Segmentation, Targeting & Positioning Prof. John Fahy, University of Limerick What Are You Going to Learn Today? What is meant by the core ideas of segmentation, targeting and positioning? What is Market Segmentation The identification of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy Jobber & Fahy (2009) 1
Why Segment Markets? Segmentation of Airline Passengers Class Passen. Price ( ) Undifferentiated Strategy Differentiated Strategy V. C. Rev. ( ) T. V. C. F. C. Profit ( ) 240 250 20 60,000 4,800 50,000 5,200 Econ. 144 250 20 36,000 2,880 Bus. 72 500 40 36,000 2,880 First 24 1,000 100 24,000 2,400 Total 240 96,000 8,160 50,000 37,840 Source: Doyle (1998) Missing the Opportunity! Chasing Legends 2
The Challenge Tours! Gives amateur cyclists a chance to ride the same course as the pros Slogan = Ride with the pros Different race lengths designed for inexperienced to competitive cyclists Growing dissatisfaction with the experience The Opportunity Registration information gives rich demographic, geographic & behavioural data Different segments have different motives and look for different rewards Segmentation allows for differentiated strategies Segmentation increases satisfaction & loyalty The Grey Goose Story Grey Goose Advert 3
The Grey Goose Story What kind of consumer is this product aimed at? What is its value proposition? Are there consumers that it is not aimed at? Grey Goose Marketing Company founded in 1996 Develop a super-premium segment for vodka French crafting in the Cognac region Bottle design smoked glass and silhouette Launched at twice the price of Absolut. Sold to Bacardi Group in 2004 for US$2bn Why was Grey Goose so successful? Named the best tasting vodka in the world by the Beverage Testing Institute in 1998 Event Marketing Get it to the hottest people in the hottest clubs in town Placement in Sex and the City 4
Sidney Frank s Marketing Genius How: Core Bases For Segmenting Consumer Markets Geographic Country, Urban/Rural etc Demographic Age, Family Size, Income, Education, etc. Psychographic Social class, lifestyle type, personality type, etc. Behavioural Product usage, benefits, type of user, etc. Segmenting Markets? Segment any three markets of your choice using the criteria listed! 5
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Benefit Segmentation Decay Prevention Fresh Breath Taste White Teeth Criteria For Good Segmentation Effective Identifiable Profitable Accessible Actionable Diet Coke Advert Coke Zero Advert Porsche s Challenge Launched 911 in 1964 Motor racing origins Legacy, performance & pricing 7
Porsche s Differentiated Strategy 2004: Porsche SUV the Cayenne Disliked by Porsche loyalists but grows to outsell the 911 in the US 2009: Panemera 4-seater luxury car (BMW 7 series, etc) 43,000 units sold since launch 2011: Re-positioning the 911 Everyday car Re-positioning the 911 Porsche Advert Evaluate Porsche s Strategy Advantages Disadvantages 8
Segmenting Markets Target Market Strategies Positioning Strategy Target marketing strategies Undifferentiated marketing Differentiated marketing Focused marketing Customized marketing Target marketing strategies Undifferentiated marketing Marketing mix Whole market 9
Price 2/10/2012 Target marketing strategies Differentiated marketing Marketing mix 1 Segment 1 Marketing mix 2 Marketing mix 3 Segment 2 Segment 3 Covering The Major Segments or. High Above Average Average Low Low Quality Level High Causing Confusion 10
Target marketing strategies Focused marketing Segment 1 Segment 2 Marketing mix Segment 3 To Exploit Opportunities Targets Up-Market Customers Focus on Product Quality Built a Brand Community High Quality but not Rolls-Royce, more BMW Target marketing strategies Customized marketing Marketing mix 1 Customer 1 Marketing mix 2 Marketing mix 3 Customer 2 Customer 3 11
Customised Marketing Mass Customisation One-To-One Marketing Customer Relationship Marketing (CRM) http://www.mymms.com/ http://www.bmw.co.uk/bmwuk/homepage/ Segmenting Markets Target Market Strategies Positioning Strategy The Saab Story Saab Advert 12
Saab s Positioning Problems Distinctive, high performance cars GM takeover in 2000, cars made on the same platform as Opel and Vectra No clear positioning in market or GM family Sales of 132,000 units in 2003 below 1987 Skyper buys Saab for $74m in 2010 when Saab had sales of 90,000 units and 3,400 employees Why did Saab collapse so badly? What Is Positioning? The act of designing the company s offering and image so that they occupy a meaningful and distinct position in the target customers minds. 13
Why Is Positioning Important? We live in an over-communicated society Consumers consciously attend to between 5 & 15% of advertising Consumer recall of adverts had fallen from 34% in 1965 to 8% in 1990 2007 study found consumers could recall 2.21 adverts ever seen Over-simplified messages are needed to get through to the prospect s mind L'Oreal Advert The Ladders in Your Customers Heads What we take in is related to what s there already We know only a few brands in any category These brands are rungs on a ladder New categories must relate to old ones Growing a brand means dislodging another Source: Ries & Trout (1986) Nike: Successful Positioning? Established in 1964 Late entrant into the shoe market dominated by Adidas, Reebok, Puma, Brooks, Tiger Market leader in sportswear in the 1990s Built brand around sports celebrities & massive advertising expenditure Ad spending grew from $30m in 1987 to $500m in 1997.. What is the Nike position in the marketplace? 14
Keys to Successful Positioning Clarity Consistency Successful Positioning Credibility Competitiveness John Fahy, 2012 Develop A Positioning Statement A plausible, memorable, image-enhancing written summation of a product s desired stature The ultimate driving machine Because I m worth it Probably the best lager in the world Positioning Strategy What space do we occupy in our customer s minds? Is it clear, credible, consistent, competitive? Is it captured in a meaningful statement? 15
Changing Mental Images! Cider A recruitment drink Cider parties Anti-social behaviour Small, declining market Repositioning Cider! Bulmers Irish Advert Target older consumers Television advertising Rugby and golf sponsorship Long necks v flagons Premium pricing Grew market share from 3% to 15% The Evolution of the Lucozade Brand: John Fahy, 2012 16
What To Do Next! Read Chapter 5 Foundations of Marketing Go To http://highered.mcgrawhill.com/sites/0077121902/student_view0/ind ex.html and take the chapter 5 online test Listen to the podcast at johnfahy.net Summary Write down your three key learning points from this section? 17