Chapter 5 - segmentation, targeting and positioning strategies PDF

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Best ways to segment, target and position a brand in the mind of a consumer...

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Chapter 5 – Segmentation, Targeting & Positioning strategies SEGMENTATION Example of where vision can help marketing people do really well New segments that are developing/segments that are changing dramatically:  First time parents- segment going through a lot of turbulence atm..diminishing group..a lot are physically removed from their own parents (moved away from parents so extended family aren’t around to help out)..both parents want to be involved (impact of social media has created a pursuit of perfection)...likely that both parents are working...much bigger stress around parenting these days  Young professionals that are living at home  Young people obsessing with image and how they’re perceived on social media  Long haul commuters  The growth of the two income family- qualifying for a mortgage, a lot of pressure on women...family creation being put on the back foot as people struggle money wise to survive  People living in nursing homes- people have emigrated, young family members have young families and jobs to be worrying about, so older generations have nowhere else to go but nursing homes Criteria for identifying segments  Behaviouristic - grouping consumers having similar uses for, and responses to particular products and services  Geography - important because of the way technology can focus on where people are, local segmentation is often used by small firms, keeps the market confined to a manageable area  Psychographic - lifestyle, personality, core values  Demographic - NB...Irish are highly educated, family life cycle, social class is changing dramatically in Ireland and that is mostly down to wealth Squeezed middle class

Market segmentation – vital for company success, involves the identification of subgroups of consumers with similar wants and buying requirements. Involves dividing the market into reasonable segments as a starting point, develop strategic goals to reach this market Variables for identifying segments: 1. Geography  Global  Regional  National  City/state  Neighbourhood - Focuses on the where issues - Local segmentation used by small firms - Keeps market confined to manageable area - Global segmentation assumes the whole world is its market but this could lead to cultural inappropriateness 2. Demographic  Gender

Age Cohorts of society – GI generation, Silent Generation, Baby Boomers, Generation X, Generation Y, Millenials  Level of education  Occupation & income level  Religion  Ethnicity  Family size -VALS typology is a multi-based approach to segmentation incorporating both psychological & demographics is developed by SRI international - Example: in US in 1970’s particular brand of cigarettes ‘Virginia Slims’ aimed at women  

3. Psychographic  Perceptual issues  Combining individuals who are psychologically similar in their orientation  Excellent potential for effective targeting segments due to the understanding of how the segment members love their daily lives and the opportunity to tie products and services to their values and aspirations Types: 1. Lifestyle – how choose to live your life, sporty, outdoors, arts 2. Personality – similar personality types, 4 main types of personality; compulsive, gregarious, authoritarian and ambitious. 5 personality traits for brands; sincerity, ruggedness, sophistication, competence and excitement 3. Core values – matches core values with target segment to build positive associations. VALS typology is as follows: a. Actualisers – high esteem b. Fullfilleds – highly educated, older, practical c. Experiencers – impulsive, variety, young d. Achievers – career oriented, hard working e. Believers – religious, community, conservative f. Strivers – financial underperformers g. Makers – DIY, independent, self sufficient h. Strugglers – poor, lacks skills, elderly 4. Behaviouristic  Grouping consumers have similar understanding of and responses to particular products or services  Types: 1. Usage rate a. Amount consumed by an individual b. Light, moderate or heavy users c. Wants and needs of some groups will be different 2. Loyalty level 5 levels of loyalty:

1. Brand insistence – highest level. Consumers won’t buy competitor products 2. Brand loyalty – customer will buy their fave brand if it is available, will buy alternative brand if not 3. Split loyalty – have loyalty to more than one brand eg loyalty to Coca Cola & Pepsi but won’t buy any other coke brand 4. Shifting loyalty – loyal for a period of time and then shit to another brand 5. Switchers – no loyalty to any brand 6 loyalty profiles: 1. Emotive loyalist – emotionally attached 2. Deliberate loyalists – rationally choose the company as the best choice 3. Inertial loyalists – sees cost of switching as too high 4. Lifestyle downward migrators – experience life changes and their needs are no longer met 5. Deliberately downward migrators – prone to frequent reassessment of their needs and have found a better solution in some other company 6. Dissatisfied downward migrators – actively dissatisfied due to one or more bad experiences Creation of special events Example: florists, candy shop, greetings cards specialised for specific events, mother’s day etc. - Used when a company has nurtured a connection with a particular occasions but wants to brand into other occasions - Another segment focused on critical events in a consumers life for example, jewellers promoting diamond rings for engagements Benefits Segmentation: Based on assumption that consumers can be grouped in terms of the key benefits from the use of the product eg. Health benefits from the use of a product Cross-border segmentation and international challenges Global expansion and spreading to new segments outside the border of the country in which the company is based: - Culture is the biggest challenge - Combine secondary data with on-the-ground observations - Phenomenology – studying consumers as they go through daily activities - Localisation – depends on how similar the uses of the product in the new context to the home uses - Diaspora marketing – involves using immigrants from the home country as targets in new international markets. This issue is that smaller organisations in emerging countries do not necessarily have the budget as the bigger companies Segmentation Tools

