Customer Insights

SESSION II

Learning Outcome:

Understand the range of customer

contexts in which the marketer
operates
 Assessment Criteria

At the end of this session you should be able to:

• Explain the characteristics and context of the organization’s customers
• Outline how the process of segmentation, targeting and
positioning supports differentiation in the market
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Bases of segmentation:
Market segmentation refers to the division of a
market into distinct groups which share
common characteristics or needs. Segmentation
breaks a total market down into a manageable
target
The process of dividing a market into distinct
subsets (segments) of consumers with common
needs or characteristics and selecting one or
more to target with a distinct marketing mix
 Customer Insights
Differentiation: Segmentation, Targeting and Positioning
Bases of segmentation:
It can be done using a number of variables; marketers may use a single variable
or multiple variables. The four main segmentation variables include:

Segmentation

Geographic Behavioural

Demographic Psychographic
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Bases of segmentation:
To be effective, segmentation needs to identify viable and meaningful segments.
Viable segments need to be:
• Identifiable
• Different
• Measurable
• Profitable
• Accessible
• Market responsiveness
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Segmentation approaches:
Single variable segmentation
This approach involves the utilization of a single variable to allocate people
to various segments. One major characteristic is often used to determine the
segments e.g. demographic information
It presents an off-the shelf and easy approach to organizations and can be
conducted from secondary sources
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Segmentation approaches:
Multiple variable segmentation
In this approach, multiple criteria are simultaneously considered and
segments are created on the basis of these multiple measures e.g. overlaying
demographic information with psychographic information
 Customer Insights
Differentiation: Segmentation, Targeting and Positioning
Segmentation approaches:
Post hoc/cluster based segmentation
This approach does not start with a preconceived notion of the market structure.
Analysis is done with the aim of uncovering naturally existing segments rather than
forcing customers into predefined categories - Model by Maier and Saunders (1990)
1. Set boundaries (determine the job to be done)
2. Collect data (obtain data for analysis)
3. Analyse the data (analytical techniques to segment the market)
4. Validate the segments (check reliability of results and managerial value)
5. Implement (select target markets, develop strategy and make it happen)
6. Track (keep checking for market changes)
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Targeting:
Targeting involves the evaluation of the segmented markets to
determine their attractiveness and selection of the most attractive
segment. The selected target market can be approached with different
marketing strategies including:
• Undifferentiated Marketing (Mass)
• Differentiated Marketing (Segmented)
• Concentrated Marketing (Niche)
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Targeting:
To evaluate the market potential and attractiveness of the different market
segments identified, marketers can consider:
• Size of the identified market segments
• Measurable differences across the identified segments
• Expected profitability
• Accessibility of the identified segments
• Benefits that each market segment expects
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Positioning is the act of designing an organisation’s offering and identity so that they
occupy a meaningful and distinct, competitive position in the target customer’s mind
(Kotler, 2003)
Positioning is the final act in the ‘target marketing process’ of segmentation and
targeting and is not about the product but what the buyer thinks about the product or
the organisation
To effectively position a product/brand within its market, it is essential to evaluate the
product/brand objectively and assess how the brand is viewed by customers and
prospects (Ries and Trout, 2001)
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Positioning can apply at the organization, product, and/or brand levels. According to
Kotler (1997), any attempt to position an organization, product, or brand should meet
the following criteria:
Importance
Any key differences identified should create a highly valued benefit for a significant
number of customers
Distinctive and pre-emptive
The differences cannot be easily imitated or performed by others
Superior
Difference should provide a better way for customers to obtain the benefits at hand
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Communicable
All differences should have the capability of being communicated to customers
and understood by them
Affordable
The target audience should afford to pay for the difference
Profitable
Differences should command a price that is adequate to make it profitable for the
organization
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning
It is important to formulate a positioning statement that is in tune with the
promotional objectives (The way in which a brand is presented to an audience
influences the way it is going to be perceived)
Generally, there are two main ways in which a brand can be positioned:
Functional:
This positioning strategy stresses the features and benefits
Expressive/symbolic:
This emphasizes the ego, social and hedonic satisfactions that a brand can
bring
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
For suitable positions to be set, marketers wishing to develop a position can be guided by:
1. Determine the position held by competitors
2. From the above, determine which position, if any, is currently held by the brand
3. Determine a positioning strategy from the information gathered i.e. what is the
desired position for the brand?
4. Determine the feasibility of the positioning strategy (a long term perspective is
required as positioning needs to be sustained)
5. Implement a programme to establish the desired position
6. Regularly monitor the perception held by the consumers of the brand and their
changing requirements
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Perceptual Maps
A perceptual map represents a geometric comparison of how competing products
are perceived (Sinclair and Stalling, 1990)
By plotting perceived positions of each brand on the map, an overall perspective
of the market can be developed
In order to establish how various offerings are perceived in a market, the key
attributes that stakeholders utilize to perceive offerings in the market need to be
established
Objective of this exercise is to produce a perceptual map where the dimensions
utilized on the two axes are the key attributes as seen by stakeholders
 Customer Insights
Differentiation: Segmentation, Targeting and Positioning
Positioning:
Perceptual Maps

