Segmentation and
Differentiation
Chapter 9
Segmentation
• Target marketing requires:
– Identify and profile distinct
groups of buyers who might
require separate marketing
mixes
– Select one or more segments to
enter
– Establish and communicate the
product’s key benefits to the
market
What is a Target
Market?
• Group of people which a firm
designs, implements and
maintains a marketing mix
intended to meet the needs of
the group.
• Options include:
– Undifferentiated strategy
– Concentrated strategy
– Multisegment strategy
Market Segments
• Segments v. sectors
• Segment: subgroup of people
sharing 1+ characteristics that
cause them to have similar
product needs
• Market segmentation:
process of dividing a market
into a meaningful relatively
similar groups.
Criteria for
segmentation
•
•
•
•
•
Measurable
Substantial
Accessible
Responsiveness/Actionable
Differentiable
Bases for Segmentation
• Geography: region, market
size, climate etc.
• Demographics: age, gender,
income, ethnic background,
family life cycle
• Psychographic: personality,
motives, lifestyles, values
• Benefit: what consumers get
out of it; occasions, benefits,
user status, usage rate, loyalty
• Usage rate: 80/20 rule, new
users, medium users etc.
Benefit Segmentation
Group activity
• Candy segmentation exercise
Making your Product
Stand Out:
Positioning and the
Art of Differentiation
Based in part on
Differentiate or Die:
Survival in Our Era of Killer
Competition
Jack Trout
It’s all in your head…
• Differentiation takes place in
the mind.
• Minds are limited and can’t
cope with a lot of information
• Minds hate confusion and love
simplicity
• Minds are insecure and buy
what others buy
• Minds can lose focus
• MINDS DON’T CHANGE?? Do
they???
Ad for?
Ad for Marlboro
Cover of what catalog?
More help?
Their current
publication…
USP
Unique Selling Proposition
• Each ad must make a
proposition to the consumer.
Not just words, not just product
puffery, not just show window
advertising. “Buy this product
and you will get this specific
benefit”
• The proposition must be one
that the competition cannot
copy
• The proposition must be so
strong that it can move millions
The Art of Positioning
• Process that influences
potential customers’ overall
perception of a brand, product
line or organization in general;
the place in the mind relative to
the competition
• Perceptual map – means of
displaying or graphing, in two
or more dimensions, the
location of products, brands or
groups of products in
consumers’ minds.
How to Do it…
•
•
•
•
•
•
Make Sense in the Context
Find the Differentiating Idea
Have the Credentials
Communicate your Difference
It helps to be RICH!!
Potential Errors:
– Underpositioning-Crystal Pepsi
– Overpositioning- Tiffany’s
– Confused Positioning – NeXT
computer
– Doubtful Positioning- Cadillac
Cimarron
What are the
Possibilities?
POSITION ON…
• Attribute
• Benefit
• Use or Application
• User
• Competitor
• Product Category
• Quality or price
• Repositioning
Positioning examples
Perceptual Map
Bad Differentiators…
• Quality and Customer Orientation
– It is a GIVEN!
– 1983 – American Airlines launched a
Aadvantage program
• Price
– How low can you go?
– Exceptions: Wal Mart, Dell – based on
something else after price
– Competitors can get around it
– Unless it is high price (Rolex)
• Creativity
– The A.E.s v. the Creatives
– Coca Cola and Mean Joe Green;
Polar bears
• Breadth of Line
– Category killers can get too big
Good Differentiators…
• Being First
– Most firsts stay first (Coke, Xerox,
Advil
– Becomes the “generic advantage”
– Not a guarantee of success & can be
bad idea (smokeless cigarettes)
• Attribute ownership
– Own what is most important to
customer (Crest)
• Leadership
– Let everyone know it
• Heritage
– Based on time, location, family,
character
Good Differentiators…
• Market specialty
– Be the expert!
• Preference
– Can be legitimate, ethical,
emulation (fit)
• How the product is made
– Technology, special ingredient
(DiGiorno Pizza, Papa John’s),
handcrafted, packaging
• Being the latest
– Intel (makes itself obsolete);
ulcer meds; technology
– Don’t solve a nonexistent
problem; must be better; don’t
mess with tradition
• Hotness
– Tastes, trends, PR
Repositioning
• Changing customers’
perception of a brand in
relation to competing brands.
• Why do it?
– Changing demographics
– Declining sales
– Changes in social environment
SUVs
What are the
Differentiators in this
Category?
Dodge Durango
Chevy Trailblazer
Chevy Trailblazer (again)
GMC Envoy
Subaru Outback
Lincoln Navigator
Lincoln Navigator (again)
Buick Rendezvous
Buick Rendezvous
Toyota Sequoia
Toyota Highlander
Ford Escape