Online with
Louise Ripley

 
Introductory Marketing
Segmentation
Chapter 7 Armstrong/ Kotler Marketing: An Introduction

Segmentation, Targeting, and Positioning
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I. Market Segmentation

Segmenting Consumer Markets

Multiple - any combination of one or more of the above

 

It can be difficult to separate the different variables on which Marketers segment markets. In which quadrant is your Marketing Plan product?
Exercise
Segmenting Variables
It can be difficult to separate the different variables on which Marketers segment markets. Which quadrant is best for your Marketing Plan product (or is it "multiple")?
Post your answer in the Moodle Discussion Group.

Segmenting Business Markets 

 

Exercise
Business Segments I
List some "Operating Characteristics" of businesses on which a marketer might segment in doing B2B marketing.
Post your answer in the Moodle Discussion Group.

 

Exercise
Business Segments 2
List some "Purchasing Approaches" of businesses on which a marketer might segment in doing B2B marketing.
Post your answer in the Moodle Discussion Group.

 

Exercise
Business Segments 3
List some "Situational Factors" of businesses on which a marketer might segment in doing B2B marketing.
Post your answer in the Moodle Discussion Group.

Segmenting International Markets 

Inter-Market Segmentation
Customers with similar needs but located in different geographical areas

Requirements for Effective Segmentation
This is one of the more difficult concepts in Marketing and one of the most important. As you look at these terms here and in your textbook, think about your planned target market for your Marketing Plan Product. 

Exercise: Plan
Effective Segmentation
Give specific examples that justify your choice of Target Market for your Marketing Plan in each of these categories (e.g.: what demographic data do you have that indicates there are enough of these people in the geographic area where you plan to sell?) 
Post your answer in the Moodle Discussion Group.

 

Marketing Plan Hint - When choosing your ONE and only one Target Market for your Marketing Plan Assignment, a link from there will bring you back here to consider this list of requirements for effective segmentation. Be sure that your one chosen Target Market meets as many as possible of these requirements. 

II. Market Targeting

Evaluating Market Segments

This is part of marketing strategy -- evaluating business opportunities in the context of what resources we have to commit and what we want to do. It links directly to Strategy

Selecting Target Segments

Undifferentiated Marketing
(Mass Marketing)
Focuses on what consumers have in common rather than what's different. The original Coca-Cola was marketed to everyone. 
Differentiated Marketing
(Segmented Marketing)
Prepares many separate offerings for many different markets. Coca-Cola today offers dozens of different kinds of coke, including this one that I drank safely when I was pregnant - no caffeine, no sugar.
Concentrated Marketing
(Niche Marketing)

A product for one small group. The drink Clearly Canadian is aimed at a very small target market. 
Micro Marketing
(Local or Individual Marketing)
One special bottled drink for one special person or group. A soft drink manufacturer might bottle a drink in a special memorial bottle for a local high school to sell at a fund-raising event. This would be micro-marketing. 

 

One of my favourite products, and one targeted to a very small niche: a Mescal lollipop that I bought in a store at the Baltimore, Maryland airport while travelling to a conference. Mescal is a Mexican booze strong enough to take the hide off an elephant, and a true test of your macho/a character is to be able to drink the stuff in the first place, but then, when done, to eat the worm. I have done this, during my wild days in West Texas.

 What really gets to me about this product is that, while the target market is obviously unconcerned enough about their health that they would eat a worm, they are health-conscious enough to want the lollipop that contains it to be SUGAR-FREE! 

More on Levels of Market Segmentation

Mass Marketing  Henry Ford offered any colour "as long as it's black" Undifferentiated
Segment Marketing  GM offers a different kind of car for all kinds of different people Differentiated
Niche Marketing  Ferrari is something special for a very small special group Concentrated 
Micromarketing    
 - Local and Individual
1-on-1 Something special just for you, yes, just you! Local or Individual
A few years back, the Business section of the Globe and Mail ran a story about Rob Magaw, a young man in California who makes his living washing cars. But it's not just a living, it's a growing business that supports four employees, and it's not just any cars. Ron Magaw washes only red and black cars, and he charges US$125.00. 
Exercise
Ron Magaw
Ron Magaw is practicing Niche Marketing. What additional services could he add to move himself into the Micromarketing category? Be sure here to differentiate carefully between niche marketing and micro-marketing).
Post your answer in the Moodle Discussion Group.

Factors to Consider in Choosing a Target-Marketing Strategy

Resources - what do you have at your disposal to work with?
Product Variability

Life Cycle Stage
Market Variability
Competition - what are the other guys doing?
Exercise
Target Market Strategy
Give an example of Product Variability, either from your Marketing Plan or from real-life products and describe how it would make it possible to find different segments to which to market the product.
Post your answer in the Moodle Discussion Group.

