L5 Segmentation Targeting & Positioning Flashcards
STP: defs
- Market segmentation = Dividing a market into distinct homogeneous groups of buyers with different needs, characteristics, or behavior, who might require separate products and Marketing-Mixes.
- Targeting = The process of identifying each market segment’s attractiveness and selecting which segments to enter.
- Positioning = Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.
Why segment?
5 reasons
t.h.i.s.d.
- Heterogeneity of customer needs and wants
- Differences in customer buying power and potential CLV
- Individualization in consumer behavior
- Targeted communication
- Advantages through specialization
How to segment? 5 properties of a good segmentation
MASDA:
- Measurability: The degree to which the size, purchasing power and profiles of a market segment can be measured.
- Accessibility: The degree to which a market segment can be reached and served.
- Substantiality: The degree to which a market segment is sufficiently large and profitable.
- Differentiability: The degree to which a market segment is conceptually distinguishable and responds differently to a different marketing mix.
- Actionability: The degree to which effective programs can be designed for attracting and serving a given market segment.
segmentation by consumer markets:
meaning
4 advantages & 2 disadvantages
= geographical
4 Advantages
- Effective for large national and international companies, because geogrpahic segmentation helps the companies target the different needs and wants of customers in different regional areas
- Effective for small companies with limited budget, because they can focus on specific geogrpahical areas
- Works well with population densities (e.g. urban, suburban, rural), because customers tend to be really different in cities on the country
- It is easy to break a marked down into different geographical areas
2 Disadvantages
- Limited technique, because it assumes that all customers in a specific geographical area have similar needs and wants
- Thus, geographical segmentation should be used in combination with another segmentation technique
segmentation by socio-demographic criteria:
def
2 Advantages & 3 Disadvantages
according to age, race, religion, gender, family size, ethnicity, income, education, and socio-economic status: data available from address brokers
+ media-data often structured according to socio-demographics.
2 Advantages
- Information you need is available (census data) in order to segment your customers
- Customer retention and loyalty (if companies spend time to identify customers’ wants and needs, customers usually come back)
3 Disadvantages
- Competitors try to use same marketing techniques and potentially take away customers
- Potentially misleading, because socio- demographic twins can have really different lifestyles
- Very little understanding of the customers themselves
segmentation by psychographic variables:
3 main elements
2 advantages
2 disadvantages
based on social class, lifestyle, or personality characteristics
- Needs, wants, attitudes, preferences, individual value system/ personality, lifestyle
2 Advantages
- Better insight into customer as a person
- In return, this technique results in more valid and responsive segments and subsequent marketing programs
2 Disadvantages
- This technique requires detailed consumer data
- Concerns with data interpretation, accessibility in real life?
benefit segmentation def=
- eg
- 2 advantages & 3 disadvantages
segment based on the different benefits sought by different customers
- e.g. price-conscious segment vs. brand- conscious segment vs. quality-conscious segment
2 Advantages
- Effective for companies whose products have unique features
- Effective for large companies who want to create multiple market segments in order to reduce rivalry
3 Disadvantages
- Potential lack of innovation due to too much reliance on benefit sought
- Marketing research required
- Target group is difficult to reach
segmentation by behavioral variables:
- examples
- 1 Advantage & 3 Disadvantages
based on behavioral variables such as:
- Occasions
- User status (non-user, ex-user, potential user, first-time user, regular user)
- Usage rate (light, medium, heavy user)
- Loyalty status
- Up-buying, cross-buying behavior
1 Advantage
- Adopted in mature markets: how to activate non-user, target switchers, convert a medium user to a heavy user
3 Disadvantages
- Low understanding of market: fails to consider the reason why consumers buy the product
- Reliance on data bases for experimentation
- Possible only for existing customers
typical steps to produce a segmentation: 4
- Desk research – What data / studies are available already? e.g. National Statistics, studies published by consulting firms: not specific enough, but useful start
- Qualitative market research e.g. focus groups, shop-alongs, in-depth interviews to get first insights
- Quantitative market research e.g., online or telephone survey to test and quantify findings
- Cluster analysis on the basis of the factor solution to find groups of participants with very similar answer patterns = segments
clusters def=
- relatively homogeneous groups
- ideally, objects in each cluster are similar to each other and dissimilar to objects in other clusters
Organizational markets
- 2 aka
- 2 similarities w consumer markets
- 3 differences w consumer markets
- aka business markets, B2B
- Similarities w consumer markets
- Individuals assume buying roles
- Purchase decisions are made to satisfy needs
- Differences w consumer markets
