Market Segmentat ion, Targeting and Positioning Chapter 4 © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-1

Market Market SegmentatioSegmentatio

n, n, Targeting Targeting

and and PositioningPositioning

Chapter 4Chapter 4

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-1


Market SegmentationMarket Segmentation

Definition—Definition—The process of dividing the total The process of dividing the total market for a good or service into smaller market for a good or service into smaller groups, each of which tends to be groups, each of which tends to be homogenous (or similar) in all significant homogenous (or similar) in all significant aspects.aspects.

One or more of these segments is then One or more of these segments is then selected as the firm’s target market(s).selected as the firm’s target market(s).

A separate A separate marketing mixmarketing mix is then developed is then developed for each segment or group of segments. This for each segment or group of segments. This is referred to as is referred to as ‘Market Segmentation’‘Market Segmentation’..

Market Coverage StrategiesMarket Coverage Strategies

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

SINGLEMarketing

Mix

SINGLEMarketing

Mix

Company Mix 1Company Mix 1



MarketMarket

A. (Aggregation) Undifferentiated Marketing

B. (Multiple segments) Differentiated Marketing

C. (Single segment) Concentrated Marketing


Benefits of segmentationBenefits of segmentation Segmentation enables marketers to:Segmentation enables marketers to:

– Identify and satisfy effectively specific Identify and satisfy effectively specific benefits sought by particular groups.benefits sought by particular groups.

Identify needs, satisfy needs.Identify needs, satisfy needs. Divide the market into segments by Divide the market into segments by

separating marketing programs.separating marketing programs. Select target market Select target market (ref p 103 magazine (ref p 103 magazine

groups).groups).

Action the market segmentation plan.Action the market segmentation plan.


Limitations of Limitations of segmentationsegmentation

Segmentation can be Segmentation can be expensiveexpensive in terms of in terms of production and marketing of products to only production and marketing of products to only those specific groups of the market.those specific groups of the market.

Mass production offers economies of scale.Mass production offers economies of scale. Standardisation of service offers: increased Standardisation of service offers: increased

delivery speed and efficiency.delivery speed and efficiency. IncreaseIncrease in promotion, administrative and in promotion, administrative and

inventory inventory costscosts..


Market segmentation Market segmentation processprocess

1.1. Identify the needs & wants of Identify the needs & wants of customers.customers.

2.2. Identify the different Identify the different characteristics between market characteristics between market segments.segments.

3.3. Estimate the market potential.Estimate the market potential.


STEP 1 Identify the needs STEP 1 Identify the needs & wants of customers& wants of customers

Objective is to identify needs not Objective is to identify needs not currently being satisfied.currently being satisfied.

eg Airlines might offer business eg Airlines might offer business travel although research shows travel although research shows that preferred departure and that preferred departure and arrival times vary to those being arrival times vary to those being offered. offered.


STEP 2 Identify the different STEP 2 Identify the different characteristics between characteristics between

market segmentsmarket segments Identifying the characteristics that Identifying the characteristics that

distinguish particular segments distinguish particular segments from others.from others.

eg Business persons require eg Business persons require varying flights and may opt to fly varying flights and may opt to fly first or business class instead offirst or business class instead ofeconomy class.economy class.


STEP 3 - Estimate the market STEP 3 - Estimate the market potentialpotential

Marketers need to know if a market Marketers need to know if a market is viable before segmentation occurs.is viable before segmentation occurs.

Forecasting of market demand will Forecasting of market demand will determine:determine:– Market demandMarket demand– Market potentialMarket potential– Sales potentialSales potential– Market shareMarket share


Bases for segmentationBases for segmentation

Ultimate consumers—buy goods and Ultimate consumers—buy goods and services for personal or household use.services for personal or household use.

Business users—buy goods and Business users—buy goods and services to generate a profit by services to generate a profit by reselling or using products as part of reselling or using products as part of the manufacturing process.the manufacturing process.

The segment determines the The segment determines the marketing mix.marketing mix.


BASES FOR SEGMENTATIONBASES FOR SEGMENTATIONCONSUMERS -Segmentation CONSUMERS -Segmentation

CategoriesCategories

GeographicGeographic—The study of city —The study of city size, urban/suburban/rural size, urban/suburban/rural population distribution and population distribution and climate.climate.

DemographicDemographic—The study of —The study of distribution of population’s age, distribution of population’s age, sex, income, stage in family cycle sex, income, stage in family cycle and ethnic background.and ethnic background.


Segmentation Categories Segmentation Categories (slide2)(slide2)

Psychographic—Psychographic—Personalties, Personalties, lifestyles, social class including lifestyles, social class including AActivities ctivities IInterests and nterests and OOpinions pinions (AIO).(AIO).

BehaviourBehaviour towards products. towards products. BenefitsBenefits desired or sought. desired or sought. Product Product usageusage rate. rate.


BUSINESS segmentationBUSINESS segmentation All consumer categories plus:All consumer categories plus:

– Customer locationCustomer location Geographic concentrationGeographic concentration

– Type of customerType of customer Size, Industry, Size, Industry, Organisational structureOrganisational structure Purchasing style & criteriaPurchasing style & criteria

– Type of buying situationType of buying situation New buyNew buy Straight rebuyStraight rebuy Modified rebuyModified rebuy


Geodemographic Geodemographic clustering, Values and clustering, Values and

Lifestyles.Lifestyles.

An extension of segmentation An extension of segmentation according to demographic criteria according to demographic criteria is called is called geodemographic geodemographic clusteringclustering, this also includes , this also includes lifestylelifestyle variables. variables.


