topic 3 segmentation

© NSW Technical and Further Education Commission Date | Version 0.0

Develop and implement marketing strategies

Topic Three: Marketing Strategy/Positioning/Segmentation

SITXMPR005



Learning outcomes

• Identify and analyse specific opportunities based on internal and external

market analysis

• Developing marketing strategies that are consistent with direction, values

and business plan of the organisation

• Ensure marketing strategies meet legal and ethical constraints

• Develop strategies in consultation with key stakeholders


Marketing strategy: What is it?

Definition:

A plan of action for identifying and analysing a target market and

developing a marketing mix to meet the needs of that market

(Elliott: 2006)


How does this fit into the overall strategic planning process?

The strategic planning process gives us a long term view on what the business

wants to achieve.

However….

Strategic Marketing gives us more of an action plan on how to create a marketing

mix that will meet our Marketing Objectives. This is more functional planning and

relies on lower level management to implement key actions.


Marketing strategies should be consistent with direction, values and business plans

Strategic marketing planning is a managerial process of ensuring a long-term

strategic fit between an organisation’s objectives, skills and resources and its

changing market, in keeping with the direction, values and business plans of the

organisation.

The aim of strategic marketing planning is to shape and reshape a company’s

business and products so that they continuously yield target profits and growth, and

look at how we talk to our customers. Airlines are always continuing to look at and

amend their strategic marketing planning look at the changes that Virgin Australia

have done over the past two years and how their strategic marketing has changed

with their product offering.


Market analysis

The company needs to ask itself… “where are we now?”

First, it needs to look at internal factors:

• Organisational objectives

• Organisational resources

• Current marketing mix

• Current market position

The main factors that need to be examined are human and financial resources:

• What skills do your staff have?

• What experience and knowledge do they have?

• What training needs do they have?

• Does your organisation have the skills base to deliver this training internally?


Setting marketing objectives

Goals for an organisation are normally set within the mission or vision. Similarly with

Marketing Objectives, these need to be clear and provide direction. Remember that

goals should always be SMART:

Specific

Measurable

Achievable

Realistic

Timely


Example

If you were to launch a new food product into the market, what would be some

marketing objectives you would set for 6 months post launch.

Suggestion could be if you were launching the Wet and Wild theme park in Sydney

or a re-launch of a recently refurbished hotel in Sydney, what would be some of the

marketing objectives you would set for 6 months post launch.


Example answers

• Reach 40% Awareness for the food product in the first year post launch Reach

80% of awareness in the first year to your target market

• Achieve $100,000 worth of sales in the first 6 months. Achieve 20,00 visitors to

your attraction in the first 6 months.

• Achieve 10% consumer loyalty to this product. Achieve 20% return visitation over

the first year.

• From these objectives you can see that there are some sales focused, marketing

focused and also another (loyalty) that shows the intention for consumers to

repeat purchase. All of them are SMART!


Next steps:

We need to establish our target market, our segment and our positioning.

This will then lead us into the development or our Marketing Plan.


1 Market segmentationMarket

Marketsegment

Marketsegmentation

People or organisations with needs or wants and the ability and willingness to buy.

A subgroup of people or organisationssharing one or more characteristics that cause them to have similar product needs.

The process of dividing a market into meaningful, relatively similar and identifiable segments or groups.

Definitions:


The importance of market segmentation

• Nearly all markets include people with different product needs and preferences.

Think of a what a family would like when travelling overseas compared to a single

person.

• It helps to define the needs and wants of your consumers more precisely as

similar segments have similar needs and wants.

• Decision-makers can define objectives and allocate resources more accurately

as consumers are not scattered but grouped.

• More precise objectives = better evaluation of performance.


Why use market segmentation


Bases for segmentation

Geography

Demographics

Psychographics

Benefits sought

Usage rate

The above are different ways in which we can segment. We will investigate each of

these and examples in the following slides


Geographic segmentation

Segmenting markets by region of the country or world, market size, market density

or climate.

