3.3.1 MAKING MARKETING DECISIONS: SEGMENTATION,

TARGETING, POSITIONINGAQA Business

3 DECISION MAKING TO IMPROVE MARKETING PERFORMANCE

Who is Lego’s target market?

3.3.1 MAKING MARKETING DECISIONS: SEGMENTATION, TARGETING, POSITIONING

In this topic you will learn about

The process and value of segmentation, targeting and positioning

Influences on choosing a target market and positioning

SEGMENTATION, TARGETING AND POSITIONING

Segmentation, targeting and positioning are 3 steps in a process

Step 1: segment the market into groups of customers with similar characteristics

Step 2: decide on what segment of the market to target

Step 3: position the product on the market by identifying how it will be viewed in relation to its competitors

Segmentation Targeting Positioning

MARKET SEGMENTATION

Market segmentation occurs when the market is split into subgroups of consumers with similar characteristics

This helps to identify different types of consumer and different wants and needs

Segmentation methods include:

Demographic

Geographic

Income

Behavioural

DEMOGRAPHIC SEGMENTATION

Identifies subgroups of the population based on their demographic profile or characteristics Age Gender Level of education Race Religion Family size Stage in life e.g. empty nesters

Demographics looks at the social and economic characteristics of individuals and households

Was Lego correct to segment the

market by gender?

GEOGRAPHIC SEGMENTATION

Geographic segmentation defines market categories based on where people live e.g. regions, cities or neighbourhoods

People in different geographical areas display different characteristics and needs e.g.

The South East of England is generally warmer than Scotland

Tastes and traditions vary between countries

Infrastructure in rural areas will differ from that of cities

How has McDonald’s had to reposition its products to meet the needs of the Indian market?

INCOME SEGMENTATION

Identifying subgroups of the market based on their levels of income and profession

A common method uses socio-economic groupings A – Higher managerial such as chief executives and directors B – Intermediate managerial such as solicitors, accountants

and doctors C1 – Supervisory, clerical or junior professional such as

teachers and junior managers C2 – Skilled manual such as plumbers, electricians and

carpenters D – Semi and unskilled workers such as refuse collectors and

window cleaners E - Pensioners, casual workers, students and unemployed

Visit the Ford website – select 3 models of cars explain which socio economic group each car would suit.

To what extent are income and profession a strong positive correlation? Is this always true?

BEHAVIOURAL SEGMENTATION

Characterises subgroups based on the behavioural patterns of the consumer rather than their characteristics

Reasons for making purchases e.g. needs, emotional, rewards

Frequency of purchase e.g. heavy user or light user

Time of purchase e.g. seasonal, weekly, late at night

Brand loyalty

Method of purchase e.g. online

Triggers e.g. response to digital marketing

Are loyalty cards for the benefit of the consumer or the business?

BENEFITS OF MARKET SEGMENTATION

There are a number of benefits for a firm that uses market segmentation as part of its market research:

Advertising can be targeted at specific market segments so that advertising spend is more effective

The most profitable and least profitable customers can be identified

Least profitable markets can be avoided

It becomes easier to identify new products

It helps the firm improve existing products and customer service

TARGETING

Targeting is the process of deciding which segment of the market to focus on

This will be influenced by:

Mission and objectives

Perceived level of demand

Degree of competition

Nature of the product

Understanding of the needs and wants of a specific segment

TARGETING

Targeting may include niche and mass marketing

Niche marketing is when a firm targets a small subsection or previously unexploited gap in a larger market Niche marketing may give a business first mover

advantage and allow them to charge a premium price

Mass marketing is when a firm targets the whole of a market rather than a particular segment Mass marketing can give a business a high volume of

sales but often at a low price

Should chocolate makers be

targeting a niche or a mass market?

POSITIONING Where a product is placed in the market relative to its

competitors

Positioning can be achieved by changing elements of the marketing mix to meet the needs of the target market

Influences on positioning include:

Internal constraints e.g. budgets

Internal strengths e.g. creativity and innovation

Market conditions e.g. degree of competition

External environment e.g. state of the economy

How can market mapping be used to help

position a business or

product in the market?

IN PAIRS

Select one industry e.g. watches, jewellery, mobile phones, hotels

Identify how the S,T,P process applies to that industry

Produce a poster to illustrate the S,T,P process in relation to your chosen industry

3.3.1 MAKING MARKETING DECISIONS: SEGMENTATION, TARGETING, POSITIONING

In this topic you have learnt about

The process and value of segmentation, targeting and positioning

Influences on choosing a target market and positioning