UNDERSTANDINGUNDERSTANDINGthethe

MARKET ENVIRONMENT:MARKET ENVIRONMENT:SEGMENTING, TARGETINGSEGMENTING, TARGETING

andandPOSITIONINGPOSITIONING

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China is an attractive target market for many companies because of its huge population --- Kotler et al.2006

STP

Segmentation : breaking down of a diverse, heterogeneous markets

Target Segment: Focus to sub group

Positioning: Act of assigning & representing a brand

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1.Break the market into smaller, more homogeneous segments

2.Specifically target the discrete market segments

3.Position the product or service to appeal to the targeted segments.

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Why do this?

Overview: Segmentation, Targeting & Positioning

The Value of STP Marketing. WHY??• Precise Specification of Marketing Objectives• Better Understanding of Needs and Motives of Target

Market• Better Understanding of Customers and Non customers• More Efficient Allocation of Resources• Ability to Assess Strengths and Weaknesses • Ability to Identify Messages to be Used Across All

Promotional Tools• Better IMC Management of Promotional Effort• Ability to Respond More Quickly to Changes in the

Environment

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Beyond STP Marketing. AFTER??

• STP Decisions are Continuously Evolving Due to the Dynamic Nature of Markets

• To Maintain the Profitability of Brands, Segmentation Decisions Must be Reassessed Regularly

• Product Differentiation Infuses STP Decisions with Vitality

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Market Segmentation - Principles

• Segmentation Variables– Geographic– Demographic– Psychographic– Behavioral – Other (anything!)

• No single best way to segment a market.• Often best to combine variables and identify smaller,

better-defined target groups.

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Demographic Segmentation• Segmentation Based on Physical

Descriptors of Individuals–Age–Gender–Ethnic Background–Education–Marital Status–Occupation

Are you a DINK?

What are you?

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Demographic Segmentation

• Use Differences in:– age, gender, family size, family life cycle,

income, occupation, education, race, and religion

– Most frequently used segmentation variable• Ease of measurement and high availability.

– Usually the worst variable to use.

Brands in Common Brands in Common Product Categories Can Be Product Categories Can Be Targeted to Audiences Targeted to Audiences Based on Ethnic BackgroundBased on Ethnic Background

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What is the Basis for What is the Basis for Segmentation in thisSegmentation in thisMessage?Message?

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Geographic Segmentation• Divide markets into different geographic

units.• Examples:

– World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc.

– Country Region: Pacific, Mountain, East Coast, etc. – City or Metro Size: New York, San Francisco– Population Density: rural, suburban, urban– Climate: northern, southern, tropical, semi-tropical

–Climate & Topographical Features–Food Preferences & Preparation Habits–Entertainment Preferences–Recreational Activities

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Behavioral Segmentation

• Occasion– Special promotions &

labels for holidays.– Special products for

special occasions.

• Benefits Sought– Different segments

desire different benefits from the same products.

• Loyalty Status – Nonusers, ex-users,

potential users, first-time users, regular users.

• Usage Rate – Light, medium, heavy.

Loyalty Status Segmentation

Switchers

Shifting loyals

Split loyals

Hard-core

• Usage Patterns & Commitment Levels– Heavy Users– Nonusers– Brand Loyal Users– Switchers or Variety Seekers– Emergent Customers

• Psychographic & Lifestyle Segmentation– AIO’s

• Benefit Segmentation

WHO you are?

WHAT you buy?

HOW you use?

Do you need to spend > $ RM?

e.g. nonsmokers

Difficult to convert

First time buyer

Target segment identified by various benefit packages

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Psychographic Segmentation

Psychographic Psychographic segmentation divides a segmentation divides a

market into different market into different groups based on social groups based on social

class, lifestyle, or class, lifestyle, or personality personality

characteristics.characteristics.People in the same demographic classification often have very different lifestyles and personalities.

Psychographics and Lifestyle segmentation

AOI Lifestyles segmentation

provides insight into consumer’s motivations.

Benefit Segmentation Divide market based on different benefits that

consumer seeks.

e.g. Honda --- Prestige?, Passenger Safety? Fuel Economy?

Club Med, Bintan, Banyan Tree, etc

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A Classic Example ofA Classic Example ofBenefit SegmentationBenefit Segmentation

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The place a product occupies in consumers’ minds relative to competing products.

Positioning

eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

Positioning Example

To (target segment and need) our (brand) is a (concept) that (point-of-difference).

Positioning Example

“To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”

Formulating a Positioning Strategyfor a Brand

ESSENTIALS OF EFFECTIVE BRAND POSITIONING STRATEGIES

• Substantive Value

• Consistency

• Simplicity & Distinctiveness

FUNDAMENTAL BRAND POSITIONING THEMES

• Benefit Positioning

• User Positioning

• Competitive Positioning

REPOSITIONING BRANDS

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