MKTG Chapter 9: Segmentation, Targeting, and Positioning

Pyschographic segmentation

- Determines how consumers actually describe themselves based on characteristics of how they choose their time and what psychological reasons determine their choices - Determining psychographics involves understanding three components 1) Self-values are goals that drive how a person lives his life 2) Self-concept is the image people ideally have of themselves 3) Lifestyles are the way we live our lives to achieve goals

Demographic segmentation

- Groups consumers based on age, gender, income, education - Characteristics must be easily identifiable - i.e. Kellog's: Fruit Loops for kids, Special K for adults

Geographic segmentation

- Organizes customers into groups based on where they live - Grouped by country, region (NE, SE), areas within region (state, city, neighborhoods, zip codes) - marketers should make adjustments to meet needs of smaller demographic groups instead of providing same g/s

Value and Lifestyle Survey (VALS)

- Tool used to support psychographic segmentation efforts - Consumers classified into 8 segments based on answers to questionnaires - Upper segments have more resources and more innovative - Horizontal dimension shows segments' primary psychological motivation for buying - Vertical dimension indicates level of resources (income, education, health, energy level, degree of innovativeness) - enables firms to identify target segments and underlying motivations - shows correlation between psychology and lifestyle choices - better at predicting consumer behavior than demographics

Occasion segmentation

- behavioral segmentation based on when a g/s is purchased or consumed - i.e. Frito Lays creates individual servings and large bags for parties

Loyalty segmentation

- behavioral segmentation in which firms invest in loyalty initiatives to retain firm's most profitable customers - i.e. United Airlines gives loyal customers reservations on sold-out flights, priority check-in

Step 2: Segmentation methods

- choose method and develop descriptions of different segments - types of segmentation methods 1) Geographic 2) Demographic 3) Psychographic 4) Benefits 5) Behavioral

Behavioral segmentation

- divides consumers into groups on basis of how they use g/s - common behavioral measures include occasion and loyalty

Benefit segmentation

- groups consumers on basis of benefits they derive from g/s - effective and relatively easy to portray g/s's benefits in firm's communication strategies - i.e. Hollywood --> variety of benefits from needing to laugh to needing to cry or feel happy

Step 3: Evaluate segment attractiveness

- is the segment identifiable? - is the segment substantial? - is the segment reachable (must know g/s exists)? - is the segment responsive? - is the segment profitable (keep in mind market growth, market access, market competitiveness)?

Step 5: Develop positioning strategy

- market positioning: define marketing mix variables so target customer shave clear understanding of what product does and how it racks up to competing products - positioning helps communicate firm's value proposition - value proposition: communicates customer benefits received from g/s and reasons for wanting to purchase it - maintaining unique value proposition only possible in monopolistic market - 7 spaces where g/s might be located in circles for a successful value proposition

Using multiple segmentation strategies

- one mixture of methods is called geodemographic segmentation - uses combination of geographic, demographic, and lifestyle characteristics to classify customers - tools used for geodemographic segmentation: PRIZM and ESRI's Tapestry - PRIZM can identify 66 geodemographic segments and each segment can be sorted by more than 60 characteristics

Positioning using perceptual mapping

- perceptual map displays 2+ positions of products/brands in consumer's minds - i.e. sweet vs. light taste and fun vs. healthy - ideal points are where a particular market segment's ideal product would lie on the map (is a numbered circle)

Step 1: Establish overall strategy or objectives

- segmentation strategy must be consistent with and derived from mission and objectives and SWOTs - i.e. Coca Cola: increase sales in mature industry

Steps of perceptual mapping

1. Determine consumers' perceptions and evaluations of g/s in relation to competitors. 2. Identify market's ideal points and size. 3. Identify competitors' positions. 4. Determine consumer preferences 5. Select the position 6. Monitor positioning strategy

Step 4: Select target market

1. Undifferentiated or Mass Marketing - g/s perceived to provide similar benefits to most consumers - used for basic commodities (sugar, salt) 2. Differentiated targeting strategy - target several segments with different offerings for each one - this strategy helps firms obtain larger market share - providing diverse products to multiple segments lowers firm's risk and diversifies business 3. Concentrated targeting strategy - target to one product to one, primary market - entrepreneurial ventures benefit from this strategy 4. Micromarketing - extreme form of segmentation that tailors g/s to suit an individual customer's wants or needs - internet helps facilitate this strategy

Positioning methods

1. Value - reflects relationship of benefits to costs - one of the most important considerations for consumers 2. Product attributes - i.e. Volvo known for its safety 3. Symbol - strong, well-known symbols create position for brand to distinguish it from competitors - ie. Colon Sanders, Tony the Tiger 4. Position against competitors - 7UP positioned themselves from Pepsi, Coke, and other caramel-colored drinks

Steps of the STP process

A) Segmentation 1. Strategy or objectives 2. Segmentation methods B) Targeting 3. Evaluate segment attractiveness 4. Select target market C) Positioning 5. Identify and develop positioning strategy