Chapter Eight: Segmentation, Targeting, and Positioning
Chapter Eight: Segmentation, Targeting, and Positioning Once the target market was identified, Unilever had to convince the targeted group that when it comes to hair care products, their choice should be Sunsilk. It is achieving this task by defining the marketing mix variables so that the target customers have a clear, distinctive, desirable understanding of what the product or services do or represent, relative to competing products. To achieve its marketing positioning, Unilever designed a life-style advertising campaign that has positioned Sunsilk as the choice of women who need “hairapy” (therapy for hair). The idea is to get customers to recall Sunsilk at the need recognition stage of the consumer buying process. It has also made sure that the shampoo is available almost anywhere its customers would want to buy it. Segmentation, Targeting, and Positioning Process Segmentation 1. Strategy or 2. Profile Objectives Segments
Targeting 3. Evaluate Segment Attractiveness
Positioning 4. Select Target 5. Identify and Market Develop Positioning Strategy
Step 1: Establish Overall Strategy or Objectives - the first step in the planning process is to articulate the vision/objectives of a company’s marketing strategy clearly - the segmentation strategy must then be consistent with and derived from the firm’s mission and objectives, as well as its current situation – SWOT - Unilever’s objective is to increase sales in a competitive industry - the company recognized its strengths were globally recognized brand name and ability to place new products on retailers’ shelves
Step 2: Profile Segments - describe the different segments (needs, wants and characteristics) which helps firms better understand the profile of the customers in each segment, as well as the customer similarities within a segment and dissimilarities across segments - segmentation in the soft drink industry includes caffeinated/decaffeinated, regular/diet - this segmentation method is based on the benefits that consumers derive from the products
Methods for Segmenting Markets Segmentation Method a) Geographic
b) Demographic c) Psychographic
d) Behavioural
Sample Segments Country, region, province, city, urban, rural Continent: N America, Asia, Europe, Africa Within US: Pacific, mountain, central, south Age, gender, income, education, occupation, race, marital status, family size, religion, ethnicity Personality (innovators, achievers, believers), Lifestyle (conservative, liberal, outgoing) and Social Class (upper, middle and working class) Benefits sought (convenience, economy, prestige, quality, speed), Usage (heavy, moderate, light) and Loyalty (not loyal, somewhat loyal, completely loyal)
Psychographics – delves into how consumers describe themselves; allows people to describe themselves using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices Determining psychographics involves knowing and understanding three components: a) Self-Values – goals for life, not just the gaols one wants to accomplish in a day - refers to overriding desires that drive how a person lives his/her life b) Self-Concept – the image a person has of him/herself c) Lifestyles – refers to the way a person lives his/her life to achieve goals The most widely used psychographic system is the VALS, which classifies consumers into eight segments: - innovators - experiencers - thinkers - makers - believers - survivors - achievers - strivers See pages 210-211 for the framework and description of VATS categories. Behavioural Segmentation – group of consumers based on the benefits they derive from products or services, from usage rate, their user status, and their loyalty Benefit Segmentation – the grouping of consumers on the basis of the benefits they derive from products or services
Loyalty Segmentation – strategy of investing in loyalty initiatives to retain the firm’s most profitable customers Geodemographic Segmentation – the grouping of consumers on the basis of a combination of geographic, demographic and lifestyle characteristics PSYTE Clusters – the grouping of all neighbourhoods in Canada into 60 different lifestyles clusters
Step 3: Evaluate Segment Attractiveness The third step in the segmentation process involves evaluating the attractiveness of the various segments. Evaluation of Segment Attractiveness a) Identifiable b) Reachable c) Responsive d) Substantial and Profitable Step 4: Select Target Market Segmentation Strategies a) Mass or Undifferentiated - a marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups b) Differentiated - a strategy through which a firm targets several market segments with a different offering for each c) Concentrated - a strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market’s needs d) Micromarketing One-to-One - an extreme form of segmentation that tailors a product or service to suit an individual customer’s wants or needs Firms that interact on a one-to-one basis with many people to create custom-made products/services are engaged in mass customization. This is the practice of interacting with many people individually to create custom-made products or services; providing one-to-one marketing to the masses. Step 5: Identify and Develop Positioning Strategy The last step in developing a market segmentation strategy is positioning.
