Ch # 7-Segmentation, Targeting & Positioning

Newport institute communication & economics Karachi

CONSUMER SEGMENTATION

Ch # 7-Segmentation, Targeting & Positioning

Market Segment
• A subgroup within the market who share certain relevant characteristics • A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix

Ch # 7-Segmentation, Targeting & Positioning

Market segmentation - Definitions
• The analytical division of the market into discrete groups of customers that share common attributes. • The identification of subsets of buyers within a market who share similarities, needs and who have similar buying processes.

Ch # 7-Segmentation, Targeting & Positioning

3 basic questions
• Who is buying? • What do they buy? • When do they buy?

Ch # 7-Segmentation, Targeting & Positioning

Steps to segmentation

MARKET SEGMENTATION Identify bases for segmenting the market

TARGET MARKETING Develop measure of segment attractiveness

MARKET POSITIONING Develop positioning for target segments

Ch # 7-Segmentation, Targeting & Positioning

Ways to segment
• Geographic: by geographical area • Demographic: by population characteristics • Psychographic: classification on the basis of psychological factors • Behavioral: classifying by purchasing behavior

Ways to segment
Geographic Region Urban/Sub urban

Ch # 7-Segmentation, Targeting & Positioning

Demographic Age Gender Occupation Socio-economic group Behavioral Rate of usage Benefits sought Loyalty status Readiness to purchase

Psychographic Life style Personality Social status

Ch # 7-Segmentation, Targeting & Positioning

Choice of market segments
Unattractive Average segment segment Absence of Strongly Avoid Competitive avoid advantage Avg. in Avoid terms of Competitive advantage Strong Possible Competitive advantage Possible Attractive segment Possible

Secondary target

Secondary target

Prime target

Firms engage in segmentation to…
• Develop different strategies for different parts of the market • Increase sales & profit from each segment • Identify marketing opportunities • Dominate certain niche segments • Reflect differences in customer tastes • Prioritize on those segments most likely to provide a higher return

Ch # 7-Segmentation, Targeting & Positioning

Evaluation of segments
• Evaluating market segments
– segment size & growth – segment’s structural analysis
• competition within the segment • existing or potential substitute products • relative power of buyers / suppliers

– company’s objectives & resources
• environment, social responsibility, if it is core business, can employ skills & resources superior to those of competition

Ch # 7-Segmentation, Targeting & Positioning

Segmentation strategies
• Undifferentiated: Ignore segments • Concentrated or focused: Concentrate on a single segment (Small firms) • Differentiated: Different marketing mix for each segment (Large firms)

Segmentation strategies
Undifferentiated Marketing Firm

Ch # 7-Segmentation, Targeting & Positioning

Market

Segment A Firm Segment B Segment C Segment D Segment A

Differentiated Marketing

Concentrated/Focused Marketing

Firm

Segment B Segment C Segment D

Ch # 7-Segmentation, Targeting & Positioning

Undifferentiated Strategy
• Also known as market aggregation • Targets entire market with the same marketing mix – segments ignored • Used when segments cannot be identified or where aggregation proves more profitable than segmentation • Ford’s Model T car were sold as the universal car – “any car as long as it is black”

Ch # 7-Segmentation, Targeting & Positioning

Concentrated strategy
• Marketing effort directed at a single highly defined segment • Niche marketing – Rolex watches • Used when one group is especially attractive for the organization to target • A useful strategy for smaller firms – avoids a head on collision with major players • Provides scope for competitive advantage in a small niche in the market

Ch # 7-Segmentation, Targeting & Positioning

Differentiation Strategy
• Multi segment approach • Separate mix for each segment • Expensive In terms of product & marketing cost • Only possible for large firms

Ch # 7-Segmentation, Targeting & Positioning

Continuum of targeting strategies
Undifferentiated Differentiated Concentrated Niche Customized Single marketing mix for all customers Different mix for each segment Targets single large segment Targets a single small segment Different mix for each customer

Ch # 7-Segmentation, Targeting & Positioning

POSITIONING

Ch # 7-Segmentation, Targeting & Positioning

Position in the market
• The location of a product or service alongside key competitors in the mind of consumers • Refers to the place the product occupies in the consumer’s perceptual map of the market

