Chapter 06 Segmentation, Targeting, and Positioning

Chapter 06 - Segmentation, Targeting, and Positioning Chapter 06 Segmentation, Targeting, and Positioning Multiple Choice Questions What is the first step in the STP process? A Selecting segmentation bases B Evaluating segment attractiveness C Defining mission statement D Establishing overall strategy E Selecting the target market The first step in planning process is to articulate the mission and the objectives of the company's marketing strategy clearly The segmentation strategy must be consistent with and derived from the firm's mission & objectives Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-02 Step 1: Establish Overall Strategy or Objectives Geographic segmentation refers to the segmentation of consumers based on: A the worth that they get from products or services B where they live C their product preferences D their level of intelligence E easily measured, objective characteristics such as age and education Geographic segmentation organizes customers into groups on the basis of where they live It is most useful for companies whose products satisfy needs that vary by region Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 6-1 Chapter 06 - Segmentation, Targeting, and Positioning A chainsaw company markets its products only in areas with forests In this case, the segmentation approach used by the company is: A geographic segmentation B benefit segmentation C demographic segmentation D behavioural segmentation E psychographic segmentation Geographic segmentation organizes customers into groups on the basis of where they live Hence, the chainsaw company is using geographic segmentation to segment its customers Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases A company makes packaged juices for the Canadian market, and different flavours are developed for specific regions In this case, the segmentation approach used by the company is: A geographic segmentation B benefit segmentation C demographic segmentation D occasion segmentation E psychographic segmentation Geographic segmentation organizes customers into groups on the basis of where they live Hence, the juice packaging company is using geographic segmentation to segment its customers 6-2 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases A company develops a variety of exotic breads targeted at suburban areas where large families reside, and the demand for easy breakfast options is high In this case, the segmentation approach used by the company is: A geographic segmentation B behavioural segmentation C demographic segmentation D occasion segmentation E psychographic segmentation Geographic segmentation organizes customers into groups on the basis of where they live In the given scenario, the company is using geographic segmentation because it is targeting its customers on the basis of where they live Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases Jimmy's Own Inc introduces different kinds of snacks for the Asian and European market In the context of segmentation bases, this is an example of: A geographic segmentation B benefit segmentation C demographic segmentation D loyalty segmentation E psychographic segmentation Geographic segmentation organizes customers into groups on the basis of where they live Jimmy's Own Inc is using geographic segmentation when it introduces different flavours for different geographic locations 6-3 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases Of the various methods for segmenting consumers, which of the following is the one that delves into how consumers describe themselves? A Geographic segmentation B Benefit segmentation C Demographic segmentation D Loyalty segmentation E Psychographic segmentation Of the various methods for segmenting, or breaking down the market, psychographics is the one that delves into how consumers describe themselves Psychographics allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases A new startup company decided to target Canadians between age of 18 and 35 who use iPhone mobile for their new application Which segmentation base(s) does the company use? A Demographic and behavioural segmentation B Geographic, behavioural and psychographic segmentation C Geographic and behavioural segmentation D Behavioural, demographic, and geographic segmentation E Psychographic, behavioural, and demographic segmentation The company is targeting Canadian (geographic), between age of 18 and 35 (demographic) who use iPhone (behavioural) 6-4 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases A company that sells bags launches a category of bags featuring children's favourite cartoon characters It also launches a line of stylish travel bags for adults In this case, the segmentation approach used by the company is: A geographic segmentation B benefit segmentation C demographic segmentation D occasion segmentation E psychographic segmentation Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, and income Hence, when a company uses age as a factor to segment its customer base, it is using demographic segmentation Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 10 Demographic segmentation refers to the segmentation of consumers based on: A the worth that consumers get from products or services B where the consumers live C how consumers describe themselves D the consumers' life goals E the consumers' age, gender, or education Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, family life cycle, and home ownership These variables represent the most common means to define segments because they are easy to identify 6-5 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 11 A credit card company issues a special card only to those customers who spend more than $100,000 a year on its other cards In this case, the segmentation approach used by the company is: