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POMDA Chapter 3 Lecture — Transcript

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0:02In this video, we'll review chapter 3 of
0:06principles of marketing for a digital
0:07age. The chapter is on segmentation,
0:10targeting, and
0:14positioning. In this chapter, we'll
0:16learn the answers to the following
0:18questions. What is segmentation and why
0:20is it important? What are the bases used
0:23in segmentation? What is the procedure
0:26for segmenting markets? How do marketers
0:28choose which segments to target? What
0:31role does strategic fit play in the
0:34market segments a company ultimately
0:35chooses to target? And how can companies
0:38establish an effective position in the
0:40marketplace?
0:45In this chapter, we'll review how
0:47marketers gain a competitive advantage
0:49by segmenting the market and targeting
0:52select groups with brand positioning
0:54designed to meet the needs, values, and
0:57characteristics of each target segment.
1:00The market may include people, groups,
1:02or organizations, which we can
1:04generically think of as units with needs
1:06or wants and the ability and willingness
1:09to buy. The three steps marketers use
1:12are called the STP model which is shown
1:14in the figure on the slide. Step one is
1:17segment the market. Step two is target
1:20the best segments and step three is
1:23position the offer. The model is useful
1:26because it helps marketers organize a
1:28large heterogeneous market into
1:30meaningful homogeneous groups and
1:33optimize marketing decisions by targeted
1:36groups.
1:42What is market
1:43segmentation? Market segmentation is the
1:46process of dividing the total market
1:49into a number of smaller, more
1:51homogeneous submarkets called market
1:54segments. Simply, the members of a
1:56market segment share something in common
1:59and they differ from members of other
2:01segments. Segmentation enables marketers
2:05to achieve a strategic tradeoff between
2:07the efficiency of treating all customers
2:10the same and the effectiveness of dress
2:12of addressing customers unique needs and
2:20characteristics. The figure shown
2:22illustrates the central role of
2:24segmentation in guiding marketing
2:26decisions. At the core, marketers seek
2:29to identify prospective customers and
2:31understand their needs. Having done so,
2:34marketers can then anticipate an offer
2:37that can meet those needs and achieve a
2:39competitive advantage. Lastly, related
2:42decisions are made to enable
2:43implementation of the marketing strategy
2:46for the chosen target segment.
2:54Let's consider an example from the
2:55beauty and cosmetics industry.
2:57Segmentation was the key to Birchbox
3:00identifying the market of women who were
3:02called beauty indifference. That was a
3:04new market opportunity and Birchbox
3:06responded with a box of beauty products
3:09delivered monthly by subscription. What
3:11else could be learned? That same data
3:13could be used to answer the following
3:15questions. What attitudes tend to drive
3:17purchases, cancellations, and renewals?
3:20Do customers value the element of
3:22surprise in each month's box or the
3:24product mix included more? What needs
3:27remain unmet that could serve as
3:29opportunities to upsell or cross-ell the
3:31customers? What is the mix of cosmetic
3:34brands being used by Birchbox customers?
3:37What media habits are prevalent among
3:39the target segment? These are all
3:41questions that could likely be answered
3:43by further analyzing the existing
3:45segmentation data. You can see from the
3:48slide that marketers benefit from
3:49segmentation in many ways, including by
3:53identifying expanded markets, by
3:56developing offers, by better satisfying
3:59customers, by increasing market share,
4:02by improving profitability, and by
4:04differentiating the brand.
4:12Something that marketers must do in
4:14order to conduct a segmentation analysis
4:17is to determine the variables or the
4:19basis to use for segmenting the market
4:22in the process. These are known as the
4:25bases of
4:26segmentation. Both B TOC and B2B markets
4:29utilize essentially the same basic
4:31segmentation bases. Table 31 identifies
4:35the most common segmentation bases and
4:38their respective variables. The bases
4:42that capture the different types of
4:44variables we can use in segmentation
4:46analyses are listed on the
4:49slide. The first base is demographic.
4:53Demographic variables include things
4:56like age, gender, income, occupation,
5:00marital status, family life cycle,
5:03education, and socioeconomic status. We
5:06also have demographic variables for
5:08business markets, but these are called
5:10firmographics.
