Jake Crozier, Jake Sixour, Quentin Petty
MKT 300 Presentation Chapter 9
Joyce Meyer
11 October 2013
Step 1, Establish overall strategy. A company’s overall strategy should be show
the company’s vision or objective. The segmentation strategy has to be consistent with
the mission of the company. The strategy should include the company’s strengths,
weaknesses, the opportunities, and the (SWOT). Companies like Victoria Secret, main
objective is to increase sales in the clothing industry. Victoria Secrets knows its strengths
are in its brand name and it ability to place new products on the shelves of retailers.
However, its primary weakness is that they do not attach male consumers. In identifying
the potentially large and profitable market segment but their competitors’ do so is a large
opportunity. Which could lead to a threat because a company may want to make a
competitive retaliation.
Step 2, of the Segmentation, Targeting, a Positioning Process, explains the
different segmentation methods that are practiced by companies. The five segmentation
methods are geographic, demographic, psychographic, benefits, and behavioral.
Companies use these methods to market towards a select group of target customers.
Marketing a product towards the group of individuals that are most likely to buy the
product utilizes the advertising budget and ensures that the company is not wasting funds.
Geographic segmentation targets a certain geographic area such as continent,
regions, country, state, city, or zip code. This method is most beneficial when companies
are marketing certain products that have a customer base that varies by region. An
example of geographic segmentation is a grocery store. Each area of the country buys
different amounts of products and ensuring that the store is advertising appropriately to
the changing regions will maximize the effectiveness of the advertisements.
Demographic segmentation targets groups of consumers by age, gender, income,
and education. Kellogg’s Cereal is a prime example of demographic segmentation. They
advertise Fruit Loops towards children with commercials that show how tasty and fun
they are to eat, and Special K towards adults by showing the health benefits of eating it
every morning. Television habits also play a key role in demographic segmentation. Men
and women watch TV in different ways. Men channel surf, watch prime time shows that
have attractive cast members, and are action oriented. Women watch shows that they can
relate to through situational plot, and shows recommended by friends. This is extremely
important for companies that have products for both genders like Gillette razors. Gillette
will chose to air each gender’s razor commercials during shows that are most likely to be
seen by that gender.
Psychographic segmentation breaks down consumers into groups based on their
lifestyles, self-concept, and self-values. This method separates consumers by how people
self-select themselves into groups based on their characteristics, behaviors, and how the
choose to occupy their time. Understanding the underlying psychological reasons that
determine these choices are key to market products effectively using psychographic
segmentation. If a person feels the need to belong to a group, then airing commercials
that show the product being used by a group of friends laughing and enjoying themselves
will give the consumer the idea that buying that item will help them be accepted socially.
Benefits segmentation focuses on how their product will benefit the consumer.
Going to see a feel good or funny movie will benefit the consumer by putting them in a
good mood. Behavioral segmentation can be broken down into two different groups:
occasional and loyalty. Occasional segmentation gives the consumer certain items
specified for a specific situation. An example of this is how Coca-Cola has different size
soft drinks for different occasions. Loyalty segmentation is when companies give special
benefits to their best customers like United Airlines giving frequent flyer miles to
customers who frequently chose their airline.
In Step 3, which is focused on evaluating segment attractiveness, marketers first
contemplate whether the segment they are considering it worth pursuing. One of the
components they focus on is if it is identifiable, meaning who is in that segment and what
are their needs. It is also important to realize that segments shouldn’t hold similarities,
because segmenting advertising would no longer be necessary. Another thing to consider
about a segment is to make sure that it is substantial. By being substantial, a target market
needs to have sufficient size in order to generate revenue for the company in which has
chosen that market. Being reachable is another quality important to consider when
segmenting a market, because if you couldn’t reach your target audience, you can’t
expect to have any impact on the market. Consumers need to be provided with the
necessary persuasion and purpose of your product in order to even consider buying it.
