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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-1
MARK1012: LECTURE 5 MOHAMMED ABDUR RAZZAQUE
RAZZAQUE:UNSW L5-2
Lectureobjectives1. Explainmarketsegmentation,andidentifyvarious
possiblebasesforsegmentingmarkets.2. Explaintherequirementsforeffectivesegmentation:
measurability,accessibility,substantiality,actionability.3. Outlinetheprocessofevaluatingmarketsegmentsand
suggestsomemethodsforselectingmarketsegments.4. Illustratetheconceptofpositioningforcompetitive
advantagebyofferingspecificexamples.5. Discusschoosingandimplementingapositioning
strategy,andcontrastpositioningbasedonproduct,service,personnelandimagedifferentiation.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-3
SometruthsaboutMarketsAllmarketers bothB2CandB2B recognisethattheycannot(i)appealtoallbuyersinthosemarkets,or(ii)appealinthesameway.
Ratherthantryingtocompeteinanentiremarket,oftenagainstsuperiorcompetitors,eachcompanymustidentifythepartsofthemarketthatitcanservebest.
Buyersaretoonumerous,toowidelyscatteredandtoovariedintheirneedsandbuyingpractices.
Differentcompaniesvarywidelyintheirabilitiestoservedifferentsegments
ofthemarket.
RAZZAQUE:UNSW L5-4
Designingacustomerdrivenmarketingstrategy
SegmentationDivide the total market into smaller segments
DifferentiationDifferentiate the market
offering to create superior customer value
TargetingSelect the segment or
segments to enter
PositioningPosition the market offering
in the minds of target customers
Create value for targeted customers
Selectcustomerstoserve Decideonavalueproposition
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-5
the process of dividing the total market for a good or service into several smaller groupssuch that the members of each group are similar with respect to the factors that influence demand.
Evaluates each segments attractiveness and selects one or more segments to enter.
A target market is a group of customers ( people or organisations) for whom a seller designs a particular marketing mix.
Segmenting Target Marketing
RAZZAQUE:UNSW L5-6
Segmentationisnecessarybecausecustomersinamarkethave: Differencesinbuyinghabits
Differencesinthewaythegoodorserviceisused
Differentmotivesforbuying.
Copyright 1997 by The McGraw-Hill Companies, Inc.
Segmentation
Markets are segmented by: Intuition based on experience
and judgment Mimicking competitors and
earlier market entrants Performing a structured
analysis that includes Identifying the current and
potential wants that exist within a market
Identifying the characteristics that distinguish segments
Finally, determining who has each want.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-7
1. Identify Bases for Segmentation
2. Develop Profiles of Segments
3. Develop Measures of Attractiveness
4. Select Target Segment(s)
6.DevelopMarketingMixforEachSegment MarketPositioning
Market Targeting
Market Segmentation
StepsinSegmentation,Targeting,PositioningandDifferentiation
5. DevelopPositioningforEachSegment
ProductDifferentiation
7.Decideonavalueproposition
RAZZAQUE:UNSW L5-8
Geographic country, region populationdensity
populationsize,
climate
Demographic Ageandlifecycle
Gender Income Education Occupation Religion Nationality
Psychographic Socio-
economic Status Values - AIO Personality
Bases for Segmenting Consumer Markets
Behavioural Purchaseoccasion
Benefitssought Usersought Userrate Loyaltystatus Readinessstage Attitudetowardsproduct
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-9
Colgate offers benefits to consumers
RAZZAQUE:UNSW L5-10
Geo-demographic Segmentation
GeographicSegmentationVariables
(e.g.,SEAsia,City,Kensington)
DemographicSegmentationVariables
(e.g.,Male,LowIncome,seniorcitizens)
GeodemographicSegmentationVariable(e.g.,SEAsianMales;Low
incomeCitydwellers;SEAsianLowIncomeearners;SeniorCitizensofKensingtonetc.)
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-11
ColourdiscriminationOlderpeoplehavedifficultydistinguishingpastelsandthegreenbluevioletpartofthecolourspectrum.Thishaveimpactonpackaging,brochuresanddisplays.
Glare Glareinpackaging,postersandfloorsinretailstoresshouldbetoneddownoreliminated.
Hearing25%ofpeopleover65experiencehearingloss;marketersusingaudiocommunicatorsshouldselectspokespersonswhohavedeepertones.
