Segmentation, Targeting and

Positioning

UCD Michael Smurfit Scoil Ghnó

School of Business Michael Smurfit UCD
Agenda

• Segmentation
• Targeting
• Positioning
Market Segmentation, Targeting
& Positioning
• “Process of Identifying market segments, selecting one or
more of them & developing a marketing mix to meet their
needs”
• Segmentation- divide along variables
• Targeting- analyze attractiveness and select
• Positioning- distinctive and favorable position in
comparison to comp.

• The Process of S, T & P

• Identify Variables for Segmenting (s)
• Divide and Profile the Market (s)
• Identify Viable Segments (t)
• Analyze and Evaluate attractiveness of Segments (t)
• Select Segments (t)
• Position and Develop Product (p)
Positioning Benefits of STP
Process

Enhanced
Profitability
Enhanced More effective
Opportunities targeting of
for Growth communications
Better matching
of customer
needs

Improved
Customer Opportunities
Retention of segment
dominance
Segmentation, Targeting and Positioning
Process
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.
 Market Segmentation

Aim is to identify segments where:

– identifiable differences exist between

segments (segment heterogeneity)

– similarities exist between members

within each segment (members
homogeneity)
Market Segmentation, Targeting &
Positioning
• Segmentation-
• Divide market into groups of (potential) customers with distinct characteristics,
behaviours, or needs.
• Aim- cluster customers into groups that differ but show homogeneity within their assigned
group.
• Bases for segmentation in a Consumer Market-
• Geographic
• Demographic (age, gender, income, occupation etc.)
• Psychographic (attitudinal, lifestyle etc.),
• Behavioral- (usage occasions etc.)
Segmenting Consumer Markets
Segmenting Consumer Markets
 Targeting
To determine which, if any, of the segments uncovered
should be targeted, we need to evaluate market segments:

• Distinct/Effective– 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 growth
– Segment profitability
– Segment size
– Competitive intensity within the segment

.
Targeting Approaches
 Undifferentiated Strategy

ORGANISATION MARKETING MIX TARGET MARKET

• Price
Post • Promotion
Everybody
Office • Product
• Distribution

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Differentiated Strategy

Marketing Miss
Mix 1 Selfridges
18- 24 age group

Marketing Dorothy
Mix 2 Perkins
20s & 30s

Arcadia Marketing Evans

Mix 3 Size 16+
Group
Outfit
Marketing Out of town
Mix 4 convenience

Wallis
Marketing 30 plus
Mix 5 age group

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 Focused Strategy
Price
conscious
consumers
MARKETING
ORGANISATION MIX

• Price
Bang &
Olufsen
• Promotion Upmarket
consumers
Music • Product
systems • Distribution

Value
seekers

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Targeting

• After decision on target market(s) needs to

define customer profile
• Demographic factors
• Geographic factors
• Behavioural factors
• Psychographic factors
• Often Develop Customer Personas
Example of Target Segment Persona

https://www.corneliamrose.com/fitmeals

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Chase Sapphire Reserve
 Positioning

• “is the act of designing the company’s

offering so that it occupies a meaningful
and distinct position in the target
consumers mind”

• Effective positioning is the act of linking

products and services to the solutions
that customers seek.

