Marketing

Segmentation, Targeting,
Divide and Rule Positioning & Marketing Mix
Dr. Paurav Shukla

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STP framework Why segmentation?

1. Better matching of customer needs
2. Enhanced profits
3. Enhanced opportunity for growth
4. Retain customers
5. Targeted communications (_)
6. Market segment share

Doyle, P. (2002), Marketing Management and Strategy, London: Prentice Hall.

Dibb, Sally (1998), Market Segmentation: Strategies for success, Marketing Intelligence and Planning; 16(7), 394–406.

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Basic market-preference patterns Market-segmentation procedure

(a) Homogeneous (b) Diffused (c) Clustered
Survey

Company
preferences preferences preferences
Motivations

Attitudes

Behavior

Analysis Repeat Purchase

Factor Product / Service

Cluster

Profiling
Satisfaction or
Dissatisfaction
Customer

Expectation

Shukla, Paurav (2001), "The Customer is Queen," in Organisational Challenges, Upinder Dhar, Ed. New Delhi: Excel Books.

Dr. Paurav Shukla 1

Marketing

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Bases for segmenting consumer markets Bases for segmenting business markets

Geographic

Demographics
Region, City or Metro

Operating Variables
Size, Density, Climate Demographic
Purchasing Approaches
Age, Gender, Family size
Situational Factors
and Life cycle, Race,
Occupation, or Income ...
(__)
Personal Characteristics

Psychographic
Lifestyle, Personality
Values
Behavioral
Occasions, Benefits,
Uses, Attitudes or
Loyalty

MacMillan, IC, and McGrath, RG (1997), Discovering New Points of Differentiation, Harvard Business
Freytag, P. V. and A. H. Clarke (2001), "Business to Business Market Segmentation," Industrial Marketing
Review, 75(4), July-August, 133-145.
Management, 30 (6), 473-86.

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Criteria for effective segmentation Dynamic targeting strategies

• Size, purchasing power,
Measurable profiles of segments can
be measured.

Substantial • Segments must be large or

profitable enough to serve.

• Segments can be
Accessible effectively reached and
served.

• Segments must respond

Differential differently to different
marketing mix elements &
actions.

• Must be able to attract and

Actionable serve the segments.

Doyle, P. (2002), Marketing Management and Strategy, London: Prentice Hall.

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Product differentiation Services differentiation

Fea- Perfor-
Conform- Ordering Customer
Installation
Miscellaneous

Form Quality ance Ease Consulting

tures mance
Quality
Services

Customer Maintenance
Dura- Relia- Repair- Delivery
bility bility ability
Style Design Training & Repair

Dr. Paurav Shukla 2

Marketing

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Image Differentiation The drivers of future

Personnel drivers
Media Atmosphere
Competence, Courtesy, Credibility, Reliability, Responsiveness,
Initiative, Communication

Channel drivers
Symbols
Coverage, Expertise, Performance

Events

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Ries and Trout on positioning Positioning map: Airlines

First High Price

Product/Market Competitive Advantage class
Position Business
Class
High Low
Level Level
Positioning Service
Gap Virgin
P Economy Service
Economy
Number 1 Current Latent
Reposition
position position “No frills”

Low Price
Ries, Al; Trout, Jack (1980) Positioning: The Battle for Your Mind, McGraw Hill.
Adopted from Perks, K (2001), Segmentation, Targeting, Positioning

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Sales & Profit Life Cycles Four introductory marketing strategies

Promotion
Sales & profits ($)

High Low

Rapid- Slow-
High skimming skimming
strategy strategy

Introduction Growth Maturity Decline

Price
Rapid- Slow-
Time Low penetration penetration
strategy strategy

Dr. Paurav Shukla 3

Marketing

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Maturity stage Decline stage

Market Modification
Increase investment

Product Modification
Resolve uncertainties - stable investment

Marketing-Mix Modification
Selective niches

Harvesting

Divesting

Moschis, G. P., E. Lee, and A. Mathur (1997), "Targeting the mature market: opportunities and challenges,"
Journal of Consumer Marketing, 14 (4), 282-93.

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Dibb & Simkin Model of Segmentation Implementation

A: Core analyses (Now)

The existing situation

General trends/marketing environment

Strengths, weaknesses, opportunities, threats

Customer needs/expectations/buyer behaviour

Competitive positions/strategies

Brand or product positioning

Balance of portfolio

B: Strategic thinking (The future)

Identification of new segmentation criteria/segmentation bases

Determination of new/revised market segments

Selection of new/revised target segments

Determination of brand positioning strategies

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Dibb & Simkin Model of Segmentation Implementation MOSAIC group H: Stylish singles

C: Implementation programs (How)
Nearly 1.3 million households, representing 5.4% of all UK

Marketing programs households
• Product range and portfolio
2.8 million people in this group
• Pricing and payment issues
Students and young professionals
• Promotional strategies and tactics
• Distribution and control

First time openers of savings accounts and mortgage
accounts
• Service levels and personnel
• Salesforce
Like weekend breaks to European capital cities
• Internal communications and organization
Prefer The Guardian, The Independent, and The Observer

Resources and scheduling
Television viewing is light: current affairs and late films
• Budgets preferred
• People and responsibilities
Shop for the food at convenience stored late in the day
• Activities

Ongoing requirements

Convenience more important than price
• Product/brand development
Prefer the city to the outer suburbs
• Marketing research
Enjoy living in diverse, cosmopolitan, multicultural
• Training environment
• Communications
Big spenders on mobile phones, CDs, sports eqp. And PCs
• Monitoring performance

Source: adopted from http://www.uk.experian.com

Dr. Paurav Shukla 4