5:11Some examples include industry vertical,
5:14size, performance, structure, ownership,
5:18years in business, customer type, and
5:21types of technology
5:23used. We can also use geographic
5:26variables to segment our market. This
5:28means to group units in the market using
5:30variables that are tied to location.
5:33Geographic segmentation answers where
5:36questions. Some of the variables we
5:38might choose include region, country,
5:41market density, climate, and
5:44environmental
5:45context. We might also look at things
5:48like local regulations, particularly if
5:51we're looking at geographic variables
5:52for business
5:54markets.
5:55Psychoraphic
5:57variables mean that we group the market
6:00units using psychological, sociological,
6:03and/or anthropological variables.
6:06Psychoraphic segmentation answers why
6:09questions. The variables of interest
6:11might include motives, personality
6:13traits, organizational personality,
6:16values, attitudes, and
6:20interests. Behavioral variables mean
6:22that we group the market units based on
6:24past or predicted behavior. This means
6:27that the segmentation variables answer
6:29how questions. For instance, we might
6:32look at the role someone has played,
6:34whether buyer, user, or influencer. We
6:37might consider purchase occasions like
6:39whether it's a gift type of occasion. We
6:43might look at customer value such as the
6:45recency, frequency, or monetary value of
6:48purchases. We could look at usage rate,
6:50readiness stage, or shopping patterns
6:53like searching online, reading reviews,
6:55or purchase preferences.
6:58Lastly, we have benefits sought. This
7:01means to group the market units based on
7:03the underlying utility or need driving
7:05the decisions. Segmentation using
7:08benefits sought answers what questions.
7:11And the primary approach to segmenting
7:14the market using benefits sought include
7:17looking at functional needs and utility
7:19or using the jobs to be done theory for
7:22segmentation.
7:29Psychoraphics encompasses personality
7:31traits, motives, attitudes, and
7:33interests. Because psychographic
7:36segmentation requires primary data,
7:38psychographic studies are oftentimes
7:40conducted at syndicated studies of mega
7:42trends, geographic regions, and industry
7:45verticals. One of the most famous
7:47psychographic segmentation schemes is
7:49called Vows. It classifies consumers by
7:52primary motivation and by their
7:54resources. A more recent classification
7:57model is Forester's empowered customer
8:00segmentation framework. It classifies
8:02customers based on five key
8:04characteristics. Their willingness to
8:07experiment, self-efficacy, digital
8:10physical integration, their information
8:12savviness, and their device usage.
8:19Based on those five psychoraphic
8:21characteristics, Forester found that
8:23there are several different categories
8:25of empowered customer segments. The
8:28segments identified include progressive
8:31pioneers, savvy seekers, convenience
8:34conformers, settled survivors, and
8:37reserved resistors. This is just an
8:39example of a type of psychographic
8:41segmentation scheme to let you know what
8:44sorts of profiles might be identified
8:47using psychographic
8:53segmentation. One of the most powerful
8:55ways to segment markets is to use
8:59benefits sought and specifically to use
9:01the jobs to be done theory that we
9:03introduced in chapter 2 as a way to
9:05better understand customer needs.
9:09Jobs to be done theory is closely tied
9:11to outcomedriven innovation, Oluk's
9:14approach to designing innovative product
9:17strategies for marketing. The key
9:19takeaway behind using the jobs to be
9:21done framework for market segmentation
9:23is this. A customer's unmet needs, need
9:27priorities, and preferences for
9:28solutions often vary by context, but
9:31they are consistent within context when
9:34you segment around unmet needs.
9:37Remember, customers hire products
9:39because they need a specific job to be
9:41performed, not because they belong to a
9:44certain segment. To use jobs to be done
9:47as a segmentation variable, marketers
9:49must answer these questions. What
9:51functional job is your customer trying
9:53to get done at each stage of the
9:55customer journey? And what does the
9:57customer need at each of these stages?
10:01Remember the first question is answered
10:03by creating a job map which depicts the
10:06eight process stages people experience
10:08in order to complete a job. These are
10:11listed in the table shown on the slide.
10:19Now that you've identified the variables
10:22that may be valuable for
10:25you in segmenting, you can move on to
10:29understanding the full segmentation
10:31procedure. There are six main stages in
10:33the segmentation procedure and these are
10:35shown in the figure on the slide. The
10:38first step is to set objectives.
