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Chapter 5

Market Segmentation,

Targeting, and Positioning

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Market Segmentation

Involves the division of a diverse market into a number of smaller submarkets that have common features.

The objective is to identify groups of potential customers with similar requirements.

Market segmentation provides a a commercially viable method of serving customer needs.

Segmentation is at the heart of strategic marketing.

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The Benefits of Market Segmentation

Enhanced

Profitability

Enhanced

Opportunities

for Growth

Improved

Customer

Retention

More effective

targeting of

communications

Opportunities

of segment

dominance

Better matching

of customer

needs

© The McGraw-Hill Companies, 2009

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Garmin

Garmin

Unashamedly

targets female

buyers

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Segmenting Consumer Markets Consumer segmentation

Profile

Socio-economic

Demographic

Geographic

Personality

Lifestyle

Psychographic

Benefits sought

Purchase occasion

Purchase behaviour

Perceptions and beliefs

Usage

Behavioural

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Consumer Segmentation Methods Variables Examples

Behavioural

Benefits sought Convenience, status, performance

Purchase occasion Self-bay, gift, special occasions

Purchase Behaviour Brand loyal, brand switching, innovators

Usage Heavy, light

Media Behaviour Primarily online, primarily offline

Psychographic

Lifestyle Trendsetters, conservatives, sophisticates

Personality Conscientious, agreeable, extrovert

Profile

Age Under 12, 12-18, 19-25, 26-35, 36-49, 50-64, 65 and over

Gender Female, male

Life Cycle Young single, young couples, young parents, middle-aged empty-nesters, retired

Social class Upper middle, middle, skilled working

Terminal education age 16, 18, 21 years

Income Income breakdown according to study objectives and income levels per country

Geographic North vs south, urban vs rural, country

Geodemographic Upwardly mobile young families living larger owner-occupied houses, older people living in small houses, European regions based on language, income, age, profile and location.

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Benefits Sought

Patek Philippe uses powerful emotional appeal to convey the benefits of ownership

of a luxury watch .

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The ACORN Targeting Classification

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Segmenting Organisational Markets

Organisational segmentation

Purchasing

organisation Choice

Criteria Geographic

location

Industry Organisational

size

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Five Criteria for Successful Segmentation

1. Effective

2. Measurable

3. Accessible

4. Actionable

5. Profitable

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Target Marketing Strategies

Customised Marketing

Differentiated Marketing

Undifferentiated Marketing

Target Marketing

Strategies Focused Marketing

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Target Marketing Strategies

Undifferentiated marketing

Marketing mix Whole market

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© The McGraw-Hill Companies, 2009

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Example of Undifferentiated Strategy

ORGANISATION MARKETING MIX TARGET MARKET

Everybody

• Price

• Promotion

• Product

• Distribution

Post

Office

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Target Marketing Strategies

Differentiated marketing

Marketing mix 1

Marketing mix 2

Marketing mix 3

Segment 1

Segment 2

Segment 3

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Example of Differentiated Strategy

Marketing

Mix 1

Marketing

Mix 2

Marketing

Mix 5

Marketing

Mix 3

Marketing

Mix 4

Arcadia

Group

Miss

Selfridges

18- 24 age group

Dorothy

Perkins

20s & 30s

Evans

Size 16+

Outfit

Out of town

convenience

Wallis

30 plus

age group

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Target Marketing Strategies

Focused marketing

Segment 1

Segment 2

Segment 3

Marketing mix

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Example of Focused Strategy

ORGANISATION MARKETING

MIX

Upmarket

consumers

Price

conscious

consumers

Value

seekers

Bang &

Olufsen

Music

systems

• Price

• Promotion

• Product

• Distribution

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Target Marketing Strategies

Customised marketing

Marketing mix 1

Marketing mix 2

Marketing mix 3

Customer 1

Customer 2

Customer 3

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Example of Customised Strategy

INDIVIDUAL

MIXES ORGANISATION INDIVIDUAL

CUSTOMERS

Industrial

Electronic

Systems

Supplier

Marketing Mix 1

Marketing

Mix 2

Marketing

Mix 3

Marketing Mix 4

Nissan

Birdseye

Heinz

Mercedes

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Positioning….

‘....is the act of designing the company’s

offering so that is 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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Panasonic Lumix Camera

This advertisement

for Lumix digital

cameras powerfully

illustrates its core

value proposition

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Coke Zero

Diet Coke and

Coke Zero: virtually

identical drinks that

are positioned

very differently

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Keys to Successful Positioning

Credibility

Clarity Consistency

Competitiveness

Successful positioning

A Perceptual Map of Supermarkets

A

B

C

D

X

G

E

F

High price

Low price

Narrow product range

Wide product range

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Repositioning Strategies

Image

repositioning

Product

repositioning

Intangible

repositioning

Tangible

repositioning

Same Different

Same

Different

Target

market

Product

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Chapter Summary 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.

There are 4 repositioning strategies: image, product, intangible and tangible repositioning .

