Market Segmenting, Targeting, and Positioning Overview

Mass Marketing

Focuses on selling a uniform product to a broad audience.

Targeted Marketing

Tailors products and messages for specific groups of customers.

Shotgun Approach

A term used to describe the wide-reaching strategy of mass marketing.

Rifle Approach

A term used to describe the precision of targeted marketing.

Henry Ford

Pioneered mass production and marketing of the Model T.

Alfred P Sloan

Introduced market segmentation by offering cars at different price points.

Benefits of Segmenting and Targeting Markets

Reduces direct competition, facilitates new product development, revitalizes older products, identifies early adopters, allocates resources effectively, and helps retain at-risk customers.

Data Sources for Market Segmentation

Includes US census bureau and other government reports.

Technology in Market Segmentation

Tools like Google AdSense, online surveys, and consumer browsing data.

Observation and Interaction

Direct engagement with potential buyers in everyday settings.

Acquiring New Customers

Costlier than retaining existing ones.

Personalized Marketing Campaigns

Strategies to retain current customers.

One-to-One Marketing Steps

Includes establishing evaluation metrics, identifying customers, differentiating customers, interacting with key customers, and customizing offerings.

Evaluation Metrics

Measure success using KPIs like customer satisfaction, revenue per customer, or transaction costs.

Behavioral Segmentation

Divides people and organizations into groups according to how they behave with or act toward products.

Demographic Segmentation

Segments buyers by tangible, personal characteristics such as age, income, ethnicity, and family size.

Geographic Segmentation

Segments customers based on their location and the products they buy based on that location.

Psychographic Segmentation

Segments customers based on their thoughts, values, and lifestyles.

Benefits Segmentation

Segments buyers by the benefits they want from products.

Usage Rate Segmentation

Segments buyers by how often they use certain products.

Age

Different age groups have different preferences.

Retro brands

Old brands or products that companies 'bring back' for a period of time.

Baby boomers

A demographic group that marketers believe were appealed to by retro brands during the recent economic downturn.

Customer lifetime value (CLV)

The potential value of customers over their lifetime, particularly relevant for Gen Y.

Income

Indicates a group's buying power and tends to reflect educational levels, occupation, and social classes.

Family life cycle

Affects people's buying behavior, with differences between family vacations and non-family vacations.

Ethnicity

Ethnic background has a huge impact on buying habits, with grocery stores catering to different ethnic groups.

Segmenting by Geography

The process of using geographic data such as zip codes to target prospective customers.

Geocoding

A process that takes data such as zip codes and plots it on a map to help businesses target customers.

PRIZM NE

The most popular geocoding software that classifies the American population into segments using zip codes and demographic information.

Geodemographics

Combining both demographic and geographic information.

Proximity marketing

A technology that firms use to segment buyers and target them within a few hundred feet of their business using wireless technology.

Segmenting by Psychographics

Focuses on why consumers behave the way they do, their priorities, and how they rank the importance of buying criteria.

Psychographic segmentation

Gathers data on activities, interests, opinions, values, and lifestyles to classify consumers into meaningful groups.

VALS framework

Developed by SRI in the late 1980s, categorizes consumers into groups based on their motivations and resources.

Innovators

Sophisticated, successful, and resourceful individuals with high self-esteem, motivated by ideals, achievement, and self-expression.

Thinkers

Mature, reflective, and well-informed individuals motivated by ideals, valuing order, knowledge, and responsibility.

Achievers

Goal-oriented individuals with structured lives centered around career and family, favoring established products.

Experiencers

Young, energetic, and impulsive consumers motivated by self-expression, enjoying variety and excitement.

Believers

Conservative and traditional individuals motivated by ideals, loyal to familiar products and brands.

Strivers

Trendy, fun-loving individuals motivated by achievement but limited by resources, aspiring to emulate wealthier lifestyles.

Makers

Practical and self-sufficient individuals motivated by self-expression, focusing on hands-on activities.

Survivors

Resource-limited consumers prioritizing safety and security.

Loyalty

Loyal to familiar brands and value-oriented purchases.

Applications of Psychographics

Psychographic data complements demographic information and provides deeper consumer insights.

VALS surveys

Tools used to gather psychographic data.

B2B Segmentation

B2B segmentation shares similarities with consumer markets but also has unique characteristics.

Segmentation Criteria

Factors used to classify markets, including demographics, geographic data, and behavior.

Demographics

Example: Goya Foods tailors products based on ethnic demographics.

Geographic Data

PRIZM overlays demographic insights with location-specific information.

Behavior

Companies classify buyers based on usage rates and service needs.

Price-Focused Segment

Small companies prioritizing cost-efficiency.

Quality and Brand-Focused Segment

Firms willing to pay for premium products.

Service-Focused Segment

Companies needing high-quality products and services.

Partnership-Focused Segment

Businesses seeking trust and reliability in suppliers.

Modern Techniques

E-mail campaigns, search-engine marketing, and social media engagement.

Psychographic Segmentation

Offers a comprehensive view of consumer behavior, enabling tailored marketing strategies.

Key Characteristics of Attractive Markets

Criteria for selecting markets, including size, growth, competition, accessibility, resource availability, and alignment with objectives.

Sizeable and Profitable Market

Large enough to justify operating costs; Example: China's massive population makes it a leading car market.

Growing Markets

Expanding segments create new opportunities; Example: Young demographics in India boost demand for Bollywood films.

Low Competition or Differentiation Opportunity

Example: IBM exited the crowded PC market and sold its line to Lenovo.

Accessible Markets

Overcoming barriers like geography, politics, technology, or societal norms; Example: Unilever employs local women in rural areas.

Resource Availability

Sufficient capital or capacity to compete; Example: Competing in the wind-power market requires significant investment.

Alignment with Objectives and Mission

Must complement the company's goals; Example: Terra Cycle avoids ventures like coal plants due to its eco-focused mission.

Mass Marketing

Uniform offering for all consumers; Advantage: Cost-efficient.

Multisegmented Marketing

Tailors products for different market segments; Example: Marriott offers diverse brands.

Concentrated Marketing

Focuses on a specific market segment; Advantage: Effective use of limited resources.

Niche Marketing

Targets a very select group of consumers; Goal: Dominate a small, specialized market.

Microtargeting (Narrowcasting)

Uses detailed data to target specific consumer profiles; Example: Acxiom offers segmented lists.

Targeting Global Markets

Companies may adopt mass marketing or tailor offerings for global markets; Example: Barbie dolls customize products for regional preferences.

Emerging Market Focus

Countries like China, India, Brazil, and Russia attract attention due to growing middle classes.

Emerging Markets

Countries like China, India, Brazil, and Russia attract attention due to growing middle classes.

Example of Emerging Market

Avon's largest market is now Brazil.

Innovation for Developing Markets

Companies develop cost-effective products for large markets and introduce them in developed markets.

Example of Innovation for Developing Markets

Tata Nano ($2,500 car for India) and GE's $1,000 electrocardiogram device.

Acquisitions and Partnerships

Buying companies with strong local presence or forming alliances where acquisition is restricted.

Example of Acquisition

Kraft's acquisition of Cadbury for Indian chocolate market access.

Example of Partnership

Heineken's purchase of Femsa for competitive advantage against Corona.

Challenges in Global Markets

Regulatory, cultural, and operational barriers.

Example of Global Market Challenge

IKEA struggled and exited Russia, whereas McDonald's thrived by adapting to the market.

Positioning

The process of tailoring a product to make it stand out from competitors in the minds of consumers.

Perceptual Map

A two-dimensional visual representation of how consumers perceive products based on certain attributes.

Attributes in Perceptual Maps

Attributes may include price, quality, customer service, etc.

Purpose of Perceptual Maps

Helps identify areas where a product can be positioned away from clusters of competitors to avoid direct competition.

Example of Perceptual Map Usage

A map showing quality on one axis and price on another can help determine the optimal combination to appeal to a target audience.

Tagline

A memorable phrase that communicates the essence of a product.

Example of Tagline

Wendy's tagline, 'It's better than fast food,' differentiates it from competitors like McDonald's or Burger King by suggesting superior quality.

Repositioning

Involves altering a product's image to appeal to a different market segment or change consumer perceptions.

Example of Repositioning: Clayton Homes

Clayton Homes introduced the i-house, designed with eco-friendly features like solar panels and rainwater collectors.

Example of Repositioning: Porsche

Porsche's Panamera Line is designed longer than traditional Porsches to cater to affluent Chinese buyers who prefer chauffeur-driven cars.

Why Positioning Matters

It helps differentiate a product in a competitive marketplace.

Why Repositioning May Be Necessary

To address shifts in consumer preferences or expand into new market segments.

Tools to Aid Positioning

Perceptual maps provide a clear view of market gaps and potential positioning strategies.

Target Audience for Nike

Nike's target audience includes athletes and fitness enthusiasts (professional and casual), lifestyle consumers valuing sporty, trendy products, and youth and millennials motivated by performance, innovation, and self-expression.

Segmentation for Nike: Behavioral

High-performance athletes seeking top-quality gear and casual users valuing comfort and style for everyday wear.

Segmentation for Nike: Geographic

Urban areas with high sports participation and fitness awareness and international markets with growing fitness culture.

Segmentation for Nike: Demographic

Primarily 18-34 years old and middle to high-income earners.

Income

Middle to high-income earners.

Gender

Segmented product lines for men, women, and kids.

Psychographic

Aspirational individuals valuing fitness, health, and success.