10:41This means that you are identifying the
10:42objectives that guide your segmentation
10:45analysis. Generally, segmentation
10:47objectives may be strategic, managerial
10:50or operational. A strategic segmentation
10:53can inform an organization's mission or
10:56its strategic focus by identifying
10:58fundamental needs in the market.
11:01Managerial segmentation can guide
11:03resource allocation and market planning
11:05and operational segmentation can focus
11:07on the execution of the marketing mix.
11:10In the second step, you're identifying
11:13the segmentation variables that are
11:14relevant for the project scope. This
11:17ties back to our discussion of the
11:18segmentation bases and the specific
11:21variables. Here you are choosing which
11:23variables to use in your segmentation
11:26analysis.
11:27You can choose any variable that you
11:30want as long as it is relevant for
11:33understanding the market that you are
11:36segmenting and as long as you have data
11:39available to use in your segmentation
11:41analysis. You're not limited by those
11:43variables that we reviewed with the five
11:45segmentation bases. Those are simply to
11:48give you some ideas of variables that
11:50you might choose from.
11:52Most segmentation analyses use between
11:55five and seven variables, but that also
11:57is not a specific
11:59limitation. The third step is to
12:01identify your data sources and collect
12:03any data that you need for the
12:05segmentation
12:07analysis. The fourth step is to analyze
12:10the data. Typically, we use a type of
12:12cluster analysis to identify the
12:15clusters or segments that result from
12:18the overall market by grouping like with
12:21like and separating those segments that
12:25are significantly
12:27different. Then we identify and profile
12:30our segments. The segments produced by
12:32the data analysis will be identified and
12:34profiled to provide information on the
12:36size of the segment, the expected growth
12:39and profit potential and other
12:41information that will be useful as the
12:42company evaluates those segments as
12:44possible target
12:46markets. Then lastly, we assess the
12:49segmentation effectiveness and reanalyze
12:51if
12:57needed. In the next step in the STP
13:00model, we must decide to target one or
13:03more of the segments that were
13:04identified during the segmentation
13:10procedure. Organizations that pursue
13:12mass marketing do not differentiate
13:15offers by target segment. Instead, they
13:17try to cover the market with just one
13:19offer. But organizations benefit from
13:22segmentation when they use a
13:24multi-segment strategy of positioning
13:27differentiated offers for each target
13:29segment they choose to target.
13:31Organizations can achieve synergy across
13:34multiple segments with a product or
13:35market
13:36specialization. Firms can also follow a
13:39concentration strategy by choosing a
13:41niche in which only one segment is
13:44targeted. Access to online behavioral
13:47data and marketing automation even makes
13:49it possible for us to target micro
13:51segments and individualized segments as
13:54viable
13:55targets. The figure shown illustrates
13:58how these targeting approaches vary and
14:00their underlying view of the market from
14:02broad to narrow.
14:07So, how do we go about choosing from all
14:10of the segments that were produced in
14:12the segmentation procedure in order to
14:14determine which of those segments we
14:16wish to target? Well, to do that, we
14:19must evaluate the segment attractiveness
14:22and strategic fit. And we want to choose
14:25to target those segments which are
14:27attractive. How do we assess
14:29attractiveness? Well, we do this by
14:31assessing the six characteristics that
14:33are listed on the slide. First is
14:36identifiable. Can we identify prospects
14:39with the segment's
14:41characteristics? Second is substantial.
14:43Is the size of the segment large enough
14:45to be potentially profitable? Third,
14:49accessible. Can the segment members be
14:51reached via media and distribution
14:53channels? Fourth, is the segment
14:56durable? In other words, will the
14:58segment be stable long enough for the
15:00company to market to it? Five,
15:03differentiable. Are the prospects in the
15:05segment homogeneous within the segment
15:08but different from those in other
15:10segments? And lastly, how actionable is
15:14the segment? Do the insights produced by
15:16the segmentation analysis clearly inform
15:19marketing strategy and tactics? And is
15:21the segment likely to be responsive to
15:23those market tactics?
