lecture # 8
DESCRIPTION
this marketing lecture with current situation.TRANSCRIPT
CONSUMER SEGMENTATION
Ch # 7-Segmentation, Targeting & Positioning
Newport institute communication & economics Karachi
Market Segment
• A subgroup within the market who share certain relevant characteristics
• A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix
Ch # 7-Segmentation, Targeting & Positioning
Market segmentation - Definitions
• The analytical division of the market into discrete groups of customers that share common attributes.
• The identification of subsets of buyers within a market who share similarities, needs and who have similar buying processes.
Ch # 7-Segmentation, Targeting & Positioning
3 basic questions
• Who is buying?
• What do they buy?
• When do they buy?
Ch # 7-Segmentation, Targeting & Positioning
Steps to segmentation
MARKET SEGMENTATION
Identify bases for segmenting the market
TARGET
MARKETING
Develop measure of segment attractiveness
MARKET
POSITIONING
Develop positioning for target segments
Ch # 7-Segmentation, Targeting & Positioning
Ways to segment
• Geographic: by geographical area
• Demographic: by population characteristics
• Psychographic: classification on the basis of psychological factors
• Behavioral: classifying by purchasing behavior
Ch # 7-Segmentation, Targeting & Positioning
Ways to segmentGeographic
Region
Urban/Sub urban
Demographic
Age
Gender
Occupation
Socio-economic group
Psychographic
Life style
Personality
Social status
Behavioral
Rate of usage
Benefits sought
Loyalty status
Readiness to purchase
Ch # 7-Segmentation, Targeting & Positioning
Choice of market segments
Unattractive segment
Average segment
Attractive segment
Absence of Competitive advantage
Strongly avoid
Avoid Possible
Avg. in terms of Competitive advantage
Avoid Possible Secondary target
Strong Competitive advantage
Possible Secondary target
Prime target
Ch # 7-Segmentation, Targeting & Positioning
Firms engage in segmentation to…
• Develop different strategies for different parts of the market
• Increase sales & profit from each segment
• Identify marketing opportunities
• Dominate certain niche segments
• Reflect differences in customer tastes
• Prioritize on those segments most likely to provide a higher return
Evaluation of segments
• Evaluating market segments– segment size & growth– segment’s structural analysis
• competition within the segment
• existing or potential substitute products
• relative power of buyers / suppliers
– company’s objectives & resources• environment, social responsibility, if it is core business,
can employ skills & resources superior to those of competition
Ch # 7-Segmentation, Targeting & Positioning
Segmentation strategies
• Undifferentiated: Ignore segments
• Concentrated or focused: Concentrate on a single segment (Small firms)
• Differentiated: Different marketing mix for each segment (Large firms)
Ch # 7-Segmentation, Targeting & Positioning
Segmentation strategies
MarketFirm
Segment A
Segment B
Segment C
Segment D
Segment A
Segment B
Segment C
Segment D
Firm
Firm
Undifferentiated
Marketing
Differentiated
Marketing
Concentrated/Focused
Marketing
Ch # 7-Segmentation, Targeting & Positioning
Undifferentiated Strategy
• Also known as market aggregation• Targets entire market with the same
marketing mix – segments ignored• Used when segments cannot be identified
or where aggregation proves more profitable than segmentation
• Ford’s Model T car were sold as the universal car – “any car as long as it is black”
Ch # 7-Segmentation, Targeting & Positioning
Concentrated strategy
• Marketing effort directed at a single highly defined segment
• Niche marketing – Rolex watches• Used when one group is especially
attractive for the organization to target• A useful strategy for smaller firms – avoids
a head on collision with major players• Provides scope for competitive advantage
in a small niche in the market
Ch # 7-Segmentation, Targeting & Positioning
Differentiation Strategy
• Multi segment approach
• Separate mix for each segment
• Expensive In terms of product & marketing cost
• Only possible for large firms
Ch # 7-Segmentation, Targeting & Positioning
Continuum of targeting strategies
Undifferentiated Single marketing mix for all customers
Differentiated Different mix for each segment
Concentrated Targets single large segment
Niche Targets a single small segment
Customized Different mix for each customer
Ch # 7-Segmentation, Targeting & Positioning
POSITIONING
Ch # 7-Segmentation, Targeting & Positioning
Position in the market
• The location of a product or service alongside key competitors in the mind of consumers
