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Lecture 212.00 Padarn

Segmentation,Targeting and

Positioning

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Describe the principles of market segmentation and thebenefits of the STP process.

Explain how market segmentation can be undertaken in

both consumer and business-to-business markets.

Describe different targeting strategies.

Explain the concept of positioning.

Illustrate how the use of perceptual maps can assist thepositioning process.

READING CHAPTER 6 BAINES

Learning Outcomes

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The biggest challenge for any marketer is tounderstand the customer.

Allows marketers to see similarities and differences

between groups of customers.

e.g. 2012 US Presidential Election Campaign.

100% awareness 48% each. 4% undecided.

Obama campaign focused on getting 18-24 to vote. 15% of electorate, 75% democrats.

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STP Process- The Trinity of Marketing

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Direction and focus for marketing strategies:-

more targeted advertising.

better product development.

brand differentiation.

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Benefits of STP

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Identify growth opportunities

new customers

growth segments

product uses

Greater return on marketing investment.

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Benefits of STP

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Collect 460billion of taxes a year

Did not have a customer approach

Segmentation exercise to:-

Reduce Costs

Improve Customer Experience

Increase Yield

Initial segment was the whole tax paying population.9

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Outcome of exercise were 5 segments

Unaware

Willing but need help

Willing and able

Rule breakers

Potential rule breakers

Stakeholder engagement to embed internally.10

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Impact

internal: culturally, thinking about citizens ascustomers.

specifically targeted external communication.

big financial efficiencies: changed targets.

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Market segmentationis the division of a market into different

groups of customers with distinctly similar needs and

product/service requirements.

Market segmentation means dividing a market into distinct groups

of buyers with different needs, characteristics or behaviours, who

might require separate products or marketing mixes.

(Kotler et al, 4thed, p.391; 5thed p.410)

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Market Segmentation and Product Differentiation

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Segmenting a market involves 3 stages:

1. Selecting a segmentation basis:

The segmentation basis is the set of variables that are used toassign buyers to different groups.

(e.g. benefits-sought from a product: decay prevention, whitening,

taste from a toothpaste)

2. Grouping together buyers who are similar in terms of the base

variables. (e.g. a segment of people who all seek similar benefits

from a product: a decay-preventionsegment)

3. Profiling each segmentin terms of other (i.e. non-base) variables

(e.g. buyers user status, brand preferences, age, income,

media-usage, shopping preferences, etc.)

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Source: Integrated Marketing Communications in Advertising and Promotion (AISE, 7thedn. by Shimp(2007). Reprinted with permission of South-Western, a division of Thomson Learning

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Business to Business (B2B)market segmentation is the

identification of:

a group of present or potential customers with some common

characteristic which is relevant in explaining (and predicting) their

response to a suppliers marketing stimuli(Wind and Cardozo,

1974).

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Business to Business Segmentation

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Decision Making Unit

Policy factors

Purchasing strategies

Attitudes towards vendors and toward risk

Choice Criteria What specifications of product/service they choose

Purchase Situation

Structure of the purchasing procedures

Type of buying situation

Stage in the purchase decision process

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Evaluation of Market Segments - DAMP

Distinctis each segment clearly different from othersegments?

Accessiblecan buyers be reached through appropriatepromotional programmes and distribution channels?

Measurableis the segment easy to identify and measure?

Profitableis the segment sufficiently large to provide astream of constant future revenues and profits.

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Even if a segment has the right size and growth, the company

must consider its own objectives and resources. Some attractive

segments can be dismissed..The company should enter only

segments in which it can offer superior value and gain

advantages over competitors.(Kotler et al 5th ed, p.424)

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A$ap RockyAerosmithAlicia KeysBeyonce

Bullet for my Valentine

Britney SpearsCalvin Harris

etc

http://www.marketingweek.co.uk/the-uses-of-research-segmentation-sony-music/4001016.article

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Once target segment (s) are identified organisation must select itspreferred approach:-1. Undifferentiated: Mass market, one big segment.

2. Differentiated targeting approach: Marketing Strategy is developed foreach segment.

3.Concentrated marketing strategy: just a few market segments or limitedresources and go for the most profitable.

4. Customised targeting strategy.Different product for each customer. e.g.some B2B assembly lines.

Targeting

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Targeting

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Positioning is the means by which goods and services can bedifferentiated from one another and so give consumers a reason to

buy.

How a brand positions itself against another brand helps to clarifyin the customers mind how that brand is different and, critically,better than the competition.

Two fundamental elements:

Physical attributes - the functionality and capability that a brand

offers.

Communication - the way in which a brand is communicated and

how consumers perceive the brand relative to other competing

brands in the market place.

Positioning

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A visual representation of each market.

Used to determine how various brands are perceived according

to attributes valued by customers.

Closer products are clustered together, the greater thecompetition.

Further apart they are, the more opportunity there is for new

brands to enter.

e.g. UK Car Market

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Perceptual Maps to aid positioning

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The following four ways outline how to approach repositioning a product,

depending on the individual situation facing a brand. In some cases, a brandmight need to be adapted before re-launch.

1. Change the tangible attributes and then communicate the new proposition to the

same market.

2. Change the way a product is communicated to the original market e.g. engine

performance.

3. Change the target market and deliver the same product. e.g. S Class Endless

Winter.

4. Change both the product (attributes) and the target market. e.g. use Lincoln brand

Repositioning

e.g. Ford: Family car.

Female bias/low income.

Switch to male bias/middle to higher

income.

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Described the principles of market segmentation

and the STP process.

Explained the characteristics and differencesbetween market segmentation and productdifferentiation.

Explained how market segmentation can beundertaken in both consumer and business tobusiness markets.

Described different targeting strategies.

Explained the concept of positioning.

Summary