Chapter 7 - Segmentation, Targeting and Positioning Flashcards
Describe Global Market Segmentation
- The process of dividing the world market into distinct subsets of customers that have similar needs (for example, country groups or individual interest groups).
- Pluralization of Consumption or segment simultaneity theory was advanced by Professor Theodore Levitt 4 decades ago stating that consumers seek variety and new segments will appear in many national markets. i.e., sushi, pizza
Describe Types of segmentation methods
- Demographic segmentation
- Psychographic segmentation
- Behavior segmentation
- Benefit segmentation
Describe Geographic Segmentation
- Dividing the world into geographic subgroups
- The advantage of geography is proximity
- However, just because people are in close proximity does not mean they are similar
Describe Demographic Segmentation
Based on measurable population characteristics
– Age
– Income
– Gender
– Age distribution
– Education
– Occupation
Generally, national income is the most important variable
Give examples of countries with regard to demographic segmentation
- 500 million Asian consumers aged 16 and younger
- India has the youngest demographic profile among the world’s large nations; half are younger than 25, 14 yr. olds & younger equal the entire U.S. population
- Half of Japanese will be 50+ yrs. by 2025 * 20% of Americans (70 million) will be 65+ by 2030
- U.S. Ethnic groups—African/Black, Hispanics, & Asian Americans have a combined annual buying power of $233 billion
Describe Income & Population Segmentation
- 2/3 world GNI in the Triad, 12% o population
- Don’t use income as the only variable for assessing market opportunity
- Use Purchasing Power Parity
- Do not read into the numbers
– Some services are free in developing nations so there is more purchasing power - For products with low enough price, population is a more important variable
Describe Market Segments by Income & Population
Global Teens
‐12 and 19 yr. olds
“A group of teenagers randomly chosen from different parts of the world will share many of the same tastes.”
Global Elite
–affluent consumers who are well traveled and have the money to spend on prestigious products with an image of exclusivity
Describe Gender Segmentation
- Gender segmentation is an obvious choice for some companies
- Fashion designers & cosmetic companies focus on women but may also offer men’s products
– Nike is opening shops for women
– Levi Strauss opened Levis for Girls in Paris
Describe Psychographic Segmentation
- Based on attitudes, values and lifestyle
- Lifestyle surveys
– SRI International’s Values and Life Styles, VALS & VALS 2
Porsche example
– Top Guns (27%): Ambition, power, control
– Elitists (24%): Old money, car is just a car
– Proud Patrons (23%): Car is reward for hard work
– Bon Vivants (17%): Car is for excitement, adventure
– Fantasists (9%): Car is form of escape
What are Euroconsumers?
The Euroconsumer:
Successful Idealists – 5% to 20% of the population; consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals
Affluent Materialists
– Status‐conscious ‘up‐andcomers’– many of whom are business professionals – use conspicuous consumption to communicate their success to others
Subdive Euroconsumers into comfortable belongers and disaffected survivors
Comfortable Belongers
– 25% to 50% of a country’s population
– conservative
– most comfortable with the familiar
– content with the comfort of home, family, friends, and community
Disaffected Survivors
– lack power and affluence
– harbor little hope for upward mobility
– tend to be either resentful or resigned
– concentrated in highcrime urban inner city
– attitudes tend to affect the rest of society
Describe Behavior Segmentation
- Focus on whether people purchase a product or not, how much, and how often they use it
- User status
- 80/2 Rule or Law of Disproportionality or Pareto’s Law–80% of a company’s revenues are accounted for by 20% of the customers
Describe Benefit Segmentation
- Benefit segmentation focuses on the value equation
– Value=Benefits/Price - Based on understanding the problem a product solves, the benefit it offers, or the issue it addresses
Describe Ethnic Segmentation and give and example of the U.S.
