WEEK 06SEGMENTATION, TARGETING &

POSITIONING STRATEGIES

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Chapter Aims

At the end of this chapter, students will be able to:

1. Judge the importance of the role of market segmentation2. Define market segmentation3. Describe the concept of a market segment4. Evaluate the criteria for effective segmentation5. Identify the bases for segmentation6. Assess the finer segmentation strategies7. Identify the major areas of analysis of market segments8. Gain knowledge about market targeting strategy9. Explain the meaning of positioning and understand the

relationship between positioning concept and positioning strategy.

THE MARKETING STRATEGY PROCESS

1. Market segmentation– the company identifies bases for segmenting a market– Forming a measurement for effective segmentation

2. Target marketing– The company develops segment profiles of the selected

segments– the company then selects target segments

3. Market positioning– the company develops positioning for each target

segments and then develops a marketing mix for each segment

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Definition of Market, Market Segment & Market Segmentation

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Definition of Market, Market Segment & Market Segmentation

A market is people or organizations with needs or wants and with the ability and the willingness to buy.

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Definition of Market, Market Segment & Market Segmentation

A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

Market Segmentation

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Definition of Market, Market Segment & Market Segmentation

Segmentation is the arts of segregating, dividing, separating and grouping our selected big market into a smaller size market that has at least one similar characteristic.

The main objective is to ease the process of understanding the nature of the market and easily target the products with that particular market.

No market segmentation

Market segmentation by age group

Fully segmented market

Market Segmentation

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Segmenting Consumer Markets

Market Segmentation

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Segmenting Consumer Markets

Geographic Demographic

Psychographic Behaviourial

Market Segmentation

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Segmenting Consumer Markets

GeographicGeographic

segmenting markets by region of a country or the world, market size, market density, or climate.

Market also can be segment using state, province and city

Example:

Johor Laksa

Asam pedas Melaka

Ipoh Hor Fun

Penang Fried Kuey Teow

Proton and Perodua cars exported to United Kingdom will have a different version of cars than that is offered in Malaysia.

Market Segmentation

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Segmenting Consumer Markets

DemographicDemographic

Divide whole market into small groups based on consumer characteristics such as by

Age (Foods, health product, clothes) Gender (Magazine, clothes, cosmetics)Income (Car, house)Ethnic (Foods)Family-Life Cycle (Car, house, food)

Market Segmentation

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Segmenting Consumer Markets

DemographicDemographic

Age and life-cycle

Markets can be segmented based on age and life-cycle stage differences.

Proton satria and Inspira are targeted to young drivers

Anlene Milk Drink is targeted to senior citizen and late adult consumers

Dutch Lady markets several brands and products of its formula milk targeted to different age segments.

Market Segmentation

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Segmenting Consumer Markets

DemographicDemographic

Gender

Gender has long been used for segmenting markets for clothing, hair dressing products, cosmetics and magazines.

Men and women have different preferences for such products.

“Wanita” magazines are meant for women, “Maskulin” magazines are meant for men.

Market Segmentation

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Segmenting Consumer Markets

DemographicDemographic

Religion

In international market, it is extremely important for the marketers to understand the cultures and norms of a particular country in their promotional campaign.

Local sensitivity must be taken into account.

Kelantan has imposed a rule on female artists to wear the hijab when taking part in promotional activities.

Market Segmentation

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Segmenting Consumer Markets

DemographicDemographic

Income

Income level influences consumers’ wants and determines their buying power.

Income level indicates their purchasing power.

BMW is targeted to high income consumers

Proton is targeted to middle income and lower income consumer

In a huge shopping complex, there are several types of shops targeting people from different income levels, such as a CK Boutique for high-income groups and Reject shop for the middle-income groups.

Market Segmentation

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Segmenting Consumer Markets

PsychographicPsychographic

Divide a market into various groups such as

Personality

Social class

Lifestyles

Examples:

KFC is targeted to consumers who nourish and appreciate family relationship

Nescafe is targeted to consumers who have happy lifestyle

Market Segmentation

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Segmenting Consumer Markets

PsychographicPsychographic

Personality  Personality reflects a person’s traits, attitudes, and habits.

Product for car drivers that are thought to be

• Nationalistic• Economical• Conservatives• Modern• High status• Sporty• Feminine• Masculine

Market Segmentation

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Segmenting Consumer Markets

PsychographicPsychographic

Lifestyles  Lifestyle segmentation divides people into groups according to the way they spend their time, the importance of the things around them, their beliefs, and socioeconomic characteristics such as income and education.