Examples:

Region of the country or world

Market size

Market density

Climate


Benefits of regional segmentation

• New ways to generate sales in sluggish and competitive markets think of the

Western Suburbs of Sydney and how the opening Wet and Wild Sydney has

effected tourism in that area

• Scanner data allows assessment of best-selling brands in region

• Regional brands appeal to local preferences

• React more quickly to competition.


Demographic segmentation

Segmenting markets by age, gender, income, ethnic background and family life

cycle.

Family Life Cycle:

A series of stages determined by a combination of:

Age

Marital status and

Children


Psychographic segmentationMarket segmentation on the basis of personality, motives, lifestyles and

geodemographics.

Lifestyle examples:

How time is spent

Beliefs

Socioeconomic characteristics

Geodemographic examples:

Segmenting potential customers into neighborhood lifestyle categories.

Combines geographic, demographic and lifestyle segmentation


Benefit segmentation

The process of grouping customers into market segments according to the benefits

they seek from the product. Think of the benefits of flying business class in a plane

compared to economy.


Usage-rate segmentation

Dividing a market by the amount of product bought or consumed.


Target market

A group of people or organisations for which an organisation designs, implements

and maintains a marketing mix intended to meet the needs of that group, resulting in

mutually satisfying exchanges.

It is easier to market a product to a target market rather than the mass market. It is

too costly to market to everyone and would be a waste of resources. Therefore,

marketers find that group of consumers with common attributes and consumption

patterns to market their product to. This also creates an easier dialogue for

marketers to communicate with consumers if they share common features.


Positioning

Developing a specific marketing mix to influence potential customers’ overall

perception of a brand, product line or organisation in general.

Position is referred to as: The place a product, brand or group of products occupies

in consumers’ minds relative to competing offerings.


There are a number of different ways you can position your product

Positioning in relation to competition - look at various airlines

Positioning based on price compare- Jetstar to Tiger Airways

Positioning based on associated benefits

Positioning based on quality of service- Ritz Carlton Hotels to Four Seasons Hotels

ACTIVITY: Can you name some brands that fit into each of these segments?


Answers…

• Positioning in relation to competition: Skiers would pay a bit more for lift

tickets at certain areas to reduce the time they wait in queues

• Positioning based on price: Research shows that people are not interested in

inflight food so ticket prices reduced and this was given as an option.

• Positioning based on associated benefits: Waterfront or beach bungalow

accommodation

• Positioning based on quality of service: star ratings for accommodation


Positioning: Example

A company representing luxury products will only confuse (as probably alienate)

their customers if they introduce a cheaper range – this undermines the perception

of exclusivity. Another example is Jetstar versus Qantas – while Jetstar is owned by

Qantas, it has been identified that there are 2 distinct markets Qantas would like to

cater for. In hotels, compare the thoughts of consumers between Sofitel and Formula

1 hotels who are owned by Accor


Product differentiation

A positioning strategy that some firms use to distinguish their products from those of

competitors.

Sometimes this is referred to as the Unique Selling Point (USP)


Perceptual mapping

A means of displaying or graphing, in two or more dimensions, the location of

products, brands or groups of products in customers’ minds.


Perceptual mapping – Levi’s

High price

Low price

Cla

ssic

Desig

ner

Old product

New product

Vintage

Red Line

Silver Tab

Slates

DockersPremium

DockersClassics

501

Red TabBasics

Red TabDry Goods

L2

Red TabElesco


Positioning bases

These are other attributes that can be used on a positioning map to analyse different

companies and products. Remember to choose attributes that are relevant and will

give insight.

• Attribute

• Price and quality

• Use or application

• Product user

• Product class

• Competitor


Why use a positioning map?

Many larger companies use positioning maps to identify key strategies:

• Gaps in the market that can be identified to create new products for

• Identify where you can place line extension to limit cannibalisation

• Understand why some products are not working/selling

• Attributes that you communicate to consumers about your product are not clear

• You are trying to communicate to consumers that there are too many attributes that this

product is trying to be


Marketing strategies

There are a number of commonly used marketing strategies. They may refer to the

type(s) of target market a company has elected to pursue or they may refer to the

elements of the marketing mix and/or brand positioning. Sometimes contingency

planning is also included in the strategic planning.

