MARKET SEGMENTATION, TARGETING, AND POSITIONING

Transcription

1 C H A P T E R T E N MARKET SEGMENTATION, TARGETING, AND POSITIONING 10-1

2 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Explain what market segmentation is, when to use it, and the five steps involved in segmentation. Recognize the different dimensions used to segment consumer and organizational markets. Develop a market-product grid to use in segmenting and targeting a market. Interpret a cross tabulation to analyze market segments. Understand how marketing managers position products in the marketplace. 10-2

3 Sneakers Story: From Little Skirmishes to All-out War Global $12 billion dollar sneaker market for all kinds of athletic shoes. Sneaker manufacturers are searching for new market segments of consumers and ways to differentiate their products from everyone else s. Reebok s marketing research shows that in 1971 only 1 of every 27 women was involved in sports; today it is 1 in 3!! Thus Reebok has put special emphasis on the female market. 10-3

4 Market Segmentation Defined Market segmentation involves aggregating prospective buyers into groups that: 1. Have common needs and 2. Will respond similarly to the marketing action. The groups that result from the market segmentation process are called market segments, a relatively homogeneous collection of prospective buyers. 10-4

5 Product Differentiation Defined Product differentiation, in the broadest sense, involves a firm s using different marketing mix activities, such as product features and advertising, to help consumers perceive the product as being different and better than competing products. The perceived differences may involve physical or nonphysical features, such as image or price. In a narrower sense, product differentiation involves a firm s selling two or more products with different features targeted to different market segments. 10-5

6 PP10-1 Market Segmentation Links Market Needs to an Organization s Marketing Program Identify market needs Benefits in terms of: Product Features Expense Quality Savings in time and convenience Process of segmenting and targeting markets Execute marketing program A marketing mix in terms of: Product Price Promotion Place 10-6

7 PP10-2 Reebok Market-Product Grid Market Segment Product GROUP Running Aerobic Tennis Basketball Children s Walking Cross Step Athletic Golf WITH Shoes Shoes Shoes Shoes Shoes Shoes Train g Train g clothing shoes General NEED runners P P Performance- aerobic P p conscious dancers consumers tennis P P (athletes) players basketball P P players step S P exercisers golfers P P Fashion- comfort & S S S S S S S conscious style consumers conscious (nonathletes) walkers S S S S P P children P KEY: P=Primary Market S=Secondary Market 10-7

8 When To Segment 1. One Product & Multiple Market Segments 2. Multiple Products & Multiple Market Segments 3. Segments of One: Mass Customization 10-8

9 Concept Check 1. Market segmentation involves aggregating prospective buyers into groups that have two key characteristics. What are they? 2. What is product differentiation? 3. The process of segmenting and targeting markets is a bridge between what two marketing activities? 10-9

10 PP10-3 Five Steps in Segmenting and Targeting Markets Identify market needs Steps in segmenting and targeting markets Form prospective buyers into segments Form products to be sold into groups Develop a market-product grid and estimate size of markets Select target markets Take marketing actions to reach target markets Execute marketing program 10-10

11 Criteria to Use in Forming Market Segments 1. Potential for increased profit and ROI. 2. Similarity of needs of potential buyers within a segment. 3. Difference of needs of buyers among segments. 4. Feasibility of marketing action to reach a segment. 5. Simplicity and cost of assigning potential buyers to segments

12 PP10-4a Canadian Consumer Market Segmentation Variables MAIN DIMENSION SEGMENTATION VARIABLES CUSTOMER CHARACTERISTICS TYPICAL BREAKDOWNS Geographic Demographic Region City or Census Metropolitan area (CMA) size Density Climate Gender Age Race Life Stage Income Family size Home ownership Education Atlantic, Quebec, Ontario, Prairies, British Columbia Under 5,000; 5,000-19,999; 20,000-49,999; 50,000-99,999; 100, ,999; 250, ,999; 500, ,999; 1,000,000 or more Urban; suburban; small town; rural East; West Male; female Under 6; 6-11; 12-17; 18-24; 25-34; 35-44; 45-54; 55-64; 65-74; 75 and over White; Black; Asian; Native; other Young single; young married; older married; etc. Under $10,000; 10,000-19,9999; 20,000-29,999; 30,000-39,999 40,000-54,999; 55,000-74,999; $75,000+ 1; 2; 3; 4; 5 or more Own home; rent home Grade school or less; some high school; high school graduate; some college; college graduate

