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Segmentation Targeting Positioning

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Presentation on theme: "Segmentation Targeting Positioning"— Presentation transcript:

1 Segmentation Targeting Positioning
Dr. Vesselin Blagoev

2 Segmentation-> Targeting-> Positioning
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 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. 06/04/2017

4 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) 06/04/2017

5 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 06/04/2017

6 Segmentation variables
Heterogeneous demand Segments relating to Customer characteristics Segments relating to Customer behaviour Demographic & Geographic variables Psychological & Sociological variables 06/04/2017

7 Consumer segmentation
Profile Behavioral Psychographic Demographic Benefits sought Purchase behavior Lifestyle Socio-economic Usage Purchase occasion Personality Geographic Perceptions and beliefs 06/04/2017

8 Bases for segmentation
1 Geographic National/regional differences in taste and product usage 2 Demographics 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? 3 Socio-economic and income Are consumption or media exposure related to social grad or income level? 06/04/2017

9 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? 06/04/2017

10 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? 06/04/2017

11 Profile: Demographic & Geographic variables
Size Age Sex Destination Geographic area Socioeconomic class Race Family life cycle Family size Marital status Income Occupation ACORN group 06/04/2017

12 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/ 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 06/04/2017

13 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. 06/04/2017

14 ACORN Group 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 06/04/2017

15 ACORN ACORN groups % Population 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 06/04/2017

16 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. 06/04/2017

17 Benefit segmentation for tooth paste
Segment Benefit required Other characteristics Sensory Flavor+appearance Usually children Social Sound bright teeth Outgoing and active, young, sometimes smokers Worrier Decay prevention Heavy users, families Independent Low prices Predominantly male, little loyalty, brand on offer 06/04/2017

18 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. 06/04/2017

19 Benefit segments Do-it-yourselfer (25%)
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 06/04/2017

20 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) 06/04/2017

21 Behavioral segmentation
Other behaviouristic criteria include: Loyalty levels Purchase occasion User status Readiness status 06/04/2017

22 Psychological & Sociological variables
Values Needs Life style Group membership 06/04/2017

23 Psychographic segments
Psychographics classify consumers according to their personal traits such as sociability, self-reliance, assertiveness, lifestyles, which cover attitudes, interests and opinions. 06/04/2017

24 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. 06/04/2017

25 Lifestyle segmentation (a Psychographic segmentation)
It is expensive to conduct – a large number of personal interviews with up to 600 questions being asked. 06/04/2017

26 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 Dwelling Food Products Geography Shopping Media Future City size Sports Achievements Culture Family life style 06/04/2017

27 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%): 06/04/2017

28 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 06/04/2017

29 Taylor Nelson’s Monitor
Self-explorer: youthful, independent, tolerant,comfortably situated, often female Social register: older, resist change, high need for control Experimentalist: independent, unconventional, energetic, work-oriented, often men in their late 20s and early 30s Conspicuous consumer: conformist, materialistic, lacking self-confidence Belonger: mature, stable, settled 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 Aimless: goal-less, uninvolved, alienated, unable to improve their position 06/04/2017

30 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’. 06/04/2017

31 SAGACITY classification scheme
Dependent Pre-family Family Late Better off Better off Worse off Worse off Blue Blue White White White Blue White Blue White Blue White Blue 06/04/2017

32 Requirements for a usable segment
The useful segment must be: Definable Sizeable Reachable Relevant 06/04/2017

33 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 06/04/2017

34 Sizeable To be big enough to make possible to achieve the required turnover and profit A trend to grow 06/04/2017

35 Reachable There must be a way of reaching the segment both effectively and efficiently Marketing communication Distribution channels 06/04/2017

36 Relevant Segment life cycle (durability)
Price level to customization costs (incl. entry investment) Extent of overlap or interdependency with other segments 06/04/2017

37 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) 06/04/2017

38 Organizational market
Macrosegment 1 (large companies) Macrosegment 2 (medium-sized companies) Macrosegment 3 (small companies) Microsegment 1 1st criterion: Reliability Microsegment 2 1st criterion: Convenience Microsegment 3 1st criterion: Price 06/04/2017

39 Organizational segmentation
Macrosegmentation Organizational size Industry Geographic location Microsegmentation Choice criteria Decision- Making structure Decision- Making process Buy class Purchasing organization Innovativeness 06/04/2017

40 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 06/04/2017

41 To segment or not to segment ?
Factor Mass Niche End user wants Similar Different Product market size Small Large Product market structure Simple Complex Market share High Low Resources of company Image 06/04/2017

42 Segmentation strategies Targeting
Marketing mix Market Mass (undifferentiated) marketing Marketing mix 1 Segment 1 Differentiated marketing (multi-segment) Marketing mix 2 Segment 2 Marketing mix 3 Segment 3 Segment 1 Marketing mix Concentrated marketing Segment 2 Segment 3 06/04/2017

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?

45 Product Positioning

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

47 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. 06/04/2017

48 Key tasks in positioning
Positioning is the choice of : Target market : where we want to compete Differential advantage : how we wish to compete 06/04/2017

49 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 06/04/2017

50 Keys to successful positioning
Clarity Consistency Successful positioning Credibility Competiti- veness 06/04/2017

51 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 06/04/2017

52 Consistency Consistent message is required.
Too many messages bombard the customers. Consistent message is required. If it is quality this year, it must be quality next year too. 06/04/2017

53 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. 06/04/2017

54 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 06/04/2017

55 Positioning map Excellent image Amstel Kamenitza Zagorka
Low Brand Awareness High Brand Awareness Pirinsko pivo Ariana Poor image 06/04/2017

56 How do we position the product?

57 Marketing mix Product Price Place Promotion Marketing mix
Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties Product List price, Discounts, Allowances, Payment Terms, Credit terms Marketing mix Price Target market Channels, Locations, Inventory, Transport Place Promotion Advertising, Personal selling, Sales, Promotion, PR

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

59 How do we position the brand?

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