1. Cluster analysis – multivariate technique, within-group differences are minimised and between-group differences are maximised. Define clear and distinct customer needs e.g. focus groups or in-depth interviews 2. Conjoint analysis – uses a series of possible product/service attribute combinations to see which ones are actually preferred by survey respondents. Company chooses a series of product attributes (3 scents, 4 colours) and a series of attribute combinations are generated 3. Discriminant analysis – identify a series of variables that help to discriminate the members of one or more groups. Examine a series of possible differentiating variables that would explain and hopefully allow prediction of different possible group memberships. Look at demographic of ppl who buy the product, and of ppl who don’t 4. Multidimensional scaling – AKA perceptual mapping. Visually demonstrate how particular consumers view the various offerings,

TARGETING Involved deciding on the segment to serve and the best action plans to reach the identified segment. According to Derek F Abell (1980) the firm faces the following choices: - Single segment concentration - Selective segment concentration - Product specialisation - Market specialisation - Full market coverage Measuring effectiveness of target segments (Kotler 2003) 1. Measurable – size of segment, income and purchasing power and characteristics of the segment 2. Accessible – the firm can reach and is able to effectively serve the segment 3. Substantial – large enough and capable of generating sufficient profits 4. Differentiable – truly distinct from other segments in terms of composition and response to marketing stimuli 5. Actionable – marketing programmes can be developed to effectively identify, attract and serve the segment Product differentiation might identify a wide variety of products that the firm could produce. However, there may not be demand for all or some of the variations. Example, Ford Motor Company offering customisation to their Thunderbird. They offered as many of 19,000 variations. Problems then arose as to how Ford were going to produce all of the variations Before identifying segments, consider whether collective segments can be profitable:  Self-selection – enables customer to find and select best product. Best for large customer bases  Scoring models – development of questions that allow scoring to categorize customers  Dual-objective segmentation – attempts to convert unreached target audience into actionable groups through reclassification

POSITIONING Positioning refers to the placing of a product or service in a particular perceptual position within the mind of a consumer. Now that there is a specific consumer segment chosen, it is vital to make a strategic plan to reach them and ensure the target consumer has a clear and distinctive image in mind that is consistent and positive. - Reis & Trout (2001) argue that positioning is the strategic key. Their favourite brand is the one they first think of when thinking of that product or service category. All competing brands goal is to be the consumers first choice. There is a ladder inside every consumers head for each and every product or service. Goal is to reach the top rung - Being on top of the ladder allows the firm to enjoy consumer franchise Consumer franchise The ability for the firm to keep its product/brand/company name foremost in the mind of the target consumer. Considered a bankable asset. Has two components: 1. Behavioural 2. Attitudinal Positioning statement Serves as the foundation for all the positioning efforts. There are 3 components: 1. The audience and context 2. The value proposition 3. The action components that will be used by the company to deliver the value proposition to the audience in the context identified Examples of positioning statements: Apple – offer personal computing service for students, professionals, educators through its innovative, software and internet offering The 4 C’s of positioning Clarity – in terms of target market and differential advantage Consistency – maintain consistent message Credibility – in the mind of target customer, they must believe the claim Competitiveness – the differential advantage should offer the customer something of value competitor cannot provide (competitors should be named) Perceptual Mapping Is the visual representation of the different competitive brand offerings in a perceptual place. It maps the various offerings within the mind-set of a consumer. It is a useful positioning tool. It is what the consumer believes, not what the management believes. Measured through surveys. The attitudinal component of consumer franchise often gets overlooked

Example of perceptual mapping could be looking at a particular chocolate bar in comparison to others in the market.

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The importance of consistency: Key strategic issue associated with positioning is to present a clear and consistent message to the target audience The company that constantly tinkers with image will possibly end up confusing its target market

Real-Time Experience Tracking (RET) MacDonald et al. 2012  Research tool  Used to measure impact of a media investment for a company that provides more evidence than traditional trackers  Seeks to capture how people respond to experiences and interactions with a given brand all in real-time  Brand health and campaign tracking are integrated so fast and smarter data about shifting behaviour and attitudes can  Delta Airlines & Unilever use RET 

Ethnography is an effective tool involving observations and personal shadowing of consumers to gain behavioural insights 1. Pre-Survey: customer fills out survey at beginning of month about a particular brand 2. Real-Time Mobile Feedback – use phones to record brand interactions throughout a month. Codes are used for customers to text reflecting their positivity of each experience 3. Online Diary – filled out in greater detail about their experience 4. Post Survey – use this to reflect changes about the products/brands resulting from the interactions. This allows the development of touchpoint impact matrices

The Building of Superconsumers – Yoon et al. 2014  Involves companies targeting existing customers to further their growth and turn them into Superconsumers  Avid customers – passionate, interested in new variants, brand loyal  Builds on Pareto Principle (80-20 rule)  Superconsumers are: heavy users, engage with brand economically and attitudinally  Consumers are valuable because they are already buying the products and so are easier to each  Companies that approach segmentation, targeting and positioning enhance their chances of success  Companies must find the appropriate target consumer, understand them, and effectively reach them and grab a position inside their heads  Company must avoid the lure of change for the sake of change and focus on consistency and do what’s best for their company  Keep up perceptions of consumers and continue to build and maintain consumer franchise...