Transcript 07 Segmenting a nd targeting.pp t

Market
Segmentation,
Targeting, and
Positioning
1
Key Terms
•
•
•
•
•
•
•
Market segmentation
Competitive advantage
Demographic segmentation
Market homogeneity
Market positioning
Market targeting
Micromarketing
2
“The mythological, homogeneous
America is gone. We are a mosaic of
minorities.”
-Joel Weiner
3
Chapter Objectives
• Explain market segmentation and
identify several possible bases for
segmenting markets
• List and distinguish among the
requirements for effective segmentation
4
Chapter Objectives
• Outline the process of evaluating market
segments
• Illustrate the concept of positioning for
competitive advantage
• Discuss choosing and implementing a
positioning strategy
5
Markets
• A market is all actual and potential
buyers of a product or service
6
Stages of Marketing
• Mass marketing
• Product-variety marketing
• Target marketing
• Micromarketing
• Customized marketing
7
Differentiation
• Distinguishing your product or
service from the competition in
ways that are both identifiable and
meaningful for the customer
• The customer should perceive a
greater value
8
Differentiation
•
Differentiation is effective when:
–
–
–
It cannot be easily copied
It appeals to a particular need or
want
It creates an image or impression
that goes beyond the specific
difference itself
9
Differentiation
•
Differentiation as a marketing tool
–
–
–
Helps create awareness and trial by the
customer
Sometimes product differentiation is
the only thing a firm can do
It is much easier to do in the
foodservice environment, even within
hotels
10
Differentiation
•
Differentiation - of anything
–
–
–
–
•
Can be product, message or brand specific
Difficult to achieve in hospitality because of
the variety of services offered
Separates product classes and products
within the same class
Provides an opportunity to strengthen
competitive strategy
Is the basis for positioning strategy
11
12
Market Segmentation
• Market segmentation:
– Is a complimentary strategy to
differentiation
– Is dividing a market into meaningful
groups who have similar wants and needs
(market segments)
– Starts with the customer
13
Market Segmentation
•
Which comes first: differentiation or
segmentation?
–
–
–
–
–
–
Both happen in combination at different times
Both are part of the marketing concept
First know how people differ
Then segment them accordingly
Develop products that meet their specific
wants and needs
Creating these two strategies are major reason
to study consumer behavior
14
Market Segmentation
•
The process:
–
–
–
–
–
Step 1: Needs and wants of the marketplace
Step 2: Projecting wants and needs into
potential markets
Step 3: Matching the market and capabilities
Step 4: Segmenting the market
Step 5: Selecting target markets from
identified segments
15
Segmenting Variables
•
Various ways in which a market can be
divided, or segmented, into meaningful
groups of buyers
–
–
–
–
–
–
Geographic
Demographic
Psychographic
Usage
Benefit
Price
16
Geographic Segmentation
• Dividing the market into different
geographic units
–
–
–
–
–
–
Nations
States
Regions
Counties
Cities
Neighbourhoods
17
Geographic Segmentation
•
Most widely used in restaurant and hotel
industry
These segments then become easier to
reach
•
–
–
–
•
Metropolitan statistical areas (MSAs)
–
•
Direct mail
Media
Data and information on demographics
Defining large metropolitan areas in terms of
supposed economic boundaries
Designated market area (DMA)
18
• Geographic segmentation calls for dividing the market
into different geographic units such as nations, states,
regions, counties, cities, or neighborhoods.
• For example, General Foods’ Maxwell House ground
coffee is sold nationally but is flavored regionally.
• For the lodging companies, Holiday Inn began as a
regional motel company out of Memphis, Tennessee.
• Motel 8 began in Aberdeen, South Dakota, with original
appeal to the Midwestern and western market, but
expanded well beyond regional boundaries.
• Hyatt Hotels initiated a program to offer regional dishes
on its menus. The Four Seasons Hotel in Washington,
D.C., became concerned about offering local cuisine.
19
Demographic Segmentation (xxx)
•
•
•
•
–
–
–
–
–
Widely used because easy to measure and
classify
Does not necessarily distinguish wants and
needs
Demographic lines are now blurred (flu)
Useful demographics
Age
Family life cycle stage
Gender
Income
Occupation
20
Age and life cycle stage: consumer needs and wants change
with age.
Some companies offer different products or marketing
strategies to penetrate various age and life cycle segments.
For example, McDonald’s offers happy meals that include
toys, aimed at young children.
American Express focuses much of its marketing attention on
the “mature” market.
Nevertheless, age and life cycle variables can be misleading.
