Brand Segmentation

Ch # 7-Segmentation, Targeting & Positioning

Newport institute communication & economics Karachi

CONSUMER
SEGMENTATION


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


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.


3 basic questions
• Who is buying?
• What do they buy?
• When do they buy?


Steps to segmentation

MARKET TARGET MARKET
SEGMENTATION
MARKETING POSITIONING

Develop measure Develop positioning
Identify bases for
of segment for target segments
segmenting the
market attractiveness


Ways to segment
• Geographic: by geographical area
• Demographic: by population
characteristics
• Psychographic: classification on the basis
of psychological factors
• Behavioral: classifying by purchasing
behavior


Ways to segment
Geographic Demographic
Region Age
Urban/Sub urban Gender
Occupation
Socio-economic group

Psychographic Behavioral
Life style Rate of usage
Personality Benefits sought
Social status Loyalty status
Readiness to purchase


Choice of market segments
Unattractive Average Attractive
segment segment segment
Absence of Strongly Avoid Possible
Competitive avoid
advantage
Avg. in Avoid Possible Secondary
terms of target
Competitive
advantage
Strong Possible Secondary Prime target
Competitive target
advantage

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


Segmentation strategies
• Undifferentiated: Ignore
segments
• Concentrated or focused:
Concentrate on a single
segment (Small firms)
• Differentiated: Different
marketing mix for each
segment (Large firms)


Segmentation strategies
Undifferentiated Firm Market

Marketing
Segment A

Segment B
Differentiated Firm
Marketing Segment C

Segment D

Segment A
Concentrated/Focused
Firm Segment B

Marketing Segment C

Segment D


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”


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


Differentiation Strategy
• Multi segment approach
• Separate mix for each segment
• Expensive In terms of product & marketing
cost
• Only possible for large firms


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


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


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


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


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


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


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


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


A perceptual map for supermarkets
Full range

Low price High price

Limited range


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


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


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


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”


Positioning strategies can be related
to…
• Product attributes
• Benefits offered
• Price
• Quality
• Application
• User categories
• Specific usage
situations


Successful positioning strategy
requires…
• Clarity
• Consistency
• Credibility
• Competitiveness


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


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


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


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.

Brand Segmentation

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