Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

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• Segmentation, Targeting, and Positioning
  Building the Right Relationships with the Right
  Customers

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Steps in Market Segmentation, Targeting, and
Positioning
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Market Segmentation
Geographic
World Region or Country
Region of Country
City or Metro Size
Density or Climate
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Market Segmentation
Demographic

• Age, gender, family size, income, occupation,
  etc.
• The most popular bases for segmenting customer
  groups.
• Easier to measure than most other types of
  variables.

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Market Segmentation
Age and Life-Cycle Stage

• PG has different toothpastes for different age
  groups.
• Click to See Crest Products for Adults and Kids
• Avoid stereotypes in promotions.
• Promote positive messages.

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Age and Life-Cycle Segmentation
PG targets kids with Crest Kids Cavity
Protection toothpaste. Its gentle on tooth
enamel and has fun- filled sparkles and sparkle
fun flavor just for kids.
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Market Segmentation
Gender

• Women make 90 of home improvement decisions.
• Women influence 80 of all household consumer
  purchases.

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Market Segmentation
Income

• Identifies and targets the affluent for luxury
  goods.
• People with low annual incomes can be a lucrative
  market.
• Some manufacturers have different grades of
  products for different markets.

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Market Segmentation
Psychographic
Social Class
Lifestyle
Personality
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Psychographic Segmentation
When Honda markets its Reflex and Elite scooters,
it appeals to the rebellious, independent kid in
all of us.
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Market Segmentation
Behavioral

• Occasions
• Special promotions and labels for holidays.
• (e.g., Hershey Kisses)
• Special products for special occasions.
• (e.g., Kodak disposable cameras)

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Market Segmentation
Behavioral

• Benefits Sought
• Different segments desire different benefits from
  products.
• (e.g., PGs multiple brands of laundry
  detergents to satisfy different needs in the
  product category)
• Click to see all of PG's detergent offerings

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Market Segmentation
Behavioral

• User Status
• Nonusers, ex-users
• Potential users
• First-time users
• Regular users

• Usage Rate
• Light
• Medium
• Heavy

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Market Segmentation
Behavioral

• Loyalty Status
• Brands
• Stores
• Companies

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Market Segmentation

• Best to use multiple approaches in order to
  identify smaller, better-defined target groups.
• Start with a single base and then expand to other
  bases.

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Geodemographic Segmentation

• Claritas, Inc.
• Potential Rating Index for Zip Markets (PRIZM)
• Based on U.S. Census data
• Profiles on 260,000 U.S. neighborhoods
• 62 clusters or types

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Description of PRIZM Cluster
BLUE BLOOD ESTATES Blue Blood Estates are
Americas wealthiest socioeconomic neighborhoods,
populated by upper-class, established managers,
professionals, and heirs to old money. They
are accustomed to privilege and living in
luxurious surroundings. One in 10 millionaires
can be found in Blue Blood Estates, and there is
a considerate drop from these heights to the next
highest level of affluence.
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PRIZM Application
In marketing its Suave shampoo, Helene Curtis
uses PRIZM to identify neighborhoods with high
concentrations of working women. Such women
respond best to advertising messages that with
Suave, looking great doesnt have to cost a
fortune.
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Segmenting Business Markets

• Consumer and business markets use many of the
  same variables for segmentation.
• Business marketers can also use

Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
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Segmenting International Markets
Factors Used
Geographic Location
Economic Factors
Political and Legal Factors
Cultural Factors
Intermarket Segmentation
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Intermarket Segmentation
Teens show surprising similarity no matter where
in the world they live. For instance, this teen
could live almost anywhere. Thus, many companies
target teenagers with worldwide marketing
campaigns.
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Requirements for Effective Segmentation
Measurable
Accessible
Substantial
Differentiable
Actionable
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Evaluating Market Segments

• Segment Size and Growth
• Analyze current segment sales, growth rates, and
  expected profitability.
• Segment Structural Attractiveness
• Consider effects of competitors, existence of
  substitute products, and the power of buyers
  suppliers.
• Company Objectives and Resources
• Examine company skills resources needed to
  succeed in that segment.
• Offer superior value and gain advantages over
  competitors.

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Target Marketing Strategies
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Undifferentiated Marketing

• Focus is on common (not different) needs of
  consumers.
• Product and marketing program are geared to the
  largest number of buyers.
• Uses mass advertising and distribution.

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Differentiated Marketing

• Firm targets several market segments and designs
  separate offers for each.
• The goal is to have higher sales and a stronger
  position with each market segment.
• This approach increases the costs of doing
  business.

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Concentrated Marketing

• The focus is acquiring a large share of one or a
  few segments of niches.
• Generally, there are fewer competitors.
• The Internet is ideal for targeting small niche
  markets.
• There is some risk in focusing on only one market.

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Micromarketing

• Tailoring products and marketing programs to suit
  the tastes of specific individuals and locations.
• Local Marketing Tailoring brands and promotions
  to the needs and wants of local customer
  groupscities, neighborhoods, specific stores.
• Individual Marketing Tailoring products and
  marketing programs to the needs and preferences
  of individual customers.

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Choosing a Market Coverage Strategy
Factors to Consider
Company Resources
Product Variability
Products Life-Cycle Stage
Market Variability
Competitors Marketing Strategies
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Socially Responsible Target Marketing

• Smart targeting helps both companies and
  consumers.
• Target marketing sometimes generates controversy
  and concern.
• Vulnerable and disadvantaged can be targeted.
• Cereal, cigarette, beer, and fast-food marketers
  have received criticism.
• Internet has raised fresh concerns about
  potential targeting abuses.

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Positioning for Competitive Advantage

• Products position is the way the product is
  defined by consumers on important attributes.
• The place the product occupies in consumers
  minds relative to competing products.

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Positioning
At Olive Garden Restaurants, When Youre Here,
Youre Family.
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Positioning Map
Positioning map for large luxury SUVs
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Choosing a Positioning Strategy
1 Identify a set of possible competitive
advantages on which to build a position
2 Choose the right competitive advantages
3 Select an overall positioning strategy
Must effectively communicate and deliver position
to market
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Identifying Possible Competitive Advantages

• Key to winning target customers is to understand
  their needs better than competitors do and to
  deliver more value.
• Competitive advantage extent to which a company
  can position itself as providing superior value.

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Identifying Possible Competitive Advantages
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Positioning Errors

• Underpositioning
• Failing to really position the company at all.
• Overpositioning
• Giving buyers too narrow a picture of the
  company.
• Confused Positioning
• Leaving buyers with a confused image of a company.

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Choosing Right Competitive Advantages
Important
Profitable
Distinctive
Affordable
Superior
Unique Selling Proposition
Communicable
Preemptive
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Which Differences to Promote?
Unilever positioned its bestselling Lever 2000
soap on three benefits in one cleansing,
deodorizing, and moisturizing benefits. Its
good for all of your 2000 parts.
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Possible Value Propositions
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Value Proposition
Much more for much more value proposition
Häagen-Dazs offers its super-premium ice cream at
a price never before charged.