15:26Once we've assessed these six
15:28characteristics, we can determine which
15:30segments are attractive enough to
15:37target. So, we want to choose to target
15:40segments that are attractive, but we
15:42also want to make sure that we're only
15:44targeting those segments that are
15:47attractive and with which we have
15:49strategic fit with our organization. Or
15:51in other words, we have compatibility
15:54between the segment and our firm. On the
15:57slide, I have several questions that can
16:00be used to assess segment firm
16:03compatibility. For instance, we can ask
16:06which of the segments have needs that
16:07are actually unmet and which segments
16:10have needs that our organization can
16:12best satisfy. We can also ask questions
16:15like what are the likely costs of
16:17effectively reaching a target segment
16:20and do we have the necessary resources
16:22and competencies to effectively reach
16:24and serve the segment? These are all
16:27things that we need to assess to ensure
16:29that a target segment is both attractive
16:32and compatible with our firm's
16:34objectives and resources.
16:40Once we've identified the segments that
16:43are attractive and compatible, those
16:45will become our target segments. Once we
16:49have this list of target segments, we
16:51will create buyer personas for each of
16:54the target segments. A buyer persona is
16:57a snapshot of a prototypical customer in
17:00the target segment. It tells the buyer
17:03story using the information we used for
17:05the segmentation analysis such as
17:07demographics, geographics,
17:09psychographics, benefits, sought and
17:11behavior. We write a basic bio that
17:15provides a composite sketch of the
17:17desired target market. I'm going to show
17:20you a template in the next slide, but
17:22what I have on the slide now is an
17:24example for a hypothetical persona
17:28called the beauty sleuth. You can see in
17:31the slide that we've got a bio, a basic
17:34character sketch of a beauty sleuth
17:36named Kora and we also have some facts
17:40about Kora. This helps the marketers to
17:44understand who is a typical member of
17:47this target segment and it helps us to
17:49make better marketing decisions quickly
17:52and effectively.
17:58On the slide now, you see a type of
18:01buyer persona template that you could
18:04use to capture core information that you
18:07need to know about the target segment.
18:09In this case, we focused on social media
18:12information, but the information that
18:14you choose to include on your buyer
18:17persona can vary depending on the types
18:19of marketing decisions that you'll want
18:22to make. Basically, you can go back to
18:24your data set that you used for your
18:26segmentation analysis and pull all kinds
18:29of facts and characteristics about the
18:31target segment and be able to script out
18:34a buyer persona that has the information
18:37that you really need to
18:45know. There are several buyer persona
18:48examples online. If you do a Google
18:50image search of the search phrase buyer
18:53persona, there are also templates that
18:56you can use to create your own buyer
18:57personas. The one shown on the slide is
19:00from an app called Extensio,
19:05extensio.com. Extensio, and they have
19:08several types of templates that are
19:10useful for marketers. This is an example
19:13of their buyer persona template.
19:20The final step in the STP model is
19:22positioning. Positioning is the process
19:25of designing a brand's offer and meaning
19:27to occupy a specific place relative to
19:30the competition in the mind of the
19:32target market. Just as the segmentation
19:34analysis informs selecting and profiling
19:37of the target segments, knowledge of the
19:39needs, preferences, and characteristics
19:41informs the positioning strategy. A
19:43positioning strategy should
19:45differentiate the brand from the
19:46competition and create and reinforce
19:49desirable brand associations. It answers
19:52the question, what do we want the target
19:54segment to perceive about the brand
19:56relative to the competing
20:02brands? Positioning can be thought of as
20:05the internal expression of the customerf
20:07facing value proposition. And I have on
20:10the slide an image that reminds you of
20:12how our value proposition is designed to
20:15meet the customer profile so that we
20:18understand the customer's jobs to be
20:20done, the benefits that they are
20:22seeking, and the pains they're trying to
20:23avoid. From that, we try to develop a
20:26value proposition that will offer
20:28benefits that are positive for meeting
20:31the needs of that customer. Well, when
20:33we look at positioning, we're trying to
20:37figure out how to express that value
20:39proposition in the minds of the
20:41consumers relative to our competition.
20:45And whatever we choose to position our
20:47brand on, it should differentiate our
20:49brand from the competition and it should
20:51be perceived as maximizing value in the
20:54minds of the target market.
21:02Specifying the positioning strategy
21:04requires identifying a competitive frame
21:06of reference and the brand's point of
21:08differentiation or pods relative to the
21:11desires of the target segment. The
21:14competitive frame of reference is a set
21:16of brands offering substitutable
21:18products and competing for the target
21:20market's business. Brands typically also
21:23have points of par. Points of parody are
21:26attributes that are similar across
21:28competitors and considered necessary to
21:30compete in the product category. But
21:32differentiation is incredibly important.
