CHP.8Segmentation, targeting and

positioning

Prepared by: Sara Arab

the segmentation, targeting and positioning is central to effective strategic marketing.

 Segmentation: is concerned with the process

of identifying different groups of customers who are similar in ways that are relevant to marketing.

Targeting: decisions can then be made based on range of identified segments.

Positioning: refers to the way in which an organization tries to communicate its value proposition to its target market in order to convince customers that it has a distinct offer

8.1 introduction-:

Segmentation essentially a process whereby a provider of goods or services chooses to groups prospective customers together on the basis of a set of common characteristics that have significant implications for its marketing activity.

Common characteristics that might be used to segment a market include variables such as age, income, personality and lifestyle.

Targeting is then concerned with the identification of an appropriate set of segments which the organization will seek to serve.

As one extreme, each individual customer could be presented as a segment of one because each individual has different needs.

8.2 the benefits of segmentation and targeting-:

1 it facilitates efficient resource utilization: a company is able to limit the scope of individual components of the mix and thus reduce costs.

 2 it allows effective targeting of new customers: nowadays,

it is unusual for a company to have a completely indiscriminate approach to targeting new customer.

 3 it facilitate competitive advantage: the more specific an

organization's approach to segmenting the market, the easier it is to establish and maintain competitive advantage.

 4 it directs the marketing mix: each target segment chosen

by an organization should be subject to a specific and relevant marketing campaign.

The benefits of segmentation and targeting are as follow-:

5 it enhances customer satisfaction: the mix should achieve a close match with customer needs and wants. The more precisely a product and its features reflect the characteristics of a given group of individuals, the greater the degree of satisfaction they should experience from its consumption.

There is no best way to segment a market. there is a variety of approaches that can be used with varying degrees of complexity and sophistication.

For an organization to get an approach to segmentation that is right for it depends on a good understanding of the market, the right skills and knowledge and carful evaluation of different options.

8.3 successful segmentation-:

1 a sense of touch for the market: the understanding of the market should be based on the ability to integrate all relevant sources of knowledge, the whole picture of the market.

 2 analytical skills and resources: access to appropriate data and the

ability to manipulate and interpret it is vital. The more varied the data about a market, the greater the number of options for segmentation.

 3 commercial judgment: common characteristics can be used in

market segmentation. These vary from basic demographic criteria, such as age and gender, through to subtle and complex criteria based upon personality traits.

 4 creative insight: to be successful, segmentation calls for a

combination of elements of marketing as both art and science. Science is required in terms of gathering of factual information, its analysis and the use of various modeling and simulation processes.

The following areas are of particular importance:

1 measurability: this is concerned with the extent to which the preferences, size and purchasing power of different segments can be measured. 

2 profitability: a segment should be the largest possible homogenous group worth going after with a tailored marketing programme.

 

One common approach is to focus attention on the following criteria:

3 accessibility: these refers to the degree to which the segments can be effectively reached and served. A bank that wishes to target individuals in social class AB will usually be to gather enough information about the television programmers that such individuals watch and the newspaper that they read and this should make such a segment relatively accessible.

 4 relevance: a segmentation system which groups

individuals in terms of lifestyle and establishes that the type of credit card carried "standard, gold, platinum "depends on an individual's aspirations and self-concept uses a personality-based characteristic explain preference.

One common approach is to focus attention on the following criteria:

8.4.1 customer characteristics "customer oriented segmentation-:"

1 demographic: age- gender- family relationship."

2 socio- economic: income- financial assets- social class."

3 geographic: region or locality.4 psychographic: attitudes- beliefs- motives.

8.4 approaches to segmenting consumer markets-:

This approach comprises variables that define the nature of the utility that consumers seek to gain from the consumption of a product or services.

8.5 approaches to segmenting "business to business markets-:

The cost of acquiring a new customer in the organizational business arena are usually considerably greater than in the consumer arena, and so too are the income flows.

8.4.2 customer needs and behaviours "product oriented-:"

Choices must be made regarding which segments to target. Choice of segmentation criteria and choice of targets is an interactive and interdependent set of processes which may well require a high degree of iteration before a final strategic position is arrived at. 

The basic of targeting strategies is as follow-:

8.6 targeting strategies-:

8.6.1 undifferentiated targeting-:An analysis of customer characteristics may

simply reveal the absence of a compelling variable upon which segmentation could be based.

A range of development, such as the regulation induced increase in new customer acquisition cost, lower product margins and the pressure to improve persistency rates, have all served to make the life insurance industry more discriminating in its all approach to gaining new customers.

8.6.2 differentiate targeting-:This arises when a company has been able

to identify a commercially valid basis upon which an aggregate market can be broken down into segments.

The fast moving consumer goods sector has probably been the best example of differentiate targeting. 

8.6.3 focused segmentation-:Company breaks a market down into a set

of segments but chooses to target a small subset of available segments.

1 single segment concentration: the organization focused only on a single segment in the market and supplies product to satisfy the needs of those customer group.

2 selective specialization: other type of niche marketing. Focused only on one segment the organization chooses to operate in several segments to less risk. 

A focused approach may make a number of different forms:

3 product specialization: most market can be seen as a different number of customer groups and a number of different but related product. The organization focused on present a particular product type to a range of customer groups.

 4 market specialization: this approach is the

opposite to product specialization. The organization chooses to specialize in meeting the needs of a particular customer groups

A focused approach may make a number of different forms:

8.6.4 customized targeting-:This approach represents the ultimate

manifestation of the segmentation concept, based as it is upon a separate marketing mix for each customer.

Positioning is a piece of marketing language that concerns the issue of perception.

Positioning is about how a company or brands wants itself to be perceived in the minds of the individual who comprise its target segments.

The objective of positioning is to generate and maintain a clear value proposition to customers, creating a distinctive place in the market for the brand or organization.

8.7 positioning products and organization-:

Positioning should be based upon product and services characteristics that:

Are relevant to the target segment.Achieve differentiation from the competition.Can be communicated clearly to the market.

Can be sustained. 

Positioning is a truly strategic concept that requires a considerable investment over a prolonged of time.

The brand characteristics upon which positioning may be built can related to demonstrable product and services attributes or image related factors.

Positioning is less well developed as a concept in the field of financial services than in the field of consumer goods.

Relies primarily on information about consumer perceptions of both the organization and its competitors. This information may be based upon either quantitative research based data or subjective judgments.

Trough the research and evaluation process, the organization typically tries to identify two major dimensions of itself or its product that could from the basis of competitive advantage.

 Whatever position is decided upon, it must

satisfy some basic tests of its likely effectiveness-:

8.7.1 perceptual mapping-:

1 clarity: is the basis of the position clear and straightforward to grasp?

2 credibility: can the position be justified and validated by the evidence available?

3 consistency: is the essence of the position communicated consistent over time in all elements of the marketing mix?

4 competitiveness: does the position result in benefits to the consumer that are demonstrably superior to those provided by its competitors?

8.7.1 perceptual mapping-:

as any aspects of marketing strategy, positioning needs to be reviewed on an appropriate basis to ensure that it delivers the required differentiation. Over time, market forces may exert pressures that threaten the relevance and value of the position.

8.8 repostioning-:

Thank you