors Ask consumers series of Q’s about their competitor’s prod

identify competitor positions Study how its consumers view its brand relative to competitors, also study how competitors

position themselves determine consumer preferences the “ideal” prod/serv that appeals to each market select position monitor position strategy

Repositioning Overriding purpose is to convey that the brand meets consumer’s changing needs