Ch 9 Segmentation Targeting and Positioning 01 28 2016 The Segmentation Targeting and Positioning Process Step One Establish Overall Strategy or Objectives o Articulate the vision or objectives of the company s marketing strategy clearly o Segmentations must be consistent Step Two Segmentation Methods o Use a particular combination of methods to segment the market then distinguish similarities and differences across the market Geographic organizes customers into the group in which they live Demographic groups customers according to easily measured objective characteristics such as age gender income and education Psychographics delves how consumers describe themselves Self value goals for life Overriding desires that drive how a person lives his her life Determine the benefits the target market may be looking for from a product Self concept self image image people ideally have of themselves Lifestyles how we live to achieve goals Value Lifestyle Survey VALS psychographic segmentation tool Classifies consumers into eight segments innovators believers achievers strivers experiencers makers or survivors Three primary motivations of U S consumers o Ideals Guided by knowledge and principles o Achievement Look for products demonstrating success o Self Expression Desire social physical activity variety risk Benefit segmentation dividing the market into segments whose needs and wants are best satisfied by the product benefit Behavioral segmentation on the basis of how they use the product or service Occasion segmentation based on when a product or service is being purchased Loyalty investing in loyalty initiatives to retain the firms most profitable customers Multiple segmentation methods Geodemographic segmentation on the basis of a combination of geographic demographic and lifestyle characteristics PRIZM potential rating index by zip market ESRI Step Three Evaluate Segment Attractiveness o Identifiable must be able to distinguish not a lot of over lap o Substantial must be big enough or wont turn profit o Reachable must be able to reach consumers communicate o Responsive customers must react positively to a firms offer o Profitable Factors to keep in mind market growth market competitiveness market access Segment profitability segment size X segment adoption percentage X purchase behavior X profit margin percentage fixed costs Segment size of ppl in a sement Segment adoption percentage of customers in the segment who are likely to adopt the product or service Purchase behavior purchase price X of times the customer would buy the product services in a year Profit margin percentage selling price variable costs selling price Fixed costs advertising expenditures rent utilities insurance and administrative salaries for managers Other factors how long the customer with stay loyal the defection rate the cost of replacing lost customers whether customers will buy more or more expensive merchandise in the future etc Step Four Select the Target Market Targeting Strategies o Undifferentiated Targeting Strategies or Mass Marketing The product provides the same benefit salt gas to everyone with no need to develop different strategies o Differentiated targeting strategies targets several markets segments with a different offering for each Conde Nast Vogue Bon appetite GQ The new Yorker o Concentrated Targeting Strategy Selecting a single primary market and focusing all energies on providing a product to fit that market s needs Entrepreneurial o Micromarketing one to one An extreme form of segmentation that tailors a product or service to a suit an individual customers wants or needs Cookies computer programs installed on hard drives that provide identifying information Step 5 Develop a positioning strategy defining the marketing mix variables so that target customers have a clear distinctive desirable understanding of the product does or represents in comparison with competing products o The unique value that a product or service provides to its customers and how it is better than and different from its competitors o Main value proposition components Target Market Offering name or brand Product service category or concept Unique point of difference benefits 1 firms value propositions 2 customers unmet needs marketing opportunity 3 firms benefits that arnt required educate customer or redesign product 4 key benefits that both the firm and the competitor provide that customers require carefully monitor performance relative to competitor on these benefits 5 Competitors value proposition 6 benefits both firms provide that customers do not appear to need 7 competitors benefits that are not required Positioning methods o Value the most popular method because the relation of price to quality is among the most important considerations for consumers when they make a purchase decision o Product attributes most important to target market o Well known symbols o Competition Positioning using a perceptual map o Perceptual map two or more dimensions the positions of products or brands in the consumers mind o Ideal points where a particular market segments ideal prduct would lie on the map Marketers derive a perceptual map by o Determining consumers perceptions and evaluations of the product or service in relation to competitors o Identify the markets ideal points and size o Identify competitors position o Determine consumer preferences o Select the position o Monitor the position strategy o 01 28 2016 01 28 2016