L.2.1 Reference Market, Segmentation, Targeting and Positioning PDF

L.2.1. Reference Market, Segmentation, Targeting and Positioning Prof. Angelo Baccelloni John Cabot University Building and managing a successful brand – Focus of the...

L.2.1. Reference Market, Segmentation, Targeting and Positioning Prof. Angelo Baccelloni John Cabot University Building and managing a successful brand – Focus of the following pages A reference framework § Research customers and the marketplace § Market segmentation and targeting A. Understand the marketplace and § Manage marketing information customers § Positioning and identity (mind) and customer data B. Design the value § Loyalty management and CLTV E. Monitor, management manage, and § After-sales Value Journey (VJ) recreate the § Portfolio and complexity management value § P&L C. Define § Promo/ communication (and § Place/ distribution § Process/ organization s extract) S a le § Product/Service/ experience the value § Brand/ product architecture D. Make the value § (Customer Engagement) available and § Pricing engage the § (Business model) § (Storytelling execution) customer Source: Kotler, Principles of Marketing A.Y. 2021/2022 – Spring Semester | 1  Identifying reference market: a critical initial challenge that affects multiple operative choices Spring Semester | 23 Target market – A conceptual introduction Leaf… …tree… …or forest? Spring Semester | 24 Target Market – Example Cola… …soft drink… …or beverage? Spring Semester | 25 Step 1: Identify the real reference market for the segmentation Product Reference Competitor Market Size Innovation market opportunities Narrow: sport Powerade, other $4.1bn Extensions for a drink sports drinks range of different tastes, sizes and types of packaging Wide: Sport and Sport water, $13.3bn physical sports drink, Fitness water, activities nutritional bars nutritional bars Spring Semester | 26  Different ways to represent a market ▪ Entire demand ▪ Segments within the demand ▪ Target(s) Spring Semester | 29 Market metrics What is an appropriate measure for Market Demand? Spring Semester | 30 Market size The potential market or market potential is the maximum volume of sales – in physical units or monetary terms – that could be available to all companies in a given industry over a given period. Factors such as a specific level of marketing expenditure or environmental conditions must also be taken into account. N = Number of potential consumers in the area P = Percentage of consumers who can access the product F = Frequency of purchases DP = “Doses” of product S = space T = Time Spring Semester | 31 Market size analysis – Measures of market demand Market demand: what are the different alternative available to measure it? SOURCE: Bendle, N, Farris, P. W., Pfeifer, P., & Reibstein, D. (2016) Marketing Metrics: The Manager's Guide to Measuring Marketing Performance (3rd Edition). Pearson Education. Spring Semester | 32 Market size analysis – Measures of market demand All customers § Structural limits of the demand Covered by § Usage Our brand + our competitors Covered by § Structural limits Our brand of the company § Marketing costs § Production limits Spring Semester | 33 Marketing to «value-performance» – Focus on revenues Improving value by closing market potential gap – Logical factors on Volume and market share Entire category Never used Specific products of my company § Additional new customer base Consumers (derived from positive reputation and do not use End of product innovation/ product portfolio extension) needs (negative) Side-effects Drop-out Using competitors’ Potential gap ? products analysis Opposition to Companies’ Values § More value from current customer base: Rarely use ‒ More frequent purchase ‒ Purchase of higher value products (up-sell – Consumers affecting pricing) do not use ‒ Purchase of other products related to the enough same brand (cross-sell) Low “dosage” ‒ Introduction of new products (business per use extension/ development) SOURCE: Bendle, N, Farris, P. W., Pfeifer, P., & Reibstein, D. (2016) Marketing Metrics: The Manager's Guide to Measuring Marketing Performance (3rd Edition). Pearson Education. Spring Semester | 34 Value tiers LUXURY 250 POLO SUPERIORE PREMIUM 130 PREZZO DI SELL OUT BASE= 100 VALUE POLO 70 INFERIORE FIRST PRICE min max VOLUMI DI SELL OUT Spring Semester | 35 Agenda § The concept of “Value” in marketing § Introduction to Value Journey (VJ) ̶ The first step: selecting the reference market ̶ Nailing the strategy through segmentation and targeting § Introduction to Self-Branding § Individual exercise: Self-Branding Spring Semester | 37 Segmentation allows you to identify homogeneous needs as basis for the development of specific products and services Heterogeneous market Homogeneous segments Segments identified by common customers’ needs Segmentation and targeting Identification of those market segments offering a higher profit potential and a higher fit with the firm’s value proposition SOURCE: Power Brands, Mazzù, Perrey (2011), Ed. Pearson Spring Semester | 38 Marketing Strategy and the Marketing Mix Market segmentation is the division of a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing mixes. Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts. 2-39 Spring Semester | Marketing Strategy and the Marketing Mix Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Differentiation begins the positioning process. | 2-40 Spring Semester Is it easy to segment the market? Example of demographic segmentation Common belief Profile 1 Profile 2 Demographic data are enough to King of UK King of the Darkness define homogeneous and relevant segments ▪ Male ▪ Born in 1948 Descriptive demographics are rarely correlated ▪ UK citizen to needs ▪ 2° married ▪ Wealthy ▪ Well-known family Charles of Windsor Ozzy Osbourne Spring Semester | 41 Is it easy to segment the market? Example of Behavioural twins Profile 1 Profile 2 Perestroika Louis Vuitton Common belief Hotel heiress pioneer Monogram Behaviours are a Canvas Bag reliable proxy of customer’s needs and attitudes Paris Hilton Mikhail Gorbachev Are they similar? Spring Semester | 42  What are the relevant segmentation axes for each target in the Customer Decision Journey? Spring Semester | 43 There are several types of segmentation (non-exhaustive list) Geographical Age and phase of the life cycle Stage of the life cycle Gender Demographic Income Generation Ethnicity and culture Segmentation Intensity of usage Traditional Behavioral occasions behavioral Type of user Social class Socio - Lifestyle psicographic Personality Fruition Behavioral digital Click-based («You are what you like») SOURCE: BrandTelling (2018), F. Giorgino & M.F. Mazzù Spring Semester | 44 Demo Segmentation – Evolution of the Geo-based type and multi-cultural marketing ▪ In some countries ethnic groups and communities keep on using their homeland language, which is different from the official one of the Country they currently live in. A number of specific activities, related ▪ In doing so they hold on to the bond with to the product and the mean of their Country of Origin. communication adopted, which are specific for an ethnicity/ community, which has a different cultural ▪ A clear example is to be found in the US, background, in terms of language, where 12.5% of the population speaks customs and traditions Spanish at home. ▪ Another example is to be found in France where 2.6% of the population speak Arabic at home. SOURCE: http://languageknowledge.eu/countries/france; wikipedia.org/wiki/Lingua_spagnola_negli_Stati_Uniti_d%27America Spring Semester | 45 Demographic segmentation: Segmentation by age and product life cycle phase Segmentation by age and life cycle phase: Segmentation by offering different products or adopting different marketing approaches for customer groups in different ages and different life cycle phases. Spring Semester | 46 Demo Segmentation - Evolution Silver economy In Italy the population older than 60 amounts to around 17 million people with an estimated growth of 35% by 2040. It’s estimated that in Italy the added value of Silver Economy, including only its most relevant sectors, amounts to 43 billion euro. SOURCE: http://www.bnpparibas.it/it/2018/03/19/bnl-focus-giovani-anziani-e-silver-economy-italia-un-nuovo-driver/, (2018); Spring Semester | 47 Demographic Segmentation: Gender Segmentation Gender Segmentation: The market is segmented on a gender basis Spring Semester | 48 Demographic Segmentation: Gender Segmentation Gender segmentation: Intimissimi case Attract product users (men), 2011 Intimissimi and not typical product campaign buyers (women) Irina Shayk testimonial for both men and women products Spring Semester | 49 Gender segmentation: evolution – Gillette and “The best men can be” Campaign outputs Gillette § Gillette’s ‘We Believe: The Best Men Can Be’ ad has been seen as a welcome statement on ‘toxic masculinity’ by some, and an unnecessary attack on men by others § The ad has 794,000 dislikes on Gillette’s YouTube channel, compared to 386,000 likes § Brandwatch says the ad has driven up social media conversation around Gillette by 11,722 percent, reaching 1.4 million online mentions § The official hashtag, ‘#thebestmencanbe’, had been tweeted over 5,000 times, and retweeted over 180,000 times § Looking specifically at the sentiment, become more negative as the time progressed: - Before the ad was released, over 85 percent of online mentions were positive - The day the ad was released, sentiment was 62.2 percent positive - After the ad was released, mentions of Gillette were 54.8 percent negative SOURCE: The Best Men Can Be’ Campaign Succeed?. Tim Cross (2019) Spring Semester | 50 Gender segmentation: evolution – The Newest Victoria’s Secret Angels Campaign outputs Victoria’s Secret plus-size models § The brand received criticism last year for enlisting a group of plus-size models for the advertising campaign for its Body range § The new Angels were keen to emphasise that diversity is very important to the company's image § Over time, Viewership of the shows plummeted 32 percent. The company insists it is still the most watched fashion event in the world and that more people are tuning in online § Investors in L Brands, owner of Victoria’s Secret brand, are taking a beating as shares are down more than 45 percent this year — making it the worst-performing stock in the S&P 500 § Changes in positioning and target could be one of the causes of these outputs SOURCE: NyPost. “Why Victoria’s Secret’s idea of sexy may be killing its brand”. Lisa Fickenscher (2018); Google Finance: L Brands index (NYSE) 2018-2019 Spring Semester | 51 Demographic segmentation: Income-based segmentation Income-based segmentation: The market is segmented on a personal income basis Spring Semester | 52 Behavioral Segmentation: Segmentation based on Usage Occasions Usage-occasion segmentation: The market is segmented on a use occasion basis, namely when customers consider the product purchase or use Spring Semester | 53 Behavioral segmentation: Sought benefits Sought benefits segmentation: The market is segmented on a benefit basis, namely on the benefits that consumers seek in product consumption or use Spring Semester | 54 Behavioral segmentation: product users Product users segmentation: Market is segmented in § Non-users § Ex-users § Potential users § New users § Regular users It is relevant when considering changes in consumers’ lifestyles (i.e. new married, etc) Spring Semester | 55 Behavioral segmentation: level of loyalty Price seeker Active Continuously hunting Also triggered by some Segmentation based upon for the lowest price avail- dissatisfaction, pro-actively the level of brand loyalty of able: very likely to switch as contact a new supplier soon as a cheaper offer is (likely to switch) customers: available (very likely to switch) Splitting the market according to, ig: § “die-hard” users § Users who purchase a Loyal/asleep Passive limited number of other Actively decides to stay with Not looking for switching brands(loyal to 2/3 incumbent or, even but potentially interested if brands) if not loyal, not involved properly contacted by § Etc. in electricity purchasing supplier (very unlikely to switch) (might switch) Spring Semester | 56 Behavioral segmentation: Intensity of usage Intensity of usage segmentation: Market is segmented in § Heavy users § Light users § Etc. It is relevant when a part of potential customers is responsible for the majority of usage/ consumption SOURCE: http://www.dailymotion.com/video/xul45_spot-heineken-neve_fun, 2008 Spring Semester | 57 Advanced segmentation – Combining socio-demo, attitudes, occasions, use, behaviors ▪ Sophisticated ▪ Being classy users Individual Follow the Being Being Price-quality ▪ Look classic ▪ Fashion victims style trends functional classic seeker ▪ Being uniformed to others Special B event Classic A Trendy and sophisticated ▪ Feeling On job C professional Hand-made and professional ▪ Being serious in society ▪ Traditional Casual style in society/ D E social Trendy and funny Mix and match "basic" event Casual at F home Relaxed and comfortable ▪ Seemingly elegant ▪ Basic ▪ Being relaxed and happy ▪ Feeling special ▪ Long - lasting style ▪ Colourful ▪ Comfortable dressing SOURCE: Power Brands, Mazzù, Perrey Spring Semester | 59 Target Market Strategy Options Target Market Strategy Options Standardized Concentrated Differentiated Copyright © 2017 Pearson Education, 6 Ltd. Spring Semester | 4 Target Market Strategy Options Standardized Global Marketing or Undifferentiated target marketing ▪ Mass marketing on a global scale ▪ Standardized marketing mix ▪ Minimal product adaptation ▪ Intensive distribution ▪ Lower production costs ▪ Lower communication costs Copyright © 2017 Pearson Education, Ltd. Spring Semester | 65 Target Market Strategy Options Concentrated Global Marketing Differentiated Global Marketing ▪ Niche marketing ▪ Multi-segment targeting ▪ Single segment of global market ▪ Two or more distinct markets ▪ Look for global depth rather than national breadth ▪ Wider market coverage ▪ Ex.: Chanel, Estee Lauder ▪ Ex.: P&G markets Old Spice and Hugo Boss for Men Spring Semester | 66