A geographic segmentation B benefit segmentation C occasion segmentation D demographic segmentation E behavioural segmentation Behavioural segmentation groups the consumer based on their usage rate IN this example, the company is targeting the heavy users of its other card to promote a new product Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 12 A sports goods manufacturing company has started creating marketing campaigns to specifically target the female market In this case, the segmentation approach used by the company is: A geographic segmentation B benefit segmentation C demographic segmentation D loyalty segmentation E psychographic segmentation Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education Hence, when the company creates marketing campaigns to specifically target the female market, it is using demographic segmentation to segment its consumers 6-6 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 13 Skincare Inc., a company known for its women's skin-care products, starts offering skincare products specifically developed for single men, with income of 50k or more/year who live in large cities in the US and Canada Which segmentation approach(es) used by the company? A Geographic, demographic, and behavioural segmentation B Behavioural and demographic segmentation C Demographic and geographic segmentation D Demographic, benefit and geographic segmentation E Psychographic and geographic segmentation Demographics: marital status, gender, and income Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 14 A lifestyle store deals with expensive and aesthetic products Most of its target customers belong to the elite class of society who want to make a style statement associated with exclusivity In this case, the segmentation approach used by the store is: A geographic segmentation B benefit segmentation C demographic segmentation D loyalty segmentation E psychographic segmentation Psychographic segmentation segments people based on their lifestyle, personality, or social class Hence, when the lifestyle store specifically targets the elite class of society, it is using psychographic segmentation 6-7 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 15 An automobile ad is created in such a way that it appeals to people who value individuality The company aims at grouping customers based on their personality characteristics This is an example of: A geographic segmentation B benefit segmentation C demographic segmentation D occasion segmentation E psychographic segmentation Psychographic segmentation segments people based on their self-concept or personality Hence, when the automobile ad targets people who value individuality, it is using psychographic segmentation Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 16 A furniture manufacturer deals in furniture with antique designs The furniture mimics the designs used in royal households and provides customers with a means of self-expression People who buy such furniture feel like they are part of a royal family In this case, the segmentation approach used by the manufacturer is: A geographic segmentation B behavioural segmentation C demographic segmentation D geodemographic segmentation E psychographic segmentation Psychographic segmentation delves into how consumers describe themselves, and it allows people to describe themselves by using those characteristics Hence, in the given scenario, the furniture manufacturer is using psychographic segmentation when it targets its customers based on their lifestyle preferences 6-8 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 17 Goals for life, not just the goals one wants to accomplish in a day, are called: A self-concepts B ideal points C self-values D lifestyles E self-morals Self-values are life goals, not just the goals one wants to accomplish in a day They refer to overriding desires that drive how a person lives his or her life Examples of self-value goals might include self-respect, self-fulfillment, or a sense of belonging Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 18 Which of the following allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices? A Demographics B Psychographics C Geodemographics D Chromodynamics E Matronymics Psychographic segmentation delves into how consumers describe themselves, and it allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices 6-9 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 19 The image a person has of himself or herself is called: A self-concept B ideal point C self-value D lifestyle E self-moral Self-concept refers to the image people have of themselves A person who has a goal to belong may see, or want to see, himself or herself as a fun-loving, gregarious type whom people wish to be around Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 20 An up-and-coming businessman buys a certain brand of apparel This brand is associated with the image of an individual who values exclusivity and style, which is the kind of person the businessman would like to be In the context of psychographic segmentation, the brand is appealing to the businessman's: A self-concept B ideal point C positioning statement D perceptual map E self-morals Self-concept refers to the image an individual has of himself or herself A person who has a goal to belong may see, or want to see, himself or herself as a fun-loving, gregarious type whom people wish to be around Hence, the brand is appealing to the businessman's selfconcept 6-10 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 104 For a segmentation strategy to be successful, the customers in a segment must react differently to a firm's offering FALSE For a segmentation strategy to be successful, the customers in a segment must react similarly and positively to a firm's offering If, through its distinctive competencies, the firm cannot