The following slides will go in to the different strategies that companies can use.


Market aggregation

Mass marketing using a single marketing mix to reach as many customers as

possible i.e. trying to be all things to all people (generalists). For example, Qantas

Holidays targets the broad community and appeals to a wide range of consumers.

It is a fairly generic product, perceived as good quality, value for money, safe, etc

and is patronised by couples, families, and older people over a broad segment of

the population. Whilst they do provide some luxury product, they do not in any way

appeal to the adventure or off-the-beaten-track type markets.

Compared to the Travel Corporation who have the brands of Contiki, Trafalgar,

AAT Kings and Busabout appealing to a variety of different markets.


Single segment target market strategy

The goal of this strategy is to out-compete all other tourism businesses for a

specific segment i.e. Contiki Tours is geared towards active, social 18-35 year olds

and provides a product specifically tailored to this market. They successfully out-

compete all other product aimed at this target market. They have selected one

specific target market and developed one marketing mix to reach this single

segment.


Concentrated marketing strategy

This strategy is similar to the single target market strategy except a few additional

target markets are pursued. P & O originally targeted only couples (of all ages) for

their Pacific cruises. They later expanded this to include young singles (friendly

fours etc) and a big emphasis of families with children and seniors market

Another example might be a conference dealing with taxation and small business

might also target accountants, academics and owner/operators.


Full coverage marketing strategy

Is when two or more different groups of potential customers are identified as target

market segments. A separate marketing mix (4 P’s) is designed to reach each

segment. A company will frequently develop a different variety of the basic product

for each segment and/or tailor separate promotional programmes for each segment.

For example, a local festival may see its target markets as all demographic groups in

various life stages (e.g. families with children). Additionally it may see the need to

cater for specific ethnic groups. To attract these groups, its programme will include

elements capable of meeting the needs of each of them. Additionally it will access

each of the target groups by different (but sometimes overlapping) promotional

efforts.

Pricing may also differ between groups with, for example, discounted prices for

families and retired couples. Trafalgar Tours offers a ‘Cost Saver’ product and also a

21-38 year old product. The products are very similar, but the products are marketed

in different ways to the targeted groups. Within the Contiki brand this also can be

seen with the offering of hotel tours, cabin and camping tours.


Creating a unique image

There are several ways of creating a unique image in the customers’ mind.

Positioning on business attributes e.g. on-line facilities

Positioning on benefits, problem solution or needs e.g. This conference is the only one at

which you will be able to hear from all Commonwealth Government departments involved in

implementing the new XYZ legislation.

Position for a specific user category e.g. a puppet festival that seeks to target only families, an

agricultural exhibition that targets farmers, snowboarding holidays.

Positioning against another business e.g. a convention which compares its programme to

another in an effort to prove that it offers better value for money/time spent.

Positioning by product class dissociation. This strategy involves a tourism business trying to

make it appear significantly different from all competitors e.g. a trade fair may focus on the fact

that it has far more buyers than any other similar event. Club Med offers all inclusive packages

(accommodation, all meals and most activities) – their villages are unique.


Ensure marketing strategies meet legal and ethical constraints

Business might have to follow or take into account the below:

• Restraint on the language and images that you use when communicating

internally and externally

• Licensing requirements for some businesses, especially those that have to follow

head office requirements

• Safety and risk factors – e.g recently a client died on a cruise ship that became

victim of a drug scene on board ship. This results in loss of business for the

cruise ship and bad publicity.


References

Marketing, Core Concepts and Applications 2nd Asia Pacific Edition; Elliot, Rundle-

Thiele, Waller, Paladino; Wiley, 2008

topic 3 segmentation

Education

marketing mix

marketing strategiestopic

key stakeholders nsw

target market

market elliott

changing market

functional planning

longterm strategic fit