Also, a responsive customer is important to have in order to be successful in segmenting
as it lets the company who is providing the offer with feedback of how their product is
satisfying the consumer sufficiently or not. If you can’t get responses, you shouldn’t
target that market. Profitability is also obviously vital to have when identifying a
segment to pursue. Important things to consider in this include market growth, market
competitiveness, and market access, as it will provide you with an expectation of how
well your product can be sold in the market.
In Step 4, which involves selecting a target market, marketers consider the pros of
a market and its own competencies thoroughly in order to determine whether to penetrate
it or not. There are a few different strategies to consider when determining how you want
to attack the market, which each provide their own unique identity. The first, which is an
Undifferentiated Targeting Strategy, or Mass Marketing, entails everyone being a
potential user of your product or service in the market. The way this is done mostly by
identifying whether the consumers hold similarities, and if it can provide the same benefit
for both. Another strategy is a Differentiated Targeting Strategy, encompasses getting
your product out to different segments, and offering them in a different way that would
comply with the needs of that segment. The most important reason this strategy is so
widely used is because it helps companies hold a larger share of the market. A third
strategy that is used as well is a Concentrated Target Strategy, in which a company
focuses all of its efforts solely on one target market, and penetrate it the best way they
can. Companies with scarce resources often focus on this strategy as it helps them use
those resources more efficiently. The last strategy, which can be used in choosing a target
market is Micromarketing or one-to-one marketing, is considered to be an extreme form
of segmentation, as companies who use it are providing a customizable product in order
to maximize the happiness for the consumer. This strategy is much more common among
smaller companies compared to large ones, as the smaller ones have a lot easier time
directing the efforts to satisfy the diverse customer base they hold.
Step 5: Develop Positioning Strategy
The positioning strategy helps communicate the firm’s value proposition, which
helps communicate the benefits customers receive from a product or service and there by
provides reasons for wanting to purchase, therefore provides reasons for wanting to
purchase it. To help visualize a value proposition think of the 4 main components: Target
market, offering name or brand, product/ service category or concept, and unique point of
difference benefits. Lets use Gatorade as an example. Their target market is athletes
around the world, offering name is Gatorade, product/ service category or concept is that
they are a sports drink, and there unique point of difference/ benefits is representing the
heart, hustle and soul of athleticism and gives fuel working muscles, fluid for hydration,
and electrolytes to help replace what is lost in sweat before, during, and after activity to
get the most out of your body.
Value is a popular positioning method because the relationship of price to quality
is among the most important considerations for consumers when they make a purchase
decision. Brands that use value are Mercedes-Benz. They use the positioning method of
luxury value, showing valuing doesn’t consider low price. Another positioning strategy
is product attributes. An example of a company that uses that Volvo’s idea of safety
image to one focused of driving performance and excitement. A well-known symbol can
also be used as a positioning tool. The Nike Swoosh, the Ralph Lauren Polo, and Tony
the Tiger are strong symbols that position a brand and distinguish them from competition.
Many symbols are legally registered trademarks that are protected for the companies that
develop them.
When developing a position strategy, firms go through five important steps. A
perceptual map displays, two or more dimensions, the position of products or brands in
the consumers mind.
In making a perceptual map, marketers must follow six steps. First step is to
determine consumers’ perceptions and evaluations of the product or service in relation to
competitors. Marketers determine their brand’s position by asking consumers a series of
questions about there and competitors’ products. Identify the market’s ideal points and
size. Companies must consider the mass of the group of consumers they are marketing
too. Third, identify competitors’ positions. Firms have to study how same competitors’
position themselves. Fourth, determine consumers’ preferences. A firm must know what
the consumer thinks about their product or services in the marketplace and their position
relative of one another. Fifth, firms must select a position. Firms must ignore what other
markets do and stick to their product and hope consumers are attracted to their original
idea. Finally step six, monitor the positioning strategy. You need to make adjustments to
the positioning strategy because if you do the same thing every year then it could end in
disaster.