• Product for Single customers• Product for Married customers with no

children• Product for Married customers with

children• Product for Newly married customers• Product for Middle-aged married

customers• Product for Older-aged married

customers

The new Satria Neo advertisement that seems to appeal to young and active people as well as to the trendsetters.

Market Segmentation

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Segmenting Consumer Markets

BehaviouralBehavioural

Divides buyers into group according to their knowledge, attitudes, response, and uses towards a product based on several variables:

Social occasionsValue & benefitConsumption leveluser statusbrand loyalty

Toothpaste Product for customers that concerned about the clean white teeth, fresh breath and maximum protection against cavities (benefit segmentation).

Products for first time users, former users, potential users, medium users and heavy users (volume segmentation)

Cigarettes for heavy smokers, moderate smokers, new smokers and quitting smokers

Telecommunication services package for heavy caller, heavy SMS user.

Price charges on regular customers, members, and non-members

Market Segmentation

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Segmenting Consumer Markets

BehaviouristicBehaviouristic

Special Occasions

Divide the market into groups according to special occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Valentine’s Day and Mother’s Day are actually designed and promoted to increase the sale of flowers, cards, and other gifts.

Market Segmentation

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Segmenting Consumer Markets

BehaviouristicBehaviouristic

Value & Benefit

value & Benefit segmentation is the process of grouping customers into market segments according to the benefits and value they seek from the product.

Huggies introduced Huggies Pull-Ups Pants, a diaper designed to help mummies catch up with active and growing babies.

Market Segmentation

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Segmenting Consumer Markets

BehaviouristicBehaviouristic

Consumption Level Consumption level segmentation divides a market by the amount of product bought or consumed.  Such categories used to differentiate its consumers are former users, first-time users, light or irregular users, medium users, and heavy users.

Market Segmentation

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Segmenting Consumer Markets

BehaviouristicBehaviouristic

User status  Markets can be segmented into non-users, ex-users, potential users, first-time users, and regular users.

A beauty centre :- needs to come up with an advertisement that appeals to be safe to potential users. - focuses on attracting current users from slipping away from their products and services.

Market Segmentation

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Segmenting Consumer Markets

BehaviouristicBehaviouristic

Brand loyalty  Brand loyalty often is defined based solely on consumers' patterns of repeat purchase behavior.   “Rotators or soft-core” may stick to two or more brands.

In Indonesia, Unilever has received Indonesia Best Brand Award (IBBA) 2009 organized by SWA magazine and MARS marketing research institution for its variety of products. The survey conducted by SWA and MARS also considers five aspects which also includes brand loyalty.

CRITERIA FOR EFFECTIVE SEGMENTATION

DISTINGUISHABLE5

REASONABLE6

REACHABLE4

ACTIONABLE3

SUBSTANTIAL2

MEASURABLE 1

CRITERIA FOR EFFECTIVE SEGMENTATION

MEASURABLE 1

SUBSTANTIAL2

It should be possible to identify customer groups by measuring size and purchasing power of the segments.

Data about the customers must be available to further target them.

These market segments should be large and profitable enough to serve.

Worth paying attention to, and being addressed to with a tailored marketing programs

CRITERIA FOR EFFECTIVE SEGMENTATION

ACTIONABLE3

REACHABLE4

It should be possible to effectively reach and serve market segments.

If we fail to reach them or they failed to get us, the segmentation is not effective especially during the promotional activities.

Effective marketing program can be designed to attract and serve these market segments.

Too small and too big could bring trouble and ineffectiveness due to failure to implement the actions.

CRITERIA FOR EFFECTIVE SEGMENTATION

DISTINGUISHABLE5

REASONABLE6

The market segments are diverse and therefore, distinguishable.

They respond differently to different marketing actions

Too small and too big segmentation is ineffective.

Don’t be greedy to serve the big size segment.

Don’t be too stingy to serve small segment because it will be not worthy.

Market Targeting

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Targeting is the act of evaluating and comparing the identified segments, and

then selecting one or more of them as the prospects with the highest potential

Market Targeting

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Evaluating the Target Market

Three factors must be considered:

segment size and growth

segment competitiveness

company objectives, goals and resources

Market Targeting

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Selecting Target Market Segments

A target market consists of a set of buyers who share common needs or characteristics that the

company decides to serve.

Market Targeting

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Four basic categories of target marketing strategy are:

Non-differentiated marketing

Differentiated marketing

Focused & Concentrated marketing

Micro marketing

Target Market Strategy

Market Targeting

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Non / Undifferentiated marketing

A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Target Market Strategy

Coca-Cola uses the appeal youthful fun in its global advertising. Its sponsorship programme is global and is adapted to events that are popular in specific countries such as soccer in other parts of the world versus football in the United States.