For instance, some customers were not the physiologically
young but the psychologically young.
Southwest Airlines realized that many senior citizens are
psychologically young. Their advertisements for senior fares
show active older people enjoying themselves.
21
–Gender: Currently, women accounted for 40 % of all
business travelers. Hotel corporations are now taking
women into consideration in designing their hotel
rooms. Most effective when combined with lifestyle
and demographic information.
–Income: Income alone does not always predict which
customers will buy a given product or service. It
should combine with other variables. For instance, the
St. Moritz on-the-Park Hotel in New York City has
combined income and geographical segmentation
variables to set its prices. Middle-income consumer is
by far the largest segment but is difficult to attract and
retain.
22
Psychographic Segmentation
•
•
•
•
•
Dividing buyers into different groups based on social
class, lifestyle, and personality characteristics
Based on activities, interests, and opinions (AIO),
self-concepts and lifestyle behaviors
Lifestyle patterns combines demographics with the
way people live, think and behave in their everyday
lives and correlate them into homogeneous
categories
A rich area for marketing effectiveness for the
hospitality industry
PRIZM and VALS
23
• Social class: social class has a strong effect on
preferences for leisure activities. For example, afternoon
tea at the Ritz-Carlton is aimed at the upper-middle and
upper classes. A neighborhood pub near a factory targets
the working class.
• Lifestyle: marketers are increasingly segmenting their
markets by consumer lifestyles. For example, nightclubs
are designed with certain clientele in mind: young singles
wanting to meet the opposite sex, singles wanting to
meet the same sex.
• Personality: marketers also use personality variables to
segment markets. For example,, Frontier Airlines is
building a personality around animals by putting colorful
graphics on their planes.
24
Behavioral Segmentation
• Buyers are divided into groups based on their
knowledge, attitude, and use or response to a
product
• The best starting point for building market segments
• Types
– Special occasion segmentation
– Benefits sought
– User status
– Usage rate
– Loyalty status
– Buyer readiness stage
25
• Special Occasions: Buyers can be grouped
according to occasions when they get the
idea, make the purchase, or use a product.
– For example, air travel is triggered by occasions
related to business, vacation, or family. Mother’s
Day has been promoted as a time to take your
mother or wife out to eat. Some hotels in the
Pocono Mountains of Pennsylvania, specialize in
the honeymoon market. Doubletree’s “Room at
the Inn” program offers free short-term lodging
for travelers needing emergency lodging between
Thanksgiving and Christmas.
26
• Benefits sought: Buyers can also be grouped according to
the product benefits they seek.
• For example, a study indicated that the benefits sought
by patrons of different types of restaurants are different.
• Knowing the attributes or benefits sought by customers
is useful in two ways. First, restaurant marketers
understand what to provide and promote to attract a
specific segment. Second, identification of customer
types is possible. This type of information reduces waste
in advertising and increases effectiveness. The French
Trianon Palace Hotel found a specific niche for travelers
who want to travel with their best friend – their dog – by
offering special services for their pets.
27
• User status: Many markets can be segmented into nonusers, former
users, potential users, first-time users, and regular users of a product.
Potential users and regular users often require different marketing
appeals.
• Usage rate: Markets can also be segmented into light-, medium-, and
heavy-user groups.
• Heavy users are often a small percentage of the market but account for
a high percentage of total buying. For example, a study found heavy
users of fast food restaurants account for only 20% of the customers
but 60% of fast food transactions. Heavy users of airline travel accounts
for only 4.1% of the customers but 70.4% of total airline trips. Heavy
users of pleasure trip users of hotels and motels account for only 7.9%
of the customers but 59.4% of room nights.
• One of the most controversial programs ever employed by the
hospitality and travel industries to ensure heavy patronage by key
customers is the frequent flyer or frequent guest program. Clearly,
marketers are eager to identify heavy users and build a marketing mix
to attract them.
28
• Loyalty status: Markets can also be segmented into
four groups: hard-core loyalty, soft-core loyalty,
switchers, and no loyalty. In the hospitality and travel
industries, marketers attempt to build brand loyalty
through relationship marketing. Loyal customers are
generally more price insensitive.
• Buyer readiness stage: At any given time, people are
in different stages of readiness to buy a product.
Some are unaware of the product; some are aware;
some are informed; some want the product; and
some intend to buy. The relative number in each
stage makes a big difference in designing a marketing
program.
