Market Segmentation and Positioning


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Covers the importance of market segmentation and positioning in marketing.

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Market Segmentation and Positioning

  1. 1. Market Segmentation and Positioning Overview
  2. 2. The Marketing Communication Matrix Mass Market Segmented/Mass Individual Customisation 2-way With Between communication Integrated mix of Dialogue based on An interactive planned messages & trust,learning & approach (listening & interactive adaptation with learning including communication eg creative outcomes eg informal dialogue F2F,database, viral, communities of initiated by planned WOM interest, internal messages) marketing via work teams 1-way To For communication Planned persuasive Planned persuasive Conventional mass messages aimed at messages on marketing brand loyalty augmented offerings Eg positioning via for targeted markets advertising eg loyalty programsBallantyne, Luxton, Powell (2004) Introduction to Marketing: A value exchange approach ed Gabbott,Pearson:381
  3. 3. Steps in the Target Marketing Process
  4. 4. Why Globalised Targeting is not Typically UndertakenTargeting “everyone” is: §  Expensive §  Wasteful §  Nearly impossible Teenagers A more sensible approach: •  Identify smaller segments who are most likely to consider your brand (segmentation) and target them with specifically designed MC messages
  5. 5. Rationale for segmentation •  Cannot communicate 1to1 with all •  Segmentation aggregates the audience & creates growth opportunities by showing: –  how to compete better in more places in the market –  how to ‘cut’ the market a different way to identify brand relationship opportunities •  Segmentation is about ……
  6. 6. The 7 Steps of Segmenting (Fig. 7-2)
  7. 7. Segmenting Current Customers§  Segment size.§  Spending patterns.§  Relationship maintenance costs.Questions asked:§  Are they high or low volume customers?§  How long ago did they purchase (recency)?§  How frequently do they purchase (frequency)?§  How much do they spend (monetary)?
  8. 8. Segmentable database •  Fusion of behaviour, relationship, demographic, psychographic & benefits data •  IMC activities designed to initiate, maintain & increase loyalty (maybe switching) •  True IMC
  9. 9. Segmenting Consumer Markets•  Segmentation variables can slice up the market –  Demographic, psychological, and behavioral differences
  10. 10. Segmenting by DemographicsAge: Generational Marketing•  Children•  Teens/tweens•  Generation Y: born between 1977 and 1994•  Generation X: born between 1965 and 1976•  Baby boomers: born between 1946 and 1964•  Older consumers
  11. 11. Segmenting by Demographics Gender•  Many products appeal to one sex or the other•  Metrosexual: a man who is heterosexual, sensitive, educated, and an urban dweller in touch with his feminine side
  12. 12. Segmenting by Demographics (cont’d) •  Family Structure •  Income •  Social Class •  Race and Ethnicity –  Irish Australian –  Asian Australian –  Aboriginals
  13. 13. Segmenting by Geography •  Geodemography: combines geography with demographics •  Geocoding: Customizes Web advertising so people who log on in different places see ad banners for local businesses
  14. 14. Segmenting by Psychographics •  Psychographics: The use of psychological, sociological and anthropological factors to construct market segments. •  AIOs: Psychographics segments consumers in terms of shared activities, interests, and opinions.
  15. 15. Segmenting by Behavior •  Segments consumers based on how they act toward, feel about, or use a product •  80/20 rule: 20 percent of purchasers account for 80 percent of a product’s sales •  Heavy, medium, and light users and nonusers of a product •  Usage occasions
  16. 16. Behavioural/demographic segments How do the conventional segmenting variables apply? •  They can also be part of the target audience measure Sophisticated Urban 25 to 34 lifestyle years old Current “light” Primary Target Audience category drinkers Existing “light” category 25 to 34 year old drinkers who are sophisticated individuals that lead an urban lifestyle
