Chapt 6 - Marketing Segmentation and Positioning

bThree Major steps in target marketingThree Major steps in target marketingCompanies must be customerCompanies must be customer--oriented so that they can oriented so that they can

deliver greater value to them and keep them satisfied deliver greater value to them and keep them satisfied and loyal. The company embarks on a process of:and loyal. The company embarks on a process of:

1. Market Segmentation

1. Market segmentation 2. Market targeting 3. Market positioning

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bDefinition:

Process of defining and Process of defining and subsub--dividing a large homogenous dividing a large homogenous market into clearly market into clearly identifiable identifiable segments segments having having similar similar


needsneeds, wants, , wants, or or demand demand characteristicscharacteristics..

Objective is :to design a marketing mix that precisely matches the expectations of customers in the targeted segment. Few firms are big enough to supply the needs of an entire market, most must breakdown the total demand into segments and choose the one or few the firm is best equipped to handle. http://www.businessdictionary.com/definition/market-segmentation.html

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b1.1 Assessment or effectiveness of market segmentation1.1 Assessment or effectiveness of market segmentationRequirements for effective segmentationRequirements for effective segmentation

There are many ways to segment a market. To be useful, market segments must be: (a) accessible


degree to which a market segment can be reached and served.

(b) actionable degree to which effective programmes can be designed for attracting and

serving the given market segment.

(c) measurable degree to which size, purchasing power and profits of a market segment can

be measured.

(d) substantial degree to which a market segment is sufficiently large or profitable.

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b1.2 Non1.2 Non--profit Benefits of segmentation: profit Benefits of segmentation: Read course book page 159 for nonRead course book page 159 for non--

profit benefits of segmentationprofit benefits of segmentation..


profit benefits of segmentationprofit benefits of segmentation..

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b1.3 Key aspects of segmentation1.3 Key aspects of segmentationIs Segmentation as much a benefit to the Is Segmentation as much a benefit to the

customer as it is to the marketer?customer as it is to the marketer?Benefits :

Increases benefits to consumers by providing products, product


Increases benefits to consumers by providing products, product features or attributes more closely matching their identified needs.

Enabling a firm to identify those groups of customers who are most likely to buy. This ensures that resources will not be wasted and marketing and sales activity can be highly focused. The result should be lower costs, greater sales and higher profitability.

Providing greater customer choice by generating a variety of products within a particular class from which consumers can choose

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b1.4 Evaluating segment attractiveness1.4 Evaluating segment attractivenessDoes it worth your effort to design and develop Does it worth your effort to design and develop a unique marketing mix for a specific segment a unique marketing mix for a specific segment

that is not attractive?that is not attractive?


Criteria of segment for developing marketing plans: Can the segment be measured? Is the segment big enough? Can the segment be reached Do segments respond differently? Can the segment be reached profitably? Is the segment suitably stable?

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b1.4 Evaluating segment 1.4 Evaluating segment attractiveness (Contd)attractiveness (Contd)Segments which are most attractive will be those whose needs Segments which are most attractive will be those whose needs

can be met by building the companys strengths and have can be met by building the companys strengths and have favorable profitability and growth.favorable profitability and growth.


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1.5 Target markets1.5 Target marketsA target market is a market or segment selected for special A target market is a market or segment selected for special

attention by an organization (possibly served with a attention by an organization (possibly served with a distinct marketing mix)distinct marketing mix)

It can adopt one of the following market coverage strategiesmarket coverage strategies:


It can adopt one of the following market coverage strategiesmarket coverage strategies: 2.1 Undifferentiated (Mass) Marketing

Produce a single product and hope to get as many customers as possible to buy it.

2.2 Concentrated (Niche) Marketing Produce the ideal product for a single segment e.g. royce cars, mother care and baby

shops)

2.3 Differentiated Marketing The company attempts to introduce several products versions, each aim at different

market segments 9

bChoosing a Target-Marketing Strategy Requires Consideration of:

company resources

2. Segmenting Consumer Markets

company resources the degree of product variability products life-cycle stage market variability competitors marketing strategies

.

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2.1 Segmentation by location (Geographic)2.1 Segmentation by location (Geographic) marketing strategy is formulated around the different needs of various cultures, countries or

regions.

significantly influenced by a range of factors including climate, religion, culture and even geography.

