Chapter 3: Market Segmentation & strategic positioning

Mass marketing
Offering the same product and marketing mix to all customers
ex Henry Ford’s Model T
Market Segmentation
Identifying distinct segments to be targeted ( by demographics, lifestyle, and behaviors associated with a product) and creating a marketing mix for the selected market

Ex Gm’s a car for every purse and purpose (seamless transition between different life stages)

Positioning
Unifying the elements of the marketing mix that expresses the offering’s value proposition.
Theodore Levitt
Marketing myopia; meaning the business should have broad definition of business
Market Segmentation, Targeting, and Positioning
key elements of the marketing mix; Allows product differentiation

ex Chewing Gum based on flavor, with/ without sugar

social benefit & health related benefit

A success strategy will make the consumers believe that their products are different and therefore one is better than the other.

Identifying who your target market is, and and the best ways to attract that market. This means paying attention to the consumer and the current environment.

Criteria for effective targeting
1) Identifiable: common need (Benefits, ages, race, etc)
2) Sizable: Enough people (to make a profit)
3) Stable: lifestyles and consumption habits won’t change much
4) Accessible: find way(s) to get the message across without breaking the bank
5) Congruent with the company’s objectives and resources.
Hybrid Segmentation
Includes attributes from two or more segmentation techniques

1.facts
2. consumer-rooted/ consumption specific

ex Vals & prism

psychographics, geodemographics, etc.

Consumer- rooted segmentation
Stems from the consumer’s physical, social, & psychological characteristics (psychographics)

1.evidence based
2. cognitions indirect psychology

Evidence based
1) Demographics (age gender, ethnicity, & income)
2) Social Class(income,education, occupation)
3) Zip code & location
Cognitions
1) psychographics (activities, interests, and opinions)

ex green consumer, impulse buyer

2) Personality traits (self-confidence, open-minded, high achiever )

3) Sociocultural values- values measured through psychology.

Demographic segmentation
Easy, cost-effective ,sees potential segments, a lot of consumption behavior can be related to demographics

ie gender specific, music is age specific, leisure activities vary with age

1. age
2. gender
3. marital status
4. family life cycle
5. income, education, occupation

Age
Needs vary with age; Categorizes by MPDD( Market place decision difficulty)

1) Baby boomers: likely to live longer, be more active, & consume more products
Generation X: skeptics
Y: Echo Boomers: green orientated, tech savvy

Gender
Women traditionally hair & cosmetics
Men Tools & shaving

However gender roles are being blurred and now there is new potential for new segments & products

Martial Status
Looks at the types of households that use certain products and targets the person actually selecting the product

Including singles, single parents, dual income married couples (for high end products )

Family life cycle
formation, growth and dissolution of families(bachelorhood, honeymooners, parenthood post-parenthood dissolution)

1. Marital status
2. employment status
3. presence or absence of children
ex young singles need basic furniture
older people without kids need more support for their backs (& can afford it)

Income, education, and occupation
The ability of the consumer to pay for a product; often combined with age; social class a good indicator

ex affluent elderly
yuppie segment

Geo-demographic segmentation
A combination of geographic and demographic segmentation; meaning people who live near you are like you in terms of lifestyle & consumption habits

ex certain types of clothing depending on where you live.

sometimes an exotic location creates a unique market opportunity, tourism of doom, unique product for a specific location- Absolut Chicago

Personality Traits
Testing people with questions or statements to see their personalities (because they will not tell you at all )

ex open-minded people like to try new things target to create positive word of mouth

Lifestyles
Psychographics; activities, interests, and opinions (buying motives, interests, beliefs, attitudes; explains WHY people purchase products

ex Likert Scale & VALS (ideal achivement, self-expression)

Vals
Stands for Value and lifestyles: Consumers are motivated by 3 things:

Achievement : Showcase success to piers

a) achievers
b) strivers
Ideals: Knowledge & Principles

a)thinkers
b) believers
Self-expression: Desire social activity, risk, & variety

a) experiencers
b) makers

Culture and Subculture
Cultural heritage (ex America it is youth, fitness and health)
ex bike in asia for efficient transportation, in america for health

Some things are present amongst all age groups. Young people in different countries tend to want the same items.

Consumption-specific segmentation bases
1. Benefit Segmentation
2. Brand Loyalty & relationship

ex Usauge rate & usage situation

Usage Rate Segmentation
Heavy, medium, and light users & nonusers of a specific brand, product, or service.

ex dog food, beer, etc

awareness status: degree of awareness, interest level, readiness to buy

level of involvement: differences between know of a product and product like purchases

Usage Situation
Occasion & situation

weekend, birthday, holiday, business trip, whether its a gift

Benefit Segmentation
Segments according to the benefits consumers seek from products and services.

1) Functional
2) Value for the money
3) Social benefit
4) positive emotional benefits
5) negative emotional benefits

Media Benefits
Taylor each ad to fit the type of media it is in.
Brand Experience
experience (through, touch, taste, smell, feeling)

think of the ad, and think of the whole scene;

creating the triggered response while they are using the product as well

brand loyalty
1) behavior- frequency of buying a product
2) attitude – consumer’s feelings or commitment to the brand

-switchers & consumer innovators: Not loyal!
active consumers more loyal to brand than passive
functional features (have the products consumers want) + are active= the best customers.

Frequency Awards Programs
Offer special rewards and bonuses to frequent buyers
Age-cycle concept
Having a relative product line (a seamless transition) for every stage of life
Behavioral Targeting
The Study of usage behavior; especially cookies showing what websites they have visited. Geodemographics are now being considered in google searches (for coupons and discounts as well)
Microtargeting
Developing personalized marketing messages or divide consumers into small groups
1.large # and diverse origins of sources
2. Observing behaviors help marketers to get a good message to that person
3. Design formulas that place consumers in certain groups
4. Include online surfing patterns and purchases
narrowcasting
the opposite of broadcasting, personalized email, mobile texts, or door-to-door presentations
Differentiated marketing
Using individual marketing mixes for targeting different segments
Concentrated marketing
Picking one segment and marketing mix and target; good for well established & competitive companies
CounterSegmentation
Combining two or more segments because one has become too small or finding a more generic need between the two target markets.
mass marketing vs segmentation
Mass marketing uses one ad and marketing mix for all of its customers.

market Segmentation breaks the people into different markets with a unique market to each.

Wendell R. Smith
the founding father of market segmentation
Heavy Half
The portion of the target market that disportionately uses the product or service

ex beer, dog food

Dick W. Twedt
Founder of the “Heavy- half approach” & usage segmentation
Russel Hailey
Founder of Benefit segmentation
example include the toothpaste market