Segmentation Targeting and Positioning Professor Lawrence Feick University

Segmentation, Targeting, and Positioning Professor Lawrence Feick University of Pittsburgh

Outline • Definitions • Segmentation and Targeting – segmentation bases – criteria • Positioning – definition and uses – perceptual maps • Summary

Definitions: markets • Market – people or organizations with the willingness, ability, and authority to buy a product • Target market – people or organizations to whom a particular marketing mix is aimed • Segmentation – dividing a heterogeneous market into homogeneous submarkets

Definitions: targeting approaches • Mass market (undifferentiated marketing) • Segmentation – focus (concentrated marketing, niche marketing) – multi-segment (differentiated marketing)

Segmentation questions • Segmentation – dividing a heterogeneous market into homogeneous submarkets • Questions: – heterogeneous on what? – on what basis to divide? – how finely to divide?

Segmentation bases • Segmentation base: the variable or variables on which the market is divided • A good segmentation base should: – yield differences in product behavior – give insight into why consumers buy – help guide marketing mix decisions

Types of segmentation bases • Independent of product category – demographic characteristics – geographic characteristics – psychographic/AIO characteristics • Product category related – benefits sought/needs met – product usage, brand loyalty, price sensitivity

Examples of demo/geo-graphics • • • Age Income Education Marital status Family lifecycle Region of country

Ebony, June 1998

Family Circle, June 1998

Proprietary geodemographic segmentation solutions • Census data updated and augmented with purchases, subscriptions, auto registrations • Group (cluster) geographic regions that are similar: often zip code-based • Uses: direct mail, media buys, site location • Eg: PRIZM from Claritas. Check it out: – http: //www. claritas. com/prizm. htm

Examples of psychographics • Activities – work, hobbies, social events, vacation, clubs • Interests – family, home, job, community, fashion, food • Opinions – self, politics, social issues, business, culture • Lifestyle – VALS 2 groups

What is your VALS 2 type? • Typical questions: – I follow the latest trends in fashion – I would rather make something than buy it – I would like to spend a year or more in a foreign country • Check it out at: – http: //future. sri. com/vals/survey. html

Examples of benefits sought • Toothpaste – cavity prevention, whiteness, fresh breath • Cake mix – ease of preparation, cost, taste, uniqueness • Cameras – ease of use, technical features, compactness

Redbook, July 1998

Examples of product-related segmentation • Product usage: nonusers, light users, heavy users – e. g. , beer, soft drinks, movie renters • Brand loyalty: loyals and switchers – e. g. , laundry detergent, coffee • Price sensitive v. price insensitive

Selecting segments • • • Segment size Segment growth and growth potential Present and future competition Consumer purchase ability and likelihood Reachability

Positioning • Usage is sloppy- often combining a brand’s position with the marketers actions to create the position • Position: brand meaning perceived by the target market in terms of – other, competing products – perceived product characteristics, features

How the manufacturer sees the product

Manufacturer’s view • • It is made from a durable alloy It is sold through independent dealers It has a three year warranty It is the best we have ever produced

How the customer sees the product

Target market’s view • It looks really good and seems sturdier than brand x or y • Can it fit in my apartment? • Would people like me buy one?

Positioning matters! • Virginia Slims • Acura, Lexus, Infiniti • Vodka

What affects a product’s position? • Product: design, features, style, packaging, warranty • Price: price level, discounts • Promotion: message, media, sales promotion, publicity • Distribution: exclusivity of coverage, types of retailer

Issues in positioning • What/how many characteristics do consumers use to distinguish products? • Where are existing products located with respect to these characteristics? • Where is an ideal product located?

Perceptual mapping • Statistical tools used to locate products in terms of perceived characteristics • Interpretation: – Products closer together are perceived as similar – Similarity relates to competitiveness • Can also plot “ideal points”

Perceptual maps: examples • Pain reliever map (text page 251) • US auto industry circa 1985

Perceptual map of the US auto market circa 1985 Classy, prestigious, distinctive Cadillac Mercedes-Benz Porsche Conservative, BMW Chrysler Buick Oldsmobile Pontiac older appeal Chevrolet Datsun Toyota Dodge Volkswagen Practical, inexpensive to own and operate Sporty, youth oriented, performance

Questions • What is the most likely competitor for Cadillac? • Would a GM manager be happy about Buick and Oldsmobile? • How is VW perceived in the US in 1998 compared to the mid 1980 s?

Reprise: segmentation, targeting, and positioning • Benefits: – focus on meeting customer needs, wards off competition, and helps anticipate changes – increases focus on longer term relationship • Costs – segments foregone • Issues – Colt 45, Joe Camel