Source: Herstein et al. (2008)

 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Positioning strategies
The development of positions that buyers can relate to and understand is a vital
part of the marketing communications plan
Examples of some strategies include:
Product features: a more commonly adopted approach that entails setting
apart a brand from its competitors on the basis of the attributes, features or
benefits it has relative to competition
Price/quality: price can be a strong communicator of quality
Use: a position can be created in the minds of buyers by informing markets of
when and how a product can be used e.g. Strepsils
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Product class dissociation: in some cases, some markets are uninteresting,
and most other positions have been adopted by competitors. Positioning is
developed by dissociating products from what is commonly known
User: involves openly positioning a product so that the target users can be
clearly identified e.g. ‘for men/women’
Competitor: achieved through positioning oneself against a main competitor
Benefit: positions can be established by proclaiming the benefits that usage
confers to those who consume e.g. Sensodyne
Heritage or cultural symbol: positions can be developed through developing
an appeal to cultural heritage and tradition. This can be symbolised by age,
particular heraldic devices or visual cues e.g. ‘established in…’
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Positioning strategies
Whatever the position adopted by an organisation or brand, both the marketing
and communication mixes MUST endorse and support the position so that there
is consistency throughout all communications
The dimensions used to position brands MUST be relevant and important to the
target audience. In addition, the image cues used must be believable and
consistently credible
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Repositioning
Markets are dynamic with rapid technological changes, evolving consumer tastes
and behaviours etc. meaning that relative positions of offerings will be challenged
and shifted on a frequent basis
Research may reveal that the current position is either inappropriate or
superseded by competition, or that attitudes have changed. In such cases,
repositioning is vital if past successes are to be maintained
However, it is important to note that repositioning is difficult; often because of the
entrenched perceptions and attitudes held by buyers as well as the significant
resources required to make the changes
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
Repositioning
According to Jewel (2007), it is important to consider repositioning from the
customer’s stand point. Two key tasks that need to be accomplished during
repositioning include:
1. The old positioning needs to be suppressed so that customers no
longer relate to it
2. Consumers need to learn the new position
 Customer Insights

Differentiation: Segmentation, Targeting and Positioning

Positioning:
According to Kotler, (1997) there are some major positioning errors that can
undermine an organizations marketing strategy
Under positioning: occurs when a target audience has only vague ideas about the
organization or its products and do not perceive anything special about it
Over positioning: where the target audience has too narrow a view/understanding
of an organization, product, or brand
Confused positioning: there are frequent changes and contradictory messages
confusing the target audience about an organization’s positioning
Doubtful positioning: the target audience does not accept the claims made for the
organization, product, or brand whether or not they are true
 Thank you!

Any Questions?