M300 02 17 14 Lecture 9 Outline of Current Lecture I Segmentation II Geography III Demographics IV Psychographics or lifestyle V Usage VI Needs VII PUNGD example VIII Positioning products for target segments Current Lecture I Segmentation a Segmentation can increase the effectiveness of i 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 targeting i 1 Define the market ii 2 Use criteria or variables to divide market into segments These 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 target iv 4 Use 4Ps to position c Criteria for success in segmentation MRRP i Measure ii Reachable iii Relevant iv Profitable d PUNGD system for segmentation i Psychographics ii Usage iii Needs iv Geography v Demographics II Geography a Divide overall market into groups based on geography b Most products derive the majority of their sales from a very small of regions c Examples i Spanish rice southern ii Tractors urban vs rural iii Women hose North III 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 demographics VI Needs a 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 Size ii Price iii Safety iv Fuel economy v Style VII PUNGD Example a Baseball Bat Example i P people who watch baseball athletics ii U heavy baseball users boys iii N performance comfort preference iv G south warmer clients who play baseball often v D men younger 12 20 VIII Positioning products for target segments a Positioning creates i Competitive advantage ii What consumers think of you relative to other products iii Creates a perception about the product iv Perceptions need not match reality to be effective b Positioning statement examples i Cheer Effective at all temperatures ii Mercedes Benz luxurious performance iii 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 market because Wal Mart had the price lead