21:35It involves creating differences in the
21:37brand's offer that sets it apart from
21:39the competition. And whatever we
21:41position on, it definitely needs to
21:44differentiate us from the competition.
21:48We have on the slide the four Ds used to
21:52select the brand attributes that we want
21:54to feature as pods in a positioning
21:56strategy. These pods should be desirable
21:59to the target market, should be
22:01something our brand can deliver, should
22:03be different from the competitors, and
22:06should be
22:11durable. Much like the segmentation
22:14bases, there are several bases that may
22:16be used to identify points of
22:18differentiation for positioning. In
22:20principle, companies can position their
22:22brand on almost an infinite number of
22:25associations. For example, cosmetic
22:27brands can be positioned on function,
22:30benefits, price, quality, ingredients,
22:32values, stylishness, users,
22:35distribution, country of origin,
22:37customer experience, or brand
22:39personality. For example, Lush Cosmetics
22:42emphasizes its value of fresh organic
22:45ingredients, social good, and no animal
22:48testing. So, your position can be from
22:51almost any positioning base, but several
22:54are quite commonly used, and these are
22:56listed in the table you see on the
22:58slide. Some of the more common
23:00positioning bases include price quality,
23:03leadership, the user, the problem
23:06solution, the point of excellence,
23:09transformation, the usage moment, the
23:12emotions associated with the brand, the
23:15brand's values, the brand's story,
23:18service, country of origin, aesthetics
23:21and design, reliability, and specific
23:24product features. Any of these might end
23:27up becoming the chosen positioning base
23:30that you use to differentiate your brand
23:33from the competition in the minds of the
23:36target
23:40market. Once you've identified your
23:42chosen positioning strategy, you'll
23:44formalize that strategy in a positioning
23:47statement. Positioning statements
23:50communicate the strategy to internal
23:52corporate audiences who are making
23:54marketing decisions. The traditional
23:57positioning statement typically includes
23:59four elements that identifies the target
24:01market, the product category or
24:03competitive frame of reference, the key
24:06benefit being promised, and reasons that
24:08the target market should believe the
24:10benefit claim. The template for
24:12positioning statements is shown in the
24:14slide.
24:15Notice that it's a little bit different
24:17from the template for stating your value
24:20proposition because the value
24:22proposition doesn't specifically include
24:25the competitive frame of reference, nor
24:27does it include reasons for the target
24:30market to believe, but they are similar
24:32to each other.
24:35So, how do we go about determining what
24:38position or positioning base it is that
24:41we want to use to differentiate from the
24:44competition and maximize value in the
24:47minds of the target market? Well, to do
24:50that, we would follow the positioning
24:52procedure. Step one is shown on the
24:54slide. Here I have gathered information
24:58about the relative importance of the top
25:01six values that guide the purchase
25:03decisions for a product category. In my
25:06hypothetical example, I found that the
25:09most important values that the target
25:11market considers are personal service,
25:14convenience, reputation, safety, price,
25:18and comfort. Imagine that I've also
25:20conducted a survey to identify the
25:22relative importance of these top values
25:25and found that safety and convenience
25:28are the most important followed by
25:30price, reputation, personal service, and
25:33then comfort. So, this reflects back to
25:36the values or needs that the target
25:38market has when choosing this particular
25:41product category. So I'm relating this
25:43back to the job to be done, the needs
25:47that customers have uh and the purchase
25:51process or the customer
25:58journey. In step one of the positioning
26:01procedure, you do need to identify the
26:04top values that are being considered
26:07when making a purchase in that
26:09particular product category. It can be
26:11useful to consider Bane's elements of
26:14value and an example uh hierarchy from
26:17Bane's elements of value is shown on the
26:20slide. Bane devised a value hierarchy
26:24that's quite similar to Maslo's need
26:26hierarchy for both BTOC markets and B2B
26:29markets. The one shown on the slide is
26:31Bane's elements of value for B2B
26:33markets. And you can see that it's
26:36identified several values that tend to
26:38be important when making purchase
26:41decisions for businesses. It may be that
26:43you select your top values for the
26:45positioning procedure from a list like
26:48this
26:53one. Another way to get this list of
26:56values is to consider a consumer
26:58benefits ladder. We can always identify
27:01what customers want, what our product
27:04does to meet those wants and needs, the
27:07functional
27:09uh the functional services that our
27:11product provides, and the emotional
27:13benefits. This is like building a ladder
27:16that connects needs to the core product
27:20benefits to the features that are
27:22provided to the emotional benefits that
27:24flow from those specific features. This
27:27can be another way to identify the
27:29values that you may want to use in step
27:31one of the positioning
27:34procedure. When identifying these
27:36values, it may be useful to group some
27:40functions together in more meaningful
27:42ways and use the values that um come
27:45about as from this grouping. For
27:49instance, looking at a list of total of
27:52a total of 50 functional benefits, I
27:54could identify nine sort of categories
27:57of these functional benefits like works
28:00better, simplifies things, saves me
28:02money, keeps me connected, has sensory
28:05appeal, is a good experience, helps me
28:08be healthier, or helps me be smarter.