29
Usage Segmentation
•
Umbrella term that covers a wide range of
categories
–
–
–
–
–
–
–
–
–
Purpose
Frequency
Monetary value
Recency (novelty)
Timing
Nature of the purchase
Where they go
Purchase occasion
Heavy, medium or light
31
Benefit Segmentation
•
May be the most basic and most predictable of all
segments
Benefits are very related to need satisfaction
Benefits
•
•
–
–
–
–
–
–
–
–
Comfort
Prestige
Low price
Recognition
Attention
Romance
Quiet
Safety
32
Price Segmentation
•
•
•
A form of benefit segmentation, only
more visible and more tangible
Price segments within a product
class
Price segments between product
classes
33
Segmentation Strategies
•
•
•
•
•
There will be many segments, some with
overlap, and different strategies for each
segment
The test of a segment is their different
behavior
Segments change over time
Market segmentation has become
increasingly critical with competition
Segmentation will remain a key
competitive strategy within the product
class
34
35
36
Target Marketing
•
Selecting specific market segments to
target and designing the product or service
to meet their specific wants or needs
•
More refined segmenting rules apply
•
Strategies:
– Undifferentiated targeting market
strategy
– Strong targeting strategy
– Differentiated multi-target marketing
37
Mass Customization
• The concept that modern technology is
bringing us closer to target markets of
one
• Make one product and personalize the
product to their specifications
• Largely due to databases that track
customer behavior
38
Requirements for Effective Segmentation
• Measurability
• Accessibility
• Substantiality
• Actionability
39
Requirements for Effective Segmentation
Measurable
Accessible
Substantial
Actionable
• Size, purchasing power, profiles
of segments can be measured.
• Segments can be effectively
reached and served.
• Segments are large or profitable
enough to serve.
• Effective programs can be
designed to attract and serve
the segments.
40
Market Targeting
• Evaluating Market Segments
• Selecting Market Segments
• Choosing a Market-Coverage
Strategy
41
• Market Targeting – Marketing segmentation
reveals the firm’s market-segment
opportunities. The firm now has to evaluate
the various segments and decide how many
and which ones to target. We now look at how
companies evaluate and select target markets.
• A. Evaluating Market Segments: When
evaluating different market segments, a firm
must look at three factors: segment size and
growth, segment structural attractiveness, and
company objectives and resources.
42
Evaluating Market Segments
• Segment Size and Growth
• Segment Structural Attractiveness
• Company Objectives and Resources
43
Segment size and growth:
• The company must first collect and analyze data
on current segment sales, growth rates, and
expected profitability for various segments.
• The “right size and grow” this a relative matter.
• The largest, fastest-growing segments are not
always the most attractive ones for every
company.
• Smaller companies may find they lack the skills
and resources needed to serve the larger
segments, or that these segments are too
competitive.
44
Segment structural attractiveness:
The company must examine several major
structural factors that affect long-run segment
attractiveness. The following three factors make
a segment less attractive:
(1) the segment already contains many strong
and aggressive competitors
(2) the buyers in the segment possess strong
bargaining power relative to sellers
(3) the segment contains powerful suppliers.
45
Company objectives and resources:
• The company must consider its own
objectives and resources in relation to that
segment.
• Some attractive segments could be
dismissed quickly because they do not mesh
with the company’s long-run objectives.
• For example, Disney has avoided getting
involved in the gaming business segment.
46
Selecting Market Segments
After evaluating different segments, the company must
now decide which and how many segments to serve. This
is the problem of target-market selection, a company can
adopt one of three market-coverage strategies:
• Undifferentiated Marketing (fast food)
• Bifurcated Marketing (dual / two segments)
• Differentiated Marketing (Adressing different
segments)
• Concentrated Marketing (few market segments – city
hotels)
47
Undifferentiated Marketing Strategy:
An undifferentiated marketing strategy ignores market
segmentation differences and goes after the entire market with
one market offer. Undifferentiated marketing provides cost
economies.
The narrow product line keeps down production, inventory, and
transportation costs. Most modern marketers have strong doubts
about this strategy in today’s competitive environment.
In recognition of this problem, many firms target smaller segments
or niches where product differentiation is appreciated.
For example, microbrewery serves a limited market. Several new
niche market airlines have emerged, such as Casino Express, which
flies between Denver, Colorado, and Elko, Nevada, and Spirit
Airlines, based in Atlantic City.
48
Bifurcated Marketing:
• In many undeveloped nations, a group of highend hotels exists for international visitors and
guests with high incomes. Another distinct
group of low-end hotels exists for locals and
adventurous tourists.
49
Differentiated Marketing Strategy:
The firm targets several market segments and designs separate
offers for each.