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The Best Drink Created

Worldwide

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Background Founded: June 16, 1903

Founder: Caleb Bradham

Global Brands:

Pepsi Quaker

Lays Tropicana

Gatorade

Competitor: Coca cola

Cooperator: Kentucky

Fried Chicken

Embrace your past, but live for now.

Slogan:

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Our Mission

As one of the largest food and beverage companies in

the world, our mission is to provide consumers around

the world with delicious, affordable, convenient and

complementary foods and beverages from wholesome

breakfasts to healthy and fun daytime snacks and

beverages to evening treats. We are committed to

investing in our people, our company and the

communities where we operate to help position the

company for long-term, sustainable growth.

Our Vision

At PepsiCo, we aim to deliver top-tier financial performance

over the long term by integrating sustainability into our

business strategy, leaving a positive imprint on society and the

environment.

We call this Performance with Purpose.

Our Vision

At PepsiCo, we aim to deliver top-tier financial

performance over the long term by integrating

sustainability into our business strategy, leaving a positive

imprint on society and the environment.

We call this Performance with Purpose.

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Over 100 Years of Fun and

Refreshment. Pepsi is one of the world's most iconic and recognized consumer brands globally. Today, the Pepsi portfolio includes three products - Pepsi, Diet Pepsi and Pepsi MAX — that each generates more than $1 billion in annual retail sales.

Good Fun Frito-Lay snack brands balance our product portfolio, blending 'good fun' with high-quality, great tasting snacks. Its portfolio includes flagship brands - LAY'S® potato chips, the No. 1 snack food brand in America, and FRITOS® corn chips, a snack fans have enjoyed for more than eight decades - among many other favorites.

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Performance

Gatorade's line of sports

fuels adds over 45 years of

sports nutrition research to

the PepsiCo portfolio in

more than 80 countries.

Gatorade has a rich history

of studying the best

athletes in the world, in the

lab and on the field, and no

one knows their fueling

needs better.

Nourishment You Can Trust

Quaker, one of the most trusted

food brands for more than 135

years, includes a portfolio with a

wide range of nourishing and

delicious meal and snack choices

that help fuel healthy families.

Holding leadership positions in their

respective categories, Quaker®

Oats, Quaker® Rice Cakes and

Quaker® Chewy® Granola Bars are

consumer favorites. Quaker also

produces popular cold cereals like

Quaker® Life® Cereal and Cap'n

Crunch® , iconic Rice-A-Roni side

dishes and beloved Aunt Jemima®

pancake syrups and mixes.

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The Fruit Juice Leader

Tropicana is one of the leading

producers and marketers of

branded fruit juices. With

innovations like Tropicana

Farmstand, juice that has one

serving of fruit and one serving

of vegetables in every glass,

and Trop 50, with 50 percent

less sugar and calories,

Tropicana has a diverse good-

for-you portfolio of delicious

and nutritious drinks that are

enjoyed all day long.

Brand’ s

Performance

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 Continue to refine our food and beverage choices to meet changing consumer needs by reducing sodium, added sugars and saturated fats, and developing a broader portfolio of product choices.

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Help protect and

conserve global

water supplies,

especially in water-

stressed areas,

and provide

access to safe

water

Create a safe, healthy,

diverse and inclusive

workplace that reflects

the global communities

in which we operate

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PEPSI CO:

Advertisement

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PEPSI CO: Marketing Mix

Product

Beverage Products – Diet

Pepsi, Gatorade, Mountain Dew,

Thirst Quencher, Tropicana,

Aquafina Bottled Water, Sierra

Mist.

Savory Food Snacks – Fritos

Corn chips, Cheetos, Ruffles

Potato Chips, Lays Potato

Chips, Tostitos, Doritos.

Other Food Products –

breakfast cereals, cakes and

cake mixes.

PepsiCo recently created

Baked Snacks North America

Business Unit to meet

consumer’s interest in more

nutritious snacks and foods.

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Price

Expenses related to transportation, ingredients and labor

continue to pressure the beverage industry toward price

increases.

PepsiCo’s drink pricing strategies may be heavily

influenced by its working relationship with Wal-Mart whose

low price themes put pressure on PepsiCo to hold down

prices.

The company strives to cut or maintain current prices by

cutting overhead and re-engineering the manufacturing

process.

PepsiCo is expanding its use of inexpensive and

recyclable plastic bottles; nevertheless the company has

instituted some price increases in recent years, specifically

in its overseas markets such as New Delhi and Duba.

Place

PepsiCo is primarily a US based

company with approximately 52% of

its revenues located in the states.

PepsiCo is in the midst of making a

$1, 000 million investment in China,

and a $500 million investment in

India. Both initiatives are part of its

expansion into international markets

and a lessening of its dependence on

US sales.

In addition the company plans on

major capital initiatives in Brazil and

Mexico.

The company is also acquiring

Russia’s leading Juice Company,

Lebedyansky, and V Water located in

the United Kingdom.