28:14So those were some considerations that
28:16might help you identify the value
28:18drivers for step one. And again,
28:21essentially what you're doing is
28:22identifying the top six values that
28:25drive the purchase decision for this
28:28product category by the target market
28:31that you are positioning for.
28:36In the second step of the positioning
28:37procedure, you want to evaluate the
28:40current position for your brand and for
28:42one competitor. And to do this in
28:45reality, you would conduct a survey
28:48where you ask a sample that represents
28:51the target market to explain how they
28:54perceive your brand and one competing
28:58brand on the list of values that you
29:01identified in step one of the
29:02positioning procedure. So in this
29:05hypothetical example, I found that brand
29:08A is perceived as being better on
29:11reputation and safety and comfort and
29:14brand B is perceived as being better on
29:17price and personal service. If I
29:20were working as a marketing strategist
29:23for brand B, I might be concerned that
29:27my brand is perceived as having a better
29:29price and I might be concerned that I'm
29:32losing on brand reputation and perceived
29:35safety. These might be concerns for me.
29:37I would also be glad that I went on
29:40personal service because that's um one
29:42of the top values and an area that I
29:45might be able to position my product on.
29:48So, what we're looking here is to see
29:50how we're currently positioned, where we
29:53win, and whether this is something that
29:55is meaningful to the target market, and
29:59whether um it's something that can
30:01differentiate our brand. We always want
30:03to choose a point of differentiation
30:06that that is something that we can win
30:08on and is something that is meaningful
30:10to the target market.
30:16This slide explains more about what I
30:19was saying in the last slide as far as
30:21choosing a position that differentiates
30:24your brand from the competition but also
30:26maximizes value in a meaningful way for
30:29the target market. Ideally, we want to
30:31be in what's called the winning zone.
30:34This means that there is a high level of
30:36motivation for the consumers by the
30:39value that uh that we are associating
30:42with our brand and there is a high
30:45ownability of that benefit for our
30:47brand. So whatever the value is, it's
30:49something that we win on relative to the
30:52competition and something that drives
30:54the behavior of the target market. In
30:57that case, we could choose that
30:59particular value to position on and we'd
31:01say that we'd be in the winning
31:04zone. What we don't want to do is end up
31:07in the losing zone or the dumb zone.
31:10We're in the losing zone if the target
31:14market is motivated by that value, but
31:17we lose on it. In other words, our
31:19competitors are better at that
31:21particular value than we are. Um, we
31:23would never want to position on
31:24something that we cannot win at relative
31:28to our competition. We also don't want
31:30to choose a value that's in the dumb
31:32zone. The dumb zone would be where it
31:36doesn't motivate the target market to
31:38make purchase decisions and the value is
31:41one that we can't win on relative to the
31:44competition. So, that would be the dumb
31:45the dumb zone. So, we always want to be
31:48in the winning zone, but sometimes we
31:50can't be. If we can't be, we could
31:52choose the risky zone. The risky zone is
31:55one where we can own that benefit. We
31:58can own that value. It differentiates
32:00our brand compared to the competition.
