#4 Segmentation Ch.8

7/30/2019 #4 Segmentation Ch.8

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Segmentation

Chapter 8


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Strategy

Sells multiple brands withinthe same product category fordetergents, soaps, and other

goods. Each brand features a

different mix of benefits andappeals to a differentsegment.

Product modifications appeal

to different niches withincertain segments.

P & G Segments the Market

Case Study

The Payoff

P&G generates revenues inexcessive of $4 billion in U.S.laundry detergent market

alone. Tide has 34% share of powder

and 24% share of liquid marketsegments.

Combined, all P&G brandsaccount for 75% share of

powder and 55% share ofliquid detergent markets.


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Target Consumers:

Market Segmentation

Group ofconsumers

With a similarresponse

To a given set of

marketing stimuli


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Requirements for Effective Segmentation. p.297

Measurability Accessibility

Substantiality Actionability


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Segmentationp.297

Accessible = can we reach these people?

Actionable = do we have the resources to serve these

people? (ie staff & $)

Measurable = is there data available to use?Substantial = are there enough of these people to

justify effort?


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Target Consumers

MarketPositioning

MarketSegmentation

Market Targeting


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The Marketing Process

Market segmentation:

Building up a market into groups with distinct needs Who might require (respond to) different marketing mix

Target marketing:

Evaluating the attractiveness of

each market segment Deciding which segment(s) to enter

Most profitably serve

Market positioning:

Occupying a clear, distinctive, anddesirable place

Relative to competing products

In the minds of target customers

Figure 2.4
http://www.lexus.com/


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Market Targeting:

Evaluating Market Segments

Segment size andgrowth

Segment structuralattractiveness

Company objectives

and resources


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Target Consumers:

Market Targeting

Evaluating eachsegments

attractiveness

Selecting one ormore segments to

enter Single or multiple

segment strategy


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Selecting Market Segments

Company marketing mix Market

A. Undifferentiated marketing (mass / combiners)

Company marketing mix 1



Segment 1

Segment 3

Segment 2

B. Differentiated marketing (segmenters)

Segment 1

Segment 3

Segment 2Company marketing mix

C. Concentrated marketing


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Steps in Market Segmentation, Targeting,

and Positioning

Market segmentation1. Identify bases for

segmenting the market

2. Develop profiles ofresulting segments

Market targeting3. Develop measures of

segment attractiveness

4. Select the targetsegment(s)

Market positioning

6. Develop marketing mixfor each target segment

5. Develop positioningfor each target segment


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Levels of Market Segmentation:

Mass Marketing Mass producing, mass distributing and mass

promoting the same product in the same way to allconsumers

Largest potential market helps lower costs equalinglower prices or higher margins

Difficult to access fragmented markets

Problems in selecting from multiple ad media and

distribution channels


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Segmented Marketing Marketing recognizes buyers differ in needs,

perceptions, and buying behaviours

Isolate broad segments comprising a market

Adapt offers to best match segment needs

Market more efficiently and effectively

More focus and less competition


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Levels of Market Segmentation:Niche Marketing

Marketing that focuses on subgroups within largeidentifiable groups in a market

Dividing a segment into sub-segments

Defining group with distinctive set of traits seeking

special combination of benefits Price premium

Few or no significant competitors

Improves focus of limited resources


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Micromarketing Tailoring products and marketing programs to suit the tastes

of specific individuals or locations

Local marketing

Local tailoring of brands and promotions

Overcomes regional differences

First-line customers

Dilutes brand image and operation efficiency Logistical problems


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Levels of Market Segmentation:Micromarketing

Individual marketing

Tailoring products and marketing programs

to the needs and preferences of individualcustomers

Mass customization

Custom-made products Self-marketing


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Market Coverage Strategies

Product / Market concentration (concentrated market) One product for one group or segment (Topol toothpaste; Ferrari; NyQuil; Efferdent;

Depends; Rolex; Viagra).

Product specialization (differentiated market) One product for everyone (baking soda; Freedent gum; Crest toothpaste; jeans;

chocolate; Tylenol)

Market specialization (differentiated market) Many products for one specific market (Coleman camping supplies; Dorel furniture;

Hasbro; Boeing / Martin Marietta; Weider)

Selective specialization (differentiated market) Many products to several unrelated markets (Bombardier; Seagrams)

Full coverage (Mass or undifferentiated market) Many products to everyone (Coke; Proctor & Gamble)


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Market Selection Strategies Influenced by:

Competitors strategy

Stage in PLC (later stages more coverage) Corporate resources (financial, labour, management,

patents)

NatureofTM (affordability / attractiveness to product. Ifbuyers have the same tastes, use undifferentiated.)

