Topic 7: Market Segmentation, Targeting and Positioning

What is the 3 step process of a Hierachal values analysis?

(1) Bring out distinctions (2) Pyramiding down, and (3) Laddering up.

"I'm willing to pay much less for fewer benefits." Is focussed on by which type of brand? and Why does this work with customers?

- (example) Aldi, a discount supermarket, specializes in staple products such as food, beverages, paper products, and inexpensive household products. Customers willingly accept small product assortment and limited service for lower prices. - Consumers attracted to this value positioning strategy are willing to give up some quality for much lower prices.

"I'm willing to pay the same for more benefits." Is focussed on by which type of brand? and Why does this work with customers?

- Japanese auto manufacturers used this value positioning strategy when entering the high-end car market with Accura (Honda), Infiniti (Nissan), and Lexus (Toyota). - The vehicles were offered at similar prices as those of US manufacturers, yet claim more benefits.

"I'm willing to pay more for more benefits." Is focussed on by which type of brand? and Why does this work with customers?

- Luxury brands focus on this value positioning strategy by offering consumers more benefits than competitors, but also charging higher prices. - Often, the price exceeds the incremental product quality, but consumers of these products are buying much more than quality products. They are buying prestige.

"I'm willing to pay less for the same benefits." Is focussed on by which type of brand? and Why does this work with customers?

- Store brands (or private label brands) like Costco's Kirkland brand, Walmart's Great Value brand, and Kroger's Big K brand offer products with national brand quality at store brand prices. - Hyundai uses this same value positioning in an attempt to steal market share away from Honda and Toyota. The company promotes Hyundai cars with Honda quality at lower prices.

What 3 things need to be understood in order to conduct a hierarchal values analysis?

1. Customer pain-points, 2. the product category, and 3. the emotional touch points that bind product to person.

What is the 3 part definition of a "Unique Selling Propisition"?

1. Each advertisement must make a proposition to the customer. Not just words, not just product puffery, not just show-window advertising. Each advertisement must say to the reader, "Buy this product, and you will get this specific benefit." 2. The proposition must be one that the competition either cannot, or does not, offer. 3. The proposition must be so strong that it can move the masses, that is, pull new customers over to the product.

What does the "Personal Relevance Bridge" provide marketers when deciding on the positioning of a product?

A deep understanding of what the Product SHOULD promise in order to know how to sell it so it sticks out in customers minds.

Why is offering lower price + more benefits very hard for a company to sustain?

Because offering more benefits costs more so profit margins are squeezed or eliminated

Why Sell through the eyes of the Love group to those in the swing group?

Because the "Love group" understand the benefits of your product or service.

In perceptual mapping, brands located near each other on the map are...

Believed to be similar by customers and, thus, in direct competition.

What are the "Love Group" also referred to as?

Brand Champions

Using customer benefits and product price, the marketing manager can...

Find new ways of positioning value for customers

Perceptual mapping is a simple method for...

Getting a feel for how customers perceive brands.

What is Demographic Segmentation?

Group division based on Age, gender, income, level of education, household composition, religion and ethnicity.

What is Geographic Segmentation?

Group division based on geographic regions, population density, population size, and climate.

What is Psychographic Segmentation?

Group division based on personality, motives, or lifestyle.

What is Behavioural Segmentation?

Group division based on the core benefits customers seek, usage situations, brand loyalty, usage rate, and price sensitivity.

Marketing managers seek to select segments that...

are going to give them the most profit

Good segmentation plans are...

measurable and identify unique needs

In some cases, launching multiple brands into a single premium segment can...

stimulate interest and growth

Today's marketing managers rarely have the resources needed to...

target and provide products for every segment in the marketplace

What is "Positioning"?

the act of designing the company's product so that it creates value in the target customers' minds

Pyramiding uncovers...

the distinctively good attributes of a product.

Gap analysis compares brands based on...

the importance and performance of the different features and benefits they have

What is the difference between Perceptual mapping and Gap Analysis?

PERCEPTUAL MAPPING identifies customers judgements on product features and benefits. GAP ANALYSIS identifies the same thing but also asks the importance of those things when deciding to buy

What is "Me too" marketing?

Same price and same benefits as competitors

Durable segmentation means...

Segment size is consistent and doesnt die out

How do marketers gain the favor of the swing group?

Sell to the "Swing group" through the eyes of the "Love group."

Out of Love, Swing and Hate Groups where do the biggest opportunities lie?

Swing Group

What does "Laddering" reveal?

The emotional connection between the product and the person that helps us to know how to effectively POSITION the product.

If the "Love connection" is the most important thing that needs to be discovered what is a "love connection"?

The emotional connection the product makes with people who love the product.

Unique needs segmentation means...

The people in the segment are all looking for similar needs/benefits but amongst other segments the needs/benefits are not similar

Substantial segmentation means...

The segment is large enough to make products profitable.

Measureable segementation means...

You can actually put a number of people in a segment

What key question covers the targeting criteria of "Competitive position."?

How intense is the competition in this segment? And do we have a different product from our competitors that offers value to those within the segment?

Marketing managers use segmentation, targeting, and positioning to. . .

Identify new opportunities

What do marketers need to do about the "hate group"?

Ignore them.

Accessible segementation means...

Individuals in the segment can be reached through the company's promotion and distribution channels.

What key question covers the targeting criteria of "Cost to reach."?

Is the market economically accessible?

What key question covers the targeting criteria of "Expected growth."?

Is the market growing?

What key question covers the targeting criteria of "Market size."?

Is the market large enough to deliver expected profits for the company?