2.2 Segmentation by demography (Demographic)2.2 Segmentation by demography (Demographic)


2.2 Segmentation by demography (Demographic)2.2 Segmentation by demography (Demographic) the common base of segmentation is by

demography such as age, sex, income, educational qualification and occupation, etc.

the total size of each segment will suggest possible levels of demand for corresponding products (rattles and prams, bicycles and motor cycles, retirement cottages and sea cruises).

another much used characteristic is the type of residence

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2.3 Segmentation by benefits2.3 Segmentation by benefits For example, if the product is a fast sports car, the target

audience in the segment of the population would be people who wants the benefits of a fast sports car.


There are different audiences for different perceived benefits. As an example: Toothpaste offers three distinct benefits, each of which will appeal to a different audience segment. One benefit relates to a tooth decay deterrent; the second, to a tooth whitener; and the third, to a mouth freshener. By segmenting the audience according to these benefits through the copywriting, the advertiser can position the product in three different markets to achieve maximum advertising effectiveness.

http://www.answers.com/topic/benefit-segmentation

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2.4 Product usage segmentation2.4 Product usage segmentationWhich segment is a valuable target for marketer?Which segment is a valuable target for marketer?

By reference to how much customers use


This is converted to a broader classification which uses the labels Heavy User, Medium User, Light User.

Clearly the Heavy User Segment is a valuable and important target for marketers.

However, there may be an attractive volume in the light user segment if the reason for light use can be clearly identified and the

marketing mix can be manipulated in order to overcome the problem.

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2.5 Multivariable segmentation2.5 Multivariable segmentationOne basis will not be appropriate in every One basis will not be appropriate in every

market, and sometimes two or more bases market, and sometimes two or more bases


market, and sometimes two or more bases market, and sometimes two or more bases might be valid at the same time. One might be valid at the same time. One

segmentation variable might be superior to segmentation variable might be superior to another in a hierarchy of variables. There are another in a hierarchy of variables. There are

thus thus primaryprimary and and secondarysecondary segmentation segmentation variables.variables.

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3.1 Roles3.1 RolesA role is the sum of system of A role is the sum of system of expectation expectation

which other people have of an individual which other people have of an individual in a in a

3. Social Status and Social Class

which other people have of an individual which other people have of an individual in a in a particular situation or relationship.particular situation or relationship.

-- For example, an individual may consider himself to be a father and For example, an individual may consider himself to be a father and husband, a good neighbor, a professional and a marketer.husband, a good neighbor, a professional and a marketer.

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3.2 Status3.2 StatusTo what extent a product appeals To what extent a product appeals differently to status differently to status


conscious conscious individualsindividuals??

-- LowLow--status status individuals in a statusindividuals in a status--conscious conscious society society may aspire to achieve higher statusmay aspire to achieve higher status

-- HighHigh--status individuals may wish to be congratulated or to status individuals may wish to be congratulated or to emphasize the exclusivity and power of their position in society: emphasize the exclusivity and power of their position in society: premium quality (and price) products frequently appeal to this sensepremium quality (and price) products frequently appeal to this sense

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3.3 Status class: stratification of UK society3.3 Status class: stratification of UK societyClass strata or division commonly derived from specific demographic Class strata or division commonly derived from specific demographic factors: factors:

Wealth / income Wealth / income economic economic


Wealth / income Wealth / income economic economic resourcesresources

Educational attainmentEducational attainment Occupational statusOccupational status

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3.4 Social grade definitions3.4 Social grade definitions3.5 Social mobility3.5 Social mobility


Read Read course book page 171course book page 171-- 172172

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Definition:

The concept of family life The concept of family life cycle cycle is based on the idea is based on the idea that the structure membership and lifestyle of a family that the structure membership and lifestyle of a family

change over time, with the age of the individual change over time, with the age of the individual

4. Family Life Cycle

change over time, with the age of the individual change over time, with the age of the individual membersmembers. .

The family progresses through a number of common The family progresses through a number of common stages of development. Researchers note that the stages of development. Researchers note that the

familys economic character familys economic character income, expenditure income, expenditure and consumption priorities will also change.and consumption priorities will also change.