- Market structure and demand
- Nature of the buying unit
- Types of decisions and the decision process
B2B vs B2C: 3 differences in market structure & demand
- Fewer and larger buyers
- Buyers can at times be competitors as well
- Derived demand:
- Business demand ultimately derives from the demand for consumer goods
- Technology Push vs. Market Pull
- Inelastic and more fluctuating demand:
Total (short-term) demand for many business products is not affected by price changes
nature of the buying unit
- aka
- 5 constituents
- 5 roles for mkting profiling
- aka buying group
- cross-functional: representatives from
- purchasing
- production
- materials mgmt
- finance
- corp & marketing planning
- …
- roles for mkting profiling:
- user
- buyer
- decider
- influencer
- gate-keeper
B2B purchasing decision process:
4 types
special features
- new order
- straight rebuy
- modified order
- buying a packaged solution
a big new order may involve a complex process w multiple stages such as search, solicitation of multiple offers, assessment, post-purchase evaluation…
Targeting
2 steps w how
- evaluating market segments
- 5-forces analysis + CLV
- estimation of customer equity
- selecting market segments
- choose scope
- choose coverage approach
selecting market segments:
3+1 ways to choose coverage, from broad to narrow scope
w advantages & disadvantages
undifferentiated (mass)
- 1 size fits all
- *advantages**:
- no need for extensive research
- low cost
- *disadvantages:**
- difficult to satisfy all customers
- fierce competition
- differentiated (mass)*
- Targeting several segments and designing separate offers for each
advantages:
- Meeting specific needs
- Higher sales and strong position
disadvantages:
- Resource-intensive product development and marketing
- Higher costs
- concentrated (niche)*
- Resources of a firm are focused on a well-defined marketing niche or segment
- *advantages:**
- Strong market position in attractive markets
- “foot-in-the-door”
disadvantages:
- High risk due to reliance on a single market niche only
- micromarketing (local or individual)*
IT targeting
def w 3 elements
+ 3 pros & 4 cons
different versions based on geo-behavioral targeting (geographical location + device/OS + source e.g. google/fb)
3 Pros
- Allow advertisers to reach more people than traditional advertising media
- Low costs
- Eliminate „wasted“ advertising to consumers whose preferences do not match products‘ attribute
4 cons
- Data privacy concerns
- Increase of ignoring internet advertising by web users due to large spam amounts
- Marketing materials are automatically available for anyone to copy
- Ad blockers
Value proposition def=
4 Cs
Value proposition = the full positioning of a brand, i.e., the full mix of benefits on which it is positioned
4Cs CrClCoCo
- clarity
- consistency
- credibility
- competitiveness
Positioning: how to gather needed info?
2 methods
comparison w pros & cons
- directly asking consumers in surveys
+ straightforward - limited to what you ask
- running perception data through statistical methods Correspondence analysis or Multidimensional Scaling (MDS) to build perceptual maps automatically showing similarities & differences
Procedure: first ask consumers to assess level of similarity bw brands, then name axes!
+ resembles real-world unconscious comparison among multiple options; may yield surprises - complex
STP process
in 6=2+2+2 steps
- Segmentation
- choice of segmentation basis
- development of profiles for each segment
- Targeting
- assessment of each segment’s attractiveness
- selection of target segments
- Positioning
- choose positioning strategy for target segments
- define marketing mix guidelines for target segments
Market segmentation def=
Market Segmentation divides a market into different groups of buyers with different needs, characteristics, or behavior.
5 possible segmentation variables:
- Geographic
- socio-demographic
- psychographic
- benefit sought
- behaviour
5 desirable characteristics of a market segment
- measurability
- accessibility
- substantiality
- differentiability
- actionability
segmentation in 3 usual steps
- desk research
- then qualitative
- then quantitative (e.g. Cluster analysis) market research
Targeting: 3+1 approaches
- undifferentiated (common need of entire market)
- differentiated (differential need of entire market)
- concentrated (common need of one segment)
- (online)
Positioning:
2 methods to map competitors’ positioning
w pros & cons
Methods:
- Asking customers directly with semantic diff. scales
- *Pros:**
- Straightforward approach, all domains of interest can be asked and compared
- *Cons:**
- You get what you ask for – you might forget important attributes
- Included attributes might not be important from the respondents’ point of view
- perceptual maps (=multidimensional space of the perceived similarities and differences among objects) via MDS = multidimensional scaling, aka correspondence analysis
Pros:- Resembles a consumer’s choice in the real world (i.e. choosing between different brands without consciously thinking about different attributes)
- Might lead to surprising new findings (maybe consumers base their selection of brands on dimensions that have not been considered so far)
- *Cons:**
- Complex technique, not always easy to interpret
Value Proposition def=
Value Proposition is the full positioning of a brand, i.e. the sum of benefits promised to each target customer segment
Value proposition:
the 5 winning benefit / price combinations
benefits: price:
more same less
more 4 4 4
same 4
less less 4 much less
