MGMT 252

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MGMT 252

• Lecture 4
• Segmentation and Positioning

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Todays Agenda

• What is Segmentation?
• Four Main Types of Segmentation
• Geographic
• Demographic
• Psychographic
• Behavioural
• Selecting a Target Market
• Positioning Strategies

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Recall Marketers tasks
TODAY
Look for Opportunities Consumer Competition Com
pany (Uncontrollable 3Cs)
Implement Positioning Product Price Promotion
Place (Controllable 4Ps)
Segmenting Targeting Positioning (STP)
What is Segmentation?
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Next few slides

• How to segment a population?
• How to identify target markets?
• How to position product in target market?

What is Segmentation?
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A Definition

• Segmentation is the process of dividing the total
  heterogeneous market for a product or service
  into several segments, each of which tends to be
  homogeneous in some significant aspects.

What is Segmentation?
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Example 1 One company serving many segments

• Air Travel
• Business/Executive Inflexible price
  insensitive. Small number of people, but travel
  often.
• Leisure Traveler/Student Flexible very price
  sensitive (other methods of travel--e.g., bus,
  car, train--are feasible travel may not be
  essential). Very large segment.

What is Segmentation?
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Example 2Different companies serve different
segments

• Canoe (located in the 54th floor of TD tower)
  serves customers who are well-off, care about
  quality, atmosphere, and services.
• McDonald (everywhere) serves customers who care
  about convenience,

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Requirements for effective segmentation

• Profitable
• and sustainable over time
• Measurable
• with accessible data
• Accessible
• through existing distribution, advertising, etc.

What is Segmentation?
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More requirements for effective segmentation

• Good segments are also
• Homogenous
• similar needs and desires within segments
• Mutually exclusive
• Different needs and desires among segments

What is Segmentation?
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Mass Marketing Same product to all consumers (no
segmentation)
Differentiated (Segmented) Marketing Different
products to one or more segments (some
segmentation)
Levels of segmentation
Niche Marketing Different products to subgroups
within segments (more segmentation)
Micro-marketing Products to suit the tastes of
individuals or locations (complete segmentation)
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Bases for market segmentation
Common bases for segmentation

• Geographic
• e.g., region, city size, density, climate
• Demographic
• e.g., age, gender, family size, income,
  occupation, religion, ethnic group
• Psychographic
• e.g., personality, lifestyle
• Behaviour
• e.g., usage rate, benefit desired

Bases of Segmentation
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Geographic Segmentation

• Regional distribution people within a given
  region tend to share values and attitudes.
• Urban, suburban, and rural distribution.
• Census Metropolitan Areas (CMAs).
• Suburban growth and back to the city.
• Geodemographic Clustering using postal codes to
  cluster segments.
• Examples?

Bases of Segmentation
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Geographic Segmentation Example

• Canwest/Global Newspapers (Southam)

Bases of Segmentation
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Geographic Segmentation Example

• GMC trucks in rural Canada/US
• Suzuki in Japan/Europe

Bases of Segmentation
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Geographic segmentation

• Home Depot introduces neighbourhood stores.
• Wal-mart is testing Neighbourhood Market grocery
  stores

Bases of Segmentation
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Segmentation by Demographics

• identifying the target segment involves
  developing a detailed profile of its members
• demographic differences are easiest to observe
  but are very simplistic
• consider differences across segments based upon
  age, gender, stage of life cycle, education,
  ethnic background, or occupation
• think about the target demographic segments for
  some new products and services

Bases of Segmentation
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Demographic Segmentation Example

• Often multidimensional
• Combine different demographics to come up with
  the segment profile
• Toyota targets
• Affluent people with Lexus
• Middle income people with Toyota

Bases of Segmentation
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Segmentation by Psychographics

• Some types of psychographic segmentation
• Personality
• Generally not practical to measure or to reach
• Lifestyle
• Consumers tend to buy products and services that
  are consistent with their lifestyle
• Lifestyle f(activities, interests, opinions)
• Social Class
• Different from income Upper, upper middle

Bases of Segmentation
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Segmentation by Behaviour

• Relationship
• Frequency of Contact Do they visit often?
• Loyalty Do they only visit you?
• Benefits Desired (e.g. Clothing)
• Sensories Comfortable fabric
• Sociables Stylish look
• Worriers Hypo-allergenic
• Independents Lowest price
• Usage Rate
• How much and how often?

