Segmentation, Targeting, and Positioning

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Chapter 2

• Segmentation, Targeting, and Positioning

2
Situation Analysis (SWOT)

• Internal Factors (Within Firm)
• Assessment of relative strengths and weaknesses
  of company and product/service
• Assessment of firm or brand image and
  implications for promotion
• Assessment of the firms promotional organization
  and capabilities
• Review of the firms previous promotional
  programs

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Situation Analysis (SWOT)

• External Factors (Environmental)
• Analysis of opportunities and threats
• Economic
• Social
• Technological
• Regulatory
• Competitive analysis (competitive advantage)

4
The Segmentation, Targeting, and Positioning
Process
Identify markets with unfulfilled needs
Determine market segmentation
Select market(s) to target
Position through marketing strategies
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Segmentation

• Dividing a market into subcategories
• usually think of subcategories as groups of
  similar consumers
• target marketing pursuing a particular strategy
  for a particular group of consumers

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Bases of Segmentation
Geographic
MSAs, countries, states, provinces, regions,
nations, continents, urban/rural, climate
Demographic
Gender, age, education, occupation,
income marital status, household size, ethnicity
Psychographic
Personality traits, attitudes, beliefs,
values, lifestyles
Behavioral
Usage situations, usage frequency, benefits
Sought, loyalty level, buying responses
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Segmentation Issues

• Why segment?
• Consumer preference heterogeneity
• Which segment to choose?
• 3 Ms Criteria
• Majority fallacy
• How many segments to choose?
• Sales-Costs Tradeoff
• increased manufacturing costs
• decreased economies of scale
• increased marketing costs
• cannibalization

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Targeting Strategies

• Undifferentiated marketing--mass marketing
  (aggregation)
• Differentiated marketing--multiple segments
• Concentrated (niche) marketing--single segment

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Positioning

• Consumers perceptions of a particular brand
  (relative to the competition)
• Affected by all marketing mix variables (i.e.,
  the 4 Ps)
• product
• price
• place
• promotion

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Positioning Strategies

• Pioneers--emphasize brand is the category
  standard
• By attribute--emphasize differentiation,
  problem-solving benefits (core benefit
  proposition)
• By price--low or high

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Positioning Strategies (cont.)

• By user--focus on the type of person who uses
  product
• By usage situation--build association between
  situation and brand
• Repositioning competition--change beliefs about a
  competitor

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Positioning Questions

• 1. What position do we have now?
• 2. What position do we want to own?
• 3. From whom must we win this position? (Or,
  how does this position compare to competitors?)
• 4. Do we have the money to do the job?
• 5. Do we have the tenacity to stay with it?
• 6. Does our creative strategy match it?

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Perceptual Map
Not Fruity Not Sweet

Sweet Fruity
Pepsi New Coke Dr. Pepper
Diet Pepsi Diet Coke Tab
Fresca
Coke Classic Cherry Coke Sprite
7Up
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Product Decisions

• A product is a bundle of benefits or values
• Product symbolism what a product or brand means
  to customers
• Product image is influenced by product quality,
  branding, packaging, and company name
• Branding
• Brand names communicate attributes and meaning
• Brand equity The added value a brand gives a
  product beyond the functional benefits provided
• Packaging
• Functional and communication benefits
• Often the customers first exposure to product

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Pricing Decisions

• Price must be consistent with perceptions of the
  product
• Higher prices communicate higher product quality
• Lower prices reflect bargain or value
  perceptions
• Situation to avoid product positioned as high
  quality while carrying a lower price than
  competitors

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Distribution Channel Decisions

• Involve selecting, managing, and motivating
  channel members
• Direct vs. indirect channels
• Direct catalogs, own retail outlets, internet,
  mail order, telemarketing
• Indirect wholesalers, distributors, retailers