Geodemographic Geodemographic clustering, Values and clustering, Values and

Lifestyles.Lifestyles.

Values and lifestyles (VALS) Values and lifestyles (VALS) categories.categories.Visible achieversSomething better

Look at me Basic needs

Socially awareYoung optimistsA fairer deal

Real conservativesTraditional family lifeConventional family life


Segmenting services Segmenting services marketsmarkets

Two key differencesTwo key differences– Customisation of the firms offerings Customisation of the firms offerings

to individuals or groups.to individuals or groups.– Avoiding clashes between Avoiding clashes between

incompatible segments.incompatible segments.


Conditions for effective Conditions for effective segmentationsegmentation

A USEFUL SEGMENTATION PROCESS MUST MEET THREE CONDITIONS :PTO

• The characteristics used to categorise customers must be measurable and the data obtainable.

• The segment itself must be accessible through existing marketing institutions with a minimum of cost and waste.

• A segment must be large enough to be profitable.


Target market strategiesTarget market strategiesMust meet 3 conditions:Must meet 3 conditions:

1.1. Target market should be compatible Target market should be compatible with organisations goals and with organisations goals and images.images.

2.2. Marketing opportunity presented by Marketing opportunity presented by the segment must match the the segment must match the company’s resources.company’s resources.

3.3. The business must generate a profit The business must generate a profit if it is to continue its existence.if it is to continue its existence.


PositioningPositioning

Definition:Definition: the perception of a the perception of a product or organisation in the product or organisation in the consumer’s mind relative to their consumer’s mind relative to their perception of other offerings in the perception of other offerings in the same category.same category.

The key words are The key words are perceptionperception in in the the mind of consumer’smind of consumer’s which which include attributes, benefits & brand.include attributes, benefits & brand.


Positioning statementPositioning statement

A statement that clearly and A statement that clearly and succinctly identifies the target succinctly identifies the target market, the benefits offered to it market, the benefits offered to it by the product, and the way in by the product, and the way in which the product is differentiated which the product is differentiated from its competitors.from its competitors.


Positioning strategiesPositioning strategies

Positioning:Positioning:– In relation to a competitor.In relation to a competitor.– According to a product class or attribute.According to a product class or attribute.– By price and quality.By price and quality.

Positioning can be in various forms, Positioning can be in various forms, although it will always incorporate a although it will always incorporate a statement that identifies, based on the statement that identifies, based on the marketing mix, how a business wants their marketing mix, how a business wants their products or services to be perceived in the products or services to be perceived in the minds of the consumer.minds of the consumer.

POSITIONING STATEMENTPOSITIONING STATEMENTEXAMPLEEXAMPLE

CURVES GYMCURVES GYM

““We offer a We offer a convenient and convenient and

modern, supervised modern, supervised exercise program exercise program for busy women.”for busy women.”


Other Categories of Product PositioningOther Categories of Product Positioning

Against aCompetitor

Against aCompetitor

UseOr application

UseOr application

QualityPrice

QualityPrice

ProductAttributes

ProductAttributes

ProductClass

ProductClass

BenefitsOffered

BenefitsOffered

UsersUsers

BB

AA

EEDD

CCHHGG

FF


Selecting a positionSelecting a position

Positioning is the final step in the Positioning is the final step in the segmentation/targeting process.segmentation/targeting process.

Marketers must consider various Marketers must consider various factors in deciding what position factors in deciding what position they should seek.they should seek.


Factors of considerationFactors of consideration

CompetitionCompetition—look for a gap or niche.—look for a gap or niche. CustomersCustomers—seek product attributes.—seek product attributes. The companyThe company—status of current image.—status of current image. Repositioning—Repositioning—needs of target market needs of target market

changed?changed? The marketing mixThe marketing mix—must support the —must support the

selected position.selected position.


EXAMPLE POSITIONING STATEMENTEXAMPLE POSITIONING STATEMENT

Roast Beef SandwichesRoast Beef Sandwiches. In this case "Roast . In this case "Roast Beef Sandwiches" is the tagline. It clearly Beef Sandwiches" is the tagline. It clearly states/describes what they sell. states/describes what they sell.

A positioning statement is a more in depth A positioning statement is a more in depth description of the product, it's competition, description of the product, it's competition, quality, etc. The positioning statement might quality, etc. The positioning statement might be be "We slow roast our beef for 3 hours to lock in all those savory juices!", Or Or "Try "Try something different for a change"something different for a change" and and "Tired "Tired of that same old burger?"of that same old burger?" (regarding the (regarding the competetion). competetion).


Sample positioning Sample positioning statementsstatements

– The most cost-effective place for small businesses to purchase office supplies online

– The most complete source of grills and barbecue recipes for people who love to cook

– The only Web site where corporate event planners can schedule meetings online

http://www133.americanexpress.com/osbn/Tool/webmarket/position.asp


Check-list for determining Check-list for determining a a positioning strategypositioning strategy

i. What position do we own? ~in the i. What position do we own? ~in the mind of the prospect.mind of the prospect.

ii. What position do we want to own?ii. What position do we want to own? iii. Whom must we outgun?iii. Whom must we outgun? iv. Do we have enough money?iv. Do we have enough money? v. Can we stick it out? Consistency v. Can we stick it out? Consistency

is essentialis essential vi. Does our advertising match our vi. Does our advertising match our

position?position?


Positioning maps are also Positioning maps are also referred to as perceptual referred to as perceptual

mapsmaps



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Market Segmentat ion, Targeting and Positioning Chapter 4 © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-1