Ch # 7-Segmentation, Targeting & Positioning

Position and Positioning
• A product’s position ultimately depends on the attitudes of people in the target market • Firms will seek to position their products to increase sales • Either marketers accept the customer attitudes as they & tailor the product to fit those attitudes OR seek to change those attitudes • Positioning indicates how a company wishes to compete in the market place

Ch # 7-Segmentation, Targeting & Positioning

Positioning
• Arranging for a brand or product to occupy a clear and distinctive place in the minds of the target customers relative to competing products and brands

Ch # 7-Segmentation, Targeting & Positioning

The role of positioning…
• To strengthen the power of messages directed at consumers • To target a particular segment – RSTP • To ensure that the product is differentiated in the minds of the consumer • To decide on the ground on which to compete • To analyze re-positioning possibilities

Ch # 7-Segmentation, Targeting & Positioning

Porter’s generic strategies
• Cost leader: Compete by being the lowest cost producer • Differentiation: Compete by offering something different & superior • Focus: Become a niche player concentrating on small part of the market

Ch # 7-Segmentation, Targeting & Positioning

Differentiation
• The basic principle is that you must either:
- Differentiate your product - Be a provider of generic products to be sold at the lowest prices

Ch # 7-Segmentation, Targeting & Positioning

Perceptual map
• The visual representation of a brand within a specific market place showing its position relative to competitors • Shows which and how products compete in consumers mind and suggests how a product can be positioned to maximize sales

Ch # 7-Segmentation, Targeting & Positioning

A perceptual map for supermarkets
Full range

Low price

High price

Limited range

Ch # 7-Segmentation, Targeting & Positioning

Position map & NPD
• Two options for firms developing new products:
- Develop a product to occupy identified gaps in the market

OR
- Develop “me-too” products which copy existing rival

A position map will assist decision making

Ch # 7-Segmentation, Targeting & Positioning

Other uses of Perceptual map
• • • • • To analyze strengths and weaknesses To reveal market segments To develop new strategies To reposition the product To decide on competitive position which the product to be distinguished from competitor offerings

Ch # 7-Segmentation, Targeting & Positioning

Approaches to Positioning
• By attribute:
Associating the brand with a desirable attribute E.g. Volvo cars associated with safety & durability Price level should be right to reflect quality E.g. Rolls Royce – High priced with quality

• By price & quality:
-

Ch # 7-Segmentation, Targeting & Positioning

Approaches to Positioning
• With respect to application/use:
Kit Kat is positioned to link in with tea or coffee break “Have a break – Have a Kit Kat”

• By product user: - E.g Ufone - “Everybody loves to Ufone”

Ch # 7-Segmentation, Targeting & Positioning

Positioning strategies can be related to…
• • • • • • • Product attributes Benefits offered Price Quality Application User categories Specific usage situations

Ch # 7-Segmentation, Targeting & Positioning

Successful positioning strategy requires…
• • • • Clarity Consistency Credibility Competitiveness

Ch # 7-Segmentation, Targeting & Positioning

Mistakes in Positioning
• Under positioning: Consumers have limited perception of the brand & are unaware of the distinguishing features • Over-positioning: Consumers believe that the brand in only active in very focused markets • Confusion: Consumers are unclear how a brand is comparable with other brands

Ch # 7-Segmentation, Targeting & Positioning

Re-positioning
• Changing the position of the product in the market • It becomes necessary sometimes: - To extend the product lifecycle
- To move into a new market segment - Because of changes in society & in social attitudes - The brand evolves with time

Ch # 7-Segmentation, Targeting & Positioning

Re-positioning
• Image re-position: No change in the product. Promotion is used to change the image of the product. Product re-positioning: Modification of the product Intangible re-positioning: Targeting a different market segment with the same product Tangible repositioning: Change in both product & target market

• • •

Ch # 7-Segmentation, Targeting & Positioning

Re-positioning Example
• Johnson & Johnson Baby shampoo: Originally aimed at infants. Re-positioned as a gentle, frequent use shampoo for the adults as well as babies.

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