provide products or services to that segment, it should not target it Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-02 Identify the criteria for determining the attractiveness of a segment and whether it is worth pursuing (targeting) Topic: 06-04 Step 3: Evaluate Segment Attractiveness 105 Entrepreneurial startup ventures often benefit from using a differentiated strategy, which allows them to employ their limited resources more efficiently FALSE When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche targeting strategy Entrepreneurial startup ventures often benefit from using a concentrated strategy, which allows them to employ their limited resources more efficiently 6-55 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Topic: 06-05 Step 4: Select Target Market 106 The degree to which firms should segment their markets depends on the balance the firms want to achieve between the added perceived customer value that segmentation can offer and its cost TRUE The degree to which firms should segment their markets—from no segmentation to one segment to multiple segments to one-to-one segments—depends on the balance the firm wants to achieve between the added perceived customer value that segmentation can offer and its cost Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Topic: 06-05 Step 4: Select Target Market 107 Personal ideas and feelings about a product or brand drive the customers toward or away from a brand or company TRUE Regardless of whether companies want them to or not, consumers form their own ideas and feelings about a product or brand, and it is those very ideas and emotions that drive them toward or away from a brand or company The positioning strategy can help communicate the firm's or the product's value proposition, which communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it 6-56 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 108 Market positioning involves a process of defining the marketing mix variables TRUE Market positioning involves a process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what a product does or represents in comparison with competing products Effective positioning is about letting consumers know what the company's unique value proposition is and for whom it is intended Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 109 Value is a popular positioning method that focuses on those attributes that are most important to the target market FALSE Value is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision Another common positioning strategy based on product attributes focuses on those attributes that are most important to the target market 6-57 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-07 Positioning Methods 110 Competition-based positioning emphasizes the psychological meaning of a brand to consumers FALSE Symbolism-based positioning emphasizes the psychological meaning of a brand to consumers Competition-based positioning involves placing a firm's product head-to-head against a specific competitor Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-07 Positioning Methods 111 Firms can choose a differentiation strategy by going after a less competitive, smaller market niche TRUE Firms can choose a differentiation strategy by going after a less competitive, smaller market niche For instance, Goodrich tires were promoted as "The Other Guys," or the ones without the blimp, to set them apart from Goodyear tires 6-58 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-05 Step 4: Select Target Market 112 Brand repositioning is the strategy used by marketers to change a brand's name without realigning the brand's core emphasis FALSE Brand repositioning refers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences Although repositioning can improve the brand's fit with its target segment or boost the vitality of old brands, it is not without costs and risks Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-09 Repositioning Short Answer Questions 113 Explain how the psychographic system VALS™ classifies customers VALS™ classifies consumers into eight segments in two dimensions On the vertical dimension, segments are described by their resources, including their income, education, health, energy level, and degree of innovativeness The upper segments have more resources and are more innovative; those on the bottom have fewer resources and are less innovative The horizontal dimension shows the segment's primary motivation Consumers buy many products and services because of their primary motivations—that is, how they see themselves in the world and how that self-image governs their activities The three universal primary motives are ideals, achievement, and self-expression People who are primarily motivated by ideals are guided by knowledge and principles, whereas those who are motivated by achievement look for products and services that demonstrate success to their peers 6-59 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 114 Explain loyalty segmentation Why is it important for companies to consider loyalty segmentation? Provide one example to support your answer Firms have long known that it pays to retain loyal customers Loyal customers are those who feel so strongly that the firm can meet their relevant needs best that any competitors are virtually excluded from their consideration—that is, these customers buy almost exclusively from the firm These loyal customers are the most profitable in the long term In light of the high cost of finding new customers and the profitability of loyal customers, today's companies are using loyalty segmentation and investing in retention and loyalty initiatives to retain their most profitable customers Airlines, for instance, definitely believe that all customers aren't created equal For example, at Air Canada, customers who have flown