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 Segmentation • Breaking down market into groups and figuring out what they 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 • The multivariate statistical analysis technique that identifies customer segments 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 each product you sell o On the score of 100, you are no more or less likely to 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 toolo 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 • Sales forecast: the amount of a product a company expects to sell during a specific period Times Series Analysis • 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 evident Test market • 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
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