MKTG 300 - Chapter #9 Material

Why do we do segmentation?

• To enhance our understanding of customers

• To aid targeting and positioning decisions

STP is not for discrimination?

• Do not do segmentation to discriminate any group especially protected characteristics, race, gender, or religion.

Before STP, marketers should have decided?

• Market boundary or “category”.

Segmentation variables?

• Split the market into groups of current or potential customers who are likely to have similar needs with respect to our product or service.

There are many variables to segment customers in the market because customers differ in their?

• Demographics

• Behaviors

• Attitudes

• Benefits they seek from the product or service

• Geographic locations 

• Aspirations

• Lifestyle

Demographic Variables?

• Demographic variables are those we can physically observe and measure.

Demographic segmentation?

• Most common segmentation strategy.

• Easy to identify and measure (age, gender, income, education)

Demographic variables have served as default segmentation variables for several reasons. Which of the following are reasons?

• Demographic information is readily available, quite often in the public sector.

• Because they are physical variables, demographics are quite reliable. This means we can use them to predict the future; if the segment of 30- to 40-year-olds is quite large this year, it is reasonable to predict that the segment of 40- to 50-year-olds will become larger over the next 10 years.

• Demographic variables are high in validity; it is relatively easy to verify their accuracy compared to that of other types of segmentation variables.

It is reasonable to predict that the segment of the 25- to 34-year-old in Chain will become?

• Much smaller over the next 10 years.

Demographic information is quite useful for initial market sizing, but it is not sufficient for truly strategic segmentation because?

• While we can react to demographic information, we cannot influence demographics with marketing tools. Thus, relying exclusively on demographics reduces our strategic power.

• Excessive reliance on demographics can sometimes unnecessarily limit the size of our potential target audience.

• Segmenting by demographics can lead to stereotyping, a practice that could be damaging to the brand franchise in the long run.

• Segmentation strategies based solely on demographics are easy for competitors to duplicate.

Behavioral Variables?

• Variable that describes the specific actions of consumers or potential consumers.

Which of the following is correct regarding behavioral segmentation?

• Behavioral information is a bit more difficult to collect than demographic information.

• Technological advances have significantly decreased its cost and increased its reliability, but behavioral data is still generally more expensive to obtain than demographic data.

• Behavioral data is increasingly available and holds great potential for behavioral segmentation.

• We can use frequent past behavior to predict future preferences without considering attitude (Machine learning & AI). This ability is the basis for Amazon and Netflix’s algorithms for making purchase recommendations to existing customers.

Non-adopters?

• Not buying our product

• Not buying competitors product

Our customers?

• Buying our product

• Not buying competitors product

Competitors customers?

• Not buying our product

• Buying competitors product

Multi-brand users?

• Buying our product

• Buying our competitors product

Attract potential non-adopters?

• Acquisition

• Stimulate demand

Increase consumption among current users?

• Retention 

• Stimulate demand

Attract competitive brand users?

• Acquisition

• Earn share

Increase consumption among multi-brand users?

• Retention

• Earn share

Attitudinal Variables?

• Attitudinal variables describe the thoughts, feelings, and beliefs of consumers.

Why attitudinal variables for segmentation?

• Marketing can change and influence attitudes of customers

• Attitudes drive behaviors (purchasing and using)

The foundation of marketing is identifying?

• Key attitude-behavior linkages

• Seeking to change behaviors 

Attitudinal data can be unreliable because?

• Attitudes may change.

Benefit variables?

• Benefits that customers seek 

Benefits variables - This is most useful way of segmenting a market?

• The segmentation method most directly related to the satisfaction of consumer needs and wants.

One of the issues with benefits variables is?

• There might be so many different benefits that customers may seek from consuming a product/service.

Among many potential benefits, marketers should choose/identify?

• Main benefit

• Dynamic benefit

Main benefit?

• Primary benefit provided by the category that differentiates the category leader.

Dynamic benefit?

• Benefit used by a competitor to take share from the category leader.

Feature-benefit-value ladder?

