Positioning in the same space with different segment focus

Different companies compete in the same space with completely different targets or segment focus. From our Live Breeze session this week, we discussed headache/pain relievers and how consumers of different demographics, specifically age, have different needs. A young person may have a simple or major headache, pain from working out in the gym, or partying too much. An older consumer may seek out similar products for arthritis pain. Females also may have their own uses/needs for similar products. Drug manufacturers and marketers take these needs and values into consideration with their formulas, names and promotion. Some of these are specifically marketed towards older consumers with a container that isn't child proof.

Another product that comes to mind that is valued and viewed differently among a variety of consumers is the automobile. A 16-year-old simply wants four wheels and a gas tank to get from Point A to Point B – sometimes that same 16-year-old wants a sports car. The parent of that same 16-year-old wants their child driving the safest car possible. Some see their car as a status symbol and others simply want a red one. A consumer in their twenties has different style preferences than those in their sixties.

Sometimes brands are known for engineering, luxury and status. One brand that is known for all of these characteristics is BMW and is usually marketed towards those with higher income or older consumers. BMW is a good example of an auto manufacturer that has taken different approaches to market to different targets. BMW has vehicles that target the power-craving consumers as well as the economical/environmental drivers.

Demographics play a big role in automotive preferences. In areas with harsher winters, trucks and four-wheel-drive SUVs are more popular. In cities, consumers may prefer smaller, more economical vehicles. Family size and age can be a factor for determining preferred vehicle size. Some auto brands such as Volvo build their reputation around safety. This reputation and message appeals to parents with young passengers/drivers. Consumer research and purchase history can help manufacturers evaluate this market.

Fuel economy is a selling factor that has become more of a concern for consumers recently due to increased fuel costs. Some manufacturers have tailored their design and marketing to selling their car is fuel efficient. This is a challenge in the consumer minds to buy a car for better fuel economy when they may want a larger, more powerful option. Volvo has marketed their vehicle lines to get good fuel economy while still maintainingthe fun factor. 

Choosing a market segment and positioning

Once the marketer has a thorough understanding of consumers and segments, they choose specific segments to focus marketing efforts. Marketers consider consumers’ demand from each segment and also the competition in order to achieve the best possible sales results.

Companies collect data on product or service benefits and rate each group – then compare to competitor’s abilities to fulfill the consumers’ specific needs.

The first step is to eliminate any segments that cannot be easily or affordably reached and those which are outside the scope of the brand. Then, determine which segments offer the best opportunities and most possible profits. Then the marketers must assess how the brand will perform and compete in the market, while factoring in environmental threats. Marketers eventually weigh each segment, prioritize and develop strategies based on their evaluations.

After marketers choose target segments, they create a positioning strategy based on the previous market research. Positioning is highlighting a product or services benefits and differentiating it from any other choices in the consumers’ minds. Marketers determine one or more distinguishing characteristics of their product or service and develop a message to make the brand stand out. Positioning displays brand value.

Segmentation and consumer obsession

In order for marketers to get the best bang for their marketing buck and not invest time and resources to market consumers that will never respond, marketers dig deeper and focus on specific groups within a market. These smaller segments are based upon consumer behaviors and needs. 

One approach to market segmentation is to sort groups of consumers based on their specific behaviors that can be related to the product or service being promoted. Another method of market segmentation is to first determine the benefits of a product or service and then match to the needs of specific consumer groups. Sometimes one single product or service can have multiple benefits that may attract different consumers so the marketing has to be uniquely tailored to each of those groups.

This is consumer obsession at its finest – marketers step into the shoes of a concise group to determine their needs. Then they convince that group that their product or service will fulfill that need. The process begins with market research that reveals how consumers view specific products and services, and how they go through the decision making/purchasing process. Brands can adapt their marketing or even their product or service based on these findings.

Once the market is segmented and specific groups are targeted, marketers can create a profile of this consumer – often based on demographics. Then the consumer obsession turns to creating a message to reach the targeted consumers.

An example of consumer obsession segmentation is a recent development called Brandvantage (April 2, 2014) developed by The Pert Group. The research method is a unique study of how consumers make choices and factors in different life influences. It “helps organizations make more informed decisions on market segmentation, campaign development, creative execution, and more.”

Dr. Rosling and data collection

Dr. Rosling’s data collection and analysis is very important for analyzing the growth and progress of “civilization” and the developed world. The data displays how different geological areas have evolved in life expectancy, family size and ultimately family planning. His analysis displays the relationship between “long life” and “small family” and how historic events and trends have moved these traits in various areas.

The visual display makes complex data easier to comprehend and understand. It shows a great amount of information in a simple to digest format and displays how the information changes over a long period of time. This visualization makes it easier to spot trends and correlation between causes and effects.

Dr. Rosling gives a description of the “health and wealth of the world” in regards to well-being and income distribution. His results are a visual representation of quality of life throughout the world.

This type of information and these types of data banks are especially useful in marketing because it shows human behavior that can be tied to consumer needs and trends. This is the ultimate demographic tool that can be used for environmental scanning and marketing planning.

These types of resources are useful for beginning research for our marketing plans. By comparing raw data to various demographics and trends, we can begin to define our consumer and their behavior. This visual display is also helpful to provide insights to our client.

