Segmentation, Targeting, and Positioning

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Segmentation, Targeting, and Positioning

• 10/15, 2008

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To be recognized as a world wide auto maker, you
have to be successful in the U.S. This is a very
difficult market to sell cars in. Customers can
be very picky and unforgiving. - Y.I.
Lee President, Hyundai Motor America
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If we distributed pictures only in the United
States, wed lose money. It takes the whole world
now to make the economics of movie-making
work. - William Mechanic President, 20th
Century Fox
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Market Segmentation

• Market segmentation represents an effort to
  identify and categorize groups of customers and
  countries according to various characteristics
• Global market segmentation is the process of
  dividing the world market into distinct subsets
  of customers that behave in the same way or have
  similar needs
• Pluralization of consumption and Segment
  simultaneity (Levitt)

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Contrasting Views of Global Segmentation

• Conventional Wisdom
• Assume heterogeneity between countries
• Focuses heavily on cultural differences at a
  macro level
• Segmentation relies heavily on clustering of
  national markets
• Within-country micro segments are assigned
  secondary priority

• Unconventional Wisdom
• Assume the emergence of segments that transcend
  national boundaries
• Acknowledges the existence of within-country
  differences
• Emphasizes differences and commonalities in
  micro-level values, consumption patterns, etc.
• Segmentation relies on grouping micro markets
  within a country or between countries
• Micro segments based on consumer behavior are
  assigned high priority

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Global Market Segmentation Matrix
Countries
Maximum Similarities
Maximum Differences
Product/Market Segments
Countries
Maximum Differences
Maximum Similarities
Product/Market Segments
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Macrosegmentation

• Macrosegmentation consists of grouping countries
  on the basis of common characteristics deemed to
  be important for marketing purposes
• The variables typically include sociodemographic
  data on population size and character, disposable
  income levels, educational background, and
  primary language(s), as well as indicators of
  level of development, infrastructure, rate of
  growth in GNP, and political affiliation

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A Market-Oriented Clustering of World Markets

• Dependent societies
• Seekers
• Climbers
• Luxury and leisure societies
• The rocking chair

• Most countries in Africa, Asia, and a few in
  South America
• Most Latin America some in Asia, and some in
  Africa
• Brazil, Venezuela, Portugal, Mexico, Taiwan,
  Malaysia, Turkey, South Korea
• United States, Canada, Japan, United Kingdom,
  Australia
• West Germany, Switzerland, Luxembourg, The
  Netherlands

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Diversification versus Focus Strategy
Factors Diversify if Focus if
Growth rate Demand stability Competitive
lag Spillover Need to adapt product Need to adapt
promotion Marginal sales Need for control Entry
barriers
Low Low Short High Low Low Diminishing Low Low
High High Long Low High High Increasing High High

• Empirical research has shown that generally
  diversified strategies tend to lead to greater
  sales abroad, while concentrated or focused
  strategies tend to result in somewhat higher
  profitability

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Microsegmentation

• In microsegmentation the global market is faced
  with the task of selecting similar target
  segments within the set of countries
• Targeted segments have to possess certain
  characteristics
• Identifiable
• Measurable
• Reachable
• Able to buy
• Willing to buy

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Segmentation Criteria

• Give a clue to what influences the segments
  buying behavior, both the consumption level and
  choice between competing brands
• Should be reflected in published data so that the
  size of the segment can be calculated
• Should help identify the media through which
  marketers can communicate with the segment
• Demographic (income population age
  distribution gender education occupation)
• Psychographic (attitudes values lifestyles)
• Behavior (usage rates user status)
• Benefit
• Ethnic

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Psychographic Segmentation

• Nokias mobile phone users poseurs,
  trendsetter, social contact seekers. and
  highfliers
• Porsches American Customers
• Top Guns (27) Driven and ambitious. Care about
  power and control. Expected to be noticed.
• Elitists (24) Old-money. A careven an
  expensive oneis just a car, not an extension of
  ones personality.
• Proud Patrons (23) Ownership is what counts. A
  car is a trophy, a reward for working hard.
  Being noticed doesnt matter.
• Bon Vivants (17) Cosmopolitan jet setters and
  thrill seekers. Car heightens excitement.
• Fantasists (9) Car represents a form of escape.
  Dont care about impressing others may even
  feel guilty about owning car.