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Definition:

Psychographics Psychographics is a form of consumer is a form of consumer research which builds up a research which builds up a

5. Psychographics and Culture

psychological profile of consumerspsychological profile of consumers in in general, or users (potential users) of a general, or users (potential users) of a

particular product. It is the main basis of particular product. It is the main basis of psychological segmentation of a market, psychological segmentation of a market,

and appropriate product positioning.and appropriate product positioning.20

Psychographics is also commonly referred to as: Lifestyle analysis AIO analysis Activities (how customers spend their

time); Interests (or preferences) and Opinions (where they sand on product related issues)


they sand on product related issues)

5.1 Psychographic segmentation5.1 Psychographic segmentationPsychographics or lifestyle segmentation is a method which seeks to

classify people according to their values, opinions, personality characteristics, interests and so on, and by its nature should be dynamic. For example, customers disposition towards savings, investment and general attitude towards money, leisure and other key influences.

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5.1 Psychographic 5.1 Psychographic segmentation (contd)segmentation (contd)Definition:Definition:

Lifestyle refers to distinctive ways of living Lifestyle refers to distinctive ways of living adopted by particular communities or subadopted by particular communities or sub--


adopted by particular communities or subadopted by particular communities or sub--sections of society. sections of society. Lifestyle is a Lifestyle is a

manifestation (expression) of a number of manifestation (expression) of a number of behavioral factors, such s motivation, behavioral factors, such s motivation,

personality and culturepersonality and culture, and depends on , and depends on accurate descriptionaccurate description

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5.1 Psychographic 5.1 Psychographic segmentation (contd)segmentation (contd)Four categories of lifestyles:Four categories of lifestyles:(a) (a) Upwardly mobile, ambitious Upwardly mobile, ambitious (People seeking more affluent (People seeking more affluent

lifestyle. Persons with such lifestyle will be prepared to try new lifestyle. Persons with such lifestyle will be prepared to try new products)products)


products)products)(b) (b) Traditional and sociable Traditional and sociable (People seeking social approval and (People seeking social approval and

reassurance. Purchasing patterns will therefore be conformist)reassurance. Purchasing patterns will therefore be conformist)(c) (c) Security and status seeking Security and status seeking (This lifestyle links status, income (This lifestyle links status, income

and security. Products that are well established and familiar inspire and security. Products that are well established and familiar inspire more confidence than new products, which will be resisted)more confidence than new products, which will be resisted)

(d) (d) Hedonistic preference Hedonistic preference ( Immediate satisfaction of wants and ( Immediate satisfaction of wants and needs. Little consideration is given to the future)needs. Little consideration is given to the future)

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5.1 Psychographic 5.1 Psychographic segmentation (contd)segmentation (contd)Four categories of lifestyles:Four categories of lifestyles:(a) (a) Upwardly mobile, ambitious Upwardly mobile, ambitious (People seeking more affluent (People seeking more affluent

lifestyle. Persons with such lifestyle will be prepared to try new lifestyle. Persons with such lifestyle will be prepared to try new products)products)


products)products)(b) (b) Traditional and sociable Traditional and sociable (People seeking social approval and (People seeking social approval and

reassurance. Purchasing patterns will therefore be conformist)reassurance. Purchasing patterns will therefore be conformist)(c) (c) Security and status seeking Security and status seeking (This lifestyle links status, income (This lifestyle links status, income

and security. Products that are well established and familiar inspire and security. Products that are well established and familiar inspire more confidence than new products, which will be resisted)more confidence than new products, which will be resisted)

(d) (d) Hedonistic preference Hedonistic preference ( Immediate satisfaction of wants and ( Immediate satisfaction of wants and needs. Little consideration is given to the future)needs. Little consideration is given to the future)

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5.2 Culture5.2 CultureCulture (shared values, beliefs an Culture (shared values, beliefs an artefactsartefacts

of a society) is deeply embedded in of a society) is deeply embedded in everyday behavior, but is susceptible to everyday behavior, but is susceptible to


everyday behavior, but is susceptible to everyday behavior, but is susceptible to measurement to some extent.measurement to some extent.

