segmentation

Marketing: Asian Edition © Oxford University Press 2013. All rights reserved

The New Generation Marketing Text!

Definitions of Research in Marketing IThe International Chamber of Commerce (ICC)/European Society for Opinion and Market Research (ESOMAR) multipart definition of marketing research stresses that:

‘Marketing research is a key element within the total field of marketing information. It links the consumer, customer and the public to the marketer through information which is used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; improve understanding of marketing as a process and of the ways in which specific marketing activities can be made more effective. Marketing research specifies the information required to address these issues; designs the method for collecting information; manages and implements the data-collection process; analyses the results; and communicates the findings and their implications’ (ESOMAR, 1995).



Learning OutcomesDescribe the principles of market segmentation and the STP

process. Explain the characteristics of and differences between market

segmentation and product differentiation.Explain how market segmentation can be undertaken in both

consumer and business-to-business markets.Describe different targeting strategies.Explain the concept of positioning.Illustrate how the use of perceptual maps can assist the

positioning process.



Case Insight – Adani Wilmar Limited Adani Wilmar Limited (AWL) is one

of the largest edible oil turned integrated agri-based company.

AWL tasted success with its flagship brand Fortune.

After a successful stint with sunflower oil and regional oil variants, the company launched ‘Fortune Plus’, which is targeted at fitness freaks.

By getting into the premium category after the launch of Fortune Plus, does the company risk losing touch with its traditional customer base?



STP Process• Method by which whole markets are subdivided into

different segments • Three activities that should be undertaken, usually

sequentially, if segmentation is to be successful: • Segmentation• Targeting • Positioning



STP Process



Benefits of STP ProcessEnhancing a company’s competitive position by providing direction & focus for marketing strategies.

Examining and identifying market growth opportunities through identification of new customers, growth segments or new product uses.

More effective and efficient matching of company resources to targeted market segments promising the greatest ROMI.



Market Segmentation•Market segmentation is the division of a market into different groups of customers with distinctly similar needs and product/service requirements.

•Purpose of market segmentation:Leverage scarce resources. To ensure that the elements of the marketing mix are

designed to meet particular needs of different customer groups.

Allows organisations to focus on specific customers needs in the most efficient and effective way.



Marketing Segmentation

Market Segmentation and Product Differentiation



Process of Market SegmentationThere are two main approaches to segmenting markets:

Breakdown Method: Adopts the view that the market is considered to consist of customers which are essentially the same, so the task is to identify groups which share particular differences.

Build-Up Method: Considers a market to consist of customers that are all different, so here the task is to find similarities.



Process of Market SegmentationThe aim is to identify segments where:

• identifiable differences exist between segments (segment heterogeneity).

• similarities exist between members within each segment (members homogeneity).



Segmenting Consumer MarketsSegmentation Bases/Criteria

• Profile Criteria - Who my market are and where are they?

• Behavioural Criteria - Where, when, and how does my market behave?

• Psychological Criteria - Why does my market behave that way?



A Priori and Post Hoc Segmentation Approaches



Segmenting Consumer Markets



Segmenting Consumer Markets

Source: Integrated Marketing Communications in Advertising and Promotion (AISE, 7th edn. by Shimp (2007). Reprinted with permission of South-Western, a division of Thomson Learning



Kantar Media-TGI Lifestage Segmentation Groups

Source: Reproduced with kind permission of Kantar Media



Example: Hybrid Segmentation Model



Segmenting Business Markets



Organizational Characteristics



Buyer Characteristics

•Decision Making UnitPolicy factorsPurchasing strategiesAttitudes towards vendors and toward risk

•Choice CriteriaWhat specifications of product/service they choose

•Purchase SituationStructure of the purchasing proceduresType of buying situation Stage in the purchase decision process



Targeting

To determine which, if any, of the segments uncovered should be targeted

Evaluation of Market Segments – DAMPDistinct – is each segment clearly different from other

segments?Accessible – can buyers be reached through appropriate

promotional programmes and distribution channels?Measurable – is the segment easy to identify and

measure?Profitable – is the segment sufficiently large to provide a

stream of constant future revenues and profits?



Segment Attractiveness Factors

•Rating approach for different segment attractiveness factors:Market growthSegment profitabilitySegment sizeCompetitive intensity within the segment Cyclical nature of the industry

•Each of these attractiveness factors is rated on a scale of 0-10 and loosely categorized as high, medium or low in attractiveness.



Segment Attractiveness Factors

Source: McDonald and Dunbar (2004). Reproduced with kind permission.



Segment Attractiveness Evaluation Matrix

Source: McDonald and Dunbar (2004). Reproduced with kind permission.



Targeting Approaches



Positioning•The act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customers’ minds.

•Two fundamental elements: Physical attributes – the functionality and capability

that a brand offers.Communication – the way in which a brand is

communicated and how consumers perceive the brand relative to other competing brands in the market place.



Example of a Perceptual Map



Positioning Strategies



Repositioning Strategies

The following four ways outline how to approach repositioning a product, depending on the individual situation facing a brand. In some cases, a brand

might need to be adapted before relaunch.

1. Change the tangible attributes and then communicate the new proposition to the same market.

2. Change the way a product is communicated to the original market.

3. Change the target market and deliver the same product.

4. Change both the product (attributes) and the target market.



Seminar Exercise: Market Segmentation

Using the information in the Table 6.8 on the Champagne market, and a suitable calculator, determine what are the most potentially profitable segments in the marketplace.

What other data do we need to determine the size of the market (market potential)?

In a group with other colleagues from your seminar/tutor group, discuss answers to the following questions:



SummaryDescribed the principles of market segmentation and the STP process.

Explained the characteristics and differences between market segmentation and product differentiation.

Explained how market segmentation can be undertaken in both consumer and business-to-business markets.

Described different targeting strategies.Explained the concept of positioning. Illustrated how the use of perceptual maps can assist the positioning process.

segmentation

Documents

Transcript of segmentation