3 - sat may 23 f advanced)

7/31/2019 3 - Sat May 23 F Advanced)

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Steps in Market Segmentation, Targeting,

and Positioning

1. Identifysegmentationvariables andsegment themarket

2. Developprofiles ofresulting

segments

MarketSegmentation

3. Evaluate

attractivenessof eachsegment

4. Select thetargetsegment(s)

MarketTargeting

5. Identify

possiblepositioningconcepts foreach targetsegment

6. Select,develop, andcommunicatethe chosenpositioning

concept

MarketPositioning


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Market Segmentation

The process of grouping customers into relatively

homogeneous sets such that customers within a

segment are similar to one another in the way they

respond to marketing effort directed at them.

A market segment is a specific group of customers

with similar needs, purchasing behaviors, andidentifying characteristics.


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Market Segmentation

Market segmentation offers potential for greater profitability through

increased efficiency and customer satisfaction.--Best (1982)

All markets are heterogeneous and thus, a nonsegmented strategy isinevitably suboptimal.

--Wind and Robertson (1983)

The most difficult aspect of any segmentation approach is the translation

of the results into a strategy.

--Wind (1978)


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Toyotas Adjacent Segmentation Strategy

PriceLev

el

Perceived Quality

Tercel

Paseo

Previa

Camry

Corrolla

AvalonSupra

Lexus


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Benefits of Market Segmentation

3. Identifies opportunities for new product development.

1. Helps in the design of marketing programs that are most effective

for reaching homogeneous groups of customers.

2. Improves the strategic allocation of marketing resources.

Methodologies:

Automatic Interaction Detector (AID) Chi-Squared Automatic Interaction Detector (CHAID)

Regression and Discriminant Analysis

Hierarchical clustering (group similar items)


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Bases for Segmenting Consumer Markets

Geographic Region, City or Metro Size, Density, Climate

Demographic

Age, Gender, Family Size and Life Cycle, Race, Occupation, Income

Psychographic Lifestyle or Personality

Behavioral Benefits, Usage Situations


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Geographic Segmentation

Variable Typical Breakdown

Region Pacific, Mountain, West North Central, West South Central,

East North Central, East South Central, South Atlantic,

Middle Atlantic, New England

City or Metro Under 5,000; 5,000-20,000; 20,001-50,000;

Size 50,001-100,000; 100,001-250,000; 250,001-500,000;

500,001-1,000,000;1,000,001-4,000,000

over 4,000,000

Density Urban, suburban, rural

Climate Northern, southern


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Demographic Segmentation

Variable Typical BreakdownAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+

Gender Male, female

Family size 1-2, 3-4, 5+

Family life Young, single; young, married, no children; young, married, youngest child under six;

cycle young, married, oldest child over six; older, married, with children;

older, married, no children under 18; older, single; other

Income Under $10,000; $10,001-$15,000; $15,001-$20,000; $20,001-$30,000;

$30,001-$50,000; $50,001-$100,000; over $100,000

Occupation Professional and technical; managers, officials, and proprietors; clerical, sales;

craftspeople; farmers; laborers; retired; students; housewives; unemployed

Education Grade school or less; some high school; high school; some college;

college graduate; graduate degree

Religion Catholic, Protestant, Jewish, Muslim, Hindu, other

Race White, black, Asian, Hispanic

Nationality American, British, French, German, Italian, Japanese


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Psychographic Segmentation

Variable Typical BreakdownLifestyle Activities, interests, opinions

Personality Compulsive, gregarious, authoritarian,ambitious

Values Sense of belonging, excitement,

warm relationships with others,

self-fulfillment, security,being well respected,

fun and enjoyment of life,

self-respect, sense of accomplishment


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Behavioral Segmentation

Variable Typical Breakdown

Usage situation Regular occasion, special occasion

Benefits Quality, service, economy, speed

User status Nonuser, ex-user, potential user,

first-time user, regular user

Usage rate Light user, medium user, heavy user

Loyalty status None, medium, strong, absolute

Readiness stage Unaware, aware, informed, interested,

desirous, intending to buy

Attitude toward Enthusiastic, positive, indifferent,

product negative, hostile


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Strategic Approach to Segmentation

and Targeting

The usage pattern should provide the

starting point for marketing segmentation.

