BUS-Week 5 Chapter 7: Segmentation Targeting and Positioning (STP)
BUS-Week 5 Oct-09-2012
Chapter 7: Segmentation Targeting and Positioning (STP) _________________________________________________________________________________________________________ ___________
Describe the STP process Describe the bases marketers use to segment a market Discuss the criteria for determining the attractiveness of a segment and whether it is worth
pursuing (targeting) Explain how a firm decides what type of segmentation strategy to use: undifferentiated,
differentiated, concentrated, or micromarketing Explain what positioning is and describe how do firms do it
Segmentation Targeting Positioning Process Strategy or Objective Segmentation Bases Evaluate Segment Attractiveness Select Target Market Identify and Develop Positioning Strategy Step 1: Establish Overall Strategy or Objectives • Consistent with mission statement • Derived from mission and current state Step 2: Profile Segments
Segmentation Base
Sample Segments country, province, city, climate
Geographic
continent: North America, Asia, Europe, Africa region: Atlantic, Central, Western Canada
Demographic
Age, gender, income, education, occupation, ethnic background, religion, family, life cycle..
Psychographic
Lifestyles, Values, Personality, SelfConcept
Behavioural
Benefits sought, Usage rates, User status, Loyalty
Geographic Segmentation • Divide market into separate geographic units • Countries, regions provinces, cities, neighbourhoods, climate, etc. • Develop appropriate marketing programs 1
Demographic Segmentation • Most common method • Divide market into groups based on: o Gender, age, ethnic group, family lifecycle stage, household type, income, occupation, education, religion • Census excellent source of segmentation data Psychographic Segmentation How consumers describe themselves • Self-values: desire to fulfill that drive how a person lives their life Ex: belongings, get the brand (eg. BMW) • Self-concept: the image people have of themselves Ex: L’Oreal use tagline “Because I’m Worth It” • Lifestyles: how we live our lives to achieve goals Ex: eg. Swim, workout. (eg. Lululemon built a global sportswear that based not on geners but on the philosophy of a healthy balanced lifestyle) The most widely used psychographic system is the VALS Strategic Business Insights: Consumers are classified into 8 segments: Innovators, Survivors, Thinkers, Achievers etc. It helps company to identify target segments and their underlying motivations Behavioural Segmentation • Benefits Sought: consumers based on the benefits they derive from the products (marketing is all about satisfying needs and wants) • User Status • Usage Rate: average user rate of TimHortons • Loyalty: die-hard for (ex: Nestle’s ice tea, air miles) Ex: Amazon makes recommendation to customers while they are browsing its site by matching their profiles to those of other customers Finding a Place to Live How can geodemographic segmentation be used to help consumers find the perfect place to live? A: young people want to live with young people Step 3: Evaluate Segment Attractiveness • Identifiable • Reachable • Responsive • Substantial and Profitable
Identifiable - Who is in their market? - Are the segments unique? - Does each segment require a unique marketing mix? Everybody’s backgrounds are different, such as culture, career, location Reachable - Know the product exists 2
-
Understand what it can do Recognize how to buy
Responsive Customers must: - React positively to firm’s offering (reputation) - Move toward the firm’s products/services - Accept the firm’s value proposition Substantial and Profitable - Size matters - Too small and segment is insignificant, not profitable - Growth potential equally important Step 4: Selecting a Target Market
You are a marketing manager for a denim company and need to choose a target market for a new line of jeans. • Both the consumers pictured wear jeans. • How do you choose? Segmentation Strategy: - Mass or Undifferentiated - Differentiated - Concentrated - Micromarketing One-to-One Step 5: Identify and Develop Positioning Strategy
Positioning Methods • Value • Product Attributes • Benefits & Symbolism • Competition • Market Leadership Value The relationship of price to quality Different consumers = different value (what comes top on your mindbrand); (ex: Walmart = “save money live better”) Product Attributes - Focus on the attributes that are most important (focus on innovation, performance etc.) - Vary by target market - (ex: Cora’s = attracting a people that wants a healthy and homey breakfast) Benefits and Symbolism - The meaning and reasons of the brand (what comes to mind) - (ex: McDonald’s, Adidas) Competition - Position against a specific competitor -
3
Position against an entire product classification (ex: Coca vs. Pepsi ) Market Leadership - Apple dominate the technology products -
Positioning Steps 1. Determine consumers’ perceptions and evaluation in relation to competitors’ 2. Identify competitors’ positions 3. Determine consumer preferences 4. Select the position 5. Monitor the positioning strategy Repositioning Absolut vodka: reposition advertising print Whirlpool: New design Elizabeth Arden: New faces YM: New audience Gallo: New image Aqua Velva: New packaging Arm & Hammer: New uses Q: Geographic segmentation is most useful for companies whose products satisfy needs that vary by __________. A) gender B) region C) age D) nationality A:b) Q: Which of the following tools is widely used for geodemographic segmentation? A) PRISM B) LSAT C) GNP D) LIMRA
A:a)
Q: Which of the following factors would be most useful in determining whether or not a product will be profitable? A) the region where the consumer lives B) the inflation rate C) the defection rate D) the speed of the distribution factors A:c) Q: Which of the following products is most likely to use an undifferentiated segmentation strategy? A) shoes B) jewellery C) cereal D) flour A:d) 4
Q: Positioning strategies generally focus on either how the product or service affects the consumer or how it is _______________. A) better than the previous year’s product line B) advertised on the Internet C) better than competitors’ products and services D) positioned relative to the company mission statement
A:c)
5
Chapter 7: Segmentation Targeting and Positioning (STP) _________________________________________________________________________________________________________ ___________
Describe the STP process Describe the bases marketers use to segment a market Discuss the criteria for determining the attractiveness of a segment and whether it is worth
pursuing (targeting) Explain how a firm decides what type of segmentation strategy to use: undifferentiated,
differentiated, concentrated, or micromarketing Explain what positioning is and describe how do firms do it
Segmentation Targeting Positioning Process Strategy or Objective Segmentation Bases Evaluate Segment Attractiveness Select Target Market Identify and Develop Positioning Strategy Step 1: Establish Overall Strategy or Objectives • Consistent with mission statement • Derived from mission and current state Step 2: Profile Segments
Segmentation Base
Sample Segments country, province, city, climate
Geographic
continent: North America, Asia, Europe, Africa region: Atlantic, Central, Western Canada
Demographic
Age, gender, income, education, occupation, ethnic background, religion, family, life cycle..