32:02We win on it. But maybe it doesn't
32:05motivate the target market towards a
32:08purchase decision. In that case, it may
32:10be that we can educate the target market
32:13to be more motivated by that particular
32:15value. So if we can't choose something
32:18in the winning zone, it may be possible
32:20for us to choose something in the risky
32:26zone. Lastly, we have step three. In
32:29this step, we're going to overlay the
32:31importance of those values with the
32:34position for brand A and brand B. This
32:37allows us to see both what is most
32:39motivational for the target market as
32:42well as where we currently win in terms
32:45of a point of differentiation. And you
32:48can see here that no winning zone is
32:50possible. Uh what's most valuable for
32:54the customers is also what the what
32:57brand A wins on not what brand B wins
33:00on. So for us, it may be that if we're
33:05helping plan marketing strategy for
33:08brand B that we would encourage them to
33:10go with a risky zone positioning
33:12strategy, which is to position on
33:15personal service. This is because we win
33:18on personal service. However, it's lower
33:21in terms of its the importance of that
33:24value. So it would have less motivation
33:26to drive uh the purchase process. Now
33:30again, normally we would prefer the
33:32winning zone, but in this particular
33:34example, we don't have that that option.
33:37However, if we were strategizing for
33:39brand A, we could say that brand A wins
33:44on reputation and safety and safety is
33:47also driving behavior. So, brand A would
33:49be able to choose that as its
33:51positioning base and be able to be in
33:53the winning
33:57zone. Once you've identified the value
34:01that you want to position on, this
34:03becomes your flag or your stake in the
34:05ground. You can think of this as a type
34:08of preemptive claim. In advertising, a
34:10preemptive claim is a claim that
34:12literally preempts the competing brands
34:15from making the same claim that you've
34:17made. And that's what you want to do by
34:19choosing the value that you're going to
34:21position on. you want to preempt the
34:23other brands from making that same uh
34:26positioning statement. When you choose
34:29this value, you want to make sure that
34:31you are choosing something that
34:32motivates the target market towards the
34:35purchase decision. And you also want to
34:38choose something that differentiates
34:40your brand from the competition. You
34:43also want to make sure that um you're
34:46not choosing a hygiene factor. A hygiene
34:48factor is a value that's important but
34:50is something that needs to be a point of
34:52parody just to be able to participate in
34:55that competition. It can't be a sort of
34:57source of
34:58differentiation. Lastly, whatever you
35:01choose as your flag should relate back
35:03to your core competence and strategic
35:05fit that we already determined as part
35:08of uh targeting that particular target
35:11market.
35:15We can call the flag a grand position.
35:20It's basically one word that's a
35:22motivational value that we can also win
35:25on compared to our competition. And we
35:29call this the grand position or our
35:30flag. And it's easy to see if you
35:33consider the examples that I have on the
35:35slide now. These are uh we're going to
35:39look at popular car brands and how they
35:42have differentiated themselves from each
35:44other. Now, all of these car brands are
35:46luxury brands that offer some status.
35:49So, we can't say that they've positioned
35:51on luxury or positioned on status
35:54because they all do that. They also all
35:56target affluent consumers, but yet they
36:00are able to position the brands as
36:03different from each other. First, we
36:05have Volvo. Volvo has positioned itself
36:08on the word safety. Safety could be
36:10thought of as Volvo's grand position. So
36:13while it's a luxury car and it targets
36:16an affluent consumer, it's targeting
36:18that target market that is both affluent
36:20and cares more about safety than any
36:23other
36:23value. The second brand is BMW. BMW has
36:28positioned itself on driving excitement,
36:30is positioned on the experience of
36:33driving the car. So even though it's a
36:35luxury brand targeting affluent
36:37consumers, it's targeting those
36:39consumers that care more about the
36:41experience of driving than it does any
36:43other
36:45value. Mercedes is a brand that has
36:48positioned itself on a classic view of
36:51luxury on sort of the epitome of the
36:54luxury category. So it's significantly
36:57different from BMW or from Volvo. And so
37:01it targets that portion of the the
37:04affluent target market who care more
37:07about classic luxury than anything else.
37:10Fourth, we have Lexus. Lexus has
37:13positioned itself as the reliable luxury
37:16choice. And lastly, we have Jaguar.
37:20Jaguar needs a repositioning campaign.