the most miles with the company, the Super Elite, receive a distinctive card, personalized Air Canada Super Elite luggage tags, special access to Aeroplan Reward seats, priority reservation waitlist, preferred seat selection, Air Canada concierge service, priority airport check-in, extra checked-baggage allowance, priority boarding, guaranteed reservations for full-fare tickets, and priority baggage handling, among other benefits None of these special services are available to the occasional flyer Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 115 Explain why geodemographic segmentation can be particularly useful for retailers Geodemographic segmentation can be particularly useful for retailers because customers typically patronize stores close to their neighbourhood Thus, retailers can use geodemographic segmentation to tailor each store's assortment to the preferences of the local community For example, if a toy chain discovers that one of its stores is surrounded by Big Sky Families, it can adjust its offerings to include less expensive merchandise This kind of segmentation is also useful for finding new locations; retailers identify their best locations and determine what type of people live in the area surrounding those stores, according to the geodemographic clusters 6-60 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 116 Explain the criteria that marketers use to determine whether a segment is worth pursuing Marketers need the segment they target to be identifiable They must determine who is within their market to be able to design products or services to meet their needs It is equally important to ensure that the segments are distinct from one another because too much overlap between segments means that distinct marketing strategies aren't necessary to meet segment members' needs The best product or service cannot have any impact if that market cannot be reached (or accessed) through persuasive communications and product distribution The segment should be reachable Consumers must know the product or service exists, understand what it can for them, and recognize how to buy it For a segmentation strategy to be successful, the market must also be responsive The customers in the segment must react similarly and positively to the firm's offering If, through its distinctive competencies, the firm cannot provide products or services to that segment, it should not target it Once the firm has identified its potential target markets, it needs to measure their size and growth potential to determine that they are substantial and profitable If a market is too small or its buying power insignificant, it won't generate sufficient profits or be able to support the marketing mix activities 6-61 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-02 Identify the criteria for determining the attractiveness of a segment and whether it is worth pursuing (targeting) Topic: 06-04 Step 3: Evaluate Segment Attractiveness 117 Explain how the use of the Internet helps companies use mass customization Provide an example to support your answer Mass customization is the practice of interacting on a one-to-one basis with many people to create custom-made products or services The Internet helps companies cater to very small segments, sometimes as small as one customer at a time, relatively efficiently and inexpensively (e.g., mortgage and insurance sites provide personalized quotes) An Internetbased company can offer one-to-one service more inexpensively than can other venues, such as retail stores or telephone-based businesses For example, frequent fliers of Air Canada can check prices and choose special services online at a fraction of the cost that the company would incur for a phone consultation with a ticket agent The Internet also simplifies customer identification Cookies, or small text files a website stores in a visitor's browser, provide a unique identification of each potential customer who visits and details how the customer has searched the site Marketers also can ask visitors to fill out an online registration form Using such information, the company can make a variety of recommendations to customers Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Topic: 06-05 Step 4: Select Target Market 118 Cramwool Inc., an apparel company, targets several market segments with a different offering for each Explain the segmentation strategy Cramwool is using Cramwool is using a differentiated segmentation strategy Firms using a differentiated segmentation strategy target several market segments with a different offering for each Firms embrace differentiated segmentation because it helps them obtain a bigger share of the market and increase the market for their products overall The more retail formats Cramwool develops to reach different market segments, the more apparel and accessories it can and will sell Furthermore, providing products or services that appeal to multiple segments helps diversify the business, thereby lowering the company's overall risk For example, if a line directed toward one segment is performing poorly, the impact on the firm's profitability can be offset by revenue from another line that is doing well 6-62 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Topic: 06-05 Step 4: Select Target Market 119 Explain the concentrated targeting strategy Discuss one company that use this strategy When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche targeting strategy Entrepreneurial startup ventures often benefit from using a concentrated strategy, which allows them to employ their limited resources more efficiently Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Topic: 06-05 Step 4: Select Target Market 120 Explain the concept of positioning Positioning is the mental picture or perception—the thoughts, feelings, and impressions—that people have