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VALS

• Based on attitudes toward issues such as the
  importance of work, the effectiveness of free
  enterprises, concentration of power, womens
  role, strength of religious belief, personality,
  and satisfaction
• An analysis of 800 such measures across 2,713
  consumers produced nine clusters that were
  labeled Inner-directed consumers
• Integrated Societally conscious Experientials
  I-am-me consumers
• Outer-directed consumers
• Achievers Emulators Belongers
• Need-driven consumers
• Survivors Sustainers

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Three Categories of Consumer Values and Lifestyles

• Need-driven consumers Exhibit spending driven by
  need rather than preference and are subdivided
  into survivors and sustainers, the former among
  the most disadvantaged people in the economy
• Outer-directed consumers Are the backbone of the
  marketplace and generally buy with awareness of
  what other people will attribute to their
  consumption of that product
• Inner-directed consumers They comprise a much
  smaller percentage of the population. Their
  lives are directed more toward their individual
  needs than toward values oriented to externals.
  Although their numbers are small, they may be
  important as trend setters or groups through whom
  successful ideas and products trickle down

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VALS 2 Types
Actualizers
Achievers
Experiencers
Fulfilleds
People Oriented
Status Oriented
Action Oriented
Believers
Strivers
Makers
Strugglers
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YRs Cross-Cultural Consumer Characterizations
(4Cs)

• 4Cs is a 20-country psychographic segmentation
  study focusing on goals, motivations, and values
  that help to determine consumer choice
• The research is based on the assumption that
  there are underlying psychological processes
  involved in human behavior that are culture-free
  and so basic that they can be found over the
  globe
• Seven different types grouped into three overall
  categories Constrained (Resigned Poor and
  Struggling Poor), Middle Majority (Mainstreamers,
  Aspirers, and Succeeders), and Innovators
  (Transitionals and Reformers)

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Consumer Profiles of YRs 4Cs
Purchase Behavior
Attitudes
Work
Lifestyle
Resigned Poor Struggling Poor Mainstreamers Asp
irers Succeeders Transitionals Reformers
Unhappy Distrustful Unhappy Dissatisfied Happy Bel
ong Unhappy Ambitious Happy Industrious Rebellious
Liberal Inner growth Improved world
Labor Unskilled Labor Craftsmen Craftsmen Teaching
Sales White collar Managerial Professional Studen
t Health field Professional Entrepreneur
Shut-in Television Sports Television Family Garden
ing Trendy Sports Fashion mags Travel Dining
out Arts/crafts Special int. mags Reading Cultural
events
Staples Price Price Discount stores Habit Brand
loyal Conspicuous consumption Credit Luxury Qualit
y Impulse Unique products Ecology Homemade/grown
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Positioning

• Positioning refers to the act of locating a brand
  in customers minds over and against other
  products in terms of product attributes and
  benefits that the brand does or does not offer
• Attribute or Benefit
• Quality and Price
• Use or User
• Competition

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Product Space

• The product space map that helps define a
  products or brands position is constructed from
  four sets of data
• Salient attributes
• Evoked set
• Attribute ratings
• Preferences
• In psychology, these diagrams are usually called
  perceptual maps

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Perceptual Map ofInternational Airlines
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?? CX
?? EG
?? BR
?? CI
?? UA
?? MH
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Global Consumer Cultures

• Shared sets of consumption-related symbols
  (product categories, brands, consumption
  activities, and so forth)
• Mass media programming

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Consumer Culture-related Positioning

• Global consumer culture positioning (GCCP)
• Local consumer culture positioning (LCCP)
• Foreign consumer culture positioning (FCCP)

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Consumer Culture-related Positioning (I)

• Global consumer culture positioning (GCCP)
• A strategy that identifies the brand as a symbol
  of a particular global culture or segment
• Effective for communicating with global teens,
  cosmopolitan elites, global-trotting laptop
  warriors who consider themselves members of a
  transnational commerce culture, and other
  groups
• High-tech and high-touch products are both
  associated with high levels of customer
  involvement and by a shared language among users

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GCCP

• High-Tech Positioning
• High-tech products are sophisticated,
  technologically complex, and/or difficult to
  explain or understand
• Consumers often have special needs or interests
  and rational buying motives
• Frequently evaluated against established
  objective standards
• Communications emphasize performance-related
  attributes and features
• High-Touch Positioning
• Consumers feel an emotional or spiritual
  connection with high-touch products
• The positioning can be reinforced by the careful
  selection of the thematic, verbal, or visual
  components incorporated into advertising and
  other communications.
• Both high-Tech and High-Touch
• Satisfy buyers rational criteria while evoking
  an emotional response

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Consumer Culture-related Positioning (II)

• Foreign consumer culture positioning (FCCP)
• A strategy that associates the brands users, use
  occasions, or production origins with a foreign
  country or culture
• Local consumer culture positioning (LCCP)
• A strategy that associates the brand with local
  cultural meanings, reflects the local cultures
  norms, portrays the brand as consumed by local
  people in the national culture, or depicts the
  product as locally produced for local consumers
• Food, personal nondurables, and household
  nondurables

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