Session 5

Branding, Market Segmentation, Targeting and Positioning

Prof. Dr. Allard Van Riel
Agenda

 Branding
 What is a Brand?
 Customer Based Brand Equity
 Brand Image
 Positioning: STP Approach
 Segmentation
 Targeting
 Positioning
What is a “brand”?

“A name, term, design, symbol, or a combination of

those, used to identify goods or services and to
differentiate them from competitors”
(American Marketing Association)

“A collection of perceptions in the mind of the

consumer”
So, is everything a brand?
Branding only takes place
- when these perceptions are managed strategically…
- to influence consumers attitudes/behaviors…
- with the purpose to create value
What are the benefits of brands?

For consumers For companies

• Simplification • Loyalty
• Risk • Price premiums
reduction • Trade cooperation &
• Uncertainty support
• Marketing
reduction
communication
• Self- effectiveness
expression • Marketing
communication
efficiency (Brand
Extensions)
How to build a successful brand?

“Doing business without knowing your customer is like

winking at a pretty girl in the dark.

Only you know what you are doing,

not the pretty girl.”
(A. Kumar)
Customer-Based Brand Equity

“The differential effect of brand knowledge on

consumer response to the marketing of a brand.”
(Keller 1993)
Brand knowledge – the core of CBBE

“The differential effect of brand knowledge on consumer response to the marketing

of a brand.” (Keller 1993)
CBBE:
high level of familiarity + strong, favorable and
unique brand associations (Keller 1993 p.3)
Brand awareness (i.e., familiarity)

Brand recognition = Ability of consumer to confirm

prior knowledge of the brand when given the brand
as a cue

Brand recall = Ability of consumers to retrieve the

brand from memory when given the product category
as a cue
What is more important:
Brand recall or brand recognition?
Depends on whether brand is present at point of decision-making
- When brand is present: brand recognition…
- When not present: brand recall…
… especially relevant with services and online brands
Brand image: Associative networks

Fine Sergio’s
Subway Dining
Sandwich
Places Eating
Out Moxie
Panera
Bread Unhealthy Value
Precooked Restaurants
Applebees
Narrow FAST Fatty
Assortment
FOOD Cookers
Low quality Cheap Good for
First to Family
market Dave Thomas

McDonald’s
Clean Burger
King
Big Wendy’s
Mac
Ronald Hamburgers Whoppers
McDonald
Value
Menu
Positioning a brand...
Positioning is not what you do to a product; it’s
what you do to the mind of the customer (Ries
and Trout 1972)
Act of designing the company’s offer and
image so that it occupies a distinct and valued
place in the target customers’ mind.

Create DESIRED brand knowledge

Positioning involves choices

Aaker and Shansby 1982 (p.2):

“A product or organization has many

associations which combine to form an
overall impression. The positioning decision
often means selecting those associations to be
build upon and emphasized or those
associations to be removed or de-
emphasized.”
 Emphasizing and de-emphasizing
brand associations
Fine Sergio’s
Subway Dining
Sandwich
Places Eating
Out Moxie
Panera
Bread Tastes good Value
Precooked Restaurants
Applebees
Fundamental
Narrow FAST Fatty
repositioning Assortment
Low FOOD Cookers
Consistent Good for
Prices Family
Healthy
Dave Thomas

McDonald’s Burger
Clean
King
Big Wendy’s
Mac Ronald Hamburgers Whoppers
McDonald
Salads Value
Menu
Strengthen links
Weaken links
The STP approach to positioning

 Remember: Positioning is what you do to

the mind of the consumer… which?
 Three activities that should be undertaken,
usually sequentially, if positioning is to be
successful:
 Segmentation
 Targeting
 Positioning
A Definition of Market Segmentation

The identification of individuals or

organizations with similar characteristics
that have significant implications for the
determination of the marketing strategy
(i.e., distribution, product or service
requirements, promotion, or pricing,
personnel, etc.).
Market Segmentation

 Involves the division of a diverse market into

a number of smaller submarkets that have
common features
 The objective is to identify groups of
potential customers with similar
requirements
 Market segmentation provides a
commercially viable method of serving
customer needs
 Segmentation is at the heart of strategic
marketing
The Benefits of Market Segmentation
Segmenting Consumer Markets
Consumer Segmentation Methods
Benefits Sought

Patek Philippe uses

powerful emotional
appeal to convey the
benefits of
ownership of a luxury
watch
The ACORN Targeting Classification
Segmenting Organizational Markets

• Organizational markets, in contrast to

consumer markets, tend to be characterized
by a relatively small number of buyers.
• Some of the most useful bases for
segmenting organizational markets are:
– Organizational size
– Industry
– Geographic location
– Choice criteria
– Purchasing Organization
 Segmenting Organizational Markets

Organizational
segmentation

Organizational Geographic Purchasing

Industry Choice criteria
size location organization
Five Criteria for Successful Segmentation

1.Effective
2.Measurable
3.Accessible
4.Actionable
5.Profitable
Target Marketing

 Target marketing refers to the choice of

specific segments to serve, and is a key
element in marketing strategy
 An organizations needs to evaluate the
segments to decide which ones to serve
using the five criteria for successful
segmentation
 E.g., CNN targets its news programs to
‘influentials’
Target Marketing Strategies
Target Marketing Strategies

 Undifferentiated marketing: a
company develops a single marketing mix
for the whole market
 Differentiated marketing: a company
develops specific marketing mixes to
appeal to all or some of the segments
 Focused marketing: a company
develops a single marketing mix aimed at
one target (niche) market
 Customized marketing: a company
develops a discrete marketing mix for
each customer
Target Market
Positioning

The act of designing the company’s

offering so that it occupies a meaningful
and distinct position in the target
consumers mind.

Effective positioning is the act of linking

products and services to the solutions that
consumers seek.
Positioning: Coca-Cola
Developing a Positioning Strategy

Deciding what position to occupy in the

market requires consideration of three
variables:

1. The customers – which attributes matter

to them?
2. The competitors – a differential advantage
that ideally cannot be easily matched
3. The company – unique sustainable
attributes
Keys to Successful Positioning
The Perceptual Map

 The perceptual map is a useful tool for

determining the position of a brand in the
marketplace.
 The key steps in producing a perceptual map
are:
 Identify a set of competing brands
 Identify the important attributes consumers use
when choosing between brands
 Conduct quantitative marketing research where
consumers score each brand on all key attributes
 Plot brands on a two-dimensional map
A Perceptual Map of Supermarkets
Repositioning

Repositioning involves changing:

– the target markets
– the differential advantage
– or both
Alternative Repositioning Strategies
Chapter Summary
1. The process of market segmentation is based on the
principles that not all customers have the same needs.
2. There are many different variables that can be used for
segmenting consumer and industrial markets.
3. The 5 criteria for successful segmentation are: effective,
measurable, accessible, actionable and profitable.
4. There are 4 generic target marketing strategies:
undifferentiated, differentiated, focus and customised
marketing.
5. Positioning is the key tool for conveying how companies
meet customer needs with products and services.
6. There are 4 repositioning strategies: image, product,
intangible and tangible repositioning.