DIRECT MARKETING and e-COMMERCE

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UNDERSTANDING the MARKET ENVIRONMENT SEGMENTING,
TARGETING and POSITIONING
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China is an attractive target market for many
companies because of its huge population ---
Kotler et al.2006
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Segmentation breaking down of a diverse,
heterogeneous markets
Positioning Act of assigning representing a
brand
STP
Target Segment Focus to sub group
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1. Break the market into smaller, more homogeneous
   segments
2. Specifically target the discrete market segments
3. Position the product or service to appeal to the
   targeted segments.

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Overview Segmentation, Targeting Positioning
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The Value of STP Marketing. WHY??

• Precise Specification of Marketing Objectives
• Better Understanding of Needs and Motives of
  Target Market
• Better Understanding of Customers and Non
  customers
• More Efficient Allocation of Resources
• Ability to Assess Strengths and Weaknesses
• Ability to Identify Messages to be Used Across
  All Promotional Tools
• Better IMC Management of Promotional Effort
• Ability to Respond More Quickly to Changes in the
  Environment

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Beyond STP Marketing. AFTER??

• STP Decisions are Continuously Evolving Due to
  the Dynamic Nature of Markets
• To Maintain the Profitability of Brands,
  Segmentation Decisions Must be Reassessed
  Regularly
• Product Differentiation Infuses STP Decisions
  with Vitality
• 4.4

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Market Segmentation - Principles

• Segmentation Variables
• Geographic
• Demographic
• Psychographic
• Behavioral
• Other (anything!)
• No single best way to segment a market.
• Often best to combine variables and identify
  smaller, better-defined target groups.

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Demographic Segmentation

• Segmentation Based on Physical Descriptors of
  Individuals
• Age
• Gender
• Ethnic Background
• Education
• Marital Status
• Occupation

Are you a DINK?
What are you?
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Demographic Segmentation

• Use Differences in
• age, gender, family size, family life cycle,
  income, occupation, education, race, and religion
• Most frequently used segmentation variable
• Ease of measurement and high availability.
• Usually the worst variable to use.

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Brands in Common Product Categories Can Be
Targeted to Audiences Based on Ethnic
Background 4.6
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What is the Basis for Segmentation in
this Message? 4.7
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Geographic Segmentation

• Divide markets into different geographic units.
• Examples
• World Region or Country North America, Western
  Europe, European Union, Pacific Rim, Mexico, etc.
• Country Region Pacific, Mountain, East Coast,
  etc.
• City or Metro Size New York, San Francisco
• Population Density rural, suburban, urban
• Climate northern, southern, tropical,
  semi-tropical

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• Climate Topographical Features
• Food Preferences Preparation Habits
• Entertainment Preferences
• Recreational Activities
• 4.8

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Behavioral Segmentation

• Occasion
• Special promotions labels for holidays.
• Special products for special occasions.
• Benefits Sought
• Different segments desire different benefits from
  the same products.

• Loyalty Status
• Nonusers, ex-users, potential users, first-time
  users, regular users.
• Usage Rate
• Light, medium, heavy.

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Loyalty Status Segmentation
Hard-core
Split loyals
Shifting loyals
Switchers
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WHO you are? WHAT you buy? HOW you use?
Do you need to spend gt RM?

• Usage Patterns Commitment Levels
• Heavy Users
• Nonusers
• Brand Loyal Users
• Switchers or Variety Seekers
• Emergent Customers
• Psychographic Lifestyle Segmentation
• AIOs
• Benefit Segmentation

e.g. nonsmokers
Difficult to convert
First time buyer
Target segment identified by various benefit
packages
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Psychographic Segmentation
Psychographic segmentation divides a market into
different groups based on social class,
lifestyle, or personality characteristics.
People in the same demographic classification
often have very different lifestyles and
personalities.
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Psychographics and Lifestyle segmentation AOI
Lifestyles segmentation
provides insight into consumers motivations.
Club Med, Bintan, Banyan Tree, etc
Benefit Segmentation Divide market based on
different benefits that consumer seeks.
e.g. Honda --- Prestige?, Passenger Safety? Fuel
Economy?
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A Classic Example of Benefit Segmentation
4.10
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Positioning

• The place a product occupies in consumers minds
  relative to competing products.

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Positioning Example
eBays positioning No matter what it is, you
can find it on eBay!
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Positioning Example
To (target segment and need) our (brand) is a
(concept) that (point-of-difference).
To busy mobile professionals who need to always
be in the loop, Blackberry is a wireless
connectivity solution that allows you to stay
connected to people and resources while on the go
more easily and reliably than the competing
technologies.
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Formulating a Positioning Strategyfor a Brand

• ESSENTIALS OF EFFECTIVE BRAND POSITIONING
  STRATEGIES
• Substantive Value
• Consistency
• Simplicity Distinctiveness
• FUNDAMENTAL BRAND POSITIONING THEMES
• Benefit Positioning
• User Positioning
• Competitive Positioning
• REPOSITIONING BRANDS