Structure

C. WHERE DO WE WANT TO BE?

Learning Objectives West, Ford & Ibrahim: Strategic Marketing 2e

Chapter 5: Segmentation, targeting, and positioning strategies
Examine the ways in which companies can segment markets Discuss ways in which marketers can measure the effectiveness of identified target markets Identify the various ways in which marketers can reach their target segments Provide an explanation of the importance of positioning the product Present several important tools for perceptual mapping

4. Strategic Marketing Decisions, Choices & Mistakes 5. Segmentation, Targeting & Positioning Strategies 6. Branding Strategies 7. Relational & Sustainability Strategies

Introduction
Market segmentation vital for company success Dividing market into reasonable segments is starting point Develop series of strategic goals + strategies to reach the identified target segments Why segment? unlikely for any company to appeal to entire market Identify segments of consumers Tailor offerings to wants & needs of target market identification of consumer subgroups with similar wants + buying requirements in group, and different between groups Helps configure marketing strategy

Criteria for identifying segments

Geography where issue Local segmentation often used by small firms Keeps the market confined to a manageable area Global segmentation : The company sees the entire world as its appropriate playing field Potential for cultural inappropriateness Need to consider topography Costs of overcoming physical obstacles
Demographic Using a series of demographic variables Gender Age Cohorts of society Moments and events in late adolescence / early adulthood (17-23 yrs) This may not work globally Level of Education Level of Income Occupation Religion Ethnicity (see Table 5.1) Family size Family life cycle stage Life conditions that have a potential impact of product/service purchase decisions Social class/status

Geography Demographic Psychographic Behaviouristic

Psychographic Bases Perceptual issues Combining individuals who are psychologically similar in their orientation Excellent potential for effective targeting segments, understanding how the segments live their daily lives Lifestyle (e.g. VALS) The ways in which individuals choose to live their lives Personality Similar personality types Kotler (2003) lists four main variations of personality: compulsive, gregarious, authoritarian and ambitious Core Values Match its core values with those of the segments, building positive associations Psychographics are not good predictors of consumers purchases

Criteria for identifying segments VALS Typology multi-based segmentation approach incorporating psychological + demographics (SRI International) For the US market - eight separate groups for segmentation Actualizers (10 % of population) Fulfilleds (11%) Experiencers (13%) Achievers (14%) Believers (17%) Strivers (12%) Makers (12%) Strugglers (12%) Behaviouristic Grouping consumers having similar uses for, and responses to particular products or services Usage rate Loyalty level Brand insistence, brand loyalty, split loyalty, shifting loyalty, no loyalty Creation of special events Benefits segmentation In terms of key benefits that consumers seek from the use of some product/service Switchers Fence-sitters Loyal Low Loyalty Customer Medium Low to Medium Moderate Loyalty High Loyal

Highest Zero

Non-customer

High

Identify Motivations Group and Structure Motivations

Segmentation Tools
Assess Assign Strategic Motivation Roles to Motivations Importance
Gas Technology Diesel Electric Customer Group Consumer Industrial Military

Segmentation Tools
Discriminant Analysis Identify a series of variables that help to discriminate the members of one or more groups Multidimensional Scaling Visually demonstrate how particular consumers view the various offerings

Cluster Analysis It is a multivariate technique Within group differences Within-group are minimized and the between-group differences are maximized Conjoint Analysis Uses a series of possible product/service attribute combinations

Customer Function
Deliver Recreation Emergency

Large Customer Size Medium Small

Targeting
Which segment to serve? What goes into plan to best serve chosen segment?
Single segment concentration Selective specialization Product specialization Market specialization Full market coverage Derek F Abell (1980) Kotler (2003) segments must be
Measurable Accessible Substantial Differentiable Actionable

Positioning
Like ladder get to top rung top of mind recall In consumers mind perception, brand image, name enjoy consumer franchise (1. behavioral, 2. attitudinal) Translates to $$
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4Cs of positioning Clarity: in terms of target market and differential advantage Consistency: maintain a consistent message Credibility: in the minds of the target customer-they must believe the claim Competitiveness: the differential advantage should offer the customer something of value competitors cannot provide (competitors should be named if possible)

[That] DHLdelivers ontime

[Because] itspickup,transportationanddelivery systemiswhollyownedandmanagedbyDHL personnel,notbythirdpartyproviders.

Perceptual Map of Brand Images

Classy distinctive proud

Strategic Position Options pick 1 for LN

The quality player with a defined Product category Product attributes and functional benefits Breadth of product line Organizational intangibles Emotional self-expressive benefits Experience Being contemporary

Cadillac Mercedes Oldsmobil e

Conservative older people

Lincol n Chrysler Buick

BMW

Porsche Lexus
Spirited performance young people fun sporty

product space The value option The innovator A narrow product focus A target market focus Being global

Pontiac Honda H d Chevrolet Toyota VW

For d Dodge

Nissan Hyundai

Brand personality Resonate with the target market Differentiate from competitors Reflect the culture, strategy, and capabilities of the business Competitor position

Practical fuel efficient affordable

Visually represents different competitive brand offerings/objects in perceptual space & minds of the target consumers Perception equals reality