Tastesensitivity Byage80,twothirdsofourtastesensitivityislost(mostforsweettastes,leastforsourtastes).Marketersshouldconsiderodouramplificationtoenhancethepalatabilityoffoodsandbeverages.
Touch Atage65,a5degreechangeintemperatureisneededtoequalthesensitivitya30yearoldwouldhavefora1degreechange.
WhyUseAgetoSegment?Consider these bodily changes that accompany ageing:
RAZZAQUE:UNSW L5-12
1.FashionStatementsmostaffluentandeducated,usecreditcards,expecttobetreatedwellbyretailpersonnel.
2.WannabuyssimilartoFashionStatementsbutwithlessincome.Enjoybuyingonimpulse.
3.FamilyValuesrepresentlargefamilies,oftenareprofessionals,buyingfocusesonchildrenorthehome.
4.DowntoBasicsmostlikelytohavechildren,notcollegeeducated,carefulspenders,prefernottousecredit,likecoupons.
5.Matriarchsolder,oftenretired,theylikedepartmentstoresbutareriskaverseandhavefewpurchaseplans.
ASEGMENTATIONEXAMPLEFemale department store shoppers have been classified into 5 types, based on demographics, values and attitudes. The groups and their descriptive names are:
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-13
Identifying and Analysing Business Market Segments
Demographic Operating variables Purchasing approaches Situational factors Personal characteristics
for SegmentingBases
for SegmentingBusinessMarkets
DemographicsPersonalCharacteristics
SituationalFactors
OperatingVariables
PurchasingApproaches
RAZZAQUE:UNSW L5-14
Signode CorporationsFourSegments
Programmed Buyers. This group buys products as a routine purchase, pays full price, and accepts below average service. This segment is highly profitable.
Relationship Buyers. This group views Signodes packaging as moderately important. They are knowledgeable about competitors offerings. They remain loyal if prices are competitive. Typically, they receive a small discount and a modest level of service.
Transaction Buyers. This group sees Signodes products as very important to their business. They are price and service sensitive. They receive above average service and a 10% discount. They will switch for a better price.
BargainHunters.ThisgroupseesSignodes productsasveryimportanttotheirbusinessanddemandthedeepestdiscountandhighestlevelofservice.Theyknowtheirsuppliersandbargainhard.Theirlargevolumeisneededbuttheyarenotveryprofitable.Les
s
M
ore
Prof
itabl
e
Pro
fitab
le
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-15
SegmentingInternationalMarkets
Political/Legal
Cultural
Intermarket
Economic
Geographic
Factorsfor
SegmentingInternationalMarkets
SouthAsiaMiddleEastAustralasia
NIEOECDECM
Politicallyvolatile
CommonLanguageReligionCustoms
SegmentingconsumerswithsimilarneedsandbuyingbehavioreventhoughtheyarelocatedindifferentgeographicalLocations.
RAZZAQUE:UNSW L5-16
Requirementsforeffectivesegmentation
RequirementsForeffectivesegmentation
Actionable
Shouldbelargeenoughtobeprofitable
Themarketsegmentcanbeeffectivelyreachedandserved
Organizationmustbeabletodistinguishthesegmentandrespondtoitsneedsdifferently
Organizationmustbeabletoidentifyand
measureeachsegment
Marketersshouldbeabletodesign
effectiveprogramstoserve
themarket
Measurable
Actionable
Differentiable Substantial
Accessible
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-17
EvaluatingMarketSegmentsI
SizeandGrowth
StructuralAttractiveness
CompanyObjectives
andResources
Segmentationrevealsthemarketsegmentopportunitiesfacingafirm.Thefirmhastoevaluatethevarioussegmentsandchoosetheonestoserve.
Select the segment with the right size growth.
[e.g., go for the Niche market]
Desirablesizeandgrowthdoesnotensurehighprofitability.Structuralfactors[competition,substitutes,powerofbuyer/sellers]areimportant
Companymustevaluateitsownobjectives,resources,constraints,strengthsandweaknesses
RAZZAQUE:UNSW L5-18
Evaluating Market Segments II
Segmentsizeandgrowth collectandanalysedataoncurrentdollarsales,projectedsales
growthratesandexpectedprofitmarginsforthevarioussegmentstoselectsegmentsthathavetherightsizeandgrowthcharacteristics,butrightsizegrowthisarelativematter.
