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Market Segmentation & Positioning
How would a breakfast cereals
manufacturer identify which consumers to
target for a muesli product?
Principles of STP & segmentation Characteristics & differences between
market segmentation & product differentiation
Segmentation in B2C & B2B markets Different targeting strategies Concept of positioning Use of perceptual maps as a positioning tool
Market Segmentation & PositioningSession Outlines
Segmentation, Targeting and Positioning STP
Market Segmentation
Brand Positioning
Similar Customer
Groups
Customer Group
Selection
Value Proposition
Male/Female. Fashion
Apparel. Aged 18-25, 26-35,
36-45 etc
Female 18- 25, 26-
30
Affordable and fast changing fashion
Target Market
The Advantages of STP
Enhances competitive positioning
Generates & develops new customers & product uses
Targets resources effectively
Non price based competition
? What is market segmentation & What is product differentiation
New Segment
New SegmentProduct Differentiation
Market Segmentation
Market Segmentation & Product Differentiation
PRIORIClassification Procedures
POST HOC(Post Research
Studies)
SIC Group Product attribute preferences,
Geography regions Product purchase patterns
Demography classifications
Product usage patterns
Life Style Systems Benefits / Values sought,
Geodemographic method
Lifestyles,
Purchase groups Brand preferences,
Price sensitivity
Segmentation Principles & Criteria
CONSUMER CRITERIA
BEHAVIOURALWho, How,
Where & When
PSYCHOLOGICAL Why & Who
PROFILEWho & Where
Transaction Lifestyle Demographic
Consumption Usage
Personality Socioeconomic
Media Usage Perceptions Geographic
Technology usage
Attitudes
Motives
Benefits sought
Segmenting Consumer Markets
Using PROFILE Criteria in Market Segmentation
What criteria would a financial investment fund use to
identify attractive market segments?
Variable• Beauty Products, Magazines (Cleo, FHM), Hair Products,
Clothing (H&M, Zara) • Some for both genders fragrances (Calvin Klein), watches (Tag)• Sun protection (Nivea), Breakfast cereals (Kellogg's) Drinks
(Petits Filous Plus)• Affluent income earners (Channel, Bentley) / low income
segments (Aldi, Lidl), Tesco (Finest; Value Strategies)• Disposable income , needs & spending priorities change over
time & vary by marital status, household composition & children.
• Tastes vary by region. Low income regions (Low cost retail formats)
• Combine demographic & census data with geographic variables ACORN ; classification of neighbourhoods by 5 lifestyle categories to help define demand for p/s
Profile Criteria
Gender
Geodemographic
Age
Income
Lifecycle
Geographic
PSYCHOGRAPHIC BENEFITRelies on understanding ATTITUDES, INTERESTS & OPINIONS (AIO) of customers & their VALUES
Meet customer wants with the BENEFITS they derive from the use of a p/s
Accor Hotel Group use value base segmentation• Economy (Ibis Budget)• Midscale (Novotel – efficiency)• Upscale (Grand Mecure)• Luxury (Sofilel)
Benefits comprise, convenience, accessibility, durability, value, novelty, innovation, multi-functionality
Nivea purchasers are based on the benefits users derive from sun care products; luxury, convenience, appearance, comfort etc.
Psychological Criteria
Psychological Criteria
How does Gap’s segmentation strategy differ form that used by Supermarkets for children's wear?
Is their an alternative?
VariableFrequency /volume of use; HIGH, MEDIUM & LOW lead to an appreciation of how products are used, when & what context family (Bisto), cameras (Olympus) http://www.youtube.com/watch?v=prSQv6aTfDI
EPOS tracks consumer purchasing data, viz quantities, incentives, region, seasons for different p/s & different segments to gain customer understanding. (Application by Dunhumby) http://www.youtube.com/watch?v=HgKthEm4afQ
Segmenting on the basis of media usage determines responsiveness to advertising, consumption & behaviour
Profile Criteria
Usage
Transaction
Media
COMPANY CRITERIA
ORGANISALTIONAL BUYERSize: MLC, Large, SME, Micro indications of order size, rates etc
DMU Structure
Location: Needs may be different area by area
Choice Criteria : types of p/s bought, selection/tendering processes form basis of clustering companies (NHS, PC by graphical or educational need)
Industry (SIC) Purchase Situation: buying situation, first time, early/late stage in buying decision, structure (centralised or other)
Segmenting Business Markets
What segmentation criteria would you suggest a
specialist restaurant use to help it expand its London
based operation into other regions of the UK
Hybrid Market Segmentation
How would you measure the attractiveness of any one
of a number of new segments to target?
Target MarketsDeciding Between New Segments
Measurable
Accessible
Substantial
Differentiable Compatible
Profitable
Size
Competition
Target MarketsDeciding Between New Segments
Rating
1. Weight each Criteria
2. Rate each Criteria
High 10-7
Medium 6-4
Low 3-0
3. Multiply Weighting by Rating Score per Segment
4. Derive a total of all the scores
Evaluation Criteria
One Product
Multiple ProductsFor Multiple (or
Single) Segments
One Product for a Single Segment
Product-Segment Decisons
Undifferentiated Marketing
Target MarketApproaches
CustomisedMarketing
DifferentiatedMarketing
FocussedMarketing
HP, Black & Dekker
Jordan’s, Ryan
Electronic gear for each user group
Olympics,Common parts for different cars
Target Marketing Strategies
Positioning
The means by which P/S:
Offer functionality & capability , Convey a promise of value
relative to competing offers Meet & satisfies customer
expectations Can be communicated Occupy a place in consumers’
minds relative to competing products
Perceptual Map for US Fragrance Market
www.perceptualmaps.com/example-maps/
Perceptual Mapping
Competitive Positioning Repositioning
FUNCTIONAL EMOTIONALProduct features: or benefits (Jordans, Redbull, Volvo)
TM User: (Pepsi Max for men, men & women, women, Hotels for particular breaks, John Smiths ‘No nonsense’)
Price & Quality: (Stella Artois, ‘reassuringly expensive’)
Benefit: Experience, feeling, emotion offered. (Times ;‘Join the debate,’ Car, toothpaste)
Use: When / how. (After Eight mints, Kellogg's cereals)
Heritage: used to symbolize experience (Konenbourg ; ‘Established since 1803’)
Product Positioning Strategies
A Value Statement?
To target a specific customer need with a unique offer of value to create a point of difference, e.g. No nonsense Life goes on The drive of your life The ultimate driving machine
http://www.youtube.com/watch?v=zFSLUJ8SIbc
4 Ways to Reposition a Product or Service1 Change the tangible attributes of the
product for the same market2 Change the communications of the
same product TMBisto, Oxo, Mars
3 Change the TM & deliver the same product
Lucozade, Pegasus tour operators
4 Change both product (attributes) & TM Boddingtons from beer to retail & hospitality
Repositioning
Market Segmentation & PositioningSeminar Case Study
easyJet
Define the basis of easyJet’s market segmentation
What was easyJet market positioning
How did easyJet’s rivals’ position in the low cost air travel segment? How can easyJet exploit their
positioning What lessons can we learn from easyJet
to take away and apply elsewhere?
easyJet
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