about a company, its products, and brands relative to competing products, brands, or companies This mental picture is formed from multiple sources such as friends, family, relatives, reference groups, published articles in magazines and newspapers, reports and stories from radio, TV, and the Internet, as well as the customer's own experience Regardless of whether companies want them to or not, consumers form their own ideas and feelings about a product or brand, and it is those very ideas and emotions that drive them toward or away from a brand or company The positioning strategy can help communicate the firm's or the product's value proposition, which communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it Positioning is one of the most important but difficult and least understood aspects of marketing strategy development 6-63 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Moderate Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 121 Discuss the use of value as a positioning method with examples Value is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision Value does not necessarily mean low priced For example, in the kids' toy market, Mega Bloks uses a low-price, value-based strategy, whereas its competitor, Lego, relies on a high-price positioning strategy Watchmaker Patek Philippe uses the advertising tagline, "You never actually own a Patek Philippe You merely take care of it for the next generation," to encourage buyers to consider its arm candy an investment Other brands that rely on a similar idea of luxury value include Hermes, Chanel, and Mercedes-Benz Some companies claim that they are offering the same value for much less money This type of positioning is common among wireless service providers, cable/satellite TV and radio providers, electronics retailers, and department stores Companies such as Internet Superstore, Buy.com, and TigerDirect emphasize that consumers are getting the best computer deals anywhere but at much lower prices Finally, companies may use value positioning to let consumers know that while they are getting much less, they are also paying much less WestJet, dollar stores, and countless retailers targeting cost-conscious consumers commonly use this strategy 6-64 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-07 Positioning Methods 122 Explain the steps that marketers can follow to derive a perceptual map with examples To derive a perceptual map, marketers follow six steps Determine consumers' perceptions and evaluations of the product or service in relation to competitors': Marketers determine their brand's position by asking consumers a series of questions about their and competitors' products Identify the market's ideal points and size: On a perceptual map, marketers can represent the size of current and potential markets Identify competitors' positions: When the firm understands how its customers view its brand relative to competitors', it must study how those same competitors position themselves Determine consumer preferences: The firm knows what the consumer thinks of the products or services in the marketplace and their positions relative to one another Now it must find out what the consumer really wants—that is, determine the ideal product or service that appeals to each market Select the position: A company could develop a new product to meet the needs of the market Alternatively, it could adjust or reposition its marketing approach Finally, it could hope that consumers will be attracted to the product they currently produce because it is closer to their ideal product than anything else on the market Monitor the positioning strategy: Markets are not stagnant Consumers' tastes shift, and competitors react to those shifts Attempting to maintain the same position year after year can spell disaster for any company Thus, firms must always view the first three steps of the positioning process as ongoing, with adjustments made in step as necessary 6-65 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-08 Positioning by Using Perceptual Mapping 123 Explain psychographic segmentation Psychographic segmentation delves into how consumers describe themselves Usually marketers determine (through demographics, buying patterns, or usage) into which segment an individual consumer falls But psychographics allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices Determining psychographics involves knowing and understanding three components: self-values, self-concept, and lifestyles Self-values are life goals, not just the goals one wants to accomplish in a day In this context, they refer to overriding desires that drive how a person lives his or her life This motivation causes people to develop self-images of how they want to be and then determine a way of life that will help them arrive at these ultimate goals From a marketing point of view, self-values help determine the benefits the target market may be looking for from a product Self-concept refers to the image people have of themselves Lifestyles, the third component of people's psychographic makeup, are the ways we live If values provide an end goal and selfconcept is the way one sees oneself in the context of that goal, lifestyles are how we live our lives to achieve goals Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 124 Explain the concept of PSYTE cluster profiles How can marketer use PSYTE cluster profile? Provide an example One tool used by Canada Post for geodemographic segmentation in Canada is PSYTE cluster profiles The PSYTE system groups all neighbourhoods in Canada into 60 different lifestyles clusters with specific locations Three PSYTE cluster examples are Urban Bohemia, Suburban Affluence, and Asian Heights PRIZM CE, a tool developed by Environics Research, groups Canadians into one of 66 lifestyle types—with names such as Cosmopolitan