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Segmentation

Targeting Positioning

Dr. Vesselin Blagoev

Segmentation-> Targeting-> Positioning

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Define the task for segmenting the market(s)

Select the bases for segmentation

Segment the market(s)

Select the target segments

Product positioning

Develop and execute the marketing programs

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2 basic approaches:

Mass marketing Segmented marketing

The basic choice of a company is to pursue either a mass marketing strategy or a segmented strategy.

Mass marketing is also known as aggregated marketing and undifferentiated marketing.

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Segmented marketing

The basic requirements of the segmented marketing are:

At least one homogeneous segment is found

A marketing mix is devised specifically for the segment(s)

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A procedure for segmenting

markets1. Broadly specify area of interest

2. Generate a list of segmentation variables

3. Qualitative analysis

4. Quantitative analysis

5. Apply size, accessibility and marketing mix control criteria

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Segmentation variables

Heterogeneous demand

Segments relating toCustomer characteristics

Segments relating toCustomer behaviour

Demographic& Geographic

variables

Psychological &Sociological

variables

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Consumer segmentation

Profile Behavioral Psychographic

Demographic

Geographic

Socio-economic Purchaseoccasion

Perceptionsand

beliefs

Usage

Benefitssought

Purchasebehavior Lifestyle

Personality

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Bases for segmentation

1 Geographic National/regional differences in taste and product usage

2 DemographicsAgeLifecycleEducationSexFamily composition

Can differences be distinguished between groups in each of those categories that reflect differences in propensity to purchase, or in product usage?

3 Socio-economic and income

Are consumption or media exposure related to social grad or income level?

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Bases for segmentation

4 Geodemographics

Does where we live condition how we live, and consequently relate to what we buy?

5 Benefits sought Are there differences in the benefits sought by different people in the same product?

6 Usage rate and brand loyalty

Are these who consume a lot of a product different from those who consume a little?

7 Psychographics Is consumption better considered in the context of ‘lifestyle’ groups?

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Bases for segmentation

8 Situation Does the situation in which consumption or purchase takes place vary? If so can individuals be grouped according to their situations?

9 Responsiveness

Do people respond differently to aspects of marketing activity? Do they use different distribution channels?

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Profile: Demographic &

Geographic variables

Size Age Sex Destination Geographic area Socioeconomic

class Race

•Family life cycle

•Family size

•Marital status

•Income

•Occupation

•ACORN group

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Profile: Socio-economic segmentation

Class Description

A Upper Middle Class High managerial/administrative/Professional, I.e. company director or established doctor

B Middle Class Intermediate managerial/administrative/ orprofessional

C1 Lower Middle Class Supervisory/clerical/junior managerial

C2 Skilled Working Class

Skilled manual workers

D Working Class Semi-skilled or unskilled workers

E Pensioners, casual workers and others

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ACORN a Geodemographic

segmentation

ACORN stands for ‘A classification of residential neighborhoods’. It segments the consumers according to the type of area in which they live into 12 major groups, further refined into 39 types.

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ACORNGroup ACORN groups in Great Britain %

A Modern family housing with manual workers

9.6

B Modern family housing, higher income 7.4

C Older housing of intermediate status 10.4

D Very poor quality, older, terraced housing 9.2

E Rural areas 5.8

F Urban local authority housing 20.6

G Housing with most overcrowding 2.9

H Low income areas with immigrants 4.2

I Students and high status non-family areas

4.3

J Traditional high status suburbia 19.1

K Areas of elderly people, often resorts 6.4

Unclass

Other 0.2

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ACORNACORN groups % Populatio

n

A Agricultural areas 3.4

B Modern family housing, higher incomes

16.2

C Older housing of intermediate status

17.6

D Poor-quality older terraced housing 4.3

E Better-off council estates 13.

F Less well-off council estates 9.4

G Poorest council estates 7.6

H Multiracial areas 3.9

I High-status non family areas 4.2

J Affluent suburban housing 15.9

K Better-off retirement areas 3.8

U Unclassified 0.7

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Benefits sought segmentation (a Behavioural segmentation)

It is axiomatic in marketing that customers buy benefits, not features. Some toothpaste users want white teeth, others fresh breath and others protection from dental decay.

