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West, Ford & Ibrahim: StrategicMarketin 2e

Chapter 5: Segmentation,targeting, and positioning

strategies

Structure

C. WHERE DO WE WANT TO BE?

4. Strategic Marketing Decisions,Choices & Mistakes

5. Segmentation, Targeting& PositioningStrategies6. Branding Strategies

7. Relational & Sustainability

Strategies

Examine the ways in which companiescan segment markets

Discuss ways in which marketers canmeasure the effectiveness of identified

Learning Objectives

target markets

Identify the various ways in whichmarketers can reach their targetsegments

Provide an explanation of theimportance of positioning the productPresent several important tools forperceptual mapping

Introduction

Market segmentation vital for company success

Dividing market into reasonable segments is starting point

Develop series of strategic goals + strategies to reach the identified targetsegments

Why segment?

unlikely for any company to appeal to entire market

Identify segments of consumers

Tailor offerings to wants & needs of target market

identification of consumer subgroups with similar wants + buyingrequirements in group, and different between groups

Helps configure marketing strategy

Behaviouristic

GeographyDemographic

Psychographic

Criteria for identifying segmentsDemographic Using a series of demographic variables

Gender Age Cohorts of society

Moments and events in lateadolescence / early adulthood (17-23yrs)

This may not work globally Level of Education Level of Income

Geography

whereissue

Local segmentation oftenused by small firms

Keeps the market confined toa manageable area

Global segmentation : Thecompany sees the entire

Occupation Rel ig ion Ethnicity (see Table 5.1) Family size Family life cycle stage

Life conditions that have a potentialimpact of product/service purchasedecisions

Social class/status

playing field

Potential for culturalinappropriateness

Need to consider topography

Costs of overcomingphysical obstacles

VALS Typology multi-based segmentation approach

incorporating psychological +demographics (SRI International)

For the US market - eight separategroups for segmentation

Actualizers (10 % of population) Fulfilleds (11%)

Psychographic Bases Perceptual issues Combining individuals who are

psychologically similar in theirorientation

Excellent potential for effectivetargeting segments, understandinghow the segments live their dailylives

Lifestyle (e.g. VALS) The ways in which individuals

choose to live their lives Personali ty

Similar ersonalit t es Experiencers(13%) Achievers (14%) Believers (17%) Strivers (12%) Makers (12%) Strugglers (12%)

Kotler (2003) lists four main

variations of personality:compulsive, gregarious,authoritarian and ambitious

Core Values Match its core values with

those of the segments, buildingpositive associations

Psychographics are not goodpredictors of consumerspurchases

Criteria for identifying segments

Behaviouristic Grouping consumers having similar uses for, and responses to particular products

or services Usage rate Loyalty level

Brand insistence, brand loyalty, split loyalty, shifting loyalty, no loyalty Creation of special events

Benefits segmentation In terms of key benefits that consumers seek from the use of some

Switchers Fence-sitters Loyal

Customer

Non-customer

Low

Loyalty

Moderate

Loyalty

Loyal

Medium

Low

to

Medium

High

Highest

Zero

High

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Segmentation Tools

Cluster Analysis

It is a multivariatetechnique

CustomerGroup

Consumer Industrial Military

Gas

Technology Diesel

Electric

Identify

Motivations Group and

Structure

MotivationsAssess

Motivation

Importance

Assign Strategic

Roles to Motivations

-are minimized and thebetween-groupdifferences are maximized

Conjoint Analysis

Uses a series of possibleproduct/service attributecombinations

CustomerFunction

Deliver Recreation Emergency

Large

CustomerSize

Medium

Small

Segmentation Tools

DiscriminantAnalysis

Identify a series ofvariables that helpto discriminate themembers of one or

more groups

MultidimensionalScaling

Visuallydemonstrate howparticularconsumers view thevarious offerings

Targeting Which segment to serve?

What goes into plan to bestserve chosen segment?

Single segment concentration

Selective specialization

Product specialization

Kotler (2003) segmentsmust be Measurable

Accessible

Substantial

Differentiable

Actionable

Market specialization

Full market coverage

Derek F Abell (1980)

Positioning

Like ladder get to top rung top of mind recall

In consumers mind perception, brand image, name

enjoy consumer franchise (1.behavioral, 2. attitudinal)

Translates to $$

4Cs of positioning

Clarity: in terms of target market and differentialadvantage

Consistency: maintain a consistent message

Credibility: in the minds of the target customer--they must believe the claim

Competitiveness: the differential advantageshouldofferthe customer something of valuecompetitors cannot provide (competitors shouldbe named if possible)

[That]DHLdelivers ontime

[Because] itspickup,transportationanddelivery

systemiswhollyownedandmanagedbyDHL

personnel,notbythirdpartyproviders.

DU

To work in

partnership with students, staff, industry,employers and governments to ensure

that Deakins academic programs are ofhigh quality, relevant, informed bycontemporary research and create a uniqueDeakin student experience and to berecognised as a national leader in flexible

education.

Perceptual Map of Brand Images

Classy distinctive proud

Spiritedperformanceyoung people

Lincoln

Cadillac

Mercedes

Oldsmobile

Chrysler

Buick

BMW

Pontiac

LexusPorsche

older people

fun sporty

Practical fuelefficient affordable

Honda

Chevrolet Nissan

Toyota

HyundaiVW

Ford

Dodge

Visually represents differentcompetitive brand offerings/objects inperceptual space & minds of thetarget consumers

Perception equals reality

Strategic Position Options pick 1 for LN

The quality player with a defined

product space

The value option

The innovator

A narrow product focus

Product category

Product attributes and functional

benefits

Breadth of product line Organizational intangibles

A target market focus

Being global

Emotional self-expressive benefits

Experience

Being contemporary

Brand personality

Competitor position Resonate with the target market Differentiate from competitors Reflect the culture, strategy, andcapabilities of the business