• We build feature-benefit-value ladders by first listing the most important brand features, and then listing their connected benefits and values.

Benefit variables that make it to our segmentation short list?

• Are most important to the customers in the category.

• Are something our brand features can support to provide.

• Have the potential to differentiate our brand in the category.

Targeting strategies?

• Undifferentiated targeting strategy (mass marketing).

• Differentiated targeting strategy (multi-segments marketing).

• Concentrated targeting strategy.

• Micro-marketing or one-to-one marketing.

Undifferentiated targeting (mass marketing) - When to adopt?

• When consumer tastes, needs, wants are same.

  • Homogeneous market

• When the company has a strong marketing power and a lot of resources.

• When no strong competitor.

Evaluate Segment Attractiveness - When marketers have to select one or several target segments, assess each segment is?

• Identifiable

• Substantial

• Reachable

• Responsive

• Profitable

Identifiable?

• Firms must be able to identify who is within their market to be able to design products or services to meet their needs.

Substantial?

• The market segment size should be substantial.

Reachable?

• Firms should be able to reach customers in the market segment.

Responsive?

• Customers in the market segment must react similarly and positively to the firm’s offering.

Profitable?

• The market segment should be profitable.

Which of the following is correct?

• The target audience description is rich and detailed and specific enough to generate a mental picture of the target audience.

• It should be shared and validated with those charged with execution, including

  • Communications

  • Product development

  • Sales

• To write a target audience description we will, in essence, pluck a person from the pool that makes up our potential market and describe this person in substantial detail.

• To bring this person to life for the people who are charged with creating value for him or her, we will include a name, a habitat, revealing behaviors, and consumption habits.

Positioning?

• The answer to how product/brand should be perceived in the market among target customers

Positioning statement?

• A statement of the desired image/value/benefit of offering to be perceived by customers.

Segmentation informs us?

• How we will define and segment our market.

Targeting describes specifically?

• Whom we will attempt to reach.

Our positioning statement outlines?

• What we will say to them.

The positioning statement is much more than a simple hand-off to the communications agency; it is the final step on the?

• Bridge between strategy and execution.

Ideal positioning?

• The best is if a company’s product offering overlaps with customer needs and wants but no overlap with competitor’ offerings.

Two practical ways to do positioning?

• Positioning Statement

• Five Box Positioning Tool 

Positioning Statement?

• A single, crisp consumer proposition.

• This message is sometimes called a “brand promise” or “value proposition”

Positioning Statement - This statement will marry our entity’s?

• Core competence & understanding of the target customer. 

Five Box Positioning Tool Box positions?

• Current do

• Current belief

• Customer proposition

• Desired belief

• Desired do

Current do?

• What key behaviors are our target customers engaging in right now that we want to change?

Current belief?

• Why we believe our audience is doing what they are doing?

Desired do?

• What do we want our target customers to do?

Desired belief?

• What attitude might drive our target audience to do what we want them to do?

Customer proposition?

• Most importantly, we will identify a simply persuasive sentence that will move our target from the current belief to the desired belief, and therefore from the current-do to the desired-do.

Customer proposition - This sentence is written in?

• The company’s voice as it is a persuasive appeal from the firm to the consumer.

What does the customer proposition contain?

• The main or dynamic variable but will never have an “and” because it will never reference both simultaneously.

Customer proposition should be backed by?

• Marketing mix and core competence

What informs us how we will define and segment our market?

What describes specifically whom we will attempt to reach?

What outlines means what we will say to them?

• Segmentation

• Targeting

• Positioning statement

What should be consistent with positioning?

What should support fulfilling and strengthening the positioning?

What decisions should be guided by positioning?

• Marketing mix

Which of the following is NOT correct about target audience description?

• It includes a name, a habitat, revealing behaviors, and consumption habits, but it excludes demographics, attitudes, values and aspirations.

Ideally the value proposition?

• Should be a benefit of company’s product, which overlaps with customer needs and wants but does not overlap with the benefits that competitors offer.

What is the primary benefit provided by the market category that differentiates the category leader?

• Main benefit