1. COURSE TITLE : MARKETING MODULE 5: Segmentation and Positioning
Ashesi University
COURSE TITLE : MARKETING
SEMESTER : FIRST, 2011/2012
MODULE 5: Segmentation and Positioning
Lecturer: Ebow Spio

2. Marketing Management Framework
Opportunities
Impediments
& Solutions
Product
Price
Place
Promotion
Physical Ev.
Process
People
Execute
Target Segment
Corporate/Business Objectives
Marketing Objectives
Sources of Volume/ Business
Position
Evaluate

3. Lesson Outcomes
Define the three steps of target marketing: market segmentation, target marketing, and market positioning
List and discuss the major bases for segmenting consumer and business markets
Explain how companies identify attractive consumer and business markets
Discuss how companies position their products for maximum competitive advantage in the marketplace

4. Steps in Segmentation, targeting and positioning
Select Customers to Serve
Decide on value proposition
Segmentation
Divide the total market into
Smaller segments
Differentiation
Differentiate the market offering to create superior customer value
Targeting
Selecting the segment or segments to enter
Positioning
Position the market offering in the minds of the target
customers
Create value for target customers

5. Definition of Key Concepts
Market Segmentation
Dividing a market into smaller groups with distinct needs, characteristics, or behaviours who might require separate products or marketing mixes
Market Targeting
The process of evaluating each segment’s attractiveness and selecting one or more segments to enter
Differentiation
Actually differentiating the market offering to create superior customer value
Positioning
Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers

6. Market Segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs
7-5

7. Market Segmentation SEGMENTATION is grouping consumers with similar
needs
Dividing a market into distinct groups
of buyers with different needs,
characteristics or behaviour, who might
require separate product or marketing
mixes
If I talk about different segements of the car market
luxury - show off/indulge
sport - thrills
family - space/safety
economy - low fuel consumption
outdoor - rugged
I am segmenting needs

8. What is the importance/benefits of Segmentation
Help identify opportunities while throwing out company weaknesses and strengths
Matching what company does best with the most lucrative segments.
Tailor the offering and position the brand
Higher Perceived Quality/Value
Greater Loyalty
More Profit

9. What is the importance/benefits of Segmentation
4. Helps us manage our portfolio
5. Identifies unmet needs (GAPS) which: > may provide entry to the market > may need to be covered to keep competition out
6. Focusing budgeting expenditures and business segments more precisely

10. Bases of Segmenting Markets : Consumer Markets
Variables for Segmenting Consumer markets
Geographic
Demographic
Psychographic
Behavioural
Geodemographics
Segmentation occurs in 3 stages :
An understanding of the needs of the various customers in the total market needs to be developed.
Customers are grouped according to their needs and characteristics
Groups are selected for targeting.

11. Bases of Segmenting Markets : Consumer Markets
Geographic Segmentation is dividing a market into
Different geographical units such as nations, states,
regions, counties, cities or neighbourhood
Variables
Region : e.g. in bouillon market in broadly Nigeria
Northern, South East and South West
City Size : , 20,000-50,000 etc
Density : Urban, suburban, rural
Climate :Tropical, temperate, artic

12. Bases of Segmenting Markets : Consumer Markets
Demographic Segmentation is dividing the market into groups based on
demographic variables such as age, sex, family, size, family life cycle,
income, occupation, education, religion, race and nationality
Most popular bases for segmenting customer groups
Age : Under 6, 6-11, 12-19, 20-34, 35-45, 46-54, 55-64, 65+
Gender : Male, Female
Family Size : 1-2,3-4, 5+
Family Life Cycle:
Income
Occupation
Education
Religion
Race
Nationality

13. Bases of Segmenting Markets : Psychographic
Psychographic Segmentation: dividing a market into different groups based on social class, lifestyle and personality characteristics
Social Class : Upper Class, Middle class, Low class
Lifestyle: Aspirers, Succeeders, Mainstreamers, reformers
Personality : Compulsive, gregarious, authoritarian, ambitious

14. Bases of Segmenting Markets : Behavioural
Behavioural Segmentation: dividing a market into groups
based on the consumer knowledge, attitude, use or
response to a product
Purchase Occasion: Regular occasion, special occasion
Benefits sought: Quality, service, economy
User status: non-user, potential user, first time user, regular user
Usage rate: Light user, medium user, heavy user
Loyalty status: none, medium, strong, absolute
Readiness status: unaware, aware, informed, interested, desirous, intending to buy
Attitude towards product: Enthusiastic, positive, indifferent, negative, hostile

15. Bases of Segmenting Markets : Multiple Segmentation
Multiple segmentation is used to identify smaller, better-defined target groups
Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns