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Benefit segmentation for

tooth paste

Segment Benefit required Other characteristicsSensory Flavor+appearance Usually children

Social Sound bright teeth Outgoing and active, young,

sometimes smokers

Worrier Decay preventionHeavy users, families

Independent Low prices Predominantly male, littleloyalty, brand on offer

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Benefit segmentation

for cars

Pleasure seekers: driving is all about pleasure (freedom, enjoyment, well being)

Image seekers: driving is all about self-image. The car provides feelings of power, prestige, status and self-enhancement. Driving is secondary.

Functionality seekers: driving is only a means of getting from point A to B. Convenience matters.

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Benefit segmentsIn the less expensive camera market:

Do-it-yourselfer (25%) Great pride in good pictures Gratification from making settings and

adjustments Pride in a complex camera Regards a good picture the results of

expertise

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Behavioral segmentation

The most obvious approach when we use behaviouristic characteristics is to study usage rates and brand loyalty:

Heavy users (say every day) Medium users (maybe once a week)

Light users (say once a month) Occasional users Non-users (never used brand)

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Behavioral segmentation

Other behaviouristic criteria include:

Loyalty levelsPurchase occasionUser statusReadiness status

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Psychological & Sociological

variables

ValuesNeedsLife styleGroup membership

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Psychographic segments

Psychographics classify consumers according to their personal traits such as sociability, self-reliance, assertiveness, lifestyles, which cover attitudes, interests and opinions.

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Lifestyle segmentation (a Psychographic segmentation)

It tells the marketer about the sort of lifestyle his customer leads, the beliefs and the opinions he holds, the type of interest he has and the background he is from.

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Lifestyle segmentation (a Psychographic segmentation)

It is expensive to conduct – a large number of personal interviews with up to 600 questions being asked.

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Lifestyle segmentation

Activities Interests Opinions Demography

Work Family Selves Age

Hobbies Home Social issues

Education

Social events

Job Politics Income

Vacation Community

Business Occupation

Entertainments

Recreation

Economics Family size

Club membership

Fashion Education Dwelling

Community

Food Products Geography

Shopping Media Future City size

Sports Achievements

Culture Family life style

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Psychographic segments

Young sophisticates (15%) : Extravagant, experimental, non-traditional, young; A, B and C1 social classes, educated, affluent, sociable,cultural interests, owner-occupiers, in full-time employment, interested in new products

Cabbages (12%) : Conservative, less quality-conscious, demographically average but more full-time housewives, middle class, average income and education, lowest level of interests in new products, home-centered, indulging in little entertaining

Traditional working class (12%):

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Psychographic segments

Coronation Street housewives (14%) : Quality-conscious, conservative, traditional and obsessional, D and E social classes, live relatively more in Lancashire and Yorkshire ITV areas, less educated, lower incomes, part-time employment, lower level of interest in new products, not sociable

Self-confident (13%) : Self-confident, quality-conscious, not-extravagant, young and well educated, owner-occupiers, average income

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Taylor Nelson’s Monitor

1. Self-explorer: youthful, independent, tolerant,comfortably situated, often female

2. Social register: older, resist change, high need for control

3. Experimentalist: independent, unconventional, energetic, work-oriented, often men in their late 20s and early 30s

4. Conspicuous consumer: conformist, materialistic, lacking self-confidence

5. Belonger: mature, stable, settled

6. Survivor: dependent on protection of authority but sceptical of its intentions, identify with country and family, tend to be male, unskilled or skilled manual workers

7. Aimless: goal-less, uninvolved, alienated, unable to improve their position

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SAGACITYa combination of Life Style + Occupation + Income

SAGACITY combines a number of demographic variables to produce 12 segments of consumers ‘at a similar stage of their (family) life cycle, and with similar disposable income and cultural characteristics’.