Elite, Electric Avenues, Les Chics, and Lunch at Tim's—and is also widely used in Canada The system provides a Canadian segmentation model that has linked geodemographics to psychographics, incorporating Social Values data from Environics Research with demographics and product preferences to explain consumer behaviour 6-66 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 125 The Canadian Wireless Communication is a $50 billion industry The number of Canadian cell phone subscribers exceeds 30 million, as of Q3 2016 Use segmentation grid and define at least three segments for this industry Students answer will vary Exhibit 6.6 should be used to define each segment One segment that is most likely to be mentioned is "students" Another segments such as "businessmen", "salesmen", "soccer moms", or "families" could be discussed as well Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases marketers use to segment a market Topic: 06-03 Step 2: Segmentation Bases 126 You are planning to launch a new reality TV show What would be your target market? Would you go for undifferentiated, differentiated, or concentrated segmentation? How would you position your TV show? Develop a positioning statement for it Student answers will vary They will choose from one of the following:  Undifferentiated segmentation strategy, or mass marketing: When everyone might be considered a potential user of its product, a firm uses an undifferentiated segmentation strategy  Differentiated segmentation strategy: Firms using a differentiated segmentation strategy target several market segments with a different offering for each  Concentrated (niche) segmentation strategy: When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche segmentation strategy Positioning is the mental picture or perception—the thoughts, feelings, and impressions—that people have about a company, its products, and brands relative to competing products, brands, or companies Positioning strategies are realized by communicating particular messages (i.e., the positioning statement) in persuasive communications through different media It expresses how a company wants to be perceived by consumers 6-67 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-05 Step 4: Select Target Market Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 127 You are a product manager in a pharmaceutical company You have developed a new drug to treat a particular terminal illness How, as a manager, would you segment, target, and position the market for the pharmaceutical company? How would you position the new drug? Student answers will vary They will choose from one of the following in each group:  Geographic: The grouping of consumers on the basis of where they live  Demographic: The grouping of consumers on the basis of age, gender, income, education, occupation, race, marital status, family size, family life cycle, religion, ethnic background, generational cohort, home ownership  Psychographic: The grouping of consumers on the basis of lifestyle, personality/selfconcept, social class  Behavioural: The grouping of consumers on the basis of benefits sought, usage, loyalty Targeting strategies:  Undifferentiated segmentation strategy, or mass marketing: When everyone might be considered a potential user of its product, a firm uses an undifferentiated segmentation strategy  Differentiated segmentation strategy: Firms using a differentiated segmentation strategy target several market segments with a different offering for each  Concentrated (niche) segmentation strategy: When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche segmentation strategy Positioning is the mental picture or perception—the thoughts, feelings, and impressions—that people have about a company, its products, and brands relative to competing products, brands, or companies 6-68 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or micromarketing Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-03 Step 2: Segmentation Bases Topic: 06-05 Step 4: Select Target Market Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 128 Develop a perceptual map for your educational institution Make sure to include at least other universities/colleges in your map Student answers will vary They should use attributes such as university/college reputation, program qualities, class sizes, minimum admission requirements etc to compare the institutions Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-06 Step 5: Identify and Develop Positioning Strategy 129 Explain brand repositioning Brand repositioning refers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences Repositioning can change the quality image of the brand Repositioning also breathes life into old brands Such revitalization sometimes can result from changing the packaging and/or altering the characteristics of the brand Although repositioning can improve the brand's fit with its target segment or boost the vitality of old brands, it is not without costs and risks Firms often need to spend tremendous amounts of money to make tangible changes to the product and packages, as well as intangible changes to the brand's image through various forms of promotion These costs may not be recovered if the repositioned brand and messages are not credible to the consumer or if the firm has mistaken a fad for a long-term market trend Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06-04 Define positioning and describe how firms it Topic: 06-09 Repositioning 6-69 ... of the youth and freedom 6-12 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06- 01 Describe... both current and future 6-22 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06- 02 Identify... quality brand among its consumers 6-38 Chapter 06 - Segmentation, Targeting, and Positioning Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 06- 04 Define