16. Segmenting Business Markets
In addition to the same segmentation variables as consumers, business can also be segmented by:
Customer-operating characteristics
Purchasing approaches
Situational factors
Personal characteristics
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17. Bases of Segmenting Markets : Business Markets
Demographics
Industry
Company size
Location
Operating
Technology
User/non-user status
Customer capabilities
Personal Characteristics
Buyer-seller similarity
Attitudes towards risk
Loyalty

18. Bases of Segmenting Markets : Business Markets
Purchasing Approaches
Purchasing function organizations
Power structure
Nature of existing relationships
General purchase policies
Purchase Criteria
Situational Factors
Urgency
Specific application
Size of the order

19. Bases of Segmenting Markets : Business Markets
Segmenting international markets
Geographic location
Economic factors
Political and legal factors
Cultural factors
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20. Bases of Segmenting Markets : Business Markets
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
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21. Requirements for Effective Segmentation
To be useful, market segments must have the following characteristics:
Homogeneous (similar) within- the customers in a market segment should be as similar as possible with respect to their responses to marketing mix variables and the segment variables/dimensions
Heterogeneous (Differentiable ) refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programmes.
Measurability/Operational: The degree to which variables such as the size, purchasing power, profile of segment and profits of the market can be measured and appropriate marketing mix developed to satisfy the market

22. Requirements for Effective Segmentation
4. Substantial : The market segments are large or profitable enough to serve
5. Accessibility: Can the markets be effectively reached and served
6. Actionability: Effective programmes can be designed for attracting and serving segments

23. Process for Segmenting Marketing
Name Broad Market
List Customer Needs
Narrow Product- Market
Identify Determining Variables
Name Possible Market Segments
Evaluate Segments
Estimate Size

24. Market Targeting
The process of evaluating each segment’s attractiveness and selecting one or more segments to enter

25. Market Targeting : Evaluating Market Segments
Segment size and growth
Segment structural attractiveness
Company objectives and resources
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26. Market Targeting : Evaluating Market Segments
Segment size and growth
Smaller versus larger segments
Growth potential
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27. Market Targeting : Evaluating Market Segments
Segment structural attractiveness
Competition
Substitute products
Power of buyers
Power of suppliers
NB: The above factors affect the profitability of the segment

28. Market Targeting : Evaluating Market Segments
Company objectives and resources
Competitive advantage
Availability of resources
Consistent with company objectives
Firms should enter segments only where it has the capacity to offer superior value and gain advantages over competitors

29. Market Targeting : Selecting Target Market Segments
Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Micromarketing
A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

30. Market Targeting : Selecting Target Market Segments
Undifferentiated marketing :targets the whole market with one offer
Mass marketing
Focuses on common needs rather than what’s different
Mass Marketing is to produce something which almost everyone would want, then produce it in vast quantities at low prices and promote heavily to gain market share.

31. Market Targeting : Selecting Target Market Segments
Differentiated marketing (multiple target market approach) : identifies and targets several different market segments and designs separate offers for each
Goal is to achieve higher sales and stronger position
Company able to direct resources more effectively.
More expensive than undifferentiated marketing
e.g. Procter & Gamble, Unilever

32. Market Targeting : Selecting Target Market Segments
Concentrated marketing (single target market approach): targets a small share of a large market
Limited company resources
Knowledge of the market
More effective and efficient
e.g. Porsche
Niche marketers focus on small sub-groups within the larger segments and produce very carefully-targeted products.

33. Market Targeting : Selecting Target Market Segments
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
Local marketing
Individual marketing
e.g. Dell, Nike online business etc.

34. Market Targeting : Selecting Target Market Segments
Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups
Cities
Neighborhoods
Stores
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35. Market Targeting : Selecting Target Market Segments
Local Marketing
Benefits:
Increased marketing effectiveness in competitive markets
More customer-specific offerings
Challenges:
Increased manufacturing and marketing costs
Less economy of scale
Logistics
Dilution of company image
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36. Market Targeting : Selecting Target Market Segments
Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers
Also known as:
One-to-one marketing
Mass customization
Markets-of-one marketing
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37. Market Targeting : Selecting Target Market Segments
Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs. Has made relationships with customers important in the new economy.
Provides a way to distinguish the company against competitors
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38. Market Targeting : Choosing a Target Strategy
Depends on:
Company resources
Product variability
Product life-cycle stage
Market variability
Competitor’s marketing strategies
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39. Market Targeting : Socially Responsible Target Marketing
Benefits customers with specific needs
Concern for vulnerable segments
Children
Alcohol
Cigarettes
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40. Target Marketers: Combiners Vrs Segmenters
Combiners: try to increase the size of their the target markets by combining two or more segments. Combiners look at various submarkets for similarities rather than differences
- Economies of scale
- Less investment
Segmenters: aim at one or more segments and try to develop different marketing mix for each segment
- Adjust marketing mix to cater for each segment
- Provide superior value
- Better customer satisfaction
- Higher Sales

