Market Segmentation and Product Positioning

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Market Segmentationand Product Positioning
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Exercise

• If Starbucks Via was a person, what would that
  person be like? Describe his/her characteristics
  and interests.
• What does this tell you?

Are your descriptions consistent with the way
Starbucks Via is being promoted (and
positioned)?MacBeth and Kyle love Via! Far Out
Via Coffee
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What is Market Segmentation?

• Market segmentation is the process of dividing a
  market into groups of similar consumers and
  selecting the most appropriate group(s) of
  individuals for the firm to serve
• Why Segment?
• Fragmentation Different groups have different
  needs/wants
• Allows marketers to establish appropriate
  marketing mix for a given segment

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Five Tasks In Market Segmentation
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(1) Analyze Consumer-Product Relations

• Analyzing C-P Relations involves figuring out
  how affect, cognition and behavior are relevant
  to how consumers experience a product
• Three Approaches
• Brainstorming to figure out what types of
  consumers are most likely to buy product and how
  they differ from other groups of customers
• Focus groups can be used to identify what
  customers want, their values, etc.
• Secondary research can be used to gain additional
  information on key market segments

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Five Tasks In Market Segmentation
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(2) Investigate Segmentation Bases

• Four common segmentation bases
• Benefit
• Psychographic
• Person/situation
• Geodemographic

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Benefit Segmentation

• Divide the market up on the basis of the benefits
  they seek from a product.
• An example toothpaste

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Psychographic Segmentation

• Psychographics
• Uses psychological, sociological, anthropological
  factors to develop segments
• Personality (sensation seeking)
• Motives (status)
• Lifestyles (HOGs)
• VALS2 (Values Lifestyles) System
• Based on psychological characteristics that
  relate to consumer behavior
• Can Identify Prevalence of 8 Types by Zip Code

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Values and Lifestyles (VALS) System
High Resources High Innovation
Achivem.
Self Expr.
Ideals
VALS Web Site
Low Resources Low Innovation
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VALS Types Part 1
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VALS Types Part 2
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Person/Situation Segmentation

• Divide market up on the basis of the benefits
  certain types of individuals (person) desire in
  certain situations (situation)
• Different strokes, for different folksin
  different situations
• An Example Old Spice

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Person/Situation Segmentation (Steps)

• Figure out if there are different usage
  situations that influence which attributes are
  important
• Assess perceptions of different segments about
  product in different situations
• Create user x usage matrix
• (cont. on next slide)

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Person/Situation Segmentation (Steps)

• Rank cells in terms of market share
• Identify important benefits sought in each cell
  of matrix
• Figure out where your competitors are located in
  the matrix
• Position your product in matrix and figure out
  how well you are meeting the need relative to
  your competitor
• Identify opportunities based on segment size,
  needs, and competitive advantage of your offering

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Demographic Segmentation

• Demographic Segmentation
• Age, sex,, income, education, family size,
  occupation, marital status
• Sociocultural Segmentation
• Culture, religion, race, social class
• Generational Segmentation
• Kids, tweens, teens, Gen X, Gen Y, Gen Z, Boomers

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Geodemographic Segmentation

• Geodemography
• Combination of geographic and demographic
  information
• Creates classifications of actual, addressable,
  mappable neighborhoods where consumers live and
  shop
• PRIZM NE system by Claritas
• Assumes consumers in certain neighborhoods are
  similar in many respects and that the best
  prospects are those who actually use a product or
  other consumes like them
• 66 clusters (one example) ?

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Sample Claritas (PRIZM) Cluster
YOUNG INFLUENTIALS (22) Once known as the home of
the nation's yuppies, Young Influentials reflects
the fading glow of acquisitive yuppiedom. Today,
the segment is a common address for younger,
middle-class singles and couples who are more
preoccupied with balancing work and leisure
pursuits. Having recently left college dorms,
they now live in apartment complexes surrounded
by ball fields, health clubs, and casual-dining
restaurants.
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Five Tasks In Market Segmentation
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(3) Positioning

• Four Steps in Positioning
• Evaluate (direct and indirect) competition
• Create product/service with competitive advantage
• Attribute (Komperdell Gloves Seamless
  Technology)
• Use or application (A Snapple A Day)
• Product user (Zales three store concepts)
• Product class (Position margarine as butter)
• Competitor (Burger King vs. McDonalds)
• Price/quality (Target an upscale discounter)
• Emotion (Nike - Just Do It!)

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(3) Positioning

• Four Steps in Positioning
• Evaluate (direct and indirect) competition
• Create product/service with competitive advantage
• Develop marketing mix to appeal to target segment
• Measure response and adapt strategy if needed
• May need to reposition product/service
• Repositioning may involve bringing old brand back
  to life (retro brand).

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Creating the Brand Personality

• Brand Personality
• A distinctive image that captures a products or
  services essence (character, benefits)
• Where does my brand stand?
• Ask customers what characteristics are important
• Measure your brand and competition on those
  dimensions
• Plot and evaluate your brands location in a
  perceptual map

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Describe These Brand Personalities
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Perceptual Map
Classy/Distinctive
Conservative
Sporty
Practical/Affordable
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Five Tasks In Market Segmentation
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(4) Select Segmentation Strategy

• Four basic segmentation strategy alternatives
• Do not to enter the market
• Be a mass marketer instead of segmenting
• Market to only one segment
• Market more than one segment and design a
  separate marketing strategy for each

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Criteria for Successful Segmentation

• Sustainable
• Large enough to justify its own marketing mix
• Identifiable and Measurable
• If not, can not determine whether its
  sustainable
• Accessible
• Must be able to reach segment with marketing mix
• Responsive
• The segment responds differently than another
  segment
• If not, no need to develop unique marketing mix

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Five Tasks In Market Segmentation
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(5) Design the Marketing Mix

• Marketing Mix
• Product
• Price
• Promotion
• Place
• Closely linked with the segmentation strategy

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Wrapping UpAn Application to Sports Marketing
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Some of My Favorite Products
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What Do All TheseProducts Do For Me?Means End
Chain
Product Attributes
Functional Consequences
Psychological Consequences
Personal Values