Nature of product (is it unique or basic?)Chiquita Bananas are the sexiest brand


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Summary of Strategies

Combiners strategy: undifferentiated market focuses on similarities and satisfies pretty

well the needs of their TM. They have large groups, but may be chipped away easily by

specialists. Hence planning and aggressive market is required. Example: Coke vs. Jolt Cola.

Segmenters strategy: differentiated market focuses on differences and satisfies very

well the needs of their TM.

Both of the above can take an innovative or imitative approach. Example: IBM vs. clones; Levis vs. others.


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Segmenting Dimensions(see Table 8.1 p. 283)

Customer related

Geographic:CMA, region, city, population

Demographic:age, sex, income, language

Situation related

Psychographic: class, lifestyle, person

Behaviouristic: benefits, usage, loyaltyExample:Coke in the morning


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Segmenting Consumer Markets:Geographic Segmentation

Divide market intoseparate geographic

units Nations, regions

provinces, cities,

etc. Develop regional

marketing programs


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Segmenting Consumer Markets:

Demographic Segmentation Most popular

method

Consumer patterns

often follow theirdemographics

Easier to measure

than mostsegmentationvariables

Needed for market

size and access


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Segmenting Consumer Markets:Demographic Segmentation

Age and life-cycle stage

Wants and needs vary with stage Guard against stereotypes

Gender

Buying patterns frequently follow gender Income

Affluent to restricted incomes


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Segmenting Consumer Markets:

Psychographic Segmentation

Lifestyle

Reflected in purchases Personality

Express who they are


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Segmenting Consumer Markets:Behavioral Segmentation

Divide market into groups based on consumerknowledge, attitude, use, or response to a product

Occasions By occasions when buyers get the idea to buy,

actually make the purchase, or use the item

Benefits sought

Major benefits, people seeking, brands deliver


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Segmenting Consumer Markets:Behavioural Segmentation

User status

Non-, ex-, potential, first-time, regular

Usage rate Light - medium - heavy

Heavy users may dominate total market

Loyalty status

Toward brand, store, and/or company Frequent buyers may not be loyal

habit, indifference, low price, productunavailability


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VALS

VALS - (Values - Lifestyles). The population can be classified by nine (8 or 10 depending on

whether we are describing USA or Canada or the world)

Psychographic Lifestyles.

Most of us are either: Outer Directed or InnerDriven.

see various overheads


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Prizm CE (p.293)

Geodemography

Birds of a feather flock together. ie where you live ishow you will behave.

66 Canadian Lifestyles.


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Positioning Competitively:Product Positioning

Defined by consumers onimportant attributes

Place product occupies in mind

relative to competing products

Information overload

Simplify evaluation

Position happens - planned ornot

use beer example ie smooth-bitter; dark-blond.


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Positioning Competitively:

Positioning Strategies

Product attributes

Benefits offered

Usage occasions

Classes of users

Directly against or

away from competitor Different product

class


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Positioning Strategy:Choosing and Implementing

Communicate and

deliver chosen position

Select the right

competitive advantage

Identify possible

competitive advantage


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Positioning Strategy:Possible Competitive Advantages

Product differentiation

Service differentiation Personnel differentiation

Image differentation


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Positioning Strategy:Selecting Competitive Advantage

How many differences to promote? Overpositioning, underpositioning, confused positioning

Which differences to promote? Important, distinctive, superior, communicable, pre-emptive, affordable,

profitable


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Communicating and Delivering theChosen Position

Concrete action

Easier to develop

than implement Positions can be

quickly lost


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Repositioning

Repositioning involves changing the place an offering occupies in

a consumers mind relative to competitive offerings. ie Cadillac

or Lays potato chips has no trans-fat label.

Beware of Green washing vrs true greening of the environment.


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GMs Strategy to Reposition ItsMajor Car Brands

A. Consumer perceptions

in 1982 [o] and GM goals

for 1990 []

B. Potential change in goals

from 1990 [] to 2002

High Price

Low Price

Family/

Conservative

Personal/

Expressive

Cadillac o

Buick o

Chevrolet o

o Pontiac

Saturn(1990)

Oldsmobile

o

High Price

Low Price

Family/

ConservativePersonal/

Expressive

Cadillac

Buick

Oldsmobile

??

?

??Chevrolet

Saturn

Pontiac

Documents

#4 Segmentation Ch.8