41. Discussion Questions
Financial services providers are looking to segment their markets in the face of greater competition and ever more demanding customers. Would segmentation work for financial services? Show how financial services providers might go about segmenting their markets and implementing selected targeting strategies

42. Differentiation & Positioning
Differentiation : how the marketing mix or offer is designed to be distinct from and better than what's available from a competitor.
Positioning is the distinct, meaningful and valued place that the brand occupies or seeks to occupy in the minds of customers vis a vis competitors or other manufacturers.
Positioning begins with differentiating a firm’s marketing offer, so that it will give consumer more value than competitors’ offers do.

43. Differentiation & Positioning
Competitive Advantage is an advantage
over competitors gained by offering
consumers greater value, either through
lower prices or by providing more benefits
that justify higher prices

44. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages
Selecting an overall positioning strategy
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45. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Product differentiation
Service differentiation
Channels
People
Image
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46. Differentiation and Positioning
Choosing the Right Competitive Advantages
A difference is worth establishing to the extent that it satisfies the following criteria:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
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47. Product Differentiation
Product anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas.
i Optional features such as cars, furniture etc e.g. Volvo
ii. Performance: Whirlpool designs its dishwasher to run more quietly
iii. Style & Design e.g. Jaguar, Ikea furniture, Bose speakers
iv. Innovation, consistency, durability, reliability and repairability : Give examples

48. Services Differentiation
Service any activity or benefit that
one party can offer to another that is essentially intangible and does not result in the ownership of anything.
Speedy, reliable and careful delivery e.g. Domino’s Pizza in 30 minutes
Installation – IBM
Customer Training – GE
Consulting Services
Speed of Service : Unique Trust, FEDEX
NB: People are prepared to pay for premium service

49. Personnel Differentiation
People
The people employed in your organisation
will determine the quality of service
your customers receive. This is truer for
services, but also impacts on businesses
making tangible products.
Companies can gain a strong competitive advantage through hiring and training better people than their competitors do

50. Personnel Differentiation: Key Differentiating Traits
Positive Attitude : A crucial difference between excellence and mediocrity is a positive attitude
Competence and Confidence : Confident people will always outperform those who are unsure of themselves.
Knowledge is a source of confidence
3. Passion to listen, learn and grow to be the best
4. Integrity

51. Image Differentiation
Even when competing offers look the same, buyers may perceive a difference based on company and brand images.
Firms work to establish images that differentiate them from competitors
A company or brand image should convey a singular and distinctive message that communicates the product’s main benefits and positioning
Symbols can provide strong company or brand recognition and image differentiation e.g. Nike, Mercedes, Databank, Ferrari. The chosen symbols must be communicated through advertising the conveys the company or brand personality
A company can also create an image through the types of event it sponsors Red Bull sponsors Formula 1 and

52. Differentiation and Positioning : Selecting overall strategy
Value proposition is the full mix of benefits upon which a brand is positioned
More for more
More for the same
Same for less
Less for much less
More for less
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53. Positioning : Value Positions

54. Positioning : Value Positions
More for More : Involves providing the most upscale product or service and charging a higher price to cover the higher costs. E.g. Mercedes Benz
i. Marketing offer high in quality
ii Offers prestige to the buyer
iii. It symbolizes status and a lofty lifestyle
iv Often price difference exceeds the actual increment in quality
NB: Can be very vulnerable . They often invite imitators who claim the same quality but a lower price. Luxury goods that sell well during good times may be at risk during economic downturns when buyers become more cautious in their spending

55. Positioning : Value Positions
2. More for the same : Attack a competitor’s more for more positioning by introducing a brand offering comparable quality but at a lower price. E.g. Toyota introduced its Lexus line with a “more for the same” value proposition.
Lexus Headline in the US : “Perhaps the first time in history that trading $72,000 car for $36,000 could be considered trading up”
3. The Same for less: Can be a powerful value proposition-everyone likes a good deal. E.g. Amazon.com sells the same book titles at lower prices that store competitors

56. Positioning : Value Positions
4. Less for much less: It involves meeting consumers’ lower performance or quality requirements at a much lower price.
A market almost always exists for products that offer less and therefore cost less.
Not all people can afford the very best
E.g. Motels, EasyJet, Rayanair

57. Positioning : Value Positions
5. More for Less: Winning value proposition could be offering more for less.
Many firms claim to do this E.g. Procter & Gamble claims that its laundry detergents provide best cleaning and everyday low prices.
Long run not sustainable because offering more usually costs more
NB: Each brand/firm must adopt a positioning strategy designed to serve the needs and wants of its target markets

58. Positioning: Product Positioning
A product’s position is the way the product is defined by consumers on important attributes.
The place the product occupies in consumers’ minds relative to competing products e.g. Key Soap
A firm’s competitive advantage & its product’s position can be quite different
A competitive advantage, like low costs or high quality, could influence a product’s position, but in many cases it is not central to it.

