Lecture 4 Segmentation and targeting 2010-11

8/7/2019 Lecture 4 Segmentation and targeting 2010-11

1/13

Segmentation, targetingand positioning 1 (STP)

STP is the heart of modern

marketing-- Philip Kotler 1992


2/13

Objectives To outline the target marketing process

(STP)

To explain marketing approaches todefining markets To review a selection of bases of

segmenting markets

To identify criteria by which a targetmarket may be selected To explain the relevance of all this to your

assignment.


3/13

Defining your market What business are we

in? The market should be

defined in terms ofcustomers needs, notthe product that youmake (Levitt 1960)

Defining the marketgives you a set ofpotential customersand potentialcompetitors

Avoid Marketing myopia


4/13

Five main bases of

segmentation Geographic

E.g. Country (gossard), region (Coca Cola)

Demographic E.g. Age, gender, social class, Life-cycle stage

Geo-demographic E.g. ACORN, MOSAIC

Psychographic E.g. Activities, Interests, Opinions, Demographics

Behavioural E.g. End use, benefits sought, usage rate, loyalty,

attitude, buyer readiness.


5/13

e cyc e s agesegmentation in financial

services

From Soper (2002) p. 69


6/13

6

Diffusion of Innovation

Curve

Time of Adoption

16%

Laggards

34%

Late Majority

34%

Early Majority

13.5%

Early

Adopters

2.5%

Innovators

X

Source: Jobber and Fahy (2006: 160)

Particularly relevant to discontinuous or dynamically continuous innovations

A

doption

Per c

entag

e


7/13

Characteristics of

innovators? Demographic

Somewhat younger More cosmopolitan Higher education Higher income Higher occupation status

Social factors Greater social participation Higher social mobility Greater geographical

mobility Greater opinion leadership

Personality factors More risk-tolerant Oriented towards new

things More information

sources used More print media

readership High involvement with

the product /servicecategory But much depends on

the product category Food vs. technology

Source: Doyle and Stern (2006: 221-222)


8/13

How do you now if a base

is worth using? A valid segment is:

Homogenous in its response to marketing

variables Substantial

Measurable

Accessible

Again, the nature of the product isimportant

One base is rarely enough


9/13

Evaluate the relevance of eachsegmentation base for the various

markets

Gender

Age

Personality

Snackingchocolate

Cars Clothing


10/13

Select a target or targets

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2Segment 3

Undifferentiated

Differentiated

Concentrated


11/13

Choosing a target

segmentCompany

CustomersCompetitors

Narver & Slater 1986

Profit

Remember the marketing orientation?


12/13

Evaluation of market

segments Market segments need to be evaluated and

ranked for possible targeting

Evaluation is typically based on: Size of segment

Growth prospects

Profitability

Competitive pressure (competitor factors)

Fit with company objectives (company factors)

Customer factors


13/13

For your assignment Define the market carefully in terms of

customer needs

Segment the market using a range of relevantbases

Give a clear argument for your choice ofsegment

Support with hard (secondary) data andexplicit reference to theories you have used.

Documents

Lecture 4 Segmentation and targeting 2010-11