Segmentation, Targeting, Positioning

• Segmentation: grouping consumers by some criteria • Targeting: choosing which group(s) to sell to • Positioning: select the marketing mix most appropriate for the target segment(s)

segment market

choose target(s)

position product(s)

Segmentation

• Segmentation = grouping consumers by some criteria, such that those within a group will respond similarly to a marketing action and those in a different group will respond differently.

Entire Market

“Segment 1″

“Segment 2″

Segmentation

all dog owners

dogs are servants

dogs are family members

potential segmentation variables:

sex
age
race
income
educational level
marital status
# of children
introvert / extrovert
zipcode
usage history
Elvis Fan?

Together, a bat and a ball cost $1.10.
The bat costs $1 more than the ball.
How much does the ball cost? _____

Together, a bat and a ball cost $1.10.
The bat costs $1 more than the ball.
How much does the ball cost? _____

“5 cents” 114 subjects

“10 cents” 75 subjects

Along what dimensions could the following
markets be segmented?

Soft Drinks:

Cell Phones:

Segmentation, Targeting, Positioning

segment market

choose target(s)

Which segment(s) do I target?…..

mass marketing

Company Marketing Mix

Market

differentiated marketing

mix 1 mix 2 mix 3

Segment 1 Segment 2 Segment 3

niche marketing

Company Marketing Mix

Segment 1 Segment 2 Segment 3

What segments are being targeted?

• Cap’n Crunch • Crystal Pepsi • The Body Shop • Dollar store • Harley Davidson • Nokia cell phones • Mountain Dew

Should I target a segment?

• sufficient heterogeneity in preferences • The segments must identifiable • large enough too be worthwhile • How competitive is the segment?

Prerequisites for segmentation

• customer needs are heterogeneous • segments are identifiable • “This is a Burger King town” • “Herb the nerd doesn’t eat here”

Positioning

1. Determine what consumers currently think about your product (wrt competing products) 2. Decide what you want consumers to think about your product. 3. Figure out how to reposition.

Position along many dimensions

1. 2. 3. 4. 5. 6. 7. Product Attributes (Certs, with Retsin) Product effects (Rembrandt gets teeth 5X whiter)
Price (“Budget Gourmet frozen dinners)
User (baby shampoo vs. gentle shampoo)
Usage (Coke in the morning)
Relation to other products (7 Up is the uncola)
Arbitrary (“Weekends are for Michelob”)

What is Burger King’s position?

• “The right food for the right times” • “Sometimes you’ve got to break the rules” • “This is a Burger King town” • “Herb the nerd doesn’t eat here”

Heavy

Heineken Becks Budweiser

Bitter

Mild

Light

Expensive

Old

Young

Cheap

mass marketing

customized marketing

“model T” “one size fits all” “shotgun” “model T”

“Burnt Sienna Honda Civic with bucket seats, dual climate control, heated handle bars, white wall tires”

“one of a kind” “rifle”

What are the advantages of customer
segmentation?

• Focuses efforts on who to find out more about • Are the segments identifiable? • Is it large enough? • What is the geographical concentration? • How price sensitive are the individuals? • What how competitive is the segment now? • How vulnerable is the segment to additional entrants?