Positioning – the mental picture that people have about a company and its products or services relative to competitors Positioning Statement – expresses how a company wants to perceived by consumers Firms Position Their Products/Services According To: a) Value - relationship of price of quality b) Product Attributes - focuses on the attributes of the product most important to the target market c) Benefits and Symbolism – emphasises the benefits of the brand as well as the psychological meaning of the brand to consumers d) Competition - firms can position their products/services head-to-head against a specific competitor or an entire/product/service classification e) Market Leadership -companies may emphasize their leadership position within their industry Positioning Stages - when developing a positioning strategy, firms go through 5 important stages - a perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind - the position of each brand is denoted by a small circle, and the numbered asterisks denote the consumers’ ideal points – where a particular market segment’s ideal product would lie on the map To derive a perceptual map, marketers follow five steps: (see page 227) 1. Determine consumers’ perceptions and evaluations of the product or service in relation to competitors 2. Identify competitors’ positions 3. Determine consumer preferences 4. Selection the position 5. Monitor the positioning strategy Repositioning – sometimes firms try to change their positioning Cadbury repositioned from a leading brand for older customers to a brand for a younger target market because customer loyalty among its older customers have been dropping. To do this, Cadbury refreshed its brand by updating the look of its packaging, displays, and marketing communications to portray a more cheerful and lively appearance. They also launched an advertising campaign that depicted the product being enjoyed in a work environment. Brand Repositioning (Rebranding) – a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences
Targeting 3. Evaluate Segment Attractiveness
Positioning 4. Select Target 5. Identify and Market Develop Positioning Strategy
Step 1: Establish Overall Strategy or Objectives - the first step in the planning process is to articulate the vision/objectives of a company’s marketing strategy clearly - the segmentation strategy must then be consistent with and derived from the firm’s mission and objectives, as well as its current situation – SWOT - Unilever’s objective is to increase sales in a competitive industry - the company recognized its strengths were globally recognized brand name and ability to place new products on retailers’ shelves
Step 2: Profile Segments - describe the different segments (needs, wants and characteristics) which helps firms better understand the profile of the customers in each segment, as well as the customer similarities within a segment and dissimilarities across segments - segmentation in the soft drink industry includes caffeinated/decaffeinated, regular/diet - this segmentation method is based on the benefits that consumers derive from the products
Methods for Segmenting Markets Segmentation Method a) Geographic
b) Demographic c) Psychographic
d) Behavioural
Sample Segments Country, region, province, city, urban, rural Continent: N America, Asia, Europe, Africa Within US: Pacific, mountain, central, south Age, gender, income, education, occupation, race, marital status, family size, religion, ethnicity Personality (innovators, achievers, believers), Lifestyle (conservative, liberal, outgoing) and Social Class (upper, middle and working class) Benefits sought (convenience, economy, prestige, quality, speed), Usage (heavy, moderate, light) and Loyalty (not loyal, somewhat loyal, completely loyal)
Psychographics – delves into how consumers describe themselves; allows people to describe themselves using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices Determining psychographics involves knowing and understanding three components: a) Self-Values – goals for life, not just the gaols one wants to accomplish in a day - refers to overriding desires that drive how a person lives his/her life b) Self-Concept – the image a person has of him/herself c) Lifestyles – refers to the way a person lives his/her life to achieve goals The most widely used psychographic system is the VALS, which classifies consumers into eight segments: - innovators - experiencers - thinkers - makers - believers - survivors - achievers - strivers See pages 210-211 for the framework and description of VATS categories. Behavioural Segmentation – group of consumers based on the benefits they derive from products or services, from usage rate, their user status, and their loyalty Benefit Segmentation – the grouping of consumers on the basis of the benefits they derive from products or services
Loyalty Segmentation – strategy of investing in loyalty initiatives to retain the firm’s most profitable customers Geodemographic Segmentation – the grouping of consumers on the basis of a combination of geographic, demographic and lifestyle characteristics PSYTE Clusters – the grouping of all neighbourhoods in Canada into 60 different lifestyles clusters
Step 3: Evaluate Segment Attractiveness The third step in the segmentation process involves evaluating the attractiveness of the various segments. Evaluation of Segment Attractiveness a) Identifiable b) Reachable c) Responsive d) Substantial and Profitable Step 4: Select Target Market Segmentation Strategies a) Mass or Undifferentiated - a marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups b) Differentiated - a strategy through which a firm targets several market segments with a different offering for each c) Concentrated - a strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market’s needs d) Micromarketing One-to-One - an extreme form of segmentation that tailors a product or service to suit an individual customer’s wants or needs Firms that interact on a one-to-one basis with many people to create custom-made products/services are engaged in mass customization. This is the practice of interacting with many people individually to create custom-made products or services; providing one-to-one marketing to the masses. Step 5: Identify and Develop Positioning Strategy The last step in developing a market segmentation strategy is positioning.
Positioning – the mental picture that people have about a company and its products or services relative to competitors Positioning Statement – expresses how a company wants to perceived by consumers Firms Position Their Products/Services According To: a) Value - relationship of price of quality b) Product Attributes - focuses on the attributes of the product most important to the target market c) Benefits and Symbolism – emphasises the benefits of the brand as well as the psychological meaning of the brand to consumers d) Competition - firms can position their products/services head-to-head against a specific competitor or an entire/product/service classification e) Market Leadership -companies may emphasize their leadership position within their industry Positioning Stages - when developing a positioning strategy, firms go through 5 important stages - a perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind - the position of each brand is denoted by a small circle, and the numbered asterisks denote the consumers’ ideal points – where a particular market segment’s ideal product would lie on the map To derive a perceptual map, marketers follow five steps: (see page 227) 1. Determine consumers’ perceptions and evaluations of the product or service in relation to competitors 2. Identify competitors’ positions 3. Determine consumer preferences 4. Selection the position 5. Monitor the positioning strategy Repositioning – sometimes firms try to change their positioning Cadbury repositioned from a leading brand for older customers to a brand for a younger target market because customer loyalty among its older customers have been dropping. To do this, Cadbury refreshed its brand by updating the look of its packaging, displays, and marketing communications to portray a more cheerful and lively appearance. They also launched an advertising campaign that depicted the product being enjoyed in a work environment. Brand Repositioning (Rebranding) – a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences
