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1 Segmentation Targeting Positioning Dr. Vesselin Blagoev.

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1 1 Segmentation Targeting Positioning Dr. Vesselin Blagoev

2 Segmentation -> Targeting -> Positioning 2 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

3 12/10/ 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.

4 12/10/20144 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)

5 12/10/20145 A procedure for segmenting markets 1. 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

6 12/10/20146 Segmentation variables Heterogeneous demand Segments relating to Customer characteristics Segments relating to Customer behaviour Demographic & Geographic variables Psychological & Sociological variables

7 12/10/20147 Consumer segmentation ProfileBehavioral Psychographic Demographic Geographic Socio-economic Purchase occasion Perceptions and beliefs Usage Benefits sought Purchase behavior Lifestyle Personality

8 12/10/20148 Bases for segmentation 1Geographic National/regional differences in taste and product usage 2Demographics Age Lifecycle Education Sex Family composition Can differences be distinguished between groups in each of those categories that reflect differences in propensity to purchase, or in product usage? 3Socio- economic and income Are consumption or media exposure related to social grad or income level?

9 12/10/20149 Bases for segmentation 4Geodemographics Does where we live condition how we live, and consequently relate to what we buy? 5Benefits sought Are there differences in the benefits sought by different people in the same product? 6Usage rate and brand loyalty Are these who consume a lot of a product different from those who consume a little? 7Psychographics Is consumption better considered in the context of ‘lifestyle’ groups?

10 12/10/ Bases for segmentation 8SituationDoes the situation in which consumption or purchase takes place vary? If so can individuals be grouped according to their situations? 9Responsivene ss Do people respond differently to aspects of marketing activity? Do they use different distribution channels?

11 12/10/ Profile: Demographic & Geographic variables Size Age Sex Destination Geographic area Socioeconomic class Race Family life cycle Family size Marital status Income Occupation ACORN group

12 12/10/ Profile: Socio-economic segmentation ClassDescription A Upper Middle Class High managerial/administrative/Professional, I.e. company director or established doctor B Middle Class Intermediate managerial/administrative/ or professional 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

13 12/10/ 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.

14 12/10/ ACORN GroupACORN groups in Great Britain% AModern family housing with manual workers9.6 BModern family housing, higher income7.4 COlder housing of intermediate status10.4 DVery poor quality, older, terraced housing9.2 ERural areas5.8 FUrban local authority housing20.6 GHousing with most overcrowding2.9 HLow income areas with immigrants4.2 IStudents and high status non-family areas4.3 JTraditional high status suburbia19.1 KAreas of elderly people, often resorts6.4 UnclassOther0.2

15 12/10/ ACORN ACORN groups %Population AAgricultural areas3.4 BModern family housing, higher incomes16.2 COlder housing of intermediate status17.6 DPoor-quality older terraced housing4.3 EBetter-off council estates13. FLess well-off council estates9.4 GPoorest council estates7.6 HMultiracial areas3.9 IHigh-status non family areas4.2 JAffluent suburban housing15.9 KBetter-off retirement areas3.8 UUnclassified0.7

16 12/10/ 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.

17 12/10/ Benefit segmentation for tooth paste SegmentBenefit requiredOther characteristics SensoryFlavor+appearanceUsually children SocialSound bright teethOutgoing and active, young, sometimes smokers WorrierDecay preventionHeavy users, families IndependentLow pricesPredominantly male, little loyalty, brand on offer

18 12/10/ 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.

19 12/10/ Benefit segments In 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

20 12/10/ 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)

21 12/10/ Behavioral segmentation Other behaviouristic criteria include: Loyalty levels Purchase occasion User status Readiness status

22 12/10/ Psychological & Sociological variables Values Needs Life style Group membership

23 12/10/ Psychographic segments Psychographics classify consumers according to their personal traits such as sociability, self-reliance, assertiveness, lifestyles, which cover attitudes, interests and opinions.

24 12/10/ 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.

25 12/10/ Lifestyle segmentation (a Psychographic segmentation) It is expensive to conduct – a large number of personal interviews with up to 600 questions being asked.

26 12/10/ Lifestyle segmentation ActivitiesInterestsOpinionsDemography WorkFamilySelvesAge HobbiesHomeSocial issuesEducation Social events JobPoliticsIncome VacationCommunityBusinessOccupation Entertainments RecreationEconomicsFamily size Club membership FashionEducationDwelling CommunityFoodProductsGeography ShoppingMediaFutureCity size Sports Achievements Culture Family life style

27 12/10/ 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%):

28 12/10/ 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

29 12/10/ 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

30 12/10/ SAGACITY a 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’.

31 12/10/ SAGACITY classification scheme DependentPre-familyFamilyLate Better off Worse off Better off Worse off White Blue White Blue WhiteBlueWhiteBlueWhiteBlue White Blue

32 12/10/ Requirements for a usable segment The useful segment must be: Definable Sizeable Reachable Relevant

33 12/10/ 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

34 12/10/ Sizeable To be big enough to make possible to achieve the required turnover and profit A trend to grow

35 12/10/ Reachable There must be a way of reaching the segment both effectively and efficiently Marketing communication Distribution channels

36 12/10/ Relevant Segment life cycle (durability) Price level to customization costs (incl. entry investment) Extent of overlap or interdependency with other segments

37 12/10/ 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)

38 12/10/ Organizational market Macrosegment 1 (large companies) Macrosegment 2 (medium-sized companies) Macrosegment 3 (small companies) Microsegment 1 1 st criterion: Reliability Microsegment 2 1 st criterion: Convenience Microsegment 3 1 st criterion: Price

39 12/10/ Organizational segmentation Macrosegmentation Microsegmentation Organizational size Geographic location Industry Innovativeness Purchasing organization Buy class Decision- Making process Decision- Making structure Choice criteria

40 12/10/ SIC Food, drink and tobacco manufacturing : code 4.2 Soft drinks: code 42.8 Mineral waters and soft drinks (carbonated and stiff) : code Fruit and vegetable juices : code

41 12/10/ To segment or not to segment ? FactorMassNiche End user wantsSimilar Different Product market size Small Large Product market structure Simple Complex Market shareHigh Low Resources of company High Low ImageHigh Low

42 12/10/ Segmentation strategies Targeting Marketing mix Marketing mix 1 Marketing mix Market Segment 1 Marketing mix 2 Marketing mix 3Segment 3 Segment 2 Segment 3 Segment 2 Mass (undifferentiated) marketing Differentiated marketing (multi-segment) Concentrated marketing

43 43 Analysis of customer behaviour 2 major theories: Rational customer who always seeks to maximize his satisfaction or utility Psycho-socio customer: family, culture affects

44 Targeting What does it mean? 44

45 Product Positioning 45

46 Different options need different strategies 46 Target segments Customer behavior Product adaptation Marketing budget Different marketing options & strategies Mktg Mix 1 (Strategy 1) Segment 1 Segment 3 Mktg Mix 2 (Strategy 2)

47 12/10/ Market positioning A 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.

48 12/10/ Key tasks in positioning Positioning is the choice of : Target market : where we want to compete Differential advantage : how we wish to compete

49 12/10/ Some basis for positioning Corporate positioningProduct 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

50 12/10/ Keys to successful positioning Clarity Credibility Competiti- veness Consistency Successful positioning

51 12/10/ 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

52 12/10/ Consistency Too many messages bombard the customers. Consistent message is required. If it is quality this year, it must be quality next year too.

53 12/10/ Credibility The 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.

54 12/10/ Competitiveness The 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

55 12/10/ Positioning map Excellent image Poor image Low Brand Awareness High Brand Awareness Amstel Kamenitza Pirinsko pivo Zagorka Ariana

56 How do we position the product? 56

57 57 Marketing mix Target market Marketing mix 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

58 58 Customer Service Price Promotion Physical Evidence Processes People Place Product Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth Heinemann 7P of Customer Service & Mktg Mix

59 How do we position the brand? 59


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