This document discusses key concepts in market segmentation, targeting, and positioning. [1] It outlines different types of market segmentation including by demographics, psychographics, geography, and behavior. [2] The benefits of segmentation are that it allows companies to better understand customer groups, communicate more effectively to specific segments, and find that some segments are more profitable than others. [3] Targeting and positioning strategies are also discussed to help ensure marketing communications are tailored to specific audience segments.

1. Market Segmentation and
Positioning
Overview

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 programs
Ballantyne, Luxton, Powell (2004) Introduction to Marketing: A value exchange approach ed Gabbott,
Pearson:381

3. Steps in the Target Marketing Process

4. Why Globalised Targeting is not Typically Undertaken
Targeting “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. 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. The 7 Steps of Segmenting (Fig. 7-2)

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. Segmentable database
• Fusion of behaviour, relationship,
demographic, psychographic & benefits data
• IMC activities designed to initiate, maintain &
increase loyalty (maybe switching)
• True IMC

9. Segmenting Consumer Markets
• Segmentation
variables can slice
up the market
– Demographic,
psychological, and
behavioral
differences

10. Segmenting by Demographics
Age: 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. 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. Segmenting by Demographics (cont’d)
• Family Structure
• Income
• Social Class
• Race and Ethnicity
– Irish Australian
– Asian Australian
– Aboriginals

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. 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. 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. 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. 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. 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. (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 18
Value / Nutritious, Low Low calorie, Good to serve Good tasting, Low price, best
no artificial calorie, good tasting to guests, satisfied hunger value for money
benefits ingredients, quick goes well with
sought natural energy beverages
Demographics Better Younger, Younger / Middle aged, Teens Larger families,
educated, single older females, non-urban better
have younger lower socio educated
children economic
Psychographics Self assured, Outdoor High anxiety, Sociable Hedonistic Self assured,
controlled types, isolated price oriented
influential,
adventurou
s
Behaviour 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 crackers
Choice) Potato chips
pretzels

20. Segmentation process in action
Define Market Australian Snack Food Consumers (adults 16 yo above)
Value/benefit sought from consumption
Select Basis for Products favoured and consumed
segmentation Lifestyle characteristics
Demographic characteristics
Media use
Conduct Random (statistical) sample of 2000 Australian adults.
research (use an Data subjected to factor analysis, cluster analysis, and
agency if
discovery
discriminant analysis
oriented) Both analytical and intuitive methods combined
Segments are profiled around key bases employed above
Profile (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. Types of Targeting
Message
Message Profitability
B2B Targeting
Targeting
Targeting Targeting
The smaller the Focus only on NAICS codes are
segment, the more those with best very helpful
the message can profit potential
target and speak to
that group

22. Examples of targeting
ü Retail shopping
centre
ü Magazine
publishing
ü BMW & Saab
magazines

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 Positioning.mov

24. Positioning
Positioning is the way
in which the brand is
seen in the mind of
the target audience
Eg Listerine
is………….

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. 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. 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. 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. Summary
We must understand:
• Who to communicate to/with/for/between
ie segmenting & targeting and
• What to communicate ie positioning /
value

30. You are welcome to contact Nigel Bairstow at B2B
Whiteboard your source of B2B Asia / Pacific
marketing advice
http://www.linkedin.com/pub/nigel-bairstow/6/41b/726
http://twitter.com/#!/b2bwhiteboard
http://www.b2b.whiteboard.com