M300 02/17/14 Lecture 9 Outline of Current Lecture I. SegmentationII. Geography III. Demographics IV. Psychographics or lifestyle V. Usage VI. NeedsVII. PUNGD exampleVIII. Positioning products for target segmentsCurrent Lecture I. Segmentationa. Segmentation can increase the effectiveness ofi. Promotions: such as media advertising to avoid wasting money on unprofitable segments.ii. Product development: P&G has 9 laundry detergent segments and have developed products to meet each needs.iii. Pricing: USAir charges business travelers $571 to fly last minute, vacationers who plan out $189. b. 4 Steps in Market segmenting/targetingi. 1. Define the marketii. 2. Use criteria or variables to divide market into segmentsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.iii. 3. Select segments to targetiv. 4. Use 4Ps to positionc. Criteria for success in segmentation (MRRP)i. Measureii. Reachableiii. Relevantiv. Profitabled. PUNGD, system for segmentationi. Psychographicsii. Usageiii. Needsiv. Geographyv. DemographicsII. Geography a. Divide overall market into groups based on geographyb. Most products derive the majority of their sales from a very small # of regionsc. Examplesi. Spanish rice – southernii. Tractors – urban vs. ruraliii. Women hose – NorthIII. Demographics a. Divide consumers into groups based on sex, income, age, occupation, race, religion, education, etc. b. Example: WWF targets young and middle aged males. Middle aged males make up 90% of viewers.IV. Psychographics or lifestyle a. Divide the population into homogenous groups based on behavioral and lifestyle profiles. b. Psychographics: the study and classification of people according to their attitudes, aspirations, and other psychological criteria. V. Usage a. Divide a population into their purchase frequency and usage level. b. There’s a group who buys more and a group who buys less. c. Actual behavior: successful when applied to demographicsVI. Needsa. Divide a population into groups based on the product’s ability to satisfy needs. b. Example: What are the different needs of the car industry?i. Sizeii. Priceiii. Safetyiv. Fuel economyv. StyleVII. PUNGD Examplea. Baseball Bat Examplei. P- people who watch baseball/athleticsii. U- heavy baseball users (boys)iii. N- performance, comfort, preferenceiv. G- south, warmer clients who play baseball oftenv. D- men, younger 12-20VIII. Positioning products for target segmentsa. Positioning createsi. Competitive advantageii. What consumers think of you relative to other productsiii. Creates a perception about the productiv. Perceptions need not match reality to be effective. b. Positioning statement examplesi. Cheer: Effective at all temperatures.ii. Mercedes-Benz: luxurious performanceiii. Johnson’s: gentle cleanser.c. Marketers can reposition existing products if needed how?i. Move to a better location on the perceptual map.ii. Example: Target had to move to a slightly higher cost, more stylish marketbecause Wal-Mart had the price