Segmentation, Targeting, and Positioning

SEGMENTATION, TARGETING AND POSITIONING

INTRODUCTION

  • Consumers are heterogeneous, meaning they differ in their needs, preferences, and responses to the marketing mix offerings known as the 4P's (Product, Price, Promotion, Place).

  • Due to this heterogeneity, it becomes increasingly challenging for firms to satisfy all customers, leading to the necessity of Market Segmentation, Targeting, and Positioning (STP).

MARKET SEGMENTATION, TARGETING, AND POSITIONING (STP)

  • Segmentation: Identifying meaningful different groups of consumers.

  • Targeting: Selecting which segment(s) to serve.

  • Positioning: Implementing the chosen image and appeal to the selected segment.

VALUES OF MULTIPLE SEGMENTS

  • Price versus attractiveness regarding durability of segments:

    • A graph may depict two segments in comparison to their durability perceptions on a scale from 0 to 10.

SEGMENTATION METHODS

  • Segmentation methods include:

    • Demographic: Age, gender, income level, education, geographic location.

    • Psychographic: Values, lifestyles, and interests.

    • Cohort Analysis: Life experiences of demographic groups such as Baby Boomers, Generation X, etc.

    • Geography: Regional segmentation, considering location issues (e.g., urban vs. rural).

    • Behavioral Factors: Product-related behaviors, channel purchasing behaviors (e.g., online shopping vs. physical shopping).

    • Loyalty/Purchase Status: Level of customer loyalty.

    • Benefits Sought: Differentiation based on what consumers seek in products like running shoes (e.g., aesthetics, technology, price).

GEOGRAPHIC SEGMENTATION

REGIONAL SEGMENTATION

  • Zip Code Clustering: Utilizing solutions like Claritas' Prizm Premier to segment the market.

  • Prizm Premier Overview:

    • Widely adopted segmentation solution aiding marketers in prospecting faster and making smarter sales decisions.

    • Provides insights including demographics, lifestyle preferences, shopping behaviors, and media usage.

    • Identifies over 68 different segments for targeted marketing.

    • Segments defined by:

    • Socioeconomic rank (income, education, occupation, home value).

    • LifeStage Groups based on age, affluence, and child presence.

    • Social Groups depending on affluence and urbanity level.

SEGMENTATION BENEFIT (EXAMPLE: MCDONALD'S)

  • Target Segments:

    • Children: Happy meals, playgrounds, toys.

    • Young Adults: Free Wi-Fi to attract customers seeking a workspace.

    • Older Adults: Lower-calorie menu items.

  • Campaigns:

    • Encouragement of the use of free Wi-Fi in over 11,500 participating locations alongside purchasing.

SELECTING A TARGET SEGMENT

  • Considerations for Attractiveness:

    • Segment size and growth potential.

    • Value of segment (monetary consideration).

    • Stability and current company position within the segment.

    • Ease of entry and competitive landscape.

    • Number and strength of competitors.

    • Aim for segments where a differential advantage exists.

TARGETING STRATEGIES

  • Focus on commonalities among targeted segments.

  • Target multiple segments with tailored offerings.

  • Pursue a large market share of a specific segment while custom-tailoring products and marketing programs to individual needs.

DIFFERENTIATION AND POSITIONING

  • Choosing a Differentiation and Positioning Strategy:

    • Identify possible value differences and competitive advantages.

    • Choose appropriate competitive advantages.

    • Determine an overall positioning strategy.

    • Recognizing that understanding consumer needs better than the competition leads to delivering superior value is crucial.

KEY CONSIDERATIONS IN POSITIONING

  • Consider three main factors:

    1. Target Segment

    2. Point of Difference

    3. Frame of Reference

  • Determine unique selling propositions to make a mark in the market.

SUMMARY OF MARKETING POSITIONING

  • As a marketer, assess:

    • The targeted segment and reasons behind targeting them.

    • Current market perception and how to alter it.

    • The value offered to consumers compared to competitors.

PRODUCT MANAGEMENT

DEFINING A PRODUCT

  • Product Definition:

    • Anything offered to a market for attention, acquisition, use, or consumption; capable of satisfying a want or need.

    • Covers physical objects, services, events, persons, places, organizations, ideas, or combinations thereof.