Psychographic
Lifestyles, Values, Personality, SelfConcept
Behavioural
Benefits sought, Usage rates, User status, Loyalty
Geographic Segmentation • Divide market into separate geographic units • Countries, regions provinces, cities, neighbourhoods, climate, etc. • Develop appropriate marketing programs 1
Demographic Segmentation • Most common method • Divide market into groups based on: o Gender, age, ethnic group, family lifecycle stage, household type, income, occupation, education, religion • Census excellent source of segmentation data Psychographic Segmentation How consumers describe themselves • Self-values: desire to fulfill that drive how a person lives their life Ex: belongings, get the brand (eg. BMW) • Self-concept: the image people have of themselves Ex: L’Oreal use tagline “Because I’m Worth It” • Lifestyles: how we live our lives to achieve goals Ex: eg. Swim, workout. (eg. Lululemon built a global sportswear that based not on geners but on the philosophy of a healthy balanced lifestyle) The most widely used psychographic system is the VALS Strategic Business Insights: Consumers are classified into 8 segments: Innovators, Survivors, Thinkers, Achievers etc. It helps company to identify target segments and their underlying motivations Behavioural Segmentation • Benefits Sought: consumers based on the benefits they derive from the products (marketing is all about satisfying needs and wants) • User Status • Usage Rate: average user rate of TimHortons • Loyalty: die-hard for (ex: Nestle’s ice tea, air miles) Ex: Amazon makes recommendation to customers while they are browsing its site by matching their profiles to those of other customers Finding a Place to Live How can geodemographic segmentation be used to help consumers find the perfect place to live? A: young people want to live with young people Step 3: Evaluate Segment Attractiveness • Identifiable • Reachable • Responsive • Substantial and Profitable
Identifiable - Who is in their market? - Are the segments unique? - Does each segment require a unique marketing mix? Everybody’s backgrounds are different, such as culture, career, location Reachable - Know the product exists 2
-
Understand what it can do Recognize how to buy
Responsive Customers must: - React positively to firm’s offering (reputation) - Move toward the firm’s products/services - Accept the firm’s value proposition Substantial and Profitable - Size matters - Too small and segment is insignificant, not profitable - Growth potential equally important Step 4: Selecting a Target Market
You are a marketing manager for a denim company and need to choose a target market for a new line of jeans. • Both the consumers pictured wear jeans. • How do you choose? Segmentation Strategy: - Mass or Undifferentiated - Differentiated - Concentrated - Micromarketing One-to-One Step 5: Identify and Develop Positioning Strategy
Positioning Methods • Value • Product Attributes • Benefits & Symbolism • Competition • Market Leadership Value The relationship of price to quality Different consumers = different value (what comes top on your mindbrand); (ex: Walmart = “save money live better”) Product Attributes - Focus on the attributes that are most important (focus on innovation, performance etc.) - Vary by target market - (ex: Cora’s = attracting a people that wants a healthy and homey breakfast) Benefits and Symbolism - The meaning and reasons of the brand (what comes to mind) - (ex: McDonald’s, Adidas) Competition - Position against a specific competitor -
3
Position against an entire product classification (ex: Coca vs. Pepsi ) Market Leadership - Apple dominate the technology products -
Positioning Steps 1. Determine consumers’ perceptions and evaluation in relation to competitors’ 2. Identify competitors’ positions 3. Determine consumer preferences 4. Select the position 5. Monitor the positioning strategy Repositioning Absolut vodka: reposition advertising print Whirlpool: New design Elizabeth Arden: New faces YM: New audience Gallo: New image Aqua Velva: New packaging Arm & Hammer: New uses Q: Geographic segmentation is most useful for companies whose products satisfy needs that vary by __________. A) gender B) region C) age D) nationality A:b) Q: Which of the following tools is widely used for geodemographic segmentation? A) PRISM B) LSAT C) GNP D) LIMRA
A:a)
Q: Which of the following factors would be most useful in determining whether or not a product will be profitable? A) the region where the consumer lives B) the inflation rate C) the defection rate D) the speed of the distribution factors A:c) Q: Which of the following products is most likely to use an undifferentiated segmentation strategy? A) shoes B) jewellery C) cereal D) flour A:d) 4
Q: Positioning strategies generally focus on either how the product or service affects the consumer or how it is _______________. A) better than the previous year’s product line B) advertised on the Internet C) better than competitors’ products and services D) positioned relative to the company mission statement
A:c)
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