Segmentstructuralattractiveness desirablesizeandgrowthmaynotprovideattractive
profitability.Thecompanymustexamineseveralmajorstructuralfactorsthataffectlongrunsegmentattractiveness.
Marketingorganisationobjectivesandresources positivesizegrowthandstructuralattractivenessmustmatch
thecompanysownobjectivesandresourcesinrelationtothatsegment.Someattractivesegmentscouldbequicklydismissedbecausetheydonotmeshwiththecompanyslongrunobjectives.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-19
MarketTargetingStrategiesI
Undifferentiatedmarketing
Differentiatedmarketing
Concentratedmarketing
Micro-marketing
MassMarketing
SegmentedMarketing
NicheMarketing
LocalorIndividualMarketing
Targeting Targeting broadly narrowly
Afterevaluatingdifferentsegments,thecompanymustdecidewhichandhowmanysegmentsitwilltarget.Atargetmarketconsistsofasetofbuyerswhosharecommonneedsthatthecompanydecidestoserve.
RAZZAQUE:UNSW L5-20
MarketTargetingStrategiesII
Segment 1
Segment 2
Segment 3
CompanyMarketing
Mix
Segment 1
Segment 2
Segment 3
CompanyMarketing
Mix
CCompany Mix 1
CCompany Mix 2
CCompany Mix 3
Market
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
Ignoremarketsegmentation;focusonwhatiscommonratherthanwhatisdifferent.Designaproductandmarketingprogramthatappealstolargestnumberofbuyers.Steel,Applesareexamples.
Targetseveralmarketsanddesignseparateofferforeach.Caterforeverypurse,price,andpersonality(Toyota).Examples:ColesMyerSupermarket,Bilo,Myerstores
Goforlargeshareofoneorfewsubmarketsratherthanforsmallsharesofmanymarkets.DELL[PC],CRAY[Mainframe],APOLLO[Workstation]
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RAZZAQUE:UNSW L5-21
CUSTOMSEGMENTATIONAspecialversionofconcentratedmarketing
Ideally,marketersshouldbeabletodefinesegmentssopreciselythattheycanofferproductsandservicesthatexactlymeettheuniqueneedsofeverycustomer.Commonfordoctors,lawyersandhairstylists.
Doesnothappeninreality;itisneitherpracticalnorpossible.ParticularlytrueforB2Borindustrialmarkets.
Theygoforcustommarketingstrategyandusecustomsegments.
In customsegmentationmanufacturerstendtoworkwithoneorafewlargeclientsanddevelopproductsorservicesthatonlythesecustomerswoulduse.
RAZZAQUE:UNSW L5-22
ChoosingaMarketCoverageStrategy
Factors
Decisions
FactorsAffectingStrategy
Decisions
CompanyResources
CompetitorsStrategies
MarketVariability
ProductVariability
Stage inLife Cycle
Limitedresource?Goforconcentrated
Uniformproducts?Undifferentiated.Manyproducts?Differentiated.
Anewproductintroducedinthemarket?Goforundifferentiatedorconcentrated
Buyershavethesametaste?Goforundifferentiated
Competitorusessegmentation?Cannotuseundifferentiated.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-23
MarketPositioningoftheProductAfterdecidingwhichsegment(orsegments)ofthemarkettoenter,thefirmmustdecidewhichpositionitwantstooccupyinthosesegments.Positioningiscustomerperceptionsofaproductimageorbenefitsversuscompetitionsproducts.
Productposition isthewaytheproductisdefinedbyconsumersonimportantattributes.Drive ispositionedasanallpurposefamilywashingdetergent;Softlyasawashingdetergentfordelicatefabricssuchaswool.
Positioningisdifferentfromproductdifferentiation.Differentiatedvalueiscreatedbythevaluepropositionusedbymarketersforthesegmentedmarket. Valuepropositionreferstothefeaturesthatdifferentiateaproductfromcompetitorsofferings
RAZZAQUE:UNSW L5-24
ChoosingaDifferentiationandPositioningStrategyAthreestepprocess1. Identifyingasetofdifferentiatingcompetitiveadvantagesuponwhichtobuildaposition
2. Identifyingandchoosingtherightcompetitiveadvantages3. Selectinganoverallpositioningstrategy.Step1:IdentifyingasetofdifferentiatingcompetitiveadvantagesuponwhichtobuildapositionCanbedonethoughperceptualmappinganalysis.Perceptualmapisamultidimensionalmapwhichidentifiesfactorsthatdiscriminatebetweenbrands.