    • Essential Takeaway: A product is characterized as a set of benefits.

UNDERSTANDING SERVICES

  • Service Definition:

    • Any activity or benefit one party offers another, which is intangible and does not result in ownership of anything.

    • Examples of services include hair styling, tax preparation, air travel, hotels, banking.

SERVICE CHARACTERISTICS

  • Product/Service Continuum: Indicates the blend of products and services (e.g., dining in a restaurant).

  • Differentiating marketing offers through the creation and management of customer experiences.

TYPES OF CONSUMER PRODUCTS

  • Consumer Product Categories:

    • Convenience Goods: Frequently purchased, little effort (e.g., Coca-Cola).

    • Shopping Products: Less frequent purchase requiring more effort (e.g., furniture).

    • Specialty Products: Strong brand loyalty and significant purchasing effort (e.g., Rolex).

    • Unsought Products: Products with little product awareness or knowledge (e.g., life insurance).

TYPES OF CONSUMER PRODUCTS DETAILS

  • Convenience:

    • Frequent purchase, minimal effort.

    • Characteristics: Low price, widespread distribution, and mass promotion.

  • Shopping:

    • Less frequent, involving significant planning and comparison.

    • Varied pricing, selective distribution.

  • Specialty:

    • Specialty products command high prices and exclusive distribution with brand loyalty.

  • Unsought Products:

    • Consumers are unaware or unmotivated to seek out these products, requiring significant marketing efforts.

BRAND DEFINITION

  • Formal Definition: Proprietary trademark for a specific product or service.

  • Marketing Perspective: A “contract” between the company and its customers.

  • Notable Quote: "A brand is no longer what we tell the consumer it is – it is what consumers tell each other it is.” - Scott D. Cook (Founder of Intuit).

BRAND EQUITY

  • Definition: The positive differential effect of knowing the brand name on customer responses toward the product or service.

  • Significance of Branding:

    • Facilitates purchasing decisions

    • Establishes customer loyalty

    • Impacts market value

    • Protects against competition

    • Reduces overall marketing costs.

INTERBRAND BEST GLOBAL BRANDS 2018

  • Top Brands Ranking:

    1. Apple

    2. Google

    3. Amazon

    4. Facebook

    5. Microsoft

    6. Coca-Cola

    7. Samsung

    8. Toyota

    9. McDonald's

    10. Mercedes-Benz.

  • Highlight of each brand's growth percentages and market share.

LOGOS IN BRANDING

  • Definition: Logos are easily recognizable symbols or stylized representations of business brand names, acting as shortcuts to identify products and firms.

  • Brand associations built through logos reflect consumer sentiments.

PRODUCT MANAGEMENT PART 2

COMMONALITIES IN PRODUCTS

  • Emphasis on features such as freshness, effectiveness, and value in product similarities amongst brands like toothpaste or detergents.

PRODUCT LINE MANAGEMENT

  • Definitions:

    • Product Line: A group of closely related products.

    • Product Line Length: Number of items in a product line.

    • Product Line Width: Number of different product lines offered.

PRODUCT DECISIONS

  • Importance of developing brand categories regarding existing vs. new products, extensions, and branding decisions.

DEVELOPING YOUR BRAND STRATEGY

  • Strategies:

    • Line Extensions: Introducing new products within the same product category.

    • Brand Extensions: Riskier, extending brand equity into entirely new categories.

    • Multi-Branding: Managing various distinct brands within the same product category to target diverse segments.

PRIVATE BRANDING

  • Type of multi-branding represented by brands like Kenmore and Craftsman

  • Showcases differentiation in product offerings.

CO-BRANDING STRATEGY

  • Definition: Marketing two or more brands together in the same promotion or package.

  • Examples may include:

    • Collaborative products between established brands like Apple and Nike (Nike+iPod).

    • Seasonal initiatives combining businesses (Benjamin Moore and Pottery Barn).

CONCLUSION

  • Summary key considerations in product management:

    • Determine products to offer and target markets efficiently.

    • Importance of attractive packaging and labeling to deter negative perceptions.

    • Focus on building and protecting a strong brand image and increasing brand awareness.

    • Rationalized extension of product lines only when it aligns with brand strategy and market understanding.