Lecture 8

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Market Segmentation & Product Positioning in the market

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PhD., Elbek Khodjaniyazov

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1

Target Marketing & Market Definition

• A Market shares similar characteristics and satisfiers for a need

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• Target Marketing helps organisations to identify marketing opportunities more successfully. Companies can develop the right offerings for each target market & then can adjust their Mix to reach the target market effectively

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• Shotgun or rifle?

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Shotgun

Approach

Rifle

Approach

Defining the Market

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• Before undertaking STP (segmentation, targeting & positioning) a company must define the market in which it operates.

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• It is important to define the market broadly enough so as not to miss out on new opportunities for diversification

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• Definite the Organisation’s mission statement
• What business are we in?
• Evening entertainment, is it dance, club, pub?

4

Benefits of S.T.P. Marketing

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• 1.To understand the needs, desires and motives of the customer
• 2. Gain understanding of why customers purchase and non-customers do-not.
• 3 More efficiently allocate human and financial resources
• 4. To identify more precisely the messages to use across the marketing mix

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Definitions of key Terms

• Market Segmentation: the act of dividing a market into distinct groups of buyers who might require separate products and or mixes. The co identifies different ways to segment the market and develops profiles of the resulting market segments.

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• Market Targeting: The act of developing measures of segment attractiveness and selecting one or more market segments to enter.

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• Product Positioning: Product positioning is not actually something we do to a product. Rather it is something we do to the minds of consumers through the communication of the Mix. It relates to how consumers perceive the product in terms of image, etc. relative to competing products

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Product position map for UK supermarkets

HIGH

LOW

HIGH

PERC I EVED

PRI CE

PERCIEVED QUALITY OF STORE OFFERING

DISCOUNT SECTOR

MIDDLE MARKET SECTOR

PREMIUMN SECTOR

Kwik Save

Lidl

Aldi

Sainsbury

Tesco

Asda

Cullens

Marks & Spencer

Kotler’s (1991) Segmentation process

• Market Segmentation:
• 1 Identify segmentation variables and segment the market
• 2. Develop profiles of resulting segments
• Market Targeting:
• 3 Evaluate the attractiveness of each segment
• 4. Select the most desirable target segment(s)
• Positioning
• 5. Identify possible positioning concepts for target segment(s) selected
• 6. Select, develop & communicate through the Marketing Mix the chosen positioning concept.

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Segmentation Variables

• Demographic
• Geographic
• Geo-demographic
• Behavioural
• Psychographics
• lifestyle

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Demographic Variables

• Variable E.g..
• Age Health care,18-30
• Gender Gillette, clothing
• Family size Food, travel, cars
• Family Life Cycle Financial, education
• Income Car, finance
• Occupation Clothes, travel, education
• Social Grade Leisure, houses
• Education School, college
• Religion Food
• Ethnicity Travel, food
• Nationality Education

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Geographic & Geo-demographic

• Geographic
• Country
• County
• City
• Climate

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• Geo-demographic
• “Birds of a feather flock together”
• Demographic variables are extracted from the census and combined with postcodes
• ACORN Analysis

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Behaviour

• Variable E.g..
• Benefits sought Toothpaste
• Usage Rate Beer: heavy, medium, light
• User Status Mortgages – first time buyer
• Occasion When used, frequency used
• Loyalty status Brand loyalty: banks, fags
• Attitude Positive,Indifferent,negative

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Psychographics

• Personality refers to “all those relatively permanent traits, dispositions or characteristics within an individual which gives some consistency to that person’s behaviour” Feist (1990)
• Psychographic segmentation holds as a premise that consumer personalities should match brand personalities
• E.g., Macho, feminine, aggressive, laidback, trendy, sexy etc

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Lifestyle

• Sporty
• Clubber
• Adventurous
• Vegetarian
• “Student”
• Gardener
• DIY enthusiast

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Product-related Behavioural Characteristics

• Benefits sought: The benefits customers look for in that product class e.g.. Crest – anti cavity, MacCleans whitening, Aqua fresh – all three
• Usage Rate: usage rate or volume segmentation divides consumers into heavy, medium and light users. E.g. airlines try to build loyalty and increase usage by offering heavy users perks and air-miles
• Occasion : Capitalises on the times when people use certain products. E.g. card industry focuses on critical life incidences

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Criteria for selecting a viable market segment

• There is no limit to the ways in which an organisation can segment its market

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• Identifiable It must be possible to locate the segment
• Measurable We must be able to measure its size and characteristics
• Meaningful Large enough to have sufficient sales and growth potential to offer long term success
• Marketable Can be reached and served profitably (accessible)

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Market Targeting

• In selecting segments to enter, the organisation can choose to enter just one single segment

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• May choose a number of different segments

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• Or try to satisfy all the segments which have been identified

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• Either way the company must tailor a mix to suit each one

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Single segment with single product.

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One Product For All Segments

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Multi segmented markets

Targeting Approaches

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Positioning

• Is done to the mind of the customer
• 1. Identify possible competitive advantages to exploit
• 2. Identify the characteristics or benefits of the product class that the consumer values the most
• 3. Choose the right one
• 4. Signal the strategy to the market using the tactical elements of the marketing mix

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Positioning

• Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offer
• Attribute or Benefit
• Quality and Price
• Use or User
• Competition

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Positioning Strategies

• Global consumer culture positioning
• Identifies the brand as a symbol of a particular global culture or segment (e.g. Global teens, global elite)
• High tech (computers, cell phones) and high touch products (perfumes, designer fashions, fine wines)
• The positioning theme travels well across cultures including the home country culture without any modifications (e.g. romance, elegant tastes, music, fashions, etc,)

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Positioning Strategies

• Foreign consumer culture positioning
• Associates the brand’s users, use occasions, or product origins with a foreign country or culture (e.g. Fosters, Outback restaurants, Marlboro, Levis)
• The positioning theme cannot travel into the home country culture without modifications
• Local Consumer Culture positioning
• Associate the brand with local cultures, symbols, meanings
• The positioning theme does not travel outside the culture (e.g. Budweiser Clydesdale horses or football associations)

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Positioning Strategies

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