SEGMENTATION, TARGETING, AND
POSITIONING
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•
•
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Segmentation
Product positioning
strategy
Bases for
segmentation
• Positioning
• Targeting
• Repositioning
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
1
SEGMENTATION, TARGETING, AND
POSITIONING
SEGMENTATION
IDENTIFYING
MEANINGFULLY
DIFFERENT GROUPS
OF CUSTOMERS
TARGETING
PROUDCT
PRICE
SELECTING WHICH
SEGMENT(S) TO
SERVE
POSITIONING
PROMOTION
IMPLEMENTING
CHOSEN IMAGE AND
APPEAL TO CHOSEN
SEGMENT
DISTRIBUTION
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
2
Learning Objectives
• Appreciate different unique needs and expectations of
different customer groups
• Appreciate tradeoffs among strategies of serving
different segments
• Understand methods for selecting and targeting
customer groups
• Understand bases for implementing target selection
through positioning
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
3
Definitions
Segmentation:
Although not all these consumers are
completely alike, they share relatively
similar needs and wants.
Marketing action involves: efforts,
resources, and decisions--product,
distribution, promotion,
and price.
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“Aggregating prospective
buyers into groups that (1)
have common needs and
(2) will respond similarly
to a marketing action.”
“The process of dividing a
market into meaningful,
relatively similar, and
identifiable segments or
groups.” (Text, p. 97)
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
4
Approaches to Marketing
Southwest
Airlines
Some auto
makers
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 Undifferentiated Strategy (no
intended difference from
competitors; no specific consumer
group sought out)
 Concentrated Strategy
(differentiation; one consumer
segment sought)
 Differentiated Strategy (same firm
makes different versions for
different segments)
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
5
Segments--Examples (1)
 Air Travel
 Business/Executive: Inflexible;
relatively price insensitive (Small
number of people, but travel
often)
 Leisure Traveler/Student:
Relatively flexible; very price
sensitive (other methods of
travel--e.g., bus, car, train--are
feasible; travel may not be
essential) (Very large segment)
 Comfort Travelers: Comfort
(e.g., space, food) important;
willing to pay (Small segment)
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
6
Examples (2): Restaurant Diners
Price Sensitivity
Low
Low
Convenience
Fancy Restaurants
--e.g., Ritz Carlton
High-end
delivered food
Denny’s
Local, “unbranded”
fast food restaurants
McDonald’s
High
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High
E.g.,
--speed
--location
SEGMENTATION, TARGETING, AND POSITIONING
Taco Bell
Lars Perner, Instructor
7
Combining variables…
 Soft drink preferences—some segmentation
variables
 Preferred taste: Cola, lime, no taste, natural juice, ice tea
 Calorie/taste tradeoff: taste more important, some importance
of both, will sacrifice taste for low calories
 Usage occasion: Multi-pack for home; single can/bottle;
fountain drink
 Price sensitivity/brand loyalty: Willingness to pay more for
name brand or specialty soda
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
8
Some combined segments…
 Price sensitive, nonbrand loyal cola-taste,
full-flavor segment,
multi-pack
 Price insensitive, cola
taste, brand loyal, low
calorie, multi-pack
 Price insensitive, natural
juice, taste sensitive,
single serving
Typical behaviors of these consumers.
Circumstances may involve occasional
variations.
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
9
Bases for Segmentation






Geographic
Demographic
Psychographic
Benefit Desired
Usage Rate
Other Behavior
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
10
•Geographic
 Regional differences
 Climate and physical
environment
 Tastes
 Campbell’s Soup
 Lifestyle and values
 Urban vs. rural areas
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
11
Demographics
 Age
 Gender
 Willingness to spend
 More useful than
income—income ≠
willingness to spend!
 “Trading Up:”
Consumers may
“splurge” in certain,
personally significant
categories while
buying more
downscale in other
categories
 Ethnicity
 Family lifecycle stage
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
12
Psychographics
 Personality
 Very difficult to measure
 Limited empirical support
 Motives
 Lifestyle
 Usually more practical
than personality
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
13
Usage Rate
 “80/20” rule—20% of consumers
may account for 80% of
consumption (in many product
categories)
 Note that larger consumption rate
segments may be subject to heavy
competition
 Reasons for targeting smaller
segments
 Reduced competition
 Opportunity for growth
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
14
Other Behavioral Bases for
Segmentation
 Involvement
 Interest
 Knowledge
 Willingness to spend time on
making product category decisions
 “Dealproneness”
 Coupon usage
 Brand switching in response to
price incentives
 Outlet (store) choice
 Specialty
 Convenience store
 “Category killer” (e.g., Fry’s, Best
Buy, Circuit City)
 Discount
 Warehouse
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SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
15
Benefits Sought
 Based on
 Differences in
arbitrary tastes
(e.g., cola vs. noncola drink)
 Ideal point
 Tradeoffs (e.g.,
taste vs. calories)
 Usage situation
(e.g., coffee for
camping (instant)
vs. higher quality
for home brewing)
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
16
Targeting: Selecting Segment(s)
and Specializing
 “You can’t be all
things to all people” --> choose one or
more groups.