– For example, Accor Hotels, a French company, operates under
12 trade names and manages several brands and types of
hotels. Included in its brands are international luxury hotels
(Sofitel), three-star hotels (Novotel), two-star hotels (Ibis),
limited-service hotels (Formula One and Motel 6), and
extended-stay hotels aimed at the elderly (Hotelia).
– It typically produces more total sales than undifferentiated
marketing. For example, Accor gets a higher hotel room
market share with three different brands in one city than if it
only had one brand in that city. However, its costs are higher
to produce the research, forecasting, analysis, and advertising
for each brand.
50
Concentrated Marketing Strategy(xxx):
• The firm pursues a large share of one or more small
markets.
• This strategy is especially appealing to companies with
limited resources. For example, Four Seasons Hotels
and Rosewood Hotels concentrate on the high-priced
hotel room market.
• Furthermore, the firm also enjoys many operative
economies because of specialization in production,
distribution, and promotion.
• If the segment is well chosen, the firm can earn a high
rate of return on investment.
51
Choosing a Market – Coverage Strategy
Factors affecting market coverage strategy
• Company resources
• Degree of product homogeneity
• Market homogeneity
• Competitors’ strategies
52
Factors Affecting Market Coverage Strategy
Companies need to consider several factors in
choosing a market-coverage strategy.
1. The Company's Resources. When the company's
resources are limited, concentrated marketing
makes the most sense.
2. The Degree of Product Homogeneity.
Undifferentiated marketing is more suited for
homogeneous products. Products that can vary in
design, such as restaurants and hotels, are more
suited to differentiation or concentration.
53
Factors Affecting Market Coverage Strategy
3. Market Homogeneity. If buyers have the same
tastes, buy a product in the same amounts, and
react the same way to marketing efforts,
undifferentiated marketing is appropriate.
4. Competitors' Strategies. When competitors use
segmentation, undifferentiated marketing can be
suicidal. Conversely, when competitors use
undifferentiated marketing, a firm can gain an
advantage by using differentiated or concentrated
marketing.
54
Market Positioning
• A product's position is considered as the way
the product is defined by consumers on
important attributes – the place the product
occupies in consumers' minds relative to
competing products.
• A hotel brand’s position can be viewed from two
perspectives – that of the brand’s management
and that of the guests.
55
Market Positioning
• The brand’s management must have a firm’s
concept of the hotel’s intended position, and
its promotional efforts must articulate not
only what the brand offers, but also how its
offerings are different from those of other
brands.
• In the final analysis, however, a brand’s
position is determined by its customers.”
56
Positioning Strategies.
The key point for marketers to remember is
that the firm must create value for the
segments that are chosen.
In other words, the differentiating features
of a company, product, or service, must be
of some importance to the consumer
markets.
57
Positioning Strategies.
• Marketers can position their products based on
specific product attributes.
• For example, seeing an interest in better seating,
AmericaWest offers 50 – 70 % price reductions for
first class seats.
• Products can also be positioned on the needs they fill
or the benefits they offer.
• For example, Bennigans advertises itself as a fun
place, while many bars promote their image as a
meeting place for members of the opposite sex (or
same sex).
58
Positioning Strategies
– Marketers can also position for certain classes of
users, such as a hotel advertising itself as a women’s
hotel.
– A product can be positioned against an existing
competitor.
– In the “Burger Wars, Wendy’s ran its “Where’s the
beef” campaign against McDonald’s and Burger King,
– Products can be positioned against another
product class.
– For example, cruise ships have positioned
themselves against other vacation alternatives.
59
Strategic Positioning Process
The positioning task consists of three steps:
1. Identifying a set of possible competitive
advantages upon which to build a position,
2. Selecting the right competitive advantages
through product differentiation, and
3. Effectively communicating and delivering the
chosen position to a carefully selected target
market.
60
Strategic Positioning Process:
• A company can differentiate itself from
competitors by bundling competitive
advantages.
• On the other hand, unbundling of products
has also worked as a positioning tactic.
• Moreover, not every company faces an
abundance of opportunities for gaining a
competitive advantage.
• Some companies can identify only minor
advantages.
61
Product Differentiation
• A company can differentiate its product or
offer products similar to competitors.
• Today, most products try to differentiate
themselves from their competitors.
• A company can differentiate along the lines of
physical attributes, service, personnel,
location, or image.
62
1 Physical Attributes Differentiation
• The physical environment offers something
that competitors cannot match.
• For example, Sheraton Place in San Francisco
is an example of renovated classic hotels.
• Planet Hollywood differentiates itself by the
memorabilia from the motion picture
industry.
