Marketing Segmentation: Targeting, and Positioning
1.Identify the essential components of a market.
2.Outline the role of market segmentation in developing a marketing strategy.
3.Describe the criteria necessary for effective segmentation.
4.Explain the geographic approach to segmenting consumer markets.
5.Discuss the demographic approach to segmenting consumer markets.
6.Outline the psychographic approach to segmenting consumer markets.
7.Describe product-related segmentation.
8.Discuss the four basic strategies for reaching target markets.
9.Summarize the types of positioning strategies, and explain the reasons for positioning and repositioning products.
STEPS TO TAKE:
The process involves:
1.Identifying the needs and wants of customers. The objective is to identify needs not currently satisfied. For example: Airlines might consider offering business travel although research shows that preferred departure and arrival times vary from those being offered.
2. Identifying the different characteristics between market segments. Identify characteristics that distinguish particular segments from others. For example:
Business persons needing varying flights, may opt to fly first or business class instead of economy class.
3. Estimating the market potential. Marketers need to know if a market is viable before segmentation occurs. Forecasting of market demand will determine:
This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups. All members in a group have similar factors that influence their demand for the particular product.
Represents an effort to identify and categorize groups of customers and countries according to common characteristics
BASIS FOR SEGMENTATION:
Geographic segmentation: nations, states, regions, cities. Largest display store in London, Medium in Reading, Bromley, Small in Croydon.
Demographic segmentation: age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Most popular and widely used bases.
Age and life-cycle stage: baby gap, gap kids, gap maternity
Gender: clothing, cosmetics, toiletries, magazines. Facial cleansing, eye brow, mascara
Income: automobiles, clothing, cosmetics, and travel. Target affluent customers or low income consumers.
Psycho-graphic segmentation: social class, lifestyles or personality characteristics.
CONSUMER MARKET SEGMENTATION:
Behavioural segmentation: dividing groups on the basis of knowledge of, attitude toward, use of, or response to a product.
Occasions: coke in the morning, water resistant watch.
Benefits sought: different toothpaste, different laundry detergents, different shampoo, different body lotion.
User status: non-users, ex-users, potential users, first time users, regular users. Blood bank (regular donors, first-time donors, ex donors).
Usage rate: Heavy users make up only 15 - 20% of all buyers but consumer 50 - 55% of all products. Extremely loyal or always search for lower price
Loyalty Status: brand (Sony), stores (Agora), company (GE)
BASIS FOR BUSINESS SEGMENTATION:
To have effective segmentation of both these approaches you need:
Measurable: size, purchasing power, and profiles can be measured. Scattered customers difficult to measure (left handed people)
Accessible: effectively reached and served.
Substantial: large or profitable enough to serve.
Differential: conceptually distinguishable and respond differently to different marketing mix elements and programs.
Actionable: Sufficient resources, marketing capabilities I.e effective marketing programs can be designed for attracting and serving the segments. Staff limitation
Segmentation is based on consumer categories plus:
Type of customer.
Size, industry. Organisational structure. Purchasing style and criteria.
Type of buying situation.
-New buy. Straight repurchase. Modified repurchase.
PRO'S & CON'S OF SEGMENTATION:
Segmentation enables marketers to:
Identify and satisfy specific benefits sought by particular groups.
Divide the market into segments by separating marketing programs.
Select target market.
Action the market segmentation plan.
Mass production, which offers economies of scale.
Standardisation of service, which increases delivery speed and efficiency.
Expense through production and marketing of products to only specific groups of the market.
Promotion, administrative and inventory costs.
MARKET COVERAGE STRATEGIES:
Selecting target market segments
Target marketing strategies:
Target broadly (undifferentiated / mass marketing): ignore market segments, go after the whole market with one offer. Coca-cola, keep down cost
Differentiated marketing: target several market segments and designs separate offers for each. GM (cars for every “purse, purpose, personality”); P&G – more total market share. Increase cost
Concentrated (niche) marketing: large share of one or a few segments or niches, ignored by larger competitors. limited resources, gain operating economies through specialisation. Porsche – sports car market, Volkswagen – small car market.
Micro-Marketing: tailor products and marketing programs to the needs and wants of specific individuals and local customer groups.
Local Marketing: local customer groups – cities, neighbourhoods, Retailers. Customise each store’s merchandise and promotions.
Individual Marketing: individual customers. Dell computer.
Customers’ image or perception of a particular brand or company, relative to their perceptions of others in the same category.
Positioning is assessed:
In relation to a competitor.
According to a product class or attribute.
By price and quality.
Positioning can be in various forms, although it always incorporates a statement that identifies, (based on the marketing mix) how a business wants its products or services to be perceived by the consumer.
POSITIONING FOR COMPETITIVE EDGE:
Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Bata – durable, Tide – powerful, Toyota – economy, Cadillac/Mercedes – luxury, Dettol soap – health and hygiene.
Choosing a Positioning Strategy
The positioning task consists of three steps:
Identifying possible competitive advantages: offer consumers greater value, either through lower prices or by providing more benefits that justify higher prices.
Offer and deliver.
In what specific ways company can differentiate its offer?
Market offer can be differentiated along the lines of product, services, channels, people, or image.
Product differentiation: little variation (chicken, steel); highly differentiated (automobiles, clothing, furniture).
Form – size, shape (aspirin – color, coating, shape)
Features – Oral – B (added blue dye in the center bristles that fades)
Durability – vehicles, kitchen appliances, must not be subject to rapid technological obsolescence (PC, Video cameras)
Reliability – which company, which manufacturer? (real estate)
Reparability – (auto mobiles)
Services differentiation: speedy, convenient, careful delivery.
Personnel differentiation: better trained personnel. (courteous, professional, smiley)
Channel differentiation: channels’ coverage, expertise, and performance. Caterpillar, Dell
Image differentiation: company or brand image Sony
Symbols: McDonald’s golden arches, apple for Apple computer.
Selecting an overall positioning strategy: value proposition – the full positioning of brand.
Five winning value propositions upon which companies can position their products:
More for more: upscale product at higher price (Mercedes-Benz automobiles; Haagen-Dazs ice cream)
More for the same: X’s teaching
The same for less: Sainsbury’s, Lidl uLess for much less: Costco, Iceland, Pound land
More for less: winning value proposition.
Communicating and Delivering the Chosen Position
Choosing the right competitive advantages: How many differences to promote and which ones.
How many differences to promote: only one benefit (crest – anticavity protection), more than one benefit (Lever 2000 – three-in-one bar soap I.e. offering cleansing, moisturizing and deodorizing benefits).
Must avoid three major positioning errors. Under positioning, over positioning, confused positioning
Which differences to promote: important, distinctive, superior, communicable, preemptive, affordable, profitable (Pepsi – crystal Pepsi) -
Offer and Deliver.
More for more: produce high quality products, charge a high price, distribute through high quality dealers, advertise in high-quality media, hire and train more service people.