Socially Responsible Target Marketing

My good friend and colleague, Herb Rotfeld, professor of Marketing at Auburn University in Alabama recently wrote a book called Adventures in Misplaced Marketing (2001, Westport, Connecticut: Quorum Books). In it he discusses issues of social conscience in the targeting of products to specific groups:

It is strange how targeting almost any group for these products [cigarettes, alcohol, gambling, etc.] other than high-income white males is criticized. A new cigarette brand aimed at office secretaries and other low-level clerical working women is condemned for targeting a "vulnerable" audience, as is another brand of menthols for urban-dwelling African-Americans. A new beer appealing to low-income black consumers generates accusations that the corporations are attempting to commit genocide, since the beer contained a higher alcohol content that these consumers preferred.

Of course, children should not be the targets of these adult products. That is why people below a certain age or elderly people with impaired judgment are called "vulnerable groups." But critics of marketing practices also refer to adult women, African-Americans, Hispanics and other minorities as "vulnerable groups," as if  they were children needing protection. It is odd that only possessors of pale penises are perceived to also possess the potential to personally resist the persuasive power of marketing promotions. Adult women should resent someone else saying they are incapable of deciding to smoke or buy guns. No one has ever suggested that African-Americans should be banned from purchasing cigarettes or alcohol. ( p. 157) 

Exercise
Socially Responsible Targeting
What are your reactions to Herb's statement? Don't be afraid to write what you really think; Herb signs himself in his emails as "Iconoclast" and writes mainly for the purpose of getting us thinking.
Post your answer in the Moodle Discussion Group.

Deciding on the Global Marketing Program

Standardized Marketing Mix -----------------------------------------------Adapted Regional Segmentation
Given: International customers have a wide variety of
cultural backgrounds, needs & wants, spending power, product preferences, shopping patterns
Too much adaptation raises costs and dilutes global brand power
More standardization results in:
lower production, distribution, marketing, & management costs
higher quality & more reliable products at lower prices
Recommended: Adapt products/marketing only when local wants can't be changed

III. Differentiation and Positioning

Positioning is something that you do in the mind of the consumer; so say Jack Trout and Al Ries in their book, Positioning: The Battle for Your Mind (New York. McGraw-Hill Trade, 2000.) It doesn't matter what YOU think your product is, if your market thinks it's something else, you've got to realize that. If you sell a light low-calorie beer and every tough-guy macho beer drinker in Manitoba thinks it's a great heavy-weight dark ale, you'd be better off to change your advertising and promote it as an ale than to try to change how those guys see it. 
Positioning can help you 

Find out how people see the market you're in or thinking of entering 
Decide on the best place in that market to locate your product

Positioning Maps

To help visualize how we will position a product, we draw a positioning map. To make this simple, we'll do it here in two dimensions, or attributes, of a product. Here I use the cereal market, and the dimensions of price and sugar content. I only use two dimensions because it's difficult to draw more than that, but recognize that complex computer programmes can do dozens of different dimensions at once and give you the perfect spot for your product. 

Draw a horizontal line intersected in the middle by a vertical line (ignore the line around the outside.)  Label the axes - one is Price, the other Sugar Content. It doesn't matter which is which; here I've called the horizontal axis Price. To the left is usually less and to the right more, the bottom less and the top more. 

         StoreSugar High in Sugar           

                                          Trix

            Honeynut

                        CocoaPuff

 

Low Price         

                                   StoreHealth

                                

 

   Quaker Oats

                                       High Price

      

                       

            Wheaties  SpecialK

Low in Sugar   Cheerios Z

Think about cereals - where do you put something like Trix? (their advertising slogan, "Silly rabbit, Trix is for kids" will tell you). Upper Right Quadrant. High in sugar and expensive, as most brand-name cereals are (and with less nutrition than a shot of whiskey, a 1960's study showed). We can put Cocoa Puffs and Honeynut Cheerios here too; there are a large number of cereals in this quadrant; I've drawn only three.
Think now of Kellogg's Special K, high in protein, low in fat, blah blah blah (advertising claims) - made for the adult market, still a brand name and fairly expensive. Place it to the right on the horizontal line (higher in cost) but further down on the vertical line (low in sugar). Lower Right Quadrant. Again, there are lots of cereals here, given the whole health-food and dieting craze of North America. Think of that little health food shop on Eglinton Avenue that smells like herbal tea and licorice and sells their own brand of health-food cereal that costs $14.59 for a 100 gram box. Call it CerealZ and put it right down there in the far right lower corner as far as you can go. Way low in sugar, way way high in price. Remember that while you're putting these brands in place, you're thinking about where you'll put (position) your cereal. 
In the Upper Left Quadrant there will be some house and store brands of sugary kid's stuff, not too expensive. In the Lower Left Quadrant are less expensive brands of health-conscious cereal, and the inexpensive old standbys like Quaker Oats oatmeal. Then imagine this map with another two dozen brands of cereal on it. Imagine it with 7 other dimensions jutting out into space. 
You can do two things with a positioning map. First - you can use it to understand where customers "position" your product in the market. Maybe you do some market research and find out that people think your cereal is an expensive low-calorie health-food cereal down there in the lower right quadrant with Kellogg's Special K and the little health-food's Z Cereal. Maybe that's where you wish it were seen but your research points out that most people see it as a cheap imitation health food cereal in the lower left quadrant. Of paramount importance is what the consumer thinks. It doesn't matter where you think your precious cereal belongs. Where does the customer see it? Once you know this, you may want to either change your marketing strategy to try to convince the market of just what your cereal is, or (easier) you may want to change your product or your marketing to conform to what the market thinks it is. 
But you are introducing a new product, and here's the Second thing you can do with a positioning map. You want to know where there's a gap, a part of the market whose needs aren't being fulfilled. Look at the map; are there empty areas on the map? There always should be and when there are there's a reason. Don't be fooled by a positioning map with a gap in it into thinking that all the idiots out there have missed the obvious market segment to go after. If you are charting price and quality, there won't be many products in the quadrant of high price-low quality and you'd be a fool to set out to sell a product in that category.  Look for a place where there aren't as many products and there won't be as much competition there, but be sure it is a place where you want to go. This is positioning. Deciding where, in the group of competitors for the market for your product class, your new product will have the best chance of success.
Exercise
Positioning Cereal
Looking at the positioning map above for breakfast cereal, where does your favourite cereal belong? 
Post your answer in the Moodle Discussion Group.