 Focus narrows scope
of competition, but
demands are greater.
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
17
IDENTIFYING TARGETS
 Customer information
“enhancement”—
information from different
sources integrated (e.g.,
real estate records,
purchase lists, magazine
subscription, credit
records)
 “Merge-purge”
 Customer lists from
different sources are
combined with removal of
duplicates
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SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
18
LISTS OF BUYERS FROM
ONLINE/CATALOG
MERCAHNTS
MERGE
PROCESS
NAMES AND
ADDRESSES FROM
ALL SOURCES USED
SURFER’S
SUPPLY
SURF CITY
REMOVE
DUPLICATES
SURFGEAR
GENERAL LISTS
(E.G., PHONE BOOK
LISTINGS)
SELECT
RESIDENCES
W/IN 2 BLOCKS
OF BEACH
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NONREDUNDANT
FINAL LIST
MAGAZINE
SUBSCRIPTIONS
SURFER
DUDE
SURFER
CHICK
EXTREME
SURFING
CALIFORNIA
SURFER
ORGANIZATION
MEMBERSHIPS
SORORITY
SURFERS OF
AMERICA
CALIFORNIA
SURFERS’ ASSOC.
PURGE
PROCESS
SEGMENTATION, TARGETING, AND POSITIONING
GEORGIA SURFER
SOCIETY
Lars Perner, Instructor
19
SEGMENTATION, TARGETING, AND
POSITIONING
PROUDCT
PRICE
PREMIUM
PREMIUM
BASIC
DURABLE
POSITIONING
LOW PRICE
IMPLEMENTING
CHOSEN IMAGE AND
APPEAL TO CHOSEN
SEGMENT
VALUE
PROMOTION
BUAD 307
DISTRIBUTION
PRESTIGE
INTENSIVE
FUN
SELECTIVE
POWERFUL
EXCLUSIVE
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
20
“STUCK IN THE MIDDLE” PROBLEM
 Brands that offer a clear benefit
tend to do better
 Clear orientation
 Wal-Mart
 Nordstrom’s
 KFC
 “Stuck in the middle”
 Sears—Competition both from
“above” and “below.”
 Nevertheless, there are
successful “middlelers:”
Denny’s, Vons, Ralph’s
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
21
Positioning Strategies
 “Head-on” competition
 Airlines (want to differentiate but have
difficulty pulling it off in practice)
 Beef products
 Differentiation
 Burger King: Grilled instead of
McDonald’s fried burgers
 Hallmark: “When you care to send the
very best…”
 Hertz (vs. “Not exactly”)
 Zachy Farms (chicken)
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
22
Repositioning
 Repositioning: Changing established position may be
difficult -- e.g.,
 Sears
 McDonald
Good sales;
poor everyday
values
Lunch; not dinner
Good for children
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
23
Multidimensional Scaling
 Consumer product perception
is identified along two or more
“dimensions”
 Methods:
 A priori specification of
dimensions  respondents
make judgments
 Respondent rating of relative
similarity of brands/product
categories  statistical model
identifies unnamed dimensions
 dimensions are inferred from
characteristics of items at
different points
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
24
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
25
HIGH
Hershey’s
Dove Milk Chocolate
Toblerone
Ritter
Mr. Goodbar
M&M
HIGH
LOW
Snickers
Almond Joy
Kitkat
Mars
York
Smores
Heath
Twix
Milky Way
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Reese’s
Butterfinger
LOW
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
26
Similarity Ratings
Snickers
Snickers
M&M
7
5
6
3
M&M
Almond Joy
Mr. Goodbar
1=“Not at all similar”
Almond Joy
7
6
2
Mr. Goodbar
7
3
7
7=“Extremely Similar”
Logically, all candy bars are “extremely similar” to themselves. The shaded
regions are redundant—only the order is varied.
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
27
Some Repositioning Campaigns
 Geritol: “Not too young for
Geritol.”
 Orange juice: “It isn’t just for
breakfast anymore.”
 Microsoft  “hipper”
NOTE: Repositioning is difficult. It will take
a great deal of advertising support. There is
no guarantee that consumers will cooperate!
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
28
Some Brands That Were Dropped
Rather Than Repositioned
 ValueJet  AirTran
 Packard Bell  e-Machines
 German Communist Party  Party for Democratic
Socialism
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
29
Euphemisms in Positioning
 “Loss Prevention Associate”
 “Sales Counselor”
 “Pre-Owned” or “Previously Loved”
Vehicle
 “Gaming”
BUAD 307
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
30