Segmenting, Targeting & Positioning Week 6 Reading: Chapter 9 up to p. 245 only MKTG 201: First Semester, 2010 Lecture Overview Segmentation Targeting Positioning

Basic Definitions Market Segments –A group of consumers with similar wants and needs who respond in the same way to a particular marketing action

Basic Definitions Target(s) or target market(s) –The segment(s) you want to market to

Basic Definitions Positioning –How you want to be perceived by your target(s)

Overview of the Segmentation Process 1.Identify the broad product-market of interest 2. Identify key buyer characteristics 3. Form loose “clusters” of buyer types 4. Identify truly differentiating dimensions

Overview of the Segmentation process 5. Name/label the different segments 6. Find out WHY they behave the way they do 7. Make a rough estimate of the size, potential and cost of each segment 8. Select your target(s)

Ways to Segment Consumer Markets – We use one or more Bases of Segmentation Demographic characteristics: variables which describe a population’s characteristics e.g. age, income, gender etc –Examples: *See Fig 9-3 on p.232

Geography Geographic characteristics: variables that describe geographic location or related variables such as climate e.g. mountain zone, North Island, North Shore. –Examples:

Psychographics Psychographic characteristics: a combination of demographic & psychological variables that describe lifestyle –Examples:

Benefits Sought* Benefits Sought Characteristics: the most important benefit(s) as perceived by the consumer –Benefits: advantages sought by buyer –Attributes: features of the product that provide the benefits * Your text calls this “segmentation by product features” (p.232)

Usage Rate Usage rate*: the degree of usage (i.e. low, medium or high) during a specific time period The rule: approx 80% of demand comes from 20% of the market *also known as segmentation by volume

Usage Rate Usage rate*: the degree of usage (i.e. low, medium or high) during a specific time period: The rule: approx 80% of demand comes from 20% of the market (heavy users) Example: –Frequent fliers –Loyalty programmes

Target Market Selection Criteria (p.238-9) Market size Expected growth Competition Cost of Reaching Compatibility - Strategic ‘ Fit ’ with the firm & objectives

Targeting – One or More? Undifferentiated or Mass Marketing –Marketing to all consumers the same way, so not really targeting at all: Targeting –Selecting one or more segments to focus marketing efforts on:

Targeting – One or more? Concentrated or Niche Marketing –Focusing on one segment only: Differentiated Marketing –Focusing on more than one segment –2-tier marketing strategies p.229

Targeting – One or more? Mass Customisation –Tailoring products to individual needs

Positioning is … Defined as creating the ‘ place ’ an offer occupies in the buyer ’ s mind, relative to competing offers, in a given market based on your source(s) of differentiation in the market the way an offer is defined by buyers in terms of important attributes: –physical –perceptual

How do we measure/describe ‘ position ’ ? Perceptual Map

Why is Position so Important? Your “ position ” (as viewed by the customer), is central to their perceptions and choice decisions All elements of the marketing programme can affect the position –Therefore, a clear positioning strategy is needed to focus the development of the marketing programme

1. Identify Bases for Segmentation 2. Develop Profiles of Segments 3. Develop Measures of Attractiveness 4. Select Target Segment(s) 6. Develop Marketing Mix for Each Segment Market Positioning Market Segmentation Steps in Segmentation, Targeting, and Positioning 5. Develop Positioning for Each Segment

Looking Back Bases for Segmenting Consumer Markets (Demographics, psychographics etc) Approaches to Targeting (Mass, niche etc) An overview of the entire process