• Hard Rock Café differentiates itself by the
music memorabilia.
63
2 Service Differentiation
• By providing services that will benefit its
target market, a company can achieve
differentiation.
• For example, Sheraton provides an inroom check-in service.
• Red Lobster allows its customers to call
from home and put their name on the
waiting list, reducing the waiting time.
64
3 Personnel Differentiation
• Companies can gain a strong competitive
advantage through hiring and training better
people than their competitors do.
• For example, Singapore Airlines enjoys an
excellent reputation largely because of the
grace of its flight attendants.
• As far as Southwest Airlines, it’s difficult for
competitors to create a spirit similar to the
spirit of Southwest’s employees.
65
4 Location
• Hospitality and travel firms should look for benefits
created by their location and use these benefits to
differentiate themselves from their market.
• For example, hotels facing Central Park in New York City
have a competitive advantage over those hotels a block
away with no view of the park.
• Motels that are located right off a freeway exit can have
double-digit advantages in percentage of occupancy over
hotels a block away.
• Restaurants along the River Walk in San Antonio, Texas
have a competitive advantage over restaurants without a
riverfront location.
66
Image Differentiation
• A company or brand image should convey a
singular or distinctive message that communicates
the product’s major benefits and positioning.
• For example, Chili’s has developed an image as a
casual and fun neighborhood restaurant.
• This message is conveyed by their advertising,
menu, the physical atmosphere, and the
employees.
• The image must be supported by everything that
the company says and does.
67
Selecting the Right Competitive Advantages
• Suppose that a company is fortunate
enough to discover several potential
competitive advantages.
• It now must choose the ones on which it
will build its positioning strategy.
• It must decide how many differences to
promote and which ones.
68
Selecting the Right Competitive Advantages:
• How Many Differences to Promote:
– Many marketers think that companies should
aggressively promote only one benefit to the
target market.
– The major ones are best quality, best service,
lowest price, best value, and best location.
– For example, Motel 6 consistently promotes
itself as the lowest-priced national chain, and
Ritz-Carlton promotes itself as a value leader.
69
Selecting the Right Competitive Advantages:
• Other marketers think that companies should
position themselves on more than one
differentiating factor.
• For example, a restaurant may claim that it has the
best steaks and service.
• A hotel may claim that it offers the best value and
location.
• However, as companies increase the number of
claims for their brands, they risk disbelief and a loss
of clear positioning.
70
The three major positioning errors:
1 Over positioning or giving buyers a too narrow
picture of the company.
2 Confused positioning: leaving buyers with a
confused image of a company.
For example, Burger King has struggled for years to
establish a profitable and consistent position.
Since 1986 it has fielded eight separate advertising
campaigns.
These advertising campaigns have left consumers
confused.
71
The three major positioning errors:
3 Under positioning or failing ever to position:
Some companies discover that buyers have only
a vague idea of the company or that they do not
really know anything special about it.
For example, many independent hotels trying to
capture an international market are underpositioned.
72
Which Differences to Promote:
Not all brand differences are meaningful, worthwhile
or make a good differentiator. Companies must
carefully select the ways in which it will distinguish
itself from competitors. A difference is worth
establishing to the extent that it satisfies the
following criteria:
• Important. The difference delivers a highly valued
benefit to target buyers.
• Distinctive. Competitors do not offer the difference,
or the company can offer it in a more distinctive
way.
73
Which Differences to Promote:
• Superior. The difference is superior to other ways
that customers might obtain the same benefit.
• Communicable. The difference is communicable
and visible to buyers.
• Preemptive. Competitors cannot easily copy the
difference.
• Affordable. Buyers can afford to pay for the
difference.
• Profitable. The company can introduce the
difference profitably
74
Communicating and Delivering the Chosen Position.
• Once having chosen positioning characteristics and a
positioning statement, a company must consistently
communicate their position to targeted customers.
All of a company's marketing mix efforts must
support its positioning strategy.
• For example, if a company decides to build service
superiority, it must hire service-oriented employees,
provide training programs, reward employees for
providing good service, and develop sales and
advertising messages to broadcast its service
superiority.
75
Positioning Measurement:
• Perceptual Mapping: Perceptual
mapping, a research tool, is sometimes
used to measure a brand’s position.
• Furthermore, increased competition, or
an ineffective positioning strategy can
make repositioning necessary.
• Perceptual maps can provide data
supporting the need for repositioning.
76
Perceptual Map (revisited)
Positioning map of service level versus price.
77
End of Chapter
Slides..
78