My company's "research"

The organization where I work (Indiana State Medical Association) maintains a sophisticated database of membership along with demographic and contact information. This is crucial to understanding the customers during marketing campaigns. The database allows us to target certain portions of membership by field:

• Do we want to market to older physicians? Residents? Students? The software can create lists based on age or years in practice.
• Do we have a special program for female physicians? The membership can easily create a list along with contact information.
• Do we want to focus on rural physicians? Indianapolis doctors? Those in the Chicago region? The member base can be compiled into lists by zip code.

While this isn't exactly “research,” many hours of research and development have gone into creating this wealth of data. This information serves as a good starting point for research – not only for demographics but other fields. Two characteristics of members the organization is especially interested in is whether the physician uses electronic medical records and whether the physician is employed or private practice. These fields are also part of the database and help to give the organization an idea of “customer behavior.” 

The database also contains information on each member about benefits sought (examples include coding/legal assistance and health/malpractice insurance).

This is a benefit of marketing events and benefits to those physicians who are already ISMA members. The organization also does traditional but less sophisticated research to learn about nonmember physicians, how to communicate and how to convince them to become members. 

Missions and the current situation

Marketing is about obsessing over the consumer. We learned last week in Theodore Levitt’s “Marketing Myopia” that marketing must be customer based rather than product based. The danger of being product based is a brand can die along with a product if it becomes obsolete.

A mission should reflect overall value of the brand and not just a product or specific service. A successful company and mission should be about the consumer/customer, fulfilling their needs and adapting to change.

The example mission statements from Chapter 2 of the text do not focus on a specific product and largely focus on goals and serving customers. The example of Target, which could easily fall into a product/retail mission, instead focuses on delivering value and a brand promise. Their mission statement also uses the welcoming term “guest” instead of customer.

I work in the communications department for the Indiana State Medical Association (ISMA). The ISMA is a nonprofit, physician membership organization. The “condensed” mission: The Indiana State Medical Association is dedicated to Indiana physicians and their efforts to provide the best possible health care for their patients. This mission is consumer/customer focused instead of product focused and the brand has adapted to climate change for over 165 years. The many benefits, medical field and technological advances have changed over time - but serving physicians and their patients has remained the same.

There are “products” and tangible benefits offered to members but the benefits are mostly services. The ISMA offers advocacy, continuing medical education, health and malpractice insurance, legal and practice management advice among many other benefits.

The marketing for the ISMA is targeted to a specific niche of Indiana physicians and is largely broken into two categories based on obvious “customer” of the organization: (1) to promote benefits/events and communicate important information to members and (2) to promote the organization to nonmember physicians and entice them to join.

The current situation of the marketing environment in healthcare is volatile to say the least. The macroenvironment factors that affect the ISMA include technological advances and integration of computer technology into medicine. Electronic health records and advanced communication methods change how a physician practices daily. In a sea of open communication and media, doctors are still required to put their patients’ care first and also respect privacy.

Politics is of course a major macroenvironment factor in the current medical world. Healthcare reform is on everyone’s minds – patients and physicians – and this is creating a large change in the environment. Doctors must always be aware of new legislation and requirements and how laws affect their practice, staff and patients. The ISMA has lobbyists to represent physicians on a state and national level, and also political action committees. Whether they like it or not, doctors must be involved in politics and government.

One challenge in the microenvironment is competition from specialty organizations that provide doctors with similar benefits to those of the ISMA. The largest recent change in the microenvironment is competing with the benefits and security offered by large hospitals and healthcare conglomerates that employ physicians. The ISMA is struggling to market additional benefits to these doctors that feel their employer offers everything they need.

  

The ISMA provides benefits to serve the needs of every physician – whether it is the simple tangible benefits offered to members, advocacy and representation for the profession or just the camaraderie and prestige of belonging to a large professional organization.

Final thoughts from Week One

I compared my initial definition of marketing with the content in Chapter One of The Marketing Plan Handbook. According to the text, “marketing is about creating, communicating, delivering and exchanging offerings that provide value. My preconceived notions of marketing weren't too far off. It also adds “profitably acquire, retain and satisfy customers in a competitively superior way.” This involves customers, price and competition. A successful marketing plan involves initial (market) research, segmentation, strategies and the four marketing mix tools – product, pricing, place and promotion (4 P's). I hope to go into greater detail on the 4 P's in the future.

Theodore Levitt’s “Marketing Myopia” reaffirms the need to research and know your market/consumers’ needs. Don’t become too comfortable with your product even if it is successful. Don’t believe that your growth is inevitable and that your success will grow along with the population. Don’t define your business around a product. He used the example of railroad vs. transportation. At this point in time, the example is relevant, especially dealing with transportation and alternative fuels. To be successful, you can no longer be a "gas station" or even "filling station" - but perhaps an "energy station."

One of my takeaways from Levitt is to always realize that tomorrow your product or service might become outdated or obsolete. Anticipate a paradigm shift. Better yet, CREATE a paradigm shift. Anticipate what products or service consumers will need. Steve Jobs sensed consumers’ needs and created inventions based on those needs. He took it one step further and created inventions before consumers even realized they needed them.

Jeff Bezos, founder of Amazon.com boils marketing into these thoughts:

• Obsess over the consumer – Regardless of the product or service, there is no value without someone to give it value. Consumers and their needs drive marketing.
• Invent on behalf of the consumer – The best inventions are the result of a problem in need of a solution. Customers don’t always invent so we must invent what they need or want – and market the invention to them.
• Think long term – Long term initiatives often result in better products and more loyal customers. Think long term to establish a brand – and create a unique culture. Zappos pushes their culture and family core values.
• Every day is day one – Never be satisfied. There is always a new solution and a new adventure around the bend.