Segmentation and Positioning

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Segmentation and Positioning

• Week 3
• Fall 2007

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Segmentation and Positioning

• Agenda
• What is segmentation and why is it important?
• Segmentation and Positioning Two sides of the
  same coin.
• Bases for segmentation
• Product Positioning

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Politics of Segmentation
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Proctor Gamble Painful Transitions

• In the 30s and 40s PG successfully used a mass
  marketing approach for its soaps,
  toothpaste.why?
• Consumers had utilitarian preferences for
  household products. (One soap or toothpaste for
  the entire family)
• Consumers were convinced of PG product quality.
• In the 60s fragmenting consumer
  needs...competitors chipped away at PGs by
  offering differentiated products. (Colgate
  toothpaste bad breath, sparkling teeth segment,
  Levers in detergent).
• PG today. follows product proliferation to
  cater to every major segment (Regular Tide,
  Liquid Tide, Tide redi-packs, Ultra Tide with
  bleach.)

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Levels of Market Segmentation

• Increasing Competition,
• Fragmentation of markets

• Information revolution
• Flex and JIT Manufacturing
• Credit-technology (Internet marketing)

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Definition

• Segmentation is the process of dividing the
  market into groups based upon important consumer
  characteristics.
• With-in group homogeneity but heterogeneity
  across groups.
• Segment is such that the company can best serve
  them vis-vis competition. (Gerbers and
  pre-school kids food).
• http//www.gerber.com/prodindex

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Why Segment Markets?
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Demographics

• Demographics What consumers are?
• Age
• Lego, Vicks child formula, chewable 4-12, adult
  formula.
• JJ baby shampoo vs. Gatorade for
  children...moving a company up or down the age
  ladder can be an effective growth strategy.
• Gender
• AMEX interesting lives campaign
• Clairol hair care for men, Lancome skin care
  take what you have and make it better.
• When and when not would this strategy succeed?

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Demographics

• Income
• Holiday Inn
• Geodemographic
• Possible due to advances in information databases
• De Claritas uses census demographic information
  and groups the zip-codes into similar
  neighborhoods (chain expansion).
• Blue-Blood estates (Chappaqua NY, Winnetka
  Illinois for Mercedes or Lexus dealerships)
• Shotguns and Pick-ups

Affluent, businessCrowne Plaza
Middle incomeH. Inn
Budget conscious...H. Inn express
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Psychographics

• Psychographics Why do consumers buy?
• Lifestyle
• Goods consumed by people reflect their
  lifestyles.a composite of activities, opinions
  and attitude to life variables.
• Oldsmobile goes for consumers with golfing
  lifestyle.
• Levis 501
• Personality
• Endowing products with brand personalities
  (pillsbury, taco bell).
• http//www.everwonder.com/david/tacobelldog.html

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Behavioral

• Use, loyalty or response to a product
• Usage occasions
• Kodak single-use cameras underwater use, indoor
  parties, outdoor photography.
• Usage Rates
• 80-20 rule, eg., beer drinkers. Should you
  always focus on the heavy users?
• Loyalty Status
• Hard-core Loyals A A A A A A Split Loyals A
  B A B A B
• Shifting Loyals A A A B B B Switchers A B E A
  D B
• How are demographics and psychographics and
  behavioral segmentation related?

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Impact of the Internet and Information Technology

• Segments of ONE
• One-to-one consumer addressability
• Personalized promotions based upon loyalty status
  (ATT, MCI war)

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Requirements For Effective Segmentation

• Measurability
• Accessibility (lefties)
• Profitability

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Targeting and Product Positioning

• Positioning a product in the consumers mind
• Where is the product slotted by consumers in a
  relevant perceptual map.
• Where does it stand w.r.t relevant competition in
  the perceptual map.
• Slotting the product in the consumers mind.
• Who am I?
• Why buy me?

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Product Positioning Process

• Product Managers Positioning Strategy Toolkit
• 1 For whom am I? Identify the Target Consumer
  Segment.
• For _____________,
• (Target Market)
• 2 Who am I? (value proposition, usp)
• our product/service is ___________________________
  ___________________
• (Most
  Important Claim/Unique Selling Proposition)
• 4 And not the competition? (competitive set)
• among all ___________________
• (Competitive Set)
• 3 Why buy me? (support)

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Positioning Strategies

• Product Quality (Ford Quality is job 1)
• Class of Users (Pepsi generation).
• Owning the category (Coke The Real thing)
• Against a Competitor (Avis)
• Repositioning Hertz

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Positioning Strategies

• Away from Competition (7-Up the Uncola)

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Customer Analysis Market Research Study
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Options

• Tell consumers 7Up possesses soft drink
  attributes
• point of parity
• Emphasize fresh, clean taste (and no caffeine)
• point of difference

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7Up The Uncola
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Positioning Traps (1)

• Positioning on unimportant attributes

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Positioning Traps (2)

• Positioning with the wrong attributes
• Diet Beer
• Gablingers
• Introduced in 1967 as a low calorie diet beer
• Lite beer by Miller
• Less fillingmeans you can drink more!
• Everything you wanted in a beer
• (like getting drunk)and less.
• 1/3 calories means you can drink 2 extra and call
  it even!

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Positioning Traps (3)

• Positioning on someone elses benefitspositioning
  is sticky
• Burger King unable to claim fast. Already
  taken by McDonalds.
• Mercedes Benz and General Motors unable to claim
  safety. Already taken by Volvo.

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Learning

• Segmentation and Positioning are two sides of the
  same coin.
• Positioning is not what you do to the product but
  what you do to the mind of the consumer!
• Good Positioning is an integrated answer to 4
  questions
• For whom am I? (Target customer segment)
• Who am I? (value proposition, usp).
• Why buy me? (support)
• And not the competition? (competitive advantage)