Strategic Marketing Lecture 4: Segmentation, Targeting, and Positioning PDF

STRATEGIC MARKETING MK42009E - MK42025E Lecture 4: Segmentation,Targeting, and Positioning ASST. PROF. ISMAIL ERZURUMLU AGENDA 1. STP Approach 2. Segmentation 3. Targeting 4. Positioning 2 STP Approach The STP Approach SEGMENTATION DIVIDING/ AGGREGATING PROSPECTIVE BUYERS INTO GROUPS THAT (1) HAVE C...

STRATEGIC MARKETING MK42009E - MK42025E Lecture 4: Segmentation,Targeting, and Positioning ASST. PROF. ISMAIL ERZURUMLU AGENDA 1. STP Approach 2. Segmentation 3. Targeting 4. Positioning 2 STP Approach The STP Approach SEGMENTATION DIVIDING/ AGGREGATING PROSPECTIVE BUYERS INTO GROUPS THAT (1) HAVE COMMON NEEDS & (2) WILL RESPOND SIMILARLY TO A MARKETING ACTION TARGETING SELECTING WHICH SEGMENT(S) TO SERVE PRODUCT PRICE POSITIONING PROMOTION IMPLEMENTING CHOSEN IMAGE AND APPEAL TO CHOSEN SEGMENT DISTRIBUTION 4 MARKETING STRATEGY - MK42082E Decision-making steps IERZURUMLU 1. Segment the SEGMENTATION Market DIVIDING/ AGGREGATING PROSPECTIVE BUYERS INTO GROUPS THAT Describe (1) HAVE2. COMMON NEEDS & Segments (2) WILL RESPOND SIMILARLY TO A MARKETING ACTION 3. Evaluate Segment TARGETING Attractiveness PRODUCT PRICE SELECTING WHICH SEGMENT(S) TO 4. Select Target SERVE Segments POSITIONING PROMOTION 5. Identify IMPLEMENTING CHOSEN IMAGE AND Position APPEAL TO CHOSEN SEGMENT DISTRIBUTION 5 Segmentation Stage 1: Segmenting the Market Key decisions to make: Why do we need segmentation? - Cut cost? Serve customers better? Higher growth or profits? Choose segmentation method - Geographic, demographic, psychographic, behavioral, value preference, etc.  What kind of companies might not need to segment their market? Decide number of segments - How much aggregation is enough? 7 Types of Segmentation Geographic Nations, regions, cities, zip codes, density, climate. Psychographic Social class, lifestyle, personality. Demographic Age, gender, family size, life cycle, income. Behavioral Need / Benefit Based: Benefits sought, needs Behavior Based: Occasions, usage rate, loyalty Decision Making: Involvement, expertise Why STP? To be more effective. Focus a business’s resources on opportunities that match its capabilities. Fine-tune product offerings to provide better value to a group of customers with common needs. Enhance understanding of competitor actions. Fine-tune a mix of persuasion tools While still being efficient. Look for ways to leverage economies of scale in production, distribution, and marketing. 8 Segmentation :Geographic & Demographic Geographic Family Age & Life Cycle Gender Educatio n Income Ethnicity 9 Segmentation: Psychographic Lifestyle 10 Would you agree with Seinfeld? Psychographic Segmentation 11 Segmentation: Behavioral Usage status Occasion Benefit-sought Usage rate Loyalty status 12 Market Segmentation: Business Markets Firmographics Industry, company size, location. Operating Variables Technology, user status, customer capabilities. Purchasing Approaches Purchasing-function organization, power structure, nature of existing relationships, purchasing criteria. Situational Factors Urgency, specific application, specific benefit sought, size of order. Personal Characteristics Buyer-seller similarity, attitudes toward risk, loyalty. Source: Thomas V. Bonoma and Benson P. Shapiro, Segmenting the Industrial Market (Lexington, MA: Lexington Books, 1983). 13 Geographic & Demographic vs. Psychographic & Behavioral Segmentation Geographic and Demographic Segmentation Psychographic and Behavioral Segmentation Easy to measure Difficult to measure Easy for competitors to measure Can provide competitive advantage May not predict sales May predict sales (especially behavioral segmentation) Dynamic 14 MARKETING STRATEGY - MK42082E IERZURUMLU Consumer vs. Business Markets 15 Stage 2: Describe the Segment (Criteria for a segment describer) Measurable – Size, purchasing power, profiles of segments can be measured. Accessible – Segments must be effectively reached and served. Substantial – Segments must be large or profitable enough to serve. Differentiable – Segments must respond differently to different marketing mix and actions. Actionable – Firm must be able to attract and serve segments. 