Bases of Segmentation
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Selecting Target Markets

• target segments should be compatible with the
  organizations goals and image
• the market opportunity represented by the segment
  must match the companys resources
• the segment must represent an opportunity to
  generate enough sales to generate a profit
• the company should select target segments where
  it can enjoy a competitive advantage

Target Markets
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Target Market Strategies

• market aggregation target the product or service
  to a mass market with little differentiation
• single-segment segmentation selecting a single
  segment to target if the segment is small, this
  may be considered a niche strategy
• multiple-segment segmentation identifying two or
  more segments as target markets involves
  developing a different marketing approach for each

Target Markets
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Positioning

• Positioning arranging for a product to occupy a
  clear, distinctive, and desirable place relative
  to competing products in the minds of target
  consumers (via the use of various marketing
  techniques and marketing-mix variables).

Positioning
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Product Position

• Product position the way the product is defined
  by consumers on important attributes the place
  the product occupies in consumers minds relative
  to competing products.
• E.g. automobile. What attributes are important
  to consumers?

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Choosing a Positioning Strategy

• Identifying a set of possible competitive
  advantages.
• Choosing the right competitive advantages.
• Selecting an overall positioning strategy.

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Positioning Strategies

• Against Competition Were as good or better
  Cola Wars, battery-bashers.
• Market Gap Find spot others missed. Niche
  producers make vinyl records.
• Set Brand Apart Stress your differences and
  avoid head-to-head competition. Nothing runs
  like a Deere.
• Leadership Be the one others follow. Used by
  Presidents Choice, Sony.
• Lifestyle Segment Appeals Use lifestyle to
  define. Some buy fancy cameras to take creative
  photography, others to impress.

Positioning
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Positioning strategies

• How do you differentiate yourself?
• Positioning by
• attributes
• benefit
• usage situation
• users
• competitors

Positioning
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Positioning by attributes
Volvo Safety
Positioning
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Positioning by benefit

• Examples
• Crest cavity prevention
• Aim good taste

Positioning
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Positioning by usage situation

• Examples
• NyQuil Nighttime cold medicine
• J J baby shampoo

Positioning
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Positioning with competitors

• Examples
• Margarine (against competitors)
• It tastes so good that I cant tell the
  difference
• I cant believe its not butter
• Butter (away from competitors) Only butter is
  butter

Positioning
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Perceptual map of beer brands
Positioning
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- and one for automobiles
Stylish, prestigious, distinctive
TM2
TM3
Staid, conservative, older
Fun, sporty, fast
TM1
Practical, common, economical
Positioning
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Potential positioning problems

• Positioning against something consumers already
  know
• usually the market leader
• Avis rental cars
• Were Number 2. We try harder.
• Tylenol
• For the millions who cant take

aspirin.
Positioning
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Potential positioning problems

• Positioning in a too-crowded marketplace
• overpositioning - narrow image
• If you like Kung Fu movies, dont miss
  Fearless
• Positioning on an unimportant attribute
• Tallest hotel in the world
• Crystal Pepsi
• Unwanted product modification
• New Coke

Positioning
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Key points for STP
Effective marketing is customer driven.

• Step 1 What kinds of customers are there
  (segmentation)?
• Step 2 Target the customer segment that can
  deliver to you the most value in as unique a way
  as possible.
• Step 3 Choose a position that communicates
  your unique and differentiable position.
• Step 4 Evaluate market response and reposition.

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Summary

• Segmentation is the process of dividing a large
  market into smaller markets
• Four Main Types of Segmentation
• Geographic
• Demographic
• Psychographic
• Behavioural
• Selecting a Target Market
• Positioning Strategies