Market segmentation and positioning

Angelika Brix Bartosz Konior Stephan Richter

November 2006

Overview:
Market segmentation Consumer Markets Organizational Markets Evaluation of segments Target Market Positioning and Repositioning

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What is Market segmentation?

...the identification of individuals or organizations with similar characteristics that have significant implications for the determination of marketing strategies.

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soucre: Jobber, p.210

What is Market segmentation?

Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. ...to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment.

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source: Wikipedia

Benefits from market segmentation

Target market selection

Differentiation

Market segmentation

Tailored marketing mix

Opportunities and threats

Source: Jobber, D. "Principles and practice of marketing"

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Benefits from market segmentation

Target market selection
Chosen segment of market Similar characteristics of customer Single marketing mix strategy

Tailored marketing mix

Grouping of customers Tailoring marketing mix package Implementation of the marketing concept

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Benefits from market segmentation

Differentiation Opportunities and threats
Rarely static markets => new segments emerge Chance of being the first Threat of faster competitors

Dividing into sub-segments Target more than one segment Differentiate its offering

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The process of market segmentation and target marketing

The disaggregated market The segmented market The target market

1 c1 c2 c4 c7 c5 c8 c3 c6 c1 c5 c7

3 c3 c1 c5 c7 c2 c6
Marketing mix targeted at segment 3

c3 c4 c8

c2 c6

c4 c8

The characteristics of individual customers are understood

Customers are grouped into segments on the basis of having similar characteristics

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

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Source: Jobber, D. "Principles and practice of marketing"

The process of market segmentation and target marketing - example

The disaggregated market

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The process of market segmentation and target marketing - example

The segmented market according to type of buyer
Sport & image Convenience & security Adventure

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The process of market segmentation and target marketing - example

The target market
Sport & image

Convenience & security

Adventure

This segment is judged to be most attractive

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Segmenting markets
Market segmentation

Consumer segmentation

Organizational segmentation

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Segmenting consumer markets

Behavioural Benefits sought Purchase occasion Consumer segmentation Psychographic Purchase behaviour

Usage Profile Perception and beliefs

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Segmenting consumer markets

Benefits sought
Functionality Pleasure Image

Simple Lack of sophisticated features Convenient

1.3 megapixel camera High quality video streaming with sound Active TFT display Bluetooth, USB XHTML browsing and email over TCP/IP MP3 player and FM radio ...

Display with Sapphire Crystal screen Stainless steel keys with jewelled bearings High price

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Source: www.nokia.com; www.vertu.com

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Segmenting consumer markets

Behavioural

Lifestyle Consumer segmentation Psychographic Personality

Profile

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Segmenting consumer markets

Behavioural

Consumer segmentation

Psychographic Demographic

Socioeconomic Profile Geographic

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Segmenting organizational markets

Macrosegmentation Organizational size Industry Organisational segmentation Geographic location

Microsegmentation

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Segmenting organizational markets

Macrosegmentation Choice Criteria Decision-making unit structure Organisational segmentation Decision-making Process Buy class Purchasing organization Microsegmentation Organizational innovativeness

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Evaluating market segments

Market attractiveness Market factors
segment size segment growth rate segment profitability price sensitive bargaining power of customers bargaining power of suppliers barriers to market segment entry barriers to market segment exit

Political, social and environmental factors Competitive factors

nature of competition new entrants competitive differentiation political issues social trends environmental issues

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Companys capability to compete

Exploitable marketing assets

Managerial capability and commitment

Capability to compete

Cost advantages

Technological edge
Source: Jobber, D. "Principles and practice of marketing"

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Target marketing strategies

Undifferentiated marketing Marketing mix Differentiated marketing

Whole market

Marketing mix 1 Marketing mix 2 Marketing mix 3

Customized marketing

Segment 1 Segment 2 Segment 3

Focused marketing

Marketing mix

Marketing mix 1 Marketing mix 2 Marketing mix 3

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Customer 1 Customer 2 Customer 3

Source: Jobber, D. "Principles and practice of marketing" 21

Positioning
Key issues of positioning
Market segmentation Target market
Where we want to compete?

Differential advantage
How we wish to compete?

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Successful positioning
Clarity

Credibility

Successful positioning

Consistency

Competitiveness

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Source: Jobber, D. "Principles and practice of marketing"

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Perceptual mapping
High price

Identify a set of competing brands Identify important attributes Conduct quantitative marketing research Plot brands on a twodimensional maps
C D
Wide product range

A B

G F X E
Low price

Narrow product range

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Source: Jobber, D. "Principles and practice of marketing"

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Repositioning strategies
Product
Same Different

Target market

Same

Image repositioning Intangible repositioning

Product repositioning Tangible repositioning

Different

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Source: Jobber, D. "Principles and practice of marketing"

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References:
1 David Jobber, Principles and Practice of Marketing, 4th Edition, page 210 2 Wikipedia, http://en.wikipedia.org/wiki/Market_segmentation 3 Nokia, http://www.nokia.co.uk/nokia/0,,71691,00.html 4 Vertu, http://www.vertu.com/

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Market segmentation and positioning

Thank you for your attention!

Angelika Brix Bartosz Konior Stephan Richter

(c) Brix, Konior, Richter

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