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SAGACITY classification scheme

Dependent Pre-family Family Late

Better off

Worse off

Better off

Worse off

White

Blue

White

Blue

White Blue White Blue White Blue White Blue

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Requirements for a usable segment

The useful segment must be:

DefinableSizeableReachableRelevant

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Definable To be able to describe the

main characteristics A degree of homogeneity (in a

heterogeneous market) To be able to measure it’s size

and define the boundaries

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Sizeable

To be big enough to make possible to achieve the required turnover and profit

A trend to grow

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ReachableThere must be a way of reaching the segment both effectively and efficiently

Marketing communicationDistribution channels

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Relevant Segment life cycle (durability) Price level to customization costs (incl. entry investment)

Extent of overlap or interdependency with other segments

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Segmentation for organizational

markets

Demographics for organizational markets include:

Geographic location (some businesses are regionally concentrated)

Primary business of industry (SIC) Size (number of employees or sales) Type of buying situation (tenders)

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Organizational market

Macrosegment 1 (large companies)

Macrosegment 2(medium-sized

companies)

Macrosegment 3(small companies)

Microsegment 11st criterion: Reliability

Microsegment 21st criterion:

Convenience

Microsegment 31st criterion: Price

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Organizational segmentation

Macrosegmentation

Microsegmentation

Organizationalsize

Geographiclocation

Industry

InnovativenessPurchasing

organizationBuy class

Decision-Makingprocess

Decision-Makingstructure

Choice criteria

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SICFood, drink and tobacco manufacturing : code 4.2

Soft drinks: code 42.8

Mineral waters and soft drinks (carbonated and stiff) : code 4283.1

Fruit and vegetable juices : code 4283.2

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To segment or not to segment ?

Factor Mass NicheEnd user wants Similar 1 2 3 4 5 Different

Product market size Small 1 2 3 4 5 Large

Product market structure

Simple 1 2 3 4 5 Complex

Market share High 1 2 3 4 5 Low

Resources of company

High 1 2 3 4 5 Low

Image High 1 2 3 4 5 Low

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Segmentation strategiesTargeting

Marketing mix

Marketing mix 1

Marketing mix

Market

Segment 1

Segment 1

Marketing mix 2Marketing mix 3 Segment 3

Segment 2

Segment 3Segment 2

Mass (undifferentiated) marketing

Differentiated marketing (multi-segment)

Concentrated marketing

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Analysis of customer behaviour2 major theories: Rational customer who always seeks to maximize his satisfaction or utility

Psycho-socio customer: family, culture affects

Targeting

What does it mean?

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Product Positioning

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Different options need different

strategies

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Target segment

s

Customer

behavior

Product adaptatio

n

Marketing budget

Different marketing options & strategies

Mktg Mix 1

(Strategy 1)

Segment 1

Segment 1

Segment 3

Mktg Mix 2

(Strategy 2)

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Market positioningA products’ position is the place the product occupies in consumers’ minds relative to competitors.Market positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

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Key tasks in positioning

Positioning is the choice of : Target market : where we

want to compete Differential advantage :

how we wish to compete

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Some basis for positioning

Corporate positioning

Product positioning

The organization could strive to attain and to maintain leadership in terms of one or more of:

The product’s positioning might emphasize:

market share cost/economy/value quality product features service product range technology product quality innovation services/customer care variety customer types integrity customer problem

solved community service use/application type

disassociation

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Keys to successful positioning

Clarity

CredibilityCompetiti-

veness

Consistency

Successfulpositioning

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Clarity

The positioning idea must be clear in terms of both target market and differential advantage:

BMW : The Ultimate Driving Machine Mars : Good Food Costs Less at Sainsbury

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Consistency

Too many messages bombard the customers. Consistent message is required.

If it is quality this year, it must be quality next year too.

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CredibilityThe differential advantage which is chosen must be credible in the minds of the target customers

Example: The ad of Lada as an exiting, sporty car by showing it slaloming through dirt tracks in Africa failed – a lack of consonance between image and reality.

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CompetitivenessThe differential advantage should have a competitive edge. It should offer something of value to the customer which the competition is failing to provide.

Example: Apple iPhone, iPad

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Positioning map Excellent image

Poor image

Low Brand Awareness

High Brand Awareness

Amstel

Kamenitza

Pirinsko pivo

Zagorka

Ariana

How do we position the product?

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Marketing mix

Target market

Marketingmix

Product

Promotion

Price

Place

Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties

List price, Discounts,Allowances, Payment Terms, Credit terms

Channels, Locations,Inventory, Transport

Advertising, Personal selling, Sales, Promotion, PR

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CustomerService

Price

Promotion

PhysicalEvidence

Processes

People

PlaceProduct

Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth Heinemann

7P of Customer Service & Mktg Mix

How do we position the brand?

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