Market Targeting

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Differentiated marketing

A market-coverage in which a firm decides to target several market segments and designs separate offers for each.

Target Market Strategy

Procter and Gamble markets six different laundry detergent brands, which compete with each other on supermarket shelves.

Market Targeting

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Concentrated marketing

Offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant to or overlooked by larger competitors.

Target Market Strategy

In cosmetics, the Chanel and other cosmetic brands that target upscale prestige segment of the market have used this approach successfully.

Market Targeting

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Micro marketing

Offers customisation and modification on products as well as the marketing mix strategies to cater the specific requirements of individual customers or segments.

Local marketingChange and modified the products according to the local needs like KFC, MC D

One-to-one marketingThe customization of products according to individual customers such as Dell but it is difficult and expensive.

Target Market Strategy

Market Positioning

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What is Market Positioning?

Market Positioning

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What is Market Positioning?

Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target market consumer. Dynamo is positioned as an

effective detergent in removing stubborn stains.

4 criteria to select positioning strategies

1.Recognize own product competitive edges (strengths) – product, service, reputation, people

2.Select most appealing edges (strengths)

3.Choose an overall positioning edges (strengths)

4.Communicate the positioning (IMC usage)

Market Positioning

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Positioning Bases

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

The product can be separated from its competitors based on attributes, features, or benefits.

The product can be separated from its competitors based on attributes, features, or benefits.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

The price and quality ladder is the most effective of all eight-attribute ladders.

The price and quality ladder is the most effective of all eight-attribute ladders.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Price Quality

Price Quality

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

The product is marketed as when or how it can be used as a strategy to win an empty slot in the customers’ mind.

The product is marketed as when or how it can be used as a strategy to win an empty slot in the customers’ mind.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

This strategy indicates that the company clearly can identify and know the consumers and their needs.

This strategy indicates that the company clearly can identify and know the consumers and their needs.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

The product class dissociation ladder implies that:

a product or company can be positioned as superior to its competitorsthe product is so different compared to its competitors it almost not fit the same product category

The product class dissociation ladder implies that:

a product or company can be positioned as superior to its competitorsthe product is so different compared to its competitors it almost not fit the same product category

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

This strategy indicates that the company clearly can identify and know the consumers and their needs.

This strategy indicates that the company clearly can identify and know the consumers and their needs.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

Market Positioning

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Positioning Bases

This strategy to position a product is done by positioning directly against or away from the competitors’ position.

This strategy to position a product is done by positioning directly against or away from the competitors’ position.

A variety of bases for positioning are:

Product features Price and Quality Use or application Product user Product class User Competitor

Click on each positioning base to know more.

CONCLUSIONS

• This chapter recognizes the role of market segmentation in the development and implementation of market-driven strategy.

• We examine the concepts of market segmentation and market segment.

• We also discuss the issues that concern the segmenting of a market requiring us to identify the bases for segmentation, forming segments, describing each segment, and analyzing and evaluating the identified segment (s).

• We also learned about market targeting and positioning strategies.

List of References

Topics

Subash C. Jain (2004) Marketing: Planning & Strategy, 7th Edition, Thomson.

Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley & Sons, Inc.

Cravens, D.W. (2000), Strategic Marketing, 6th Edition, McGraw Hill.

Kotler P& Armstrong.G., (2004) Principles of Marketing, 10th edition, Pearson.

Kotabe, Masaki & Kristian Helsen (2001). Global Marketing Management 2nd Edition John Wiley & Son. Inc New York.

List of References

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Ebert, R., & Griffin, R. (2003). Business Essential, 4th Edition. New Jersey: Prentice Hall.

Ferrel, O., Hirt, G., & Ferrel, L. (2009). Business: A Changing World. New York: McGraw Hill.

khalid, K. e. (2008). Business Management: A Malaysian Perspective. Kuala Lumpur: Oxford University Press.

McDaniel, C., & Gitman, L. (2008). The Future of Business. Ohio: Thomson- South Western.(2008). The Future of Business. Ohio: Thomson- South Western.

List of References

Topics

(n.d.). Retrieved April 13, 2009, from BuckInvestor.com: http://www.buckinvestor.com/basics/economic_systems.shtml

(n.d.). Retrieved April 13, 2009, from EconGuru Economics Guide: http://www.econguru.com/econ/production-factors.shtml

(n.d.). Retrieved April 13, 2009, from tutor2u: http://tutor2u.net/economics/gcse/revision_notes/basics_factors_of_production.htm

Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley & Sons, Inc.