  17. 17. Segmenting Business-to-Business Markets •  By organizational demographics •  By production technology used •  By whether customer is a user/nonuser of product •  By Australian Classification System (ASIC)
  18. 18. 3 Key Benefits of Segmenting a Market Costs Less to Sell to Existing Customers Key Some Customers Benefits Are More Profitable Knowing Who’s in Your Segment Can Lead You to Others in the Same Group For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/IrwinBrands
  19. 19. (Source, Reed et al, 1994) Benefit Based Snack Food Segments Nutritional Weight Guilty Party Indiscriminate Economical snackers, watchers Snacker snackers snackers snackers% Snackers 22 14 9 15 15 18Value / Nutritious, Low Low calorie, Good to serve Good tasting, Low price, best no artificial calorie, good tasting to guests, satisfied hunger value for moneybenefits ingredients, quick goes well withsought natural energy beveragesDemographics Better Younger, Younger / Middle aged, Teens Larger families, educated, single older females, non-urban better have younger lower socio educated children economicPsychographics Self assured, Outdoor High anxiety, Sociable Hedonistic Self assured, controlled types, isolated price oriented influential, adventurou sBehaviour light Light heavy average heavy Average(usage level)Behaviour Fruits, Yoghurt, Yoghurt, Nuts, potato Confectionary, No specific vegetables, cheese crackers, chips, Ice-cream, focus(product cheese biscuits, pretzels, Biscuits confection crackersChoice) Potato chips pretzels
  20. 20. Segmentation process in actionDefine Market Australian Snack Food Consumers (adults 16 yo above) Value/benefit sought from consumptionSelect Basis for Products favoured and consumedsegmentation Lifestyle characteristics Demographic characteristics Media useConduct Random (statistical) sample of 2000 Australian adults.research (use an Data subjected to factor analysis, cluster analysis, andagency ifdiscovery discriminant analysisoriented) Both analytical and intuitive methods combined Segments are profiled around key bases employed aboveProfile (value/benefits sought as primary clustering)segments Segments are named to best represent their benefits sought / profile, eg nutritional, weight watchers, guilty, party, indiscriminate, economical snackers
  21. 21. Types of Targeting Message Message Profitability B2B Targeting Targeting Targeting TargetingThe smaller the Focus only on NAICS codes aresegment, the more those with best very helpfulthe message can profit potentialtarget and speak tothat group
  22. 22. Examples of targetingü  Retail shopping centreü  Magazine publishingü  BMW & Saab magazines
  23. 23. Positioning Strategies •  Category positioning – how it fits in •  Image positioning – what it means •  Unique product feature positioning – technical differences •  Benefit positioning – what it can do •  Brand
  24. 24. PositioningPositioning is the way in which the brand is seen in the mind of the target audience Eg Listerine is………….
  25. 25. Listerine is….. the mouth wash that tastes unpleasant but that’s how it kills germs and so it’s worth it if you are the kind of person who doesn’t mind suffering for your health … dynamite against germs
  26. 26. Brand awareness•  Dependant upon how the purchase decision is entered into•  Two main types of choice situations in buyer behaviour –  Recall –  Recognition•  2 distinct strategies for creating/ maintaining brand awareness
  27. 27. Brand attitude•  “…the buyer’s evaluation of the brand with respect to its perceived ability to meet a currently relevant motivation –  As communicators, we try to create, increase, maintain, modify or change attitudes•  Motivations may be negative (informational) or positive (transformational)
  28. 28. Brand purchase intention•  The buyer’s “self instruction” to purchase the brand•  Low involvement brand choice + a favourable attitude = purchase at next buying opportunity•  High involvement brand choice + favourable attitude may not necessarily create a buying opportunity Ø Explicit brand purchase intention is necessary
  29. 29. Summary We must understand: •  Who to communicate to/with/for/between ie segmenting & targeting and •  What to communicate ie positioning / value
  30. 30. You are welcome to contact Nigel Bairstow at B2BWhiteboard your source of B2B Asia / Pacificmarketing advice!/b2bwhiteboard