37:23It's primarily positioned as a sporty
37:26British car, but it's no longer made in
37:29Britain. It's now made in India. And it
37:33probably was difficult for you to come
37:35up with a word that meant uh Jaguar or
37:38that seemed like Jaguar's flag. So,
37:41whenever this happens, we would say that
37:43brand is in need of a repositioning
37:49campaign. If you're struggling to
37:51identify a good position to use, one
37:54that has a point of differentiation and
37:57is also motivational to the target
37:59market, it might help to develop a
38:01positioning map. A positioning map can
38:04be useful for identifying opening open
38:07positions in the competitive frame of
38:08reference and clarifying possible points
38:11of differentiation.
38:13The position map, also sometimes called
38:15a perceptual map, displays the competing
38:18brands based on their respective
38:19positions on two dimensions. So whereas
38:22our positioning procedure allowed us to
38:25look at several possible associations,
38:28the positioning map only allows you to
38:30look at two at a time. To create a
38:33positioning map requires three steps.
38:35One, you have to define the market and
38:37the competitive frame of reference. Two,
38:40you have to choose two dimensions or two
38:42values. And three, you have to plot the
38:44positions of each of the competing
38:47brands. The figure on the slide shows
38:50you an example of a positioning map for
38:53the cosmetics industry that's based on
38:55price and type of ingredients
39:01used. The key lesson here is that you
39:04definitely want to have a position. You
39:07always want to have a flag. Whatever you
39:09choose as that grand position or flag
39:12should be relevant and important to the
39:14target market so that it motivates and
39:16drives their purchase behavior. And you
39:19always want to be different from your
39:21competition. So don't try to steal a
39:23competitor's flag. Choose something
39:25where you have a point of
39:26differentiation and can win on that
39:29particular value. And lastly, it's best
39:32if the value you choose matches your
39:34core competence.
39:39Once you've identified your grand flag,
39:42your grand position, you will write a
39:44positioning statement. And I have a
39:46template for you on the slide.
39:49Basically, you're just filling in the
39:52blanks in parentheses to create a
39:55statement that will become an internal
39:57document and guide marketing decisions.
40:00The template goes like this. For target
40:03market, the brand name is the frame of
40:05reference which delivers the benefit or
40:08point of difference because only brand
40:10name is reason to believe. So you're
40:13specifying the target market, you're
40:15inserting your brand name, you're giving
40:17the product category or the or the
40:19competitive frame of reference, you're
40:21sharing your point of difference, and
40:23then you're giving a reason to believe.
40:25For instance, you might say for affluent
40:30uh uh auto drivers, BMW is the luxury
40:35auto brand which delivers the best in
40:38driving experience because only BMW is
40:42driving excitement. That would just be a
40:45quick simple example for you.
40:50Here's an example for a hypothetical
40:54cookie that has decided to position
40:56itself as the healthy cookie option. So,
41:00it wrote its positioning statement to
41:02say two healthy proactive preventors who
41:05want to do more for their health,
41:07working moms in the 35 to 40 year old
41:10category. Graze is the tasty, healthy
41:14cookie option. That is the guilt-free
41:16cookie that tastes so good you can stay
41:18in control of your health. That's
41:20because in blind taste tests, Grays
41:22match the leaders on taste, but only 100
41:24calories and three grams of net carbs.
41:27So, you can see it's summarized its
41:29target audience. It's shown the
41:32competitive frame of reference. It's
41:34competing against other cookies and it's
41:36positioning itself as the guilt-free
41:38cookie or the healthy cookie option. And
41:41so we could say that the guilt-free
41:43cookie is Gray's grand position or its
41:47flag. Now, all of the marketing that
41:50Grays performs would seek to position
41:54Grays as the guilt-free cookie in the
41:57minds of the target market.
42:05So, now that you've read chapter 3 of
42:08principles of marketing for a digital
42:10age and watched this video, you should
42:12be able to answer the review questions
42:15shown on the slide. You should know what
42:17segmentation is and the benefits of
42:20segmentation. You should know the bases
42:22of segmentation and some of the sample
42:24variables that would fall into each of
42:26these categories of segmentation
42:28variables. You should know the steps in
42:30the segmentation procedure.
42:32And you should know the targeting
42:34approaches that marketers can choose.
42:36You should also understand why personas
42:38are so important for understanding the
42:42characteristics of our target markets.
42:44Lastly, you should know what a brand
42:46position is, why marketers choose the
42:48positioning strategy, and the steps in
42:50the positioning procedure.

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