Transcript Elements of Marketing Strategy and Planning

CHAPTER 6:
SEGMENTATION,
TARGET MARKETING,
POSITIONING, AND CRM
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McGraw-Hill
Education
Part 2: Use Information to Drive Marketing Decisions
LEARNING OBJECTIVES
2
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Explain the criteria for effective segmentation

Identify the various approaches to market segmentation

Describe the steps in target marketing

Define positioning and link it to the use of the marketing mix

Use and interpret perceptual maps

Identify sources of differentiation

Avoid potential positioning errors

Define CRM and articulate its objectives and capabilities

Understand the concept of customer touchpoints and why they are
critical in CRM
3
FULFILLING CONSUMER
NEEDS AND WANTS
Market Segmentation
 Target Marketing
 Positioning

EXHIBIT 6.1
MARKET SEGMENTATION, TARGET MARKETING, AND POSITIONING
Market Segmentation
Dividing a market into meaningful smaller
markets or submarkets based on common
characteristics.
CHAPTER 01
Target Marketing
Evaluating the market segments, then making
decisions about which among them is most worthy
of investment for development.
Positioning
Communicating one or more sources of value to
customers in ways that connect needs and wants to
what the product has to offer. Positioning strategies
are executed through the development of unique
combinations of the marketing mix variables.
WHAT IS SEGMENTATION?
5
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Segmentation seeks to find one or more
factors about members of a heterogeneous
market that allow for dividing of the market
into smaller, more homogeneous subgroups.
The purpose is to develop different marketing
strategies to best meet the segments’ distinct
needs and wants.
What is Segmentation?
6
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Not all customers are alike.
Subgroups of customers can be identified on some
basis of similarity.
The subgroups will be smaller and more
homogeneous than the overall market.
Needs and wants of a subgroup are more
efficiently and effectively addressed than would be
possible within the heterogeneous full market.
Criteria for
Effective Segmentation
7
1.
2.
3.
4.
Is the segment of sufficient size?
Is the segment readily identifiable and can it be
measured?
Is the segment clearly differentiated on one or
more important dimensions?
Can the segment be reached in order to deliver
the value of the product?
Geographic Segmentation
8
By region
By density
of
population
By climate
Geographic
Segmentation
By growth
in
population
By size of
population
Demographic Segmentation
9
Age
Generational
Group
Geodemographics
Social Class
Gender
Demographic
Segmentation
Family and
Household
Education
Race and
Ethnicity
Occupation
Income
Geodemographics
10
 Hybrid
of geographic and demographic
 PRIZM-NE database profiles every zip code in the U.S.
by demographic and psychographic methods
Winner’s Circle
 Wealthy Suburban lifestyle
35-54 yr. old couples
Large families
$100,000 median income
Area with parks, golf courses
Near upscale malls
They travel, shop, ski, eat out
Photo
Psychographic Segmentation
11
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Personality, Lifestyle, and Values
AIO Attitudes, Interests, and Opinions
VALS data based on level of resources and primary
motivation
VALS™ FRAMEWORK
CHAPTER 01
EXHIBIT 6.11
Reprinted with permission from VALSTM Program, SRI Consulting Business Intelligence (SRIC-BI); www.sric-bi.com/VALS.
9-12
Behavioral Segmentation
13
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Behavioral Segmentation
 Benefits
Sought looks to identify the crucial valueadding properties of an offering.
 Key
starting place for segmentation
 Usage
Patterns
 Light, medium, or
 80/20
 Loyalty
heavy users
rule
programs build on satisfying heaviest users
9-13
14
SEGMENTING CONSUMER
MARKETS

Firms use Multiple Segmentation
Approaches Simultaneously
 Firms
develop a profile of a segment that
might include aspects of any or all of the
segmentation approaches.
9-14
Target Marketing
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Analyze market segments.
Develop profiles of each
potential target market.
Select a target marketing
approach.
16
SEGMENTING
BUSINESS MARKETS

Demographic
 Industry
 Company
size
Operating Variables
 Technology
 User
Purchasing Approaches
 Purchasing
 Location


Status
 Customer capabilities
Function
organization
 Power Structure
 Nature of existing
relationships
 General purchasing
policies
 Purchasing criteria
9-16
17
SEGMENTING
BUSINESS MARKETS

Situational Factors
 Urgency
Personal
characteristics
 Specific
 Buyer-seller
application
 Size of order

similarity
 Attitudes towards risk
 Loyalty
TARGET MARKETING
18

Analyze Market Segments
Segment Size and
Growth Potential
Competitive Forces
related to the segment
Strategic Fit of the
Segment
TARGET MARKETING
19

