Chapter 6 Flashcards
4 major steps in creating value for target consumer
Segmentation, Differentiation, Positioning and Targeting
What are the Segmentation Variables?
Behavioural, Psychographic, Demographic and Geographic
Geographic Segmentation
market divided based on geographic location, cities, neighbourhoods, regions, etc.
Demographic Segmentation
Based on age/life cycle, gender and income. most popular bases for segmentation.
Psychographic Segmentation
Based on lifestyle or personality characteristics
1) Extraversion
2) Agreeableness
3) Openness
4) Conscientiousness
5) Neuroticism
Behavioural Segmentation
Based on knowledge, attitudes, uses or responses
- Occasions
- Benefits Sought
- Usage Rate
- Usage Status (segment by types of users (potential, ex, regulars, etc)
- Loyalty Status
Occasions
according to occasions when they get the idea to buy and actually make purchase decision
What do Business Info Services (e.g. Nielson) provide?
multi-variable segmentation systems which merge the 4 original ones. gives firms ability to segment by postal code or even household.
Segmenting Business Markets
1) Customer Operating Characteristics
2) Purchasing Approaches
3) Situational Factors
4) Personal Characteristics
Also include geographically, demographically (industry) or behavioural (minus occasions).
Starbucks Segments
1) Colleges & Universities
2) Gov & Military
3) Offices
Segmenting International Markets
1) Geographical Locations - Western Europe, Pacific Rim, etc. Not always most precise because it is assumed that nations near each other are similar when they may not be. e.g. not every country in latin America speaks spanish.
2) Economic Factors - pop income, level of economic development. e.g. BRICS heavily targeted due to rapid development.
3) Political & Legal Factors
4) Cultural Factors
Intermarket (Cross-Market) Segmentation
segments who have similar behaviours despite being in different countries (e.g. H&M targets frugal people in 43 countries).
Requirements for Effective Segmentation
1) Measurable
2) Accessible
3) Substantial
4) Differentiable
5) Actionable
e.g. dividing salt buyers into blondes and brunettes
Types of Target Marketing Segments
Undifferentiated (mass)
Differentiated (segmented)
Concentrated (niche)
Micromarketing (local or individual)
Concentrated Marketing
going after large share of one or few smaller segments instead of small share of large market
Micromarketing
tailoring products and marketing programs to specific individuals
Local Marketing
form of micromarketing, tailored to local wants and need (e.g. Marriott Renaissance Hotels)
Individual Marketing
form of micromarketing, tailored to individual preferences, custom products. e.g. Nike ID
Choosing a Targeting Strategy
Concentrated: if firm has limited resources
Undifferentiated: suited for uniform products
Differentiated or concentration: products that vary in design
Socially Responsible Target Marketing
biggest issues: targeting of vulnerable or disadvantaged customers (e.g. Happy Meal targeting children) and firms building detailed customer profiles with personal data.
Product Position
complex set of perceptions, impressions and feelings (e.g. Sonos: “all the music on Earth, in every room of your house, wirelessly). Simplifies buying process.
Positioning Maps
Shows consumer perceptions of brands against their competitors in terms of price and other variables.
Choosing a Differentiation and Positioning Strategy
1) Identifying Value Differences & Competitive Advantages
2) Choosing the Right Competitive Advantages
3) Selecting an Overall Positioning Strategy
Value Differentiation
What makes the product different and of value to customer. May be found through product, service, channel, people, image, etc…
How is Competitive Advantage Gained?
having lower prices or benefits that justify higher prices
Choosing Right Competitive Advantage
1) Important
2) Distinctive
3) Superior
4) Preemptive (hard to copy)
5) Affordable
6) Profitable
Selecting Overall Positioning Strategy
selecting winning proposition (diagram in notebook)
5 Winning Value Propositions
1) More for More (luxury)
2) More for the same (high quality for lower price)
3) More for less (specials, sales)
4) Same for less (Walmart, Super C)
5) Less for much less (lower quality for lower cost, Dollarama)
Positioning Statement
summarizes company or brand positioning
- Format: “To [target segment & need], our [brand] is [concept] that [point of difference].”