59. Positioning: Product Positioning
Product positioning simplifies buying decision making
Consumers position products with or without the help of marketers
Marketers do not want to leave their products’ positions to chance
They plan positions that will give their products the greatest advantage in selected target markets and they design marketing mixes to create these planned positions

60. Positioning: Product Positioning Alternatives
Strengthen a brand’s current position in the mind of consumers e.g. Avis “We’re number two. We try harder”
Search for a new unoccupied position in the mind of consumers e.g. P&P newspaper in Ghana and Sun in Nigeria
To deposition or reposition the competition

61. Positioning Strategies
Positioning Strategies use associations to
change consumers’ perception of products
Product attributes position many technical products e.g. cars, watches e.g. BMW “ The Ultimate driving machine”
Benefits offered or the needs they fill position many products e.g. Crest reduces cavities and Macleans Sensitive relieves the pain of sensitive teeth.
Usage Occasions position many products e.g. Mentadent Night Action toothpaste or internationally Kitkat means “Have a break”

62. Positioning Strategies
4.Users help position products. Johnson & Johnson reposition baby shampoo towards a new user category of adults who wash their hair frequently and need a gentle shampoo
5. Activities after used to sell expensive products e.g. Rolex for sailing,
6. Personalities often help positioning. Prestigious brands are often positioned using successful personalities who can add to a products character e.g. Nike, Rolex
7. Origin positions product by association of place of manufacture e.g. shoes, champagne

63. Positioning Strategies
8. Other brands can help position products E.g. with VW engineering and Skoda “more for less” positioning
9. Competitors provide two positioning alternatives
i. Directly against a competitor e.g. Avis vrs Hetz
ii. Away from competitors e.g. 7 Up positioned as “Uncola, the fresh and thirst quenching alternative to Coke and Pepsi
10. Product Class membership is another strategy. E.g “I can’t believe is not butter”

64. Choosing and Implementing a position Strategy : Selecting the right competitive advantage
2 decision areas namely how many differences to promote e.g. only one benefit to the target market or more?
Many argue company should aggressively promote only one benefit
Unique Selling Proposition (USP) is the unique product
benefit that a firm aggressively promotes in a consistent
manner to its target market. The benefit usually reflects
functional superiority e.g. best quality, best services, lowest
price, most advanced technology
Emotional Selling Proposition: Non functional attribute that
has unique associations for consumers e.g. Rolex, Ferrari

65. Choosing and Implementing a position Strategy : Pitfalls to avoid
Other Marketers advocate that firms position themselves or products on more than one attribute e.g. Volvo positions its automobiles as “safest” and “most durable”
Pitfalls to avoid
i. Underpositioning: an error referring to failure to position a brand or company
ii Overpositioning: an error referring to too narrow a picture of the company, its product and brand being communicated to target customers.
iii. Confused positioning: error that leaves consumers with confused image of the company its products or brand
iv. Implausible Positioning: Making claims that stretch the perception of the buyers too far to be believed e.g. Launch of Lexus luxury car in US by Toyota company

66. Choosing and Implementing a position Strategy : Selecting the right competitive advantage
Which differences to promote? . A difference is worth establishing if it satisfies the following criteria;
Important : Difference delivers a highly valued benefit to target buyers
Distinctive : Competitors do not offer the differences or the firm can offer it in a more distinctive way
Superior : superior to other ways by which customers might obtain the same benefit
Communicable: Can be communicated and visible to buyers
Pre-emptive: Competitors cannot easily copy the difference
Affordable : Buyers can afford to pay for the difference
Profitable : The firm can introduce the difference profitably

67. Communicating and Delivering the chosen position
Once a firm has chosen a position, it must take strong steps to deliver an communicate the desired position to target consumers.
i. All the marketing mix effort must support positioning strategy E.g. “high quality position” means it must produce high quality product, charge a high price, distribute through high quality dealers, advertise in high quality media etc

68. Developing a Positioning Statement
Positioning statement states the product’s membership in a category and then shows its point-of-difference from other members of the category.
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69. Differentiation and Positioning
Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions
Price and orientation
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70. Differentiation and Positioning
A perceptual map for a shampoo market