Market Segmentat ion, Targeting and Positioning Chapter 4 © 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-1

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-2 Market Segmentation n Definition—The process of dividing the total market for a good or service into smaller groups, each of which tends to be homogenous (or similar) in all significant aspects. n One or more of these segments is then selected as the firm’s target market(s). n A separate marketing mix is then developed for each segment or group of segments. This is referred to as ‘Market Segmentation’.

Market Coverage Strategies Segment 1 Segment 2 Segment 3 Company Marketing Mix Company Marketing Mix Segment 1 Segment 2 Segment 3 SINGLE Marketing Mix SINGLE Marketing Mix Company Mix 1 Company Mix 2 Company Mix 3 Market A. (Aggregation) Undifferentiated Marketing B. (Multiple segments) Differentiated Marketing C. (Single segment) Concentrated Marketing

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-4 Benefits of segmentation n Segmentation enables marketers to: –Identify and satisfy effectively specific benefits sought by particular groups. n Identify needs, satisfy needs. n Divide the market into segments by separating marketing programs. n Select target market (ref p 103 magazine groups). n Action the market segmentation plan.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-5 Limitations of segmentation n Segmentation can be expensive in terms of production and marketing of products to only those specific groups of the market. n Mass production offers economies of scale. n Standardisation of service offers: increased delivery speed and efficiency. n Increase in promotion, administrative and inventory costs.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-6 Market segmentation process 1. Identify the needs & wants of customers. 2. Identify the different characteristics between market segments. 3. Estimate the market potential.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-7 STEP 1 Identify the needs & wants of customers n Objective is to identify needs not currently being satisfied. n eg Airlines might offer business travel although research shows that preferred departure and arrival times vary to those being offered.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-8 STEP 2 Identify the different characteristics between market segments n Identifying the characteristics that distinguish particular segments from others. n eg Business persons require varying flights and may opt to fly first or business class instead of economy class.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-9 STEP 3 - Estimate the market potential n Marketers need to know if a market is viable before segmentation occurs. n Forecasting of market demand will determine: –Market demand –Market potential –Sales potential –Market share

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-10 Bases for segmentation n Ultimate consumers—buy goods and services for personal or household use. n Business users—buy goods and services to generate a profit by reselling or using products as part of the manufacturing process. n The segment determines the marketing mix.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-11 BASES FOR SEGMENTATION CONSUMERS -Segmentation Categories n Geographic—The study of city size, urban/suburban/rural population distribution and climate. n Demographic—The study of distribution of population’s age, sex, income, stage in family cycle and ethnic background.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-12 Segmentation Categories (slide2) n Psychographic—Personalties, lifestyles, social class including Activities Interests and Opinions (AIO). n Behaviour towards products. n Benefits desired or sought. n Product usage rate.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-13 BUSINESS segmentation n All consumer categories plus: –Customer location n Geographic concentration –Type of customer n Size, Industry, n Organisational structure n Purchasing style & criteria –Type of buying situation n New buy n Straight rebuy n Modified rebuy

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-14 Geodemographic clustering, Values and Lifestyles. n An extension of segmentation according to demographic criteria is called geodemographic clustering, this also includes lifestyle variables.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-15 Geodemographic clustering, Values and Lifestyles. n Values and lifestyles (VALS) categories. Visible achievers Something better Look at me Basic needs Socially aware Young optimists A fairer deal Real conservatives Traditional family life Conventional family life

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-16 Segmenting services markets n Two key differences –Customisation of the firms offerings to individuals or groups. –Avoiding clashes between incompatible segments.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-17 Conditions for effective segmentation A USEFUL SEGMENTATION PROCESS MUST MEET THREE CONDITIONS :PTO The characteristics used to categorise customers must be measurable and the data obtainable. The segment itself must be accessible through existing marketing institutions with a minimum of cost and waste. A segment must be large enough to be profitable.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-18 Target market strategies Must meet 3 conditions: 1. Target market should be compatible with organisations goals and images. 2. Marketing opportunity presented by the segment must match the company’s resources. 3. The business must generate a profit if it is to continue its existence.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-19 Positioning n Definition: the perception of a product or organisation in the consumer’s mind relative to their perception of other offerings in the same category. n The key words are perception in the mind of consumer’s which include attributes, benefits & brand.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-20 Positioning statement n A statement that clearly and succinctly identifies the target market, the benefits offered to it by the product, and the way in which the product is differentiated from its competitors.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-21 Positioning strategies n Positioning: –In relation to a competitor. –According to a product class or attribute. –By price and quality. n Positioning can be in various forms, although it will always incorporate a statement that identifies, based on the marketing mix, how a business wants their products or services to be perceived in the minds of the consumer.

POSITIONING STATEMENT EXAMPLE CURVES GYM “We offer a convenient and modern, supervised exercise program for busy women.”

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-23 Other Categories of Product Positioning Against a Competitor Against a Competitor Use Or application Use Or application Quality Price Quality Price Product Attributes Product Attributes Product Class Product Class Benefits Offered Benefits Offered Users B B A A E E D D C C H H G G F F

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-24 Selecting a position n Positioning is the final step in the segmentation/targeting process. n Marketers must consider various factors in deciding what position they should seek.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-25 Factors of consideration n Competition—look for a gap or niche. n Customers—seek product attributes. n The company—status of current image. n Repositioning—needs of target market changed? n The marketing mix—must support the selected position.

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-26 EXAMPLE POSITIONING STATEMENT n Roast Beef Sandwiches. In this case "Roast Beef Sandwiches" is the tagline. It clearly states/describes what they sell. A positioning statement is a more in depth description of the product, it's competition, quality, etc. The positioning statement might be Or "Try something different for a change" and "Tired of that same old burger?" (regarding the competetion). n Roast Beef Sandwiches. In this case "Roast Beef Sandwiches" is the tagline. It clearly states/describes what they sell. A positioning statement is a more in depth description of the product, it's competition, quality, etc. The positioning statement might be "We slow roast our beef for 3 hours to lock in all those savory juices!", Or "Try something different for a change" and "Tired of that same old burger?" (regarding the competetion).

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-27 Sample positioning statements – –The most cost-effective place for small businesses to purchase office supplies online – –The most complete source of grills and barbecue recipes for people who love to cook – –The only Web site where corporate event planners can schedule meetings online ool/webmarket/position.asp

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-28 Check-list for determining a positioning strategy n i. What position do we own? ~in the mind of the prospect. n ii. What position do we want to own? n iii. Whom must we outgun? n iv. Do we have enough money? n v. Can we stick it out? Consistency is essential n vi. Does our advertising match our position?

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-29 Positioning maps are also referred to as perceptual maps

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-30 n

© 2001 McGraw-Hill Australia PPT slides t/a Rix, Marketing: A Practical Approach 4th ed 4-31