09 19 2012 Segmentation and Positioning Which customer has the highest probability of reacting to the message we are sending or buying the product we are creating Create great products and then identifying the customers that are going to be willing to buy them How is a firm supposed to make sense of a huge market And then how do you make money from each part of the market Consider 9 3 billion soft drinks were sold in the US in 2011 208 47 million barrels of beer were sold in the US over 230 million people visited theme parks in the US Market segmentation is the process of dividing up a market into smaller groups The groups are designed to have similar wants and needs The idea is that firms can use their marketing to tailor products for the different groups Targeting the segment to buy those products Marketing mix product price place promotion Use marketing mix to tailor the products to different segments of the market Targeting Firms then develop new products or reposition old ones to target lucrative consumers o Who is Olive Garden s target market Families young people teenagers o Also owns Red Lobster Capital Grill Targeting strategies Undifferentiated entire market is target market 1 marketing mix theoretical no one market that just sells one thing like salt many different types of salt eggs oil etc Homogenous market similar needs Differentiated two or more segments more than 1 marketing mix meeting people the body and art market Banana Republic Gap are differentiating their products to different ages people income Concentrated single market segment 1 marketing mix Segmentation and targeting are all around you every day Creating a portfolio of products so they won t be dead if one market segment goes down There are products targeted to one lucrative part of the population Chelada targeted at Hispanics beer mixed with tomato juice This market is so lucrative that it is completely differentiated and segmented into different wants and needs Breaking down market into groups and figuring out what they Segmentation need want Targeting Finding your market and advertising directly to that market The one market that has the highest probability of buying your product Coca Cola bought Vitamin Water because they didn t have a product that targeted that segment of the market DisneyLand Paris Tokyo Hong Kong o Loved Disney o Large market o Moved the product to them so they can access easier Blizzard Beach Animal Kingdom Hollywood Studios segmented the market in for Disney o Differentiated market Crest How many crest products there are Targeting every segment of the market through the different types of toothpaste Cluster Analysis customer segments The multivariate statistical analysis technique that identifies o Takes large data and breaks them down into clusters or market segments o Technique that allows market segments to happen o Learn everything they can about the segments o The research measures things like price sensitivity and importance of quality and on time delivery o Cluster analysis identifies groups segments of customers that have similar characteristics o Finds probabilities of each segment on basis of buying o On the score of 100 you are no more or less likely to each product you sell buy a product o If 140 you are 40 more likely to buy a product Size of circles corresponds to the size of market Segment Attractiveness versus Competitive advantage o Firms can plot the segments against their core competencies and target the groups with the most sales potential o Then you learn about these customers and target them to the products you sell o Certain types of commercials come on with certain types of television shows o Product placement in tv shows place product in that particular show or movie and that makes sense for those who are watching Larger companies have an in house marketing research group Other companies can buy from consulting firms Segmentation bases Demographics o Describes characteristics of a population Gender age ethnicity education religion iPhones Geographic o Region city size urban rural region o McDonalds Psychographics o Personality motives lifestyles o Mountain Dew targets thrill seekers gamers Behavioristic o Usage volume benefits loyalty price sensitivity Use Related Segmentation Usage Rate heavy medium light Awareness Status unaware interested Brand Loyalty VALS puts it all together The values and Lifestyle Survey 35 or so questions This survey attempts to break you down into 8 VALS types o Thinkers innovations ideals survivors achievers experiencers believers strivers makers Stats what they watch read how many they are Don t know where they are GeoVALS does know where they are sells color coded maps on where these people are Firms to know Nielsen s Claritas Provides market research and target marketing Offers Prism a geo demographic segmentation tool o Describes exactly who lives in the zip code Company sells you the probability of the segments of buying the different products Helpful in choosing store location purchasing targeted advertising and direct mail Pay attention to what companies sell why certain products are being targeted at you PepsiCo Diversified into Gatorade Forecasting Market Demand to sell during a specific period Times Series Analysis Sales forecast the amount of a product a company expects Using historical sales data to discover patterns in the firms sales Trend analysis Cycle analysis Seasonal analysis Regression analysis Predicting sales based on finding a relationship between past sales and one or more independent variables o Requires the use of historical sales data o Helps you to predict the future o Cannot use for new products o Is useful when precise association between variables is Test market evident Making a product available to buyers in one or more test areas and measuring purchases and consumer responses o Information about customers actual rather than intended purchase behavior o Effective at estimating sales of new products o Time consuming and expensive Pick cities that look like the demographic of the US Jacksonville becomes a test market city Introducing a product you are not currently selling on a smaller scale o Cost to see if it works o A lot of money in a lot of different markets all over the US Used to forecast demand Multiple forecasting methods Use a variety of methods Short range and long range forecasts will require different methods Positioning Product Positioning o The process of developing and maintain
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