The population of many countries includes ethnic groups of significant size
Three main groups in the U.S. include AfricanAmericans, AsianAmericans, and Hispanic Americans
Hispanic Americans
– 50 million Hispanic Americans (14% of total pop.) with $978 billion annual buying power
– “$1 trillion Latina” 24 million Hispanic women: 42% single, 35% HOH, 54% working
How to: Assessing Market Potential, what to be mindful about
Be mindful of the pitfalls
– Tendency to overstate the size and short‐term attractiveness of individual country markets
– The company does not want to ‘miss out’ on a strategic opportunity
– Management’s network of contacts will emerge as a primary criterion for targeting
How to: Assessing Market Potential, three basic criteria for targeting
– Current size of the segment and anticipated growth potential
– Potential competition
– Compatibility with company’s overall objectives and the feasibility of successfully reaching the target audience
or in a nutshell:
* Current size of the segment and growth potential
* Potential competition
* Compatibility and feasibility
Criteria for targeting - focus on Current Segment Size & Growth
- Is the market segment currently large enough to present a company with the opportunity to make a profit?
- If the answer is ‘no,’ does it have significant growth potential to make it attractive in terms of a company’s long‐term strategy?
Criteria for targeting - focus on Potential Competition
- Is there currently strong competition in the market segment?
- Is the competition vulnerable in terms of price or quality?
Criteria for targeting - focus on Feasibility and Compatibility
- Will adaptation be required? If so, is this economically justifiable in terms of expected sales?
- Will import restrictions, high tariffs, or a strong home country currency drive up the price of the product in the target market currency and effectively dampen demand?
Describe the 4-Stap Framework for Selecting Target Markets
- What are the key drivers of this marketing modell?
- Are enabling conditions in place for this marketing model?
- What is the cost of entry? What is the cost of waiting?
- Is the risk/control tarde-off appropriate?
9 Questions for Creating a Product‐Market Profile
- Who buys our product?
- Who does not buy it?
- What need or function does it serve?
- Is there a market need that is not being met by current product/brand offerings?
- What problem does our product solve?
- What are customers buying to satisfy the need for which our product is targeted?
- What price are they paying?
- When is the product purchased?
- Where is it purchased
How to make Product‐Market Decisions
- Review current and potential products for best match for country markets or segments
- Create a matrix with countries and products to help with analysis
List Target Market Strategy Options
Standardized Global Marketing or Undifferentiated target marketing
Concentrated Global Marketing
Differentiated Global Marketing
Target Market Strategy Options - deep dive on Standardized Global Marketing or Undifferentiated target marketing
– Mass marketing on a global scale
– Standardized marketing mix
– Minimal product adaptation
– Intensive distribution
– Lower production costs
– Lower communication costs
Target Market Strategy Options - deep dive on Concentrated Global Marketing
– Niche marketing
– Single segment of global market
– Look for global depth rather than national breadth
– Ex.: Chanel, Estee Lauder
Target Market Strategy Options - deep dive on Differentiated Global Marketing
– Multi‐segment targeting
– Two or more distinct markets
– Wider market coverage
– Ex.: P&G markets Old Spice and Hugo Boss for Men
Describe/Define Positioning
Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offer
– Attribute or Benefit
– Quality and Price
– Use or User
– Competition
Positioning - deep dive on Attribute or Benefit
– Economy
– Reliability
– Durability
- BMW: The Ultimate Driving Machine or Visa: It’s Everywhere You Want To Be
- Foreign Consumer Culture Positioning: Focus on import benefits
Positioning - deep dive on Quality and Price
Continuum from high price/quality and high price to good value
- Stella Artois beer: Reassuring Expensive
- FCCP: Grey Goose (France), Ketel One (the Netherlands)
Positioning - deep dive on Use or User
Associates the brand with a user or class of users
- Max Factor: The makeup that makeup artists use
Positioning - deep dive on Competition
Implicit or explicit reference to competition
- Dove: Campaign for Real Beauty
– 2% of women worldwide think they are beautiful
– New definition of beauty