Itisausefultoolforplottingmovesovertimebycompetitorsaswellastheresultsofafirmsownbrandpositioningstrategy.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-25
PerceptualMappingBaseduponresearchusingexistingorprospectiveconsumers:managementdeterminesthosedimensionsmostimportanttoconsumersinevaluatingbrands;and
howconsumersseecompetitiveproductsintermsoftheirperformanceonthesedimensions.
Perceptualmapsarevaluablein: determiningconsumerperceptionsofexistingproducts; offeringinsightstonewproductopportunities; gapsintheperceptualspacemaysuggestpositionsfornewofferingsinthemarket.
RAZZAQUE:UNSW L5-26
Perceptual Mapping and Positioning Decisions
Conservative Sporty
Upscale, Classy
Practical, Affordable
Mercedes
CadillacLincoln
PorscheVolvo
Saab
FordDodge
ChevroletToyota
ChryslerBuick
Cost-Performance
Gap
Nissan
BMW
Honda
PlymouthHyundai
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-27
Brandpositionofdepartmentstores
High perceived quality and status
Extensive personalised service
Low perceived quality and status
Limited service Less personal
David Jones
Myer
Target
Kmart
RAZZAQUE:UNSW L5-28
Step2.IdentifyingandchoosingtherightcompetitiveadvantageI
Consumerschooseproductsandservicesthatoffergreatestvalue.Competitiveadvantagecanbeprovidedby:
ProductdifferentiationHighlystandardisedproducts(e.g.,chicken,steel,aspirin)vs.highlydifferentiatedproducts,(e.g.,motorcars,furniture,camera). Features,performance,style,design,consistency,durability,reliabilityandreparabilityareallareasofpossibledifferentiation.
Servicesdifferentiationdifferentiate theservicesthataccompanytheproduct.
e.g.,intermsofdelivery,installation,repairandcustomertrainingservices.
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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Step2.IdentifyingandchoosingtherightcompetitiveadvantageII
PersonneldifferentiationByhiringandtrainingbetterpeoplethantheircompetitors.Requiresacompanytoselectitscustomercontactpeoplecarefullyandtrainthemwell.
ImagedifferentiationWorktoestablishimagesthatdifferentiatethemfromcompetitors.Acompanyorbrandimageshouldconveyasingularanddistinctivemessagethatcommunicatestheproductsmajorbenefitsandpositioning.
Symbolscanprovidestrongcompanyorbrandrecognitionandimagedifferentiation.
Acompanycanalsocreateanimagethroughthetypesofeventitsponsors..
RAZZAQUE:UNSW L5-30
Step2.IdentifyingandchoosingtherightcompetitiveadvantageIII
Mustavoidthreemajorpositioningerrors: Underpositioning failingtopositionthecompanyatall.
Overpositioning givingbuyerstoonarrowapictureofthecompany.
Confused positioning leavingbuyerswithaconfusedimageofthecompany.
Criteriafor
DeterminingWhich
Differencesto
PromoteAAffordable Superior
Profitable
PPre-emptive
DDistinctive
Important
Commun-icable
Howmanydifferencestopromote?Whichdifferencestopromote?
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-31
WhichDifferencestoPromote?Adifferenceisworthestablishingtotheextentitsatisfiesthefollowingcriteria:Important thedifferencedeliversahighlyvaluedbenefit.Distinctive competitorsdonotofferthedifference.Superior thedifferenceissuperiortootherwaysinwhichthecustomersmayobtainthesamebenefit.
Communicable thedifferenceiscommunicableandvisibletobuyers.
Preemptive competitorscannoteasilycopythedifference.Affordable thebuyerscanaffordthedifference.Profitable thedifferencecanbeintroducethedifferenceprofitably.