Develop Profiles of Each Potential Target Market
Primary Target
Markets
Secondary Target Markets
Tertiary Target Markets
Target markets to abandon for future development
EXHIBIT 6.15
CONTINUUM OF TARGET MARKETING APPROACHES
Very
Broad
CHAPTER 01
Undifferentiated
target marketing
Very
Narrow
Differentiated
target marketing
Concentrated
target marketing
Customized
target marketing
TARGET MARKETING
21

Select a Target Marketing Approach
Undifferentiated Target Marketing
Differentiated Target Marketing
Concentrated Target Marketing
Customized (One-to-One) Marketing
POSITIONING
22
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The firm must turn its attention to creating,
communicating, and delivering the value offering to
the target markets.
Positioning the product so that consumers
understand its ability to fulfill their needs and
wants.
Positioning is not what the company does to the
product. It’s what the company does to the mind
of the customer.
Positioning and Research
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Positioning studies often starts with focus groups
that develop set of attributes.
Next, surveys are developed that have respondents
rate the attributes of the firm and of its
competitors.
Finally, gap analysis is used to determine gaps of by
attribute in importance vs. delivery and vs.
competitors.
CHAPTER 01
EXHIBIT 6.16
EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
CHAPTER 01
EXHIBIT 616
EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
CHAPTER 01
EXHIBIT 6.16
EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
27
Sources of Differential
Competitive Advantage
Price
Leadership
Image
Leadership
Innovative
Leadership
Convenience
Leadership
Service
Leadership
Personnel
Leadership
Product
Leadership
Positioning Errors
28
Underpositioning
Overpositioning
Confused
Positioning
Doubtful
Positioning
29
Customer Relationship
Management--CRM
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A comprehensive business model for increasing
revenues and profits by focusing on customers.
Manages the most valuable customers relationships
Identifies customer touchpoints
Must have the support of senior management
Cuts across the entire organization but most used
by marketing, sales, and customer service
Drives the firm to be customer-centric
Objectives of CRM
30
Customer
Acquisition
Customer
Retention
Customer
Profitability
31
Customer Satisfaction
and Loyalty
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Customer Satisfaction means that the offering
meets or exceeds the customer’s expectations.
Customer Loyalty implies repeat purchases.
 High
satisfaction
 High level of perceived value
 Strong relationship with the brand
CRM Metrics
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Lifetime Value of a Customer
Relationships pay off in terms of cost savings,
revenue growth, profits, referrals
Can be calculated as:
CLV($)=Margin ($) x (Retention Rate [%]÷1 +
Discount Rate[%]-Retention Rate[%] (from Ch. 16)
Return on Customer Investment can be
calculated to determine if the fire should fire a
customer.
Process Cycle for CRM
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Phase 1:
Knowledge Discovery
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Customer touchpoints: point-of-sale systems,
call-center files, Internet access, direct selling
contacts, other customer contact
A Data Warehouse contains all information
about touchpoints.
Data mining uses massive amounts of data
collected through CRM to develop segments and
micro-segments
Database marketing is the creation of lists to
reach segments.
CRM Phases 2-4
35
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Marketing Planning phase uses the key use of
the output from the knowledge discovery phase.
Develops the marketing mix strategy.
Customer interaction phase is the
implementation of the customer strategies and
programs. Includes personal selling and other
customer-directed interactions aimed at
touchpoints.
Analysis and Refinement is where
organizational learning takes place.
Customer Touchpoints
36
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Interactive touchpoints are two-way and have
direct interface between customers and the sales
force, telemarketer, customer service rep, or
interactive website.
Noninteractive touchpoints are static such as
direct mail or website data entry form.
Customer Touchpoints
37
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Where are all potential touchpoints?
What are specific objectives for information
collected at each touchpoint?
How will information be collected and integrated
into customer database?
What kind of policies will govern how the
information will be accessed and used?
Customer-centric Culture
38
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Relationship that promotes mutually shared
rewards and risk management
Focus selling on customer business consultation
and solutions
Educate customers about value chain
opportunities through crating relationships
Focus on continuous improvement principles
stressing customer satisfaction and loyalty
39
Firms with a
Customer Orientation
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Place the customer at the core of all aspects of the
firm
Instill a firm-wide focus on understanding
customer requirements
Make sure that all employees understand the
customer marketplace
Align system capabilities internally so that the firm
offers innovative, competively differentiated,
satisfying products and services
Customer Mind-set
40
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All employees believe
that understanding
customers, external or
internal, is central to
doing a good job.
Photo Credits
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Slide 6-3: Eyewire Retail Collection
Slide 6-10: Realistic Reflections
Slide 6-11: UpperCut Images, John Smith
Slide 6-15 Ariel Skellay/Blend Images
Slide 6-40: Purestock