Ch. 7 Segmenting, Targeting and Positioning

Wherever you are right now, stand up and shout the marketing cheer!

"Stand for something; Stand for something different; Stand for something different, that's important."

Big-N-Large (BnL) sells self-aware robot trash compactors. If BnL has 43% of the market and sales of $2.6B in 2008, what was the size of the entire market in 2008? (the equation for market share can be found in the Chapter 2 slides.) If the average selling price for a single product in this product category is $2,000, how many units did BnL sell? If each customer in the market on average purchased 1.5 of these self-aware trash compactors, how many customers were in the entire market in 2008?

Market size: $2,600,000,000/.43 = $6,046,511,627.91 Units sold: $2,600,000,000/$2,000 = 1,300,000 units Units sold in the entire market: $6,046,511,627.91/$2,000 = 3,023,255 units 2008 Customers: 3,023,255/1.5 = 2,015,503 customers

With respect to bases for segmentation, what is the difference between measurable, accessible, and actionable? Give an example.

Segments are Measurable if data exist that allow the segment to be identified, meaning the size, purchasing power, and demographic profiles of each can be determined. This is just enough data to be able to differentiate between different segments. Segments are Accessible if the the segment can be reached and served. For example, new home owners are easy to communicate with because marketers can access data on new home purchases and change of address information through the MLS (multiple listing service) and Post Office. Segments are actionable when marketers can effectively market to them. The requires resources (the example given in your textbook for this basis), but it also requires understanding the customer or "putting a face" on the customer. Usually, the minimal data needed to make a segment measurable (e.g., demographics) is not enough to understand who the segment really is, and therefore communicate with the segment in meaningful ways and create offerings for customers that will be appealing to them.

Segmentation

dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes

Segmentation Basis

the basis by which you segment your market (geographic, demographic, etc...)

Substantial

the market segments are large enough or profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program.

What are the two criteria for choosing a good target and what types of issues fall under each criterion.

• Evaluating Market Segments -Size and growth factors -Structural factors -Long-run segment attractiveness -Company objectives and resources • Selecting Target Market Segments -Undifferentiated Marketing -Differentiated Marketing -Concentrated Marketing -Micromarketing -Individual Marketing -Choosing a targeting strategy

Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variable(s) do you think Starbucks is using?

• Geographic • Demographic (most popular) • Psychographic • Behavior

Can you list (without help from the textbook) five variables under each of the four bases of segmentation?

• Geographic (world region or country, country region, city or metro size, density, climate) • Demographic (age, gender, family size, income, occupation, education, religion) • Psychographic [also called psychological] (social class, lifestyle, personality, attitudes, expertise) • Behavior (occasions, benefits, user status, user rates, loyalty status, attitude toward product)

Driefly describe the four major steps in designing a customer driven marketing strategy

• Market Segmentation: divide a market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. • Market Targeting: evaluate each segment's attractiveness and select one or more segments to enter. • Differentiation: differentiate the firm's market offering to create superior customer value. • Positioning: arrange for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.

Positioning

Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumers (company controls this)

Geographic Segmentation

Dividing a market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods

Psychographic Segmentation

Dividing a market into different groups based on social class, lifestyle, or personality characteristics.

Behavioral Segmentation

Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product.

Demographic Segmentation

Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality

Actionable

Effective programs can be designed for attracting and serving the segments.

Use the USP to create a positioning statement for the brand in your marketing plan.

For Segment 3, Burt's Bees is the best lip balm provider because it rates high on performance. To receive high performance customers will pay more than the market price and be willing to sacrifice variety in lip balm features.

Unique selling proposition

For [target market], the [name of product/service] is [single most important claim] among all [competitive frame] because [single most important support]

Define the word "position" and state what criteria must be met to form an effective position (hint: the slides list four criteria, three from the marketing cheer slide).

Position: the place the product occupies in consumers' minds relative to competitors 1. Must stand for something 2. Must stand for something that's different 3. Must stand for something that's important 4. Position must be linked to the value proposition (credibility); this means that the position must make sense given the key benefits of the product.

Accessible

The market segments that can be effectively reached and served.

Targeting

The process pf evaluating each market segment's attractiveness and selectomg one or more segments to enter

Differentiable

The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.

Measurable

The size, purchasing power, and profiles of the segments can be measured.

Product Position

The way the product is defined by consumers on important attributes--the place the product occupies in consumers' minds relative to competing products (consumer controls this--this is different from Positioning)

Create a two-dimensional perceptual map—like the map of lip balm in the positioning slides from Chapter 7—using the information in the table below.

[just plot the data on a chart and see which segment is being untapped]