13 PP10-4b Canadian Consumer Market Segmentation Variables MAIN DIMENSION SEGMENTATION VARIABLES TYPICAL BREAKDOWNS CUSTOMER CHARACTERISTICS Behavioural Benefits sought Usage rate User status Loyalty status Quality; service; low cost Light user; medium user; heavy user Non-user; ex-user; prospect; first-time user; regular user None; medium; strong Psychographic Personality Lifestyle (GoldFarb Segments) Gregarious; compulsive; extroverted; introverted Structured; discontented; fearful; assured; resentful; caring 10-13

14 PP10-5 Segmentation Variables for Organizational Markets MAIN MAIN DIMENSIONS DIMENSIONS VARIABLES VARIABLES TYPICAL TYPICAL BREAKDOWNS BREAKDOWNS Geographic Geographic Region Region Atlantic, Atlantic, Quebec, Quebec, Ontario, Ontario, segmentation segmentation Prairies, Prairies, British British Columbia Columbia Location Location In In CMA; CMA; not not in in CMA CMA Demographic Demographic NAICS NAICS code code 2-digit; 2-digit; 3-digit; 3-digit; 4-digit; 4-digit; 5-digit 5-digit segmentation segmentation categories categories Number Number of of Employees Employees 1 19; 1 19; 20 99; 20 99; ; ; Annual Annual Sales Sales Volume Volume Less Less than than $1 $1 million; million; $1 10 $1 10 million; million; $ $ million; million; over over $100 $100 million million Behavioural Behavioural Benefits Benefits sought sought Quality; Quality; customer customer service; service; low low segmentation segmentation price price Usage Usage rate rate Light Light user; user; medium medium user; user; heavy heavy user user User User status status Nonuser; Nonuser; ex-user; ex-user; prospect; prospect; firsttime firsttime user; user; regular regular user user Loyalty Loyalty status status None; None; medium; medium; strong strong Purchase Purchase method method Centralized; Centralized; decentralized; decentralized; Individual; Individual; group group Type Type of of buy buy New New buy; buy; modified modified rebuy; rebuy; straight straight rebuy rebuy 10-14

15 PP10-6 Selecting a Target Market for your Fast-Food Restaurant Next to an Urban University PRODUCTS: MEALS BETWEEN- AFTER- BREAK- MEAL DINNER MARKETS FAST LUNCH SNACK DINNER SNACK STUDENT Dormitory Apartment Day Commuter Night Commuter NONSTUDENT Faculty or Staff Live in area Work in area Key: 3 Large market; 2 meduim market; 1 small market; 0 no market 10-15

16 Criteria to Use in Picking the Target Segments 1. Size: The estimated size of the market to determine whether or not it is worth going after. 2. Expected Growth: The size of the market may be small, but if it is growing significantly it may be worth going after. 3. Competitive position: The less competition the more attractive the market

17 Criteria to Use in Picking the Target Segments 4. Cost of reaching the market: Is the market accessible to a firm s marketing actions? If not it should not be pursued. 5. Compatibility with the organization s objectives and resources

18 PP10-7 Advertising Actions to Reach Specific Student Segments PRODUCTS: MEALS BETWEEN- AFTER- MEAL DINNER MARKETS LUNCH SNACK DINNER SNACK Dormitory students Apartment students Day Commuter students Night Commuter students Ads in buses; flyers under windshield wipers of cars in parking lots Ad campaign: Ten percent off all purchases between 2:00 and 4:30 P.M. during winter quarter Ad on flyer under windshield wipers of cars in night parking lots: Free Frosty with this coupon when you buy a hamburger and french fries