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Promotion

PepsiCo instituted a so called Pepsi Stuff promotion whereby customers could accumulate Pepsi Points from buying various products these points could be used to by other products, most recently AmazonMP3. A recent promotion involving the NY Yankees was not well received when not enough free tickets were made available. In 2008 PepsiCo employed Tiger Woods to promote a Gatorade brand called Gatorade Tiger. PepsiCo continues is promotional association with the NFL and the Super Bowl specifically marketing Pepsi and Doritos. In 2009 Pepsi launched its “Pepsi Throwback” campaigned offering a drink with the sugar content of its original product.

Competitor:

Coca cola

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Taste the feeling

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Founded : 1886; 130 years ago

Founder: Asa Griggs Candler

Headquarter:

Atlanta, Georgia, United States

Competitor: PepsiCo

Slogan: Taste the feeling

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Brands

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Coca-Cola Coca-Cola is the

most popular and

biggest-selling soft

drink in history, as

well as one of the

most recognizable

brands in the world.

Sprite Introduced in 1961, Sprite

is the world's leading

lemon-lime flavored soft

drink. Sprite is sold in more

than 190 countries and

ranks as the No. 3 soft

drink worldwide.

Fanta Introduced in 1940, Fanta is the second

oldest brand of The Coca-

Cola Company and our second largest

brand outside the US. Fanta Orange is

the leading flavor but almost every fruit

grown is available as a Fanta flavor

somewhere. Consumed more than 130

million times every day around the

world, consumers love Fanta for its

great, fruity taste.

Diet Coke

Diet Coke, also known as Coca-Cola light in

some markets, is a sugar- and calorie-free

soft drink. Diet Coke/Coca-Cola light is one

of the largest and most successful brands of

The Coca-Cola Company, available in more

than 150 markets around the world.

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Coca-Cola Zero

Coke Zero was Coca-Cola's largest product

launch in 22 years and launched in 2005,

reaching billion-dollar status in 2007. Coca-

Cola Zero offers great Coke taste, uplifting

refreshment and zero sugar.

Coke-Style

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At London Fashion Week,

where the duo debuted their

Autumn Winter 2016

collection, Coca-Cola made a

striking appearance among

the new designs, which

featured vintage "bathing

beauties" ads and the

iconic Coca-Cola bottle.

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Brand’s

Sustainability

ME, WE, WORLD

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COCA-COLA’S

Advertisements

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Product

Coca-Cola is the leading provider of soft drinks

in the world. In 2010, it not only had the No. 1

selling soda with regular Coke, but its Diet

Coke brand outpaced Pepsi for second billing.

Within the pop category, Coca-Cola has a

number of brand variants, including Dr Pepper

and Sprite. The company also produces fruit

juices and sports drinks. Emphasis on the soft

drink industry, though, has contributed to

Coca-Cola's ability to distinguish itself as a

quality provider.

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Place

Coca-Cola's distribution process

is a key element of its offering.

The company's products are

available in cans and bottles in

supermarkets and other retail

stores around the world.

Additionally, the company

provides supplies for fountain

drinks in many restaurants. It

sells its products in thousands of

pop vending machines placed

in businesses and public

buildings. The ease and

convenience of getting to the

product is important to customer

loyalty.

Price

The long-term pricing strategy of Coca-Cola can be best

described as value oriented. Despite being a leader in its

industry, its fierce rivalry with Pepsi has forced Coca-Cola to

maintain affordable price points to appeal to its vast middle

class market. The company was criticized by shareholders

and analysts in 2011 for maintaining relatively low

price points in response to economic recession in the United

States. While this point emphasizes the risks to any

company of adopting a price-driven strategy, Coca-Cola's

strong global brand allows for brief periods of price drops.

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Promotion

Coca-Cola invests billions of dollars

a year in advertising and promotions

around the world to maintain its

position of industry leadership

against rival Pepsi. Pepsi increased

its TV ad budget by 30 percent in

2011 when it fell behind Diet Coke.

Coca-Cola spends a good portion of

its ad budget on television

advertising. It has used polar bear

characters and a message of

nostalgia and tradition as part of its

branding over time. Magazine ads,

online and social media have also

been used as media for Coca-Cola

marketing. Sales promotions at the

store are used to drive revenue

during slow periods.

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Coke is targeting international growth;

Pepsi is growing its snack business.

And both are going head-to-head in the

rapidly expanding bottled-water

business.

Pepsi's Aquafina is beating Coke's

Dasani in the water wars.

Diet Coke vs. Diet Pepsi; Sprite vs, Mountain

Dew; Nestea vs. Lipton, Tropicana vs.

Minutemaid. And the list goes on.

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Some 60 percent of PepsiCo’s profits

come from its snack business. From

Fritos to Lays to Cracker Jacks and

Tostitos, Pepsi has a virtual

monopoly, with no competition from

Coke.

Coke, meanwhile, just scored a big coup

by winning the soft-drink business at

Subway, a fast-food chain now bigger than

McDonald's, that had previously served

only Pepsi.

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