M04: Marketing Management

Workshop 4:
Segmentation, Targeting and Positioning
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Segmentation

Defn-The identification of groups of individuals or organizations with similar characteristics that have significant implications for the determination of marketing strategy. (Jobber, 2004:210)

The identification of each segment is an opportunity: A company with limited resources needs only pick the best opportunities
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The process of market segmentation and target marketing

The disaggregated market The segmented market The target market

c1 c4
c7 c2

c3 c6

c5

c8

c1 c3 c5 c2 c4 c7 c6 c8
Customers are grouped into segments on the basis of having similar characteristics

c1 c5 c2 c7 c6

Marketing mix targeted at segment 3

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The characteristics of individual customers are understood

Segment 3 is judged to be most attractive and a marketing mix strategy is designed for that target market
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Why segment?

You cant please all of the people all of the time Marketers have to please some of the people all of the time These chosen few are the target market Makes customers easier to identify, communicate and satisfy their needs More effective allocation of resources A single product is unlikely to satisfy the whole market
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Tesco

Tesco caters for two market segments: consumers looking for value and those who are more quality conscious.

Methods of Segmentation
Geographic Demographic Geodemographic Psychoanalytic Usage Loyalty Lifestage Benefits

sought

Geographic
Defines customers according to location Country Region Urban/ Rural The needs of potential customers in one area might be different from those in another area Examples of companies that segment geographically?

Demographic
The most basic and the most often used Based on information of the customers household including age, sex, race, income, occupation, socio-economic status, family structure Easily available data

Geodemographic
Combines the previous two There is a relationship between the area that people live in and their purchase behaviour Where we live may determine how we live Post code based

Geodemographic

United States: http://www.census.gov/ United Kingdom: http://www.statistics.gov.uk/ http:/neighbourhood.statistics.gov.uk/dissemination/LeadK eyFigures.do?a=3&b=276829&c=nottingham&d=13&e=16 &g=395722&i=1001x1003x1004&m=0&enc=1 Australia: http://www.abs.gov.au/ http://www.ourbrisbane.com/living/suburbs/sunnybank/reiq New Zealand: http://www.stats.govt.nz/ Canada: http://www.statcan.ca/ India: http://www.censusindia.net/
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Psychographic
Divides a market on the basis of personality or lifestyle These patterns are reflected in the purchase behaviour By clustering common lifestyles a correlation with a consumers product and/or media usage pattern emerges

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Psychographic
VALS uses psychology to segment people according to their distinct personality traits. The 8 personality traits are the motivationthe cause. Buying behaviour becomes the effectthe observable, external behaviour prompted by an internal driver.

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Examples VALS Projects

A major automotive component manufacturer used VALS to identify consumers who were most likely to be enthusiastic about vehicle-safety innovations and obtain their reactions to a variety of safety innovations for the car. VALS allowed the manufacturer to identify the most likely entrystage target for different safety innovations. In addition, VALS enabled a unique comparison between psychologically similar consumers in the United States and the United Kingdom.
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Behavioural - Usage

Paretos rule says that 80% of products are bought by 20% of customers- 80/20 rule Development of customer profiles for these 20% is important Main clusters are: heavy, medium, light and non-users End use may also vary for some products

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Behavioural - Loyalty

Four groups
Hard

core loyals (fanatical) Soft core loyals (fan) Shifting loyals (follower) Switchers (fickle)

Analyse the behaviour of these groups to understand what makes each of them tick Growth of loyalty cards
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Behavioural - Lifestage

People have varying amounts of disposable income and time at various stages of their lives Priorities for spending change at various trigger points Important for message and media planning
Generation X Generation Y Yuppies Dinkys Babyboomers

Young single First time housebuyers Families with children Empty nesters Pensioners

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Behavioural Benefits Sought

Example: fruit drinks

Extra energy Vitamins Natural Low cal Low cost Healthy

Lucozade Ribena OJ Diet coke Own brand Water

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Segmentation SummaryBenefits

More precise market definition Better understanding of customer needs Chance to tailor marketing mix More efficient use of resources Increased customer satisfaction

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Segment Evaluation
Kotler gives 5 criteria: All segments should be identifiable All segments should be substantial All segments should be accessible All segments should be unique All segments should be durable

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Targeting
Definition: The choice of specific segments to serve a key element in Marketing Strategy.
(Jobber, 2005:228)

Target marketing is the process of: Selecting certain segments Writing specific marketing plans Satisfying the needs of the potential buyers in each target group
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Example Paint
Specialist Retail

Industrial

Trade

Heavy Users

Light Users

Medium Users

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Targeting

Segment suitability One segment or a range? What are the resources available? Develop a marketing mix to meet the needs of the segment within the resources available Segmentation will take place early in the marketing strategy process Accessibility is the key

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Bang & Olufsen

Bang & Olufsen targets upmarket consumers.

Types of Target Marketing

Segment 1
Product Price Segment 2 Place Promotion Segment 3

Company

Undifferentiated marketing
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Types of Target Marketing

P P P P

P
P P P P

Segmen t1

Company

P P P

Segmen t2

Segmen t3

Differentiated marketing
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Types of Target Marketing

Segment 1
Product Price Segment 2 Place Promotion Segment 3

Company

Concentrated marketing
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Positioning
All products, services and organisations have a position Position has to be managed or it can drift- M & S, Jaguar Branding is important Positioning should communicate the brands place in the market or it can confuse the customers

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Positioning Strategies

The development of a position that buyers can relate to is an important part of the Marcomms plan The position adopted is a statement about the brands personality The visual images and the tagline will be a significant trigger to recall the brand

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Positioning Strategies

Product features
easiest

concept to adopt. The brand is set apart by its attributes managed. High price = high quality
how or when a product can be used creates a position
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Price/quality
easily

Usage
showing

Positioning Strategies

Product class dissociation some markets are dull. This positioning tries to divorce the products position from the market User position the product so that the target market can be clearly identified Competitor positioning the product vis--vis the competitor Benefit proclaiming the benefit that usage confers on the user Heritage or cultural symbolism an appeal to tradition or heritage. Usually denotes solidity and enduring quality 30

Positioning Strategies
Functional Positioning
Symbolic Positioning

Informationbased Rational Benefits

Branding Strategy

Image-based Social/Ego Associations

Marketing Communications Mix

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Repositioning Strategies
Technology evolves Consumer tastes change New offerings and substitute products enter the market Relative positions shift If the positioning is strong and continually reinforced, it may not need to be altered

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Repositioning Strategies
A brand may need to be repositioned if: The position is weak A market opportunity arises Mergers/takeovers occur Buyer preferences change Find a new market New competitors enter
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Repositioned Brands
Lucozade Co-op Tesco Tango

koda
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Perceptual Map

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Perceptual Map
Mercedes CLK VW Toureg Ford Mondeo Vauxhall Carlton BMW 5 Renault Espace Vauxhall Vectra Jaguar S Vauxhall Nova Fiat Uno Renault Clio Porsche 911 TVR

Luxury

Family

Performance

Economy
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Keys to Successful Positioning

Clarity

Credibility

Successful Positioning

Consistency

Competitiveness
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