Choosing A Differentiation and Positioning Strategy 

In the positioning task, the important thing in the real world is to know what dimensions of your product are most important to the consumer and to concentrate on those. A positioning map with price and quality is obvious; try to think of one that is particular to your product class. Don't waste time on unrealistic strategies -- we'll make the highest quality thingamajig and sell it at rock bottom prices. Think realistically. Below are some common dimensions for some common consumer products. 

Shampoo
dandruff control - harsh or light
perfume level
conditioner included or not
Beer
high or low calorie
dark or light
domestic or imported
brand name or store brand
Watch
sporty versus dress
gadget-ridden or simplicity itself
level of accuracy 
(does a 3-year-old need a watch accurate to a millisecond?)
Furniture
sturdy, long lasting
antique or contemporary
heavy or light
service level
delivery options
Dog beds
warmth, portability, ease of washing
price may not be a particularly important variable - 
how much is the doting owner willing to pay?
Exercise 
Positioning Dimensions
For one of these product classes, choose an example of an actual product and describe what the dimensions mean for someone purchasing it.
Post your answer in the Moodle Discussion Group.

 

Marketing Plan Hint - When establishing your company's positioning in your Marketing Plan Assignment, a link from there will bring you back here to consider the material on positioning. Take care with this part; it is an extremely important part of Marketing.  

Identifying Possible Competitive Advantages

Product Differentiation
features, performance, style & design, attributes
Service Differentiation
delivery, installation, repair, customer training
Channel Differentiation
offering goods and services in more convenient places
People Differentiation
hiring & training better people than competitors do
Image Differentiation
symbols, characters

Exercise: Plan
Differentiation
On which of these competitive advantages will you position your Marketing Plan product in the market and why?
Post your answer in the Moodle Discussion Group. 

Choosing the Right Competitive Advantages

How many and which differences to promote
A difference between brands suitable for a Positioning Strategy should be
Exercise: Plan
Criteria
State which of these criteria above your product meets, and explain why.
Post your answer in the Moodle Discussion Group.

Selecting an Overall Positioning Strategy

Exercise: Plan
Value Propositions
What Value Proposition does your Marketing Plan product offer to your target market? Explain. 
Post your answer in the Moodle Discussion Group.

Communication and Delivering the Chosen Position

Perhaps the most important point here is that if you decide to position your product on a particular dimension or attribute, be sure you can deliver. If you're going to offer the fastest grocery delivery for Internet shopping in the city, be sure you ARE fast. There is an old adage in marketing that says you can use false advertising but not for very long. People quickly find out if you do what you say you will, and word-of-mouth works faster than any other kind of promotion. To properly communicate and deliver a chosen position: 

Pulling It All Together

All these topics in Marketing relate to each other. You can't do strategy without knowing about positioning and you can't position your product if you don't know what market you are targeting or what level of segmentation you will pursue. 

Exercise: Lab
Pulling it Together
Watch for an ad for a product you like on TV. Watch the ad closely, thinking about who it's targeted at and how it's positioned. Then watch for ads for its closest competitors (e.g.: if you are looking at Head and Shoulders shampoo ads, then watch for other shampoo ads such as Clairol Herbal Essence)

On what "dimensions" does your product differ from those of one of its competitors? (e.g.: H&S is sold as a dandruff control shampoo whereas Clairol Herbal Essence is sold as a satisfying sexual experience).

Post your answer in the Moodle Discussion Group.

Other Units

Introduction Strategy Society Environments Research Buyers
Segmentation Product Price Place Promotion The Marketing Plan

Return to Course Syllabus

AP/ADMS 2200 3.0 Introductory Marketing
York University, Toronto
M Louise Ripley, M.B.A., Ph.D.