Other factors (demographics, benefits,lifestyles etc.) may be used to make the

usage-based approach actionable and to

enrich the positioning.


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Convey the Benefits to The Swing Group

Those who are

Indifferent

Those Who

Love US

Swing

GroupFuture

BarriersUnderstand

Benefits

Those Who

Hate US

The Usage-based Approach


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Brand and Category Development

MaintainPoint of Entry

Category Build

MarketPenetration

?

CDI

BDI

Low

LowHigh

High


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Major Segmentation Variables for Business Markets

Demographic

Industry

Company size Location

Operating Variables

Technology

User/nonuser status

Customer capabilities

Purchasing Approaches

Purchasing-function organization

Power structure

Nature of existing relationship

General purchasing policies

Purchasing criteria

Situational Factors

Urgency

Specific application

Size of order


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Market Targeting

The process of evaluating the various segments and deciding how many

and which segments to serve.


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Segment Attractiveness


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Segment Profitability

Segment Segment


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Person/Situation Segmentation

Step 1: Use observational studies, focus group interviews, and secondary data to discover whether

different usage situations exist and whether they are determinant, in the sense that they appear toaffect the importance of various product characteristics.

Step 2: Identify needs, benefits and perceptions by usage situation as well as by individual difference

characteristics.

Step 3: Construct a person/situation segmentation matrix. The rows are the major usage situations and

the columns are the groups of users identified by a singlecharacteristic or combination of characteristics.

Step 5: Rank the cells in the matrix in terms of potential sales volume.

Step 4: Profile each nonempty cell. State the major benefits sought, important product attributes, and unique market

behavior for each nonempty cell of the matrix. (Some types of people will never consume the product in certain situations.)

Step 6: Position your competitors offerings within the matrix. The person/situation segments they

currently serve can be determined by the product feature they promote and other marketing strategies.

Step 7: Position your offering within the matrix on the same criteria.

Step 8: Assess how well your current offering and marketing strategy meet the needs of the segment

compared to the competitions offering.

Step 9: Identify market opportunities based on segment size, needs, and competitive advantage.


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Usage

Situation

Person

Benefits sought

1. Profile segments

Person by Situation Segmentation

3

Competitor B

2

Competitor C

1

Company

2. Rank segments

Competitor A

3. Identify competitors

Company

4. Identify companysposition Salient attributesBehaviors


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S

ituation

Person

Person by Situation Segmentation:Family Dining Segments

Special trip,Eat at restaurant

Female

$25,000 or less

Cabin FeverReduce loneliness

Less bored blue

Get out of the house

Female, 22-44

Married with kids

Married with kids,

$35,000

Family Meal Reward everyone

Easy to get

Food kids like

Married with kids,

$25,000+

Kids TreatMake kids happy

Kids wont

embarrass me

Good Price-Value Save money

Stay home, dont cook

Discount prices

Eat at restaurant,

3+ people,

Under $4/person

Family dinner,Eat at home,

Under $5/person

Family dinner,

Eat at home,

$3/person

Source: Pizza Hut

Moms Night OffReward, rejuvenate

An extravagance

On the Way HomeQuick and easy

Convenient

Kids feel special


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S

ituation

Person

Person by Situation Segmentation:Family Dining Segments

Special trip,Eat at restaurant

Female

$25,000 or less

Cabin FeverReduce loneliness

Less bored blue

Get out of the house

Female, 22-44

Married with kids

Married with kids,

$35,000

Family Meal Reward everyone

Easy to get

Food kids like

Married with kids,

$25,000+

Kids TreatMake kids happy

Kids wont

embarrass me

Good Price-Value Save money

Stay home, dont cook

Discount prices

Eat at restaurant,

3+ people,

Under $4/person

Family dinner,Eat at home,

Under $5/person

Family dinner,

Eat at home,

$3/person

S Pi H

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