• Refers to the place the product occupies in the consumer’s perceptual map of the market
Ch # 7-Segmentation, Targeting & Positioning
Position and Positioning
• A product’s position ultimately depends on the attitudes of people in the target market
• Firms will seek to position their products to increase sales
• Either marketers accept the customer attitudes as they & tailor the product to fit those attitudes OR seek to change those attitudes
• Positioning indicates how a company wishes to compete in the market place
Ch # 7-Segmentation, Targeting & Positioning
Positioning
• Arranging for a brand or product to occupy a clear and distinctive place in the minds of the target customers relative to competing products and brands
Ch # 7-Segmentation, Targeting & Positioning
The role of positioning…
• To strengthen the power of messages directed at consumers
• To target a particular segment – RSTP
• To ensure that the product is differentiated in the minds of the consumer
• To decide on the ground on which to compete
• To analyze re-positioning possibilities
Ch # 7-Segmentation, Targeting & Positioning
Porter’s generic strategies
• Cost leader: Compete by being the lowest cost producer
• Differentiation: Compete by offering something different & superior
• Focus: Become a niche player concentrating on small part of the market
Ch # 7-Segmentation, Targeting & Positioning
Differentiation
• The basic principle is that you must either:- Differentiate your product- Be a provider of generic products to be sold at
the lowest prices
Ch # 7-Segmentation, Targeting & Positioning
Perceptual map
• The visual representation of a brand within a specific market place showing its position relative to competitors
• Shows which and how products compete in consumers mind and suggests how a product can be positioned to maximize sales
Ch # 7-Segmentation, Targeting & Positioning
A perceptual map for supermarkets
Full range
Limited range
Low price High price
Ch # 7-Segmentation, Targeting & Positioning
Position map & NPD
• Two options for firms developing new products:- Develop a product to occupy identified gaps in
the market
OR- Develop “me-too” products which copy
existing rival
A position map will assist decision making
Ch # 7-Segmentation, Targeting & Positioning
Other uses of Perceptual map
• To analyze strengths and weaknesses
• To reveal market segments
• To develop new strategies
• To reposition the product
• To decide on competitive position which the product to be distinguished from competitor offerings
Ch # 7-Segmentation, Targeting & Positioning
Approaches to Positioning
• By attribute:- Associating the brand with a desirable
attribute
- E.g. Volvo cars associated with safety &
durability
• By price & quality:- Price level should be right to reflect quality
- E.g. Rolls Royce – High priced with quality
Ch # 7-Segmentation, Targeting & Positioning
Approaches to Positioning
• With respect to application/use:- Kit Kat is positioned to link in with tea or
coffee break “Have a break – Have a Kit
Kat”
• By product user:
- E.g Ufone - “Everybody loves to Ufone”
Ch # 7-Segmentation, Targeting & Positioning
Positioning strategies can be related to…
• Product attributes• Benefits offered• Price• Quality• Application• User categories• Specific usage
situations
Ch # 7-Segmentation, Targeting & Positioning
Successful positioning strategy requires…
• Clarity
• Consistency
• Credibility
• Competitiveness
Ch # 7-Segmentation, Targeting & Positioning
Mistakes in Positioning
• Under positioning: Consumers have limited perception of the brand & are unaware of the distinguishing features
• Over-positioning: Consumers believe that the brand in only active in very focused markets
• Confusion: Consumers are unclear how a brand is comparable with other brands
Ch # 7-Segmentation, Targeting & Positioning
Re-positioning
• Changing the position of the product in the market
• It becomes necessary sometimes:
- To extend the product lifecycle
- To move into a new market segment
- Because of changes in society & in social
attitudes
- The brand evolves with time
Ch # 7-Segmentation, Targeting & Positioning
Re-positioning
• Image re-position: No change in the product. Promotion is used to change the image of the product.
• Product re-positioning: Modification of the product
• Intangible re-positioning: Targeting a different market segment with the same product
• Tangible repositioning: Change in both product & target market
Ch # 7-Segmentation, Targeting & Positioning
Re-positioning Example
• Johnson & Johnson Baby shampoo:
Originally aimed at infants. Re-positioned as a gentle, frequent use shampoo for the adults as well as babies.
Ch # 7-Segmentation, Targeting & Positioning