Segmentation, Targeting and Positioning

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Segmentation, Targeting and Positioning

• MGT 252 Lecture 5

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace

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Case StudyArt Gallery of Ontario - AGO

• Targeting critical segments is critical for the
  AGO to survive.
• The 30 to 40-year old urban professionals may be
  one of the few segments with enough money to
  support cultural institutions.
• However, this Me Generation is unphilantropic
  relative to their wealth.
• They want cars, houses, big jewellery.

• Potential donors in this cohort have a desire for
  interaction, involvement, and meaningful comment
  on art as well on the AGOs tactics.
• Create a distinct position to attract these
  younger donors.
• New program New Founders initiative
• In return for their support, donors would be
  invited to small dinner parties and exclusive
  tours of exhibitions.
• The program has been a resounding success.

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace

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Segmentation, Targeting, and Positioning

• Market segmentation dividing market into
  distinct groups with distinct needs,
  characteristics, or behaviours, who might require
  separate products or marketing mixes
• Target marketing choosing which group(s) to
  appeal to
• Market positioning creating a clear,
  distinctive, and desirable position in the target
  consumers mind, relative to competition

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace

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Segmenting Consumer Markets

• Geographical segmentation
• Demographic segmentation
• Most popular bases for segmenting consumer
  markets
• Psychographic segmentation
• Lifestyle, social class, and personality-based
  segmentation
• Behavioural segmentation
• Occasions, benefits sought, user status, usage
  rate, loyalty status.
• Using multiple segmentation bases

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Geographic Segmentation Variables

• World region or country
• U.S. region
• State
• City

• Neighborhood
• City or metro size
• Density
• Climate

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Demographic Segmentation Variables

• Age
• Gender
• Family size
• Family life cycle
• Income

• Occupation
• Education
• Religion
• Race
• Generation
• Nationality

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Behavioural Segmentation Variables

• Occasions
• Benefits
• User status

• User rates
• Loyalty status
• Readiness stage
• Attitude toward the product

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Discussion Question

• Based on the car examples on the following slide,
  how do car manufacturers use the following
  segments when marketing products?
• Geographic
• Demographic
• Psychographic
• behavioural

?
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Segmenting Business Markets

• Geographic segmentation
• Demographic segmentation
• Industry, company size, location
• Operating characteristics
• Technology, usage status, customer capabilities
• Purchasing approaches
• Situational factors
• Urgency, specific application, size of order
• Personal characteristics
• Buyer-seller similarity, attitudes toward risk,
  loyalty

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Segmenting International Markets

• Geographic segmentation
• Location or region
• Economic factors
• Population income or level of economic
  development
• Political and legal factors
• Type/stability of government, monetary
  regulations, amount of bureaucracy, etc.
• Cultural factors
• Language, religion, values, attitudes, customs,
  behavioural patterns

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Segmenting International Markets

• Intermarket segmentation
• Forming segments of consumers who have similar
  needs, even though they live in different
  countries

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Segmenting Markets Effectively

• Measurable
• Size, purchasing power, and profile of segment
• Accessible
• Can be reached and served
• Substantial
• Large and profitable enough to serve
• Differentiable
• Respond differently
• Actionable
• Effective programs can be developed

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace

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Target Marketing

• Target Market
• Consists of a set of buyers who share common
  needs or characteristics that the company decides
  to serve

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Target Marketing

• Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
• Company objectives and resources

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Target Marketing Strategies

• Undifferentiated (mass) marketing
• Market coverage strategy that ignores market
  segment differences and targets the whole market
  with one offer
• Differentiated (segmented) marketing
• Market coverage strategy that targets several
  market segments and designs separate offers for
  each
• Concentrated (niche) marketing
• Market coverage strategy in which a company
  pursues a large share of one or a few submarkets
• Micromarketing
• The practice of tailoring products and marketing
  programs to the needs/wants of specific
  individuals and local customer groups
• Includes local marketing and individual marketing

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Choosing aTarget Marketing Strategy

• Considerations include
• Company resources
• The degree of product variability
• Products life-cycle stage
• Market variability
• Competitors marketing strategies

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Target Marketing

• Socially Responsible Targeting
• Some segments, especially children, are at
  special risk
• Spillover from adult to children markets
• Many potential abuses on the Internet, including
  fraud Internet shoppers
• Products of questionable benefit
• Controversy occurs when the methods used are
  questionable

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace

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Positioning

• The way the product is defined by consumers on
  important attributes - the place the product
  occupies in consumers minds relative to
  competing products relative to competing products
• Involves implanting the brands unique benefits
  and differentiation in the customer mind
• Perceptual positioning maps show perceptions of
  brands on important buying dimensions

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Choosing a Positioning Strategy

• Identifying Possible Competitive Advantages
• Choosing the right competitive advantage
• Selecting an Overall Positioning Strategy

• Differentiation can be based on
• Products
• Services
• Channels
• People
• Image

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Choosing a Positioning Strategy

• Identifying Possible Competitive Advantages
• Choosing the right competitive advantages
• Selecting an Overall Positioning Strategy

• How many differences to promote?
• Unique selling proposition
• Several benefits
• Which differences to promote? Criteria include
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable

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Choosing a Positioning Strategy

• Identifying Possible Competitive Advantages
• Choosing the right competitive advantages
• Selecting an Overall Positioning Strategy

• Value propositions represent the full positioning
  of the brand
• Possible value propositions
• More for more
• More for the same
• More for less
• The same for less
• Less for much less

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WestJets Value PropositionLess for Much Less

• Founded in 1996 to provide low-fare air travel
  across western Canada
• Specializes in serving the VFR market (people
  visiting friends and relatives).
• Main competitor the family car
• People would choose to fly rather than drive if
  offered low fares
• One type of plane, offers basic in-flight service
  (no meals, no movies), single class service, no
  baggage transfer services with other airlines,
  etc.
• However less service for less money is defined
  as fewer amenities for a lower fare, not less
  customer service.
• Generates 1 billion in revenues

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Developing a Positioning Statement

• A positioning statement summarizes the company or
  brand positioning
• EXAMPLE To (target segment and need) our (brand)
  is (concept) that (point-of-difference)

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Communicating and Delivering the Chosen Position

• Companies must take strong steps to deliver and
  communicate the desired position to target
  consumers
• The marketing mix efforts must support the
  positioning strategy
• Positions must be monitored and adapted over time
  to match changes in consumer needs and
  competitors strategies

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Learning Goals

• Define the three steps of target marketing
  market segmentation, target marketing, and market
  positioning
• List and discuss the major bases for segmenting
  consumer and business markets
• Explain how companies identify attractive market
  segments and choose a target marketing strategy
• Discuss how companies position their products for
  maximum competitive advantage in the marketplace