Chapter 2; Segmentation, Targeting, & Positioning for IMC

Segmentation

A strategy in marketing to divide a market into smaller, more manageable groups of consumers, who share similar attributes, traits, needs, wants, desires, or behaviors.

• Being effective will divide market into groups that:

  • Have similar characteristics

  • Respond similarly to marketing efforts & communications (within the segment)

Segmentation Strategies

1. Geographic

2. Demographic

3. Behavioristic

4. Psychographic

Geographic segmentation

Market is divided into distinct customer groups (segments) based on consumers’ physical location.

• Region, country, state, city, neighborhood, urban/rural, time zone, seasonality, etc.

  • Example: The North Face sells heavy winter and snow gear in colder regions (MN), and light weight jackets in warmer regions (CA)

  • Example: McDonald’s in Chile sell avocado burger, avocados grown there, and people love them.

Demographic Segmentation

A type of segmentation where the market is divided into segments (groups) based on consumers’ measurable statistical (demographic) traits or characteristics.

• Age, gender, income, ethnicity, education, occupation, family status, etc.

  • Example: Income; Louis Vuitton direct their high end marketing toward individuals with a high income, where dollar general is focused on lower income consumers

  • Example: Gender; Gillette razors branding more masculine for mens razors, and more feminine for women’s grooming

Behavioristic segmentation

Market is divided into segments based on consumers’ exhibited behaviors and how they interact with products, services, ideas, or brands.

• Understands how, when, and where consumers might make purchases in the future, not the full explanation as to WHY they buy it.

  • There are 4 Key behavioristic variables/types

Psychographic Segmentation

A market is divided into distinct customer groups (segments) based on consumers’ psychological traits and characteristics, such as their values, attitudes, personalities, and lifestyles.

• One of the most powerful methods for understanding consumer behavior. Works best when marketers understand the motivations of the consumer.

• LIMITATIONS: this data is more challenging and expensive to obtain.

  • Example: Patagonia targets hikers and people who like the outdoors.

4 Variables of Behavioristic Segmentation

1. User Status

2. Usage Rate

3. Purchase Occasion

4. Benefits Sought

User Status

What type of user the consumer is of the product.

• Sole Users — Brand loyal; require little advertising and promo

• Semisole Users — Semi-loyal; but will buy other brand if discounted

• Discount Users — Will buy focal brand if discounted

• Aware Non-triers — Use products in the category, but not focal brand

• Trial/Rejectors — Have tried focal brand, but didn’t like the product.

Usage Rate

Measures usage rates to define consumers as light, medium, or heavy users.

• Example: Hardee’s advertising using this method “HFFU” Heavy Fast Food Users. Eat hardees 4-5 times a week, and typically 17-34 years old, so marketing is very “bro” and “man”

Benefits Sought

What benefits consumers seek in the products they buy.

• Price, quality, status, taste, and health.

Purchase Occasion

Buyers can be distinguished by when they use a product or service. Might be affected by frequency, fads, and seasons.

• Example of Frequency: Regular: Gasoline & Food; Occasional: Car, House, wedding ring.

• Example of Fads: High waisted skinny jeans, air force 1’s, fidget spinners, wheelie shoes.

• Example of Seasons: Ski’s, Air Conditioners, Winter Coats, Flip Flops

Target Marketing

A marketing strategy that focuses the marketing efforts and resources on a specific, well-defined segment of customers who are expected to respond favorably toward the organization’s offerings.

Shotgun Strategy

A singular general message is shared with the widest possible audience (the entire market) without consideration of market segmentation or the specific needs of individuals with unique market segments.

• Example: Napoleon handing out pens to everyone, that say “vote for pedro”

Targeted Strategy

A marketing strategy that is characterized by identifying specific customer segments that we hope will respond favorably to those offerings, and then customizing marketing communications specifically designed to appeal to individuals within those segments.

• Example: Napoleon walking up to kid that got bullied and saying “vote for pedro for protection”, later the kid got protection.

Micro-targeting

A marketing strategy that utilizes very detailed, personal, consumer data to implement an extremely precise form of targeting toward very narrowly defined segments of the market (sometimes at the individual level), affording highly specific and personalized messages to be direct at consumers.

• Example: 500k white males in chicago, 100K like brazilian soccer, 1.4K follow the ny times.

Brand/Product Positioning

A process where we define how a company’s products, services, and/or brand are perceived in the minds of consumers in a specific target audience, typically relative to the company’s competitors.

• A process used to create cognitive schemas in consumers’ minds.

  • Example: Walmart positions itself as a retailer that provides everyday low prices.

Cognitive Schema

An organized mental framework stored in long-term memory that helps the human brain categorize, interpret, and process incoming information.

Target Market

A group of segments the company wishes to appeal to, design products for, and tailor its marketing activities toward.

• Firms typically have primary and secondary markets, and allocate resources to them accordingly.

The Target Marketing Process

1. Identify markets with unfulfilled needs

2. Determine market segmentation

3. Strategically select segment to target

4. Position through marketing strategies

Importance of the STP Framework

STP helps identify the needs, wants, desires, values, and dreams of consumers in the target audience.

• It provides structure for communicating effectively with members of the target audience.

• Also guides branding to create proper schemas in consumers’ minds.

The Different Positioning Strategies

• Attributes & Benefits

• Price or Quality

• Use or Application

• Product Class

• Product User

• Competitor

Attributes & Benefits

A method of positioning that emphasizes one (or more) of a product, service, or brand’s specific attributes or benefits.

• Example: Repackaging a can of coke that has a smaller amount in it, and positioning it as “only 100 calories”, and then charge more bc its deemed healthier.

Use or Application

A method of positioning that emphasizes how a product, service, or brand can be used or applied in specific situations, typically emphasizing its practical benefits.

• Baking soda → Used for baking products, but also is put in fridges to get ride of odors.

Product Class

A method of positioning that emphasizes how a product, service, or brand fits within a specific category or class of products to help consumers understand its role and purpose.

• Example different types of butter → Kerrygold, land o lakes, it’s not butter.

Product User

Emphasizes how a product, service, or brand should be perceived by a specific group of users.

• Example: Huggies Diapers position themselves for new parents and infants, focusing on gentle care and leak protection.

Competitor

Emphasizes how a product, service, or brand should be perceived by consumers in relation to its competitors.

• Example: Apple ads with Mac (cool actor) vs PC (nerdy actor)

Positioning Statement

To (target) our brand is the (concept) that (point of difference) because (reason to believe).

• Example: Chevy: To working class American men 30-35 who work and live on rugged terrain. Chevy is the truck. That is long lasting and dependable over your lifetime. Because it is “built like a rock”.

Price or Quality

A method of positioning that emphasizes a product, service, or brand’s price point or quality.

• Ex: Trix being better quality, so price is higher, compared to store brand “Pranks”