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Positioning

• Positioning Requires a marketer to define and

communicate similarities and differences between
their brand and competitors.
• Deciding on positioning requires:
• 1. Choosing a frame of reference by identifying
the target market and relevant competition
• 2. Identifying Points of Parity and Difference.
• 3. Choosing and communicating on Points of
Difference (and Parity if applicable)
 Positioning: Frame of Reference
• Customers determine value of an offering relative
to a reference point used to assess used to assess
its benefits and costs
• A frame of reference serves as a benchmark
against which customers evaluate the benefits of a
company’s offering.
• Decisions about frame of reference closely linked
to target market decisions – deciding on certain
type of customer can define the nature of
competition and who you will be compared against
• Starting point is to define category membership-
products or sets of products with which a brand
competes
 Positioning: Points of Difference and
Parity
• Once have fixed FoR for positioning by defining customer market
and nature of competition, they can then define PoDs (attributes or
benefits that are unique to co. offering) and PoPs (attributes or
benefits that are in common with competition)
• Points of Difference:
• Attributes of benefits that differentiate
• Can be based on virtually any type of benefit or attribute.
• Could be functional or could be image related
• E.g. Product attributes or benefits-form (Lyons), features (Flora Pro
V), performance (Neurofen plus), durability (Duracell), reliability
(Reputation/ISO standards- UCD?), style (Mac)
• Can have a number of PoD’s- e.g. Apple- design, ease of use, and
image related based on innovation, Nike- performance, innovative
products, image related of winning/pushing self
• Creating strong, favourable and unique associations is challenging
but imperative for positioning.
• Should be desirable, deliverable, and differentiate from competition
Positioning

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.

Position a brand functionally and/or expressively

(symbolically)
Positioning Strategies
Positioning
Positioning: Points of Difference and Parity
• Points of Parity:
• Attributes or benefits that might be shared with
other brands.
• Come in three basic forms:
• Category Points of Parity - attributes or benefits
that consumers view as essential to a legitimate
and credible offering within a category.
• Correlational Points of Parity- potentially negative
associations. Many positive associations can also
have negatives attached- e.g. being inexpensive
hard to convince that of highest quality
• Competitive Points of Parity- are associations to
overcome perceived weaknesses in comparison to
competitors PODs- i.e. claim or make PODs to be
POPs
Positioning

• Once decided on frame of reference, PODs and

POPs need to communicate offerings positioning
• A step towards this is to create a positioning
statement-
• It can communicate an offerings category
membership along with its PODs and POPs and
help develop a narrative to convey the offerings
positioning.
 Positioning Statement

• (x) is the brand for (target audience) that

satisfies (category need) by offering (benefit)
1. Satisfy why people need it
2. Provide a motivating reason to consider it
3. Emphasise (in advertising) an optimum
benefit
4. Have a focus consistent with the motivation
driving behaviour in the category
– “Pillsbury is better than any other brand of
baked goods at helping moms to provide their
family with emotional warmth because it has
years of baked goods experience”
Positioning Statement

• Other Examples:
• Hertz-
• “For busy professionals (tgt mkt) Hertz offers, a
fast, convenient way to rent the right type of car
at an airport (Value Prop)”
• Volvo-
• “For safety conscious upscale families (tgt mkt),
Volvo offers the safest, most durable automobile
in which your family can ride (Value Prop)”
 Summary of Positioning

• Steps to Positioning?
• (1) Identify Frame of Reference
• (2) Identify possible points of parity and difference
– Differentiation-
– Product differentiation- form (Lyons), features (Flora Pro V),
performance (Neurofen plus), durability (Duracell) , reliability
(Reputation/ISO standards- Smurfit?), style (Mac)
– Service Differentiation- delivery (Fedex) , servicescape
(Starbucks), people and management of customer experience
(Singapore Airlines).
– Image Differentiation- Basically through image or brand- e.g.
IBM (reputation built through time), Apple etc (i.e. Intangible
elements)

• (3) Select the key points of difference (BMW- performance and

image)

• (4) Communicate and deliver on chosen position (should be clear,

consistent, competitive and believable)
Perceptual Mapping

• Visual display of consumer/customer perceptions

of existing market offerings

• Often 2*2, other dimensions can be added

• Help identify positioning options

Conclusion

• The process of market segmentation is based on the

principle that not all customers have the same needs.
• They are many different variables which can be used for
segmenting consumer and industrial markets.
• The 5 criteria for successful segmentation are: effective,
measurable, accessible, actionable and profitable.
• There are 4 generic target marketing strategies:
undifferentiated, differentiated, focus and customised
marketing.
• Positioning is the key tool for conveying how companies
meet customer needs with products and services.

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