((a) Attitude measure techniques(b) Projective techniques(c) Content analysis(d) Observation(e) Surveys

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Although industrial markets are usually Although industrial markets are usually smaller than consumer markets, smaller than consumer markets,

segmentation can still be worthwhile. How segmentation can still be worthwhile. How could segmentation be done for industrial could segmentation be done for industrial

6. SEGMENTING INDUSTRIAL MARKETS

could segmentation be done for industrial could segmentation be done for industrial markets?markets?

((a) By location(b) Customer size(c) Usage rate(d) Industry classification (standard industry classification)(e) Product use

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Definition: Definition:

PositioningPositioning is the act of designing is the act of designing the the companys offer and image companys offer and image so so

7. POSITIONING PRODUCTS AND BRANDS

that it offers a distinct and valued that it offers a distinct and valued place place in the target customers in the target customers

mindmind..

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bChoosing a Positioning Strategy

Which Which differences to promotedifferences to promote??Factors of competitive advantages:


Identifying possible competitive advantages Products, services, channels, people or image can

be sources of differentiation.

Choosing the right competitive advantage How many differences to promote?

Unique selling proposition Positioning errors to avoid

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bCriteria for Meaningful Differences

ImportantSuperior

DistinctiveCommunicable


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Superior Preemptive

Communicable Affordable

ProfitableProfitable


Selecting an overall positioning strategyExample of price as value proposition:


Example of price as value proposition:

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Pay more for More Value Proposition Pay more for the Same Value Proposition Pay same price as competitors for Less Value

Proposition Pay less for Much Less Value Proposition Pay More for Less Value Proposition


Developing a positioning statement


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Positioning statements summarize the company or brand

positioning Communicating the chosen position

bPositioning and Repositioning

Position MappingGraphic illustration that shows differences in


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Graphic illustration that shows differences in consumers perceptions of competing products

RepositionReposition Marketing strategy to change the position of its product

in consumers minds relative to the positions of competing products

bPerpetual MappingBrands can be positioned in relation to Brands can be positioned in relation to

competitive brands on product maps competitive brands on product maps in which in which relative positions are defined in terms of how relative positions are defined in terms of how


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buyers perceive key characteristics.buyers perceive key characteristics.Price and quality are clearly important elements in every marketing

mix, but in the customers opinion, they cannot be considered independent variables. A high price will almost always be associated with high quality and equally, low price with low quality. Thus, while everybody would like to buy a bargain brand, there is a problem to overcome. Will customers accept that a high quality product can be offered at a low price?

b Perpetual Mapping

A basic perceptual map plots brands in perceived price and perceived A basic perceptual map plots brands in perceived price and perceived quality terms.quality terms.

Cowboy brands Cowboy brands Premium BrandsPremium Brands

High PriceHigh Price

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Cowboy brands Cowboy brands Premium BrandsPremium Brands

Bargain BrandsBargain BrandsEconomy BrandsEconomy Brands

Low QualityLow Quality High Quality High Quality

Low PriceLow PriceFigure 6.13 Figure 6.13 -- Product positioning map: Breakfast market Product positioning map: Breakfast market

b Perpetual Mapping

As As KotlerKotler demonstrate, perceptual maps can also indicate how customers demonstrate, perceptual maps can also indicate how customers perceive competitive brands performing on key product user benefitsperceive competitive brands performing on key product user benefits

Bacon and Eggs.Bacon and Eggs. Cold cerealCold cereal

ExpensiveExpensive

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Bacon and Eggs.Bacon and Eggs. Cold cerealCold cereal

Instant breakfastInstant breakfastPancakesPancakes

Hot cerealHot cereal

SlowSlow QuickQuick

InexpensiveInexpensiveFigure 6.13 Figure 6.13 -- Product positioning map: Breakfast market Product positioning map: Breakfast market

Perceptual Map of various automobiles on the two dimensions

sportiness/conservative and classy/affordable:

Perpetual Mapping contd

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What do the companies offer and what What do the companies offer and what What do the companies offer and what What do the companies offer and what What do the companies offer and what What do the companies offer and what What do the companies offer and what What do the companies offer and what

kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from kind of image you do you perceive from

these brands?these brands?these brands?these brands?these brands?these brands?these brands?these brands?

Perpetual Mapping contd

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Chapt 6 - Marketing Segmentation and Positioning

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Transcript of Chapt 6 - Marketing Segmentation and Positioning