RAZZAQUE:UNSW L5-32
Various Possible Positioning Strategies
AgainstaCompetitor
UsageOccasions
AwayfromCompetitors
ProductAttributes
ProductClass
BenefitsOffered
Users
B
A
EEDD
CCHHGG
FF
Source: Kotler Brown Adam ArmstrongMarketing 5th Ed Copyright 2001 Pearson Education Australia
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ExamplesofPositioningStrategies
Position on specific product attributes [Hyundai Excel>>low price] on the benefits offered [Colgate>>cavity prevention] according to usage occasions [Sustagen>>replaces body fluids] for certain classes of users [Mothercare>> baby products] against a competitor [Tandy and Compaq vis--vis IBM] away from competitors [7-up, the un-cola >>vs Coke and Pepsi] for different product classes [Margarines vs butter; margarines
vs cooking oil] using combination strategies [J&Js affinity Brand is a hair
conditioner for women over 40 >> product class and user]
RAZZAQUE:UNSW L5-34
SelectinganOverallPositioningStrategy
Moreformorepositioninginvolvesprovidingthemostupscaleproductorserviceandchargingahigherpriceforhighercosts.
Moreforthesamecompaniescanattackacompetitorsmoreformorepositioningbyintroducingabrandofferingofcomparablequalityatalowerprice.
Thesameforless apowerfulvaluepropositionofferinggooddeals.
Lessformuchlessmeetsthedemandforproductsthatofferlessandcostless.
Moreforless awinningvaluepropositionbutmaybeimpossibletomaintaininthelongrun.
Thefullpositionofabrandistermedthebrandsvalueproposition.
Companyandbrandpositioningshouldbesummedupinapositioningstatement.
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RAZZAQUE:UNSW L5-35
PossibleValuePropositions
Moreformore
Moreforthesame
Moreforless
Thesameforless
Lessformuchless
Ben
efits
More
The Same
Less
More
The Same LessPrice
Winning value propositions
Losing value propositions
RAZZAQUE:UNSW L5-36
DevelopingapositioningstatementProductCompanyandbrandpositioningshouldbesummedupinapositioningstatementoftheform:To(targetsegmentandneed)our(brand)is(concept)that(pointofdifference).
Example:Tobusy,mobileprofessionalswhoneedtobealwaysintheloop,Blackberry isawirelessconnectivitysolution thatallowsyoutostayconnectedtodata,peopleandresourceswhileonthego,easilyandreliablymoresothancompetingtechnologies.
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RAZZAQUE:UNSW L5-37
Step3:Designmarketingprogramtocommunicatebenefitsandpersuadecustomers.
Afterselectingaposition,thecompany musttakestrongstepstodeliverandcommunicatethe
desiredpositiontotargetcustomers. Themarketingmixeffortsmustsupportthepositioning
strategy. Designingthemarketingmixinvolvesworkingoutthe
tacticaldetailsofthepositioningstrategy.Theposition mustbemonitoredandadaptedovertimetomatchchanges
inconsumerneedsandcompetitorsstrategies. shouldevolvegraduallyasitadaptstotheeverchanging
marketingenvironment.
RAZZAQUE:UNSW L5-38
The positioning statement
addresses three key questions:
1. Whoisthetargetcustomer?
2.Whyshouldthecustomerbuy?
3.Whatareweselling?
Six Questions to Ask When Applying a Positioning Strategy
1. Whatisourpresentpositionintheprospectsmind?
2. Whatpositionwouldweliketoown?3. Whichcompaniesposegreatest
challengeagainstthisposition?4. Dowehaveenoughfinancialsupportto
gainandholdthisposition?5. Dowehavethecouragetostickwith
oneconsistentpositioningconcept?6. Doesourcreativeapproach(4Ps)match
ourchosenpositioningstrategy?
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MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning
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RAZZAQUE:UNSW L5-39
SomeConfusingTermstoNote
Customer perceptions of a product image or benefits versus competitions products.
Positioning
The features that make a product distinct from competitors offerings.
Differentiation
You have chosen a segment ..1. whose size can be determined.2. you know where your customers live, where
they shop, what media they are exposed to etc.
4. you have enough resource to get the product to the market.
3. you expect the segment to yield sufficient profit
MeasurabilityAccessability
Substantiality
Actionability
You are talking about
Company A sells an Deluxe range of matching products for kitchen.They are following a ____________ marketing strategy.
Company A also sells a basic range of different products for kitchen.They are following a ____________ marketing strategy.
Custom
Undifferentiated