19 PP10-MNN Apple s Segmentation Strategy MARKETS PRODUCTS (PERSONAL COMPUTERS) SECTOR SEGMENT POWER MACINTOSH G3 POWERBOOK G3 IMAC POWER MACINTOSH G3 SERVER Consumer/ household Family/ Games EDUCATION Primary through OAC Community College and University Students Faculty/ administration Students Faculty/ administration COMMERICAL Small business Large business Design and Publishing Owners/ employees Administration/ technical Media/graphics/ Internet Desktop publishing 10-19

20 Concept Check 1. What are some of the variables used to segment customer markets? 2. What are some criteria used to decide which segments to choose for targets? 3. Why is usage rate important in segmentation studies? 10-20

21 Definition of Cross Tabulation A cross tabulation, or cross-tab is is.... a method of of presenting and relating data having two or or more variables. Cross tabs are used to to analyze and discover relationships in in the data. An important aspect of of cross tabulations is is deciding which two variables should be be paired together for analysis

22 PP10-8 Cross Tabulations A. ABSOLUTE FREQUENCIES FREQUENCY AGE OF HEAD OF ONCE 2 OR 3 ONCE HOUSEHOLD A WEEK TIMES A MONTH (YEARS) OR MORE A MONTH OR LESS TOTAL 24 or less 25 to or over Total B. ROW PERCENTAGES: RUNNING PERCENTAGES HORIZONTALLY AGE OF HEAD OF ONCE 2 OR 3 ONCE HOUSEHOLD A WEEK TIMES A MONTH (YEARS) OR MORE A MONTH OR LESS TOTAL 24 or less 25 to or over Total 67.0% % % 30.6% 23.0% 100.0% 10-22

23 The Value of Cross Tabulations The most widely used technique for organizing and presenting marketing data. The simple format allows direct interpretation and an easy means of communicating data to management

24 The Value of Cross Tabulations They have great flexibility and can be used to summarize experimental, observational, and questionnaire data. The ultimate value of cross tabulations to a marketing manager lies in obtaining a better understanding of the wants and needs of buyers and targeting key segments

25 Product Positioning Product Positioning refers to the place an offering occupies in consumers minds on important attributes relative to competitive offerings. 2 Approaches to Product Positioning: 1. Head-to-Head Positioning: involves competing directly with competitors on similar attributes in the same target market. 2. Differentiation Positioning: involves seeking a less competitive, smaller market niche in which to locate a brand

26 Perceptual Maps A key to positioning a product effectively is the perceptions of consumers. In determining a brand s position and the preferences of consumers, companies obtain three types of data from consumers: 1. Evaluations of the important attributes for a product class. 2. Judgments of the existing brands with the important attributes. 3. Ratings of an ideal brand s attributes

27 Perceptual Maps From these data, it is possible to develop a perceptual map, a means of displaying via two dimensions the location products or brands occupy in the minds of consumers

28 PP10-9 GM s Strategy to Reposition Its Major Car Brands A. Consumer perceptions in 1982 [o] and GM goals for 1990 [] Cadillac o Buick o Family/ Conservative Chevrolet o High Price Oldsmobile o o Pontiac Low Price Personal/ Expressive Saturn (1990) B. Potential change in goals from 1990 [] to 2002 Cadillac Buick Family/ Conservative Chevrolet? High Price? Oldsmobile Pontiac? Low Price?? Personal/ Expressive Saturn 10-28

29 Repositioning Repositioning involves changing the place an offering occupies in a consumer s mind relative to competitive offerings

30 Concept Check 1. What is cross tabulation? 2. What are some advantages of cross tabulations? 3. Why do marketers use perceptual maps in product positioning decisions? 10-30

31 SLN10-1 Market-Product Grid Showing Size of Markets for Pillows for Three Different Segments of Sleepers Products Medium Markets Soft Pillow Pillow Firm Pillow Stomach Sleepers L M S Back Sleepers M L M Side Sleepers S M L KEY: L, Large Market; M, medium market; S, small market 10-31