16 Stage 3: Segment Attractiveness Market Growth – Size – Growth rate – Profits Market Competitiveness – Number of Competitors – Entry barriers – Substitutes Market Access – Ease of developing or accessing distribution channels – Brand familiarity 17 Targeting Stage 4: Targeting Selecting Segment(s) and Specializing …choosing the segment(s) on which to focus: – Profitable – Fit with firm objectives and resources “You can’t be all things to all people” ---> choose one or more groups. Focus narrows scope of competition, but demands are greater. Choose segments where the organization’s marketing efforts will have the greatest impact. 19 Five Patterns of Target Market Selection 20 Five Patterns of Target Market Selection 21 Stage 4: Targeting Target Profitable Segments Current Profitability Future Profit Potential Current customers / Potential customers Poor Marginal High High Steer to more profitability/ Future Target Steer to more profitability/ Future Target Nurture/ Primary Target Divest/ Avoid Steer to more profitability/ Avoid Retain/ Secondary Target Low Source: Rakesh Niraj, Jahendra Gupta, & Chakravarthi Narasimhan (2001), “Customer Profitability in a Supply Chain,” Journal of Marketing, 65 (July), 1-16. 22 Positioning MARKETING STRATEGY - MK42082E IERZURUMLU Stage 5: Positioning Strategies Strategies undertaken to ensure that differences between our product and competitors has: – Distinct position in customers mind – Important position in customers mind – End result: customer-focused value proposition, or reason why the target market/segment should buy the product/service. Process: – Differentiate the product offering: - Design meaningful differences into the total offering to distinguish the company’s offering from competitors’ offerings. – Develop value proposition. – Create awareness among target market. – Reflect the culture and strategy of the business. 24 25 26 Develop a Positioning Statement To (target segment or need) our (brand) is (concept) that (point of difference). “To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. With Mountain Dew you can stay alert and keep going even when you haven’t been able to get a good night’s sleep.” 27 Evernote position statement To (target segment or need) our (brand) is (concept) that (point of difference). Evernote using your computer, phone, tablet, and the Web need help remembering things digital content management application busy multitasker makes it easy to capture and remember moments and ideas from your everyday life 28 Evernote position statement To (target segment or need) our (brand) is (concept) that (point of difference). “To busy multitasker who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everday life using your computer, phone, tablet, and the Web.” 29 Perceptual Mapping..shows consumer perceptions of the brands on important buying dimensions” 30 Perceptual Mapping Which dimensions are important to consumers in the product class? This gives you the map’s dimensions. How do consumers perceive our brands and competitors’ brands on these dimensions? This gives you the product locations on the map. 31 The Overall Positioning Strategy is linked to a value proposition which is the full mix of benefits upon which a brand is positioned. MacBook Air  Thinnest Apple  Design and simplicity 32 Perceptual Mapping: Applications Product Repositioning: Move perception of your product closer to segment’s ideal point. Our product - - - - > Customers’ ideal point Move the segment’s ideal point closer to your product. Customers’ ideal point - - - > Our product Move perceptions of competitors’ products further from segment’s ideal point < - - - Customers’ ideal point … Competitors’ products - - - > 33 The Marlboro Man increased sales by 3,241% in 1955 to $5 billion. In 1954 the brand's U.S. share stood at less than 1%. 34 Selecting an Overall Positioning Strategy: 35 Fun Challenge: Segmenting the Food Market 36