1. The Value of Segmentation and Targeting
LECTURE WEEK 5
The Value of Segmentation and Targeting

2. Lecture questions
What are the different levels of market segmentation?
How can a company divide a market into segments?
How should a company choose the most attractive target markets?
What are the requirements for effective segmentation?

3. Lecture questions (continued)
How can a firm create, develop and communicate a successful positioning strategy in the market?
Why is the concept of positioning so important to marketing practitioners?
How can companies seek to positively differentiate their offerings in today’s market conditions?
When might companies need to reposition their market offerings and what are the main inherent risks of such a strategy?

4. Morgan cars serve a niche market
Morgan Cars: have a long order book and continue to serve a niche market for handbuilt traditional sports cars for baby boomers Source: Steve Sant/Alamy

5. Effective targeting requires…
Identify and profile distinct groups of buyers who differ in their needs and preferences.
Select one or more market segments to enter.
Establish and communicate the distinctive benefits of the market offering.

6. Four levels of micromarketing
Segments
Niches
Local areas
Individuals

7. What is a market segment?
A market segment consists of a group of customers who share a similar set of needs ad wants.
For a discussion of market analysis and market segmentation, view the following video:

8. Flexible marketing offerings
Naked
solution:
Product and service elements that all segment members value.
Discretionary options:
Some segment members value options but not all.

9. Preference segments
Homogeneous preferences exist when consumers want the same things.
Diffused preferences exist when consumers want very different things.
Clustered preferences reveal natural segments from groups with shared preferences.

10. This delicatessen focuses on local marketing
A Polish food shop opens to provide a taste of home for the large local Polish community in Darlington in the north of England Source: Gregory Wrona/Alamy

11. The long tail
Chris Anderson explains the long tail equation:
The lower the cost of distribution, the more you can economically offer without having to predict demand.
The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes.
Aggregate enough minority taste, and you may find a new market.
See a video clip featuring Chris Anderson at

12. What is customerisation?
Customerisation combines operationally driven mass customisation with customised marketing in a way that empowers consumers to design the product and service offering of their choice.

13. Segmenting consumer markets
Geographic
Demographic
Psychographic
Behavioural

14. Claritas’ PRIZM Education and affluence Family life cycle Urbanisation
Race and ethnicity
Mobility
For a discussion on how to maximise revenue using PRIZM, watch this video clip:

15. Demographic segmentation
Age and life cycle
Life Stage
Gender
Income
Generation
Social class

16. Mini cooper: generation targeting
Memories for baby boomers and a cool car for 20 year olds Source: Sandro Campardo/AP/PA Photos

17. Psychographic segmentation
Psychographic segmentation divides buyers into different groups on the basis of traits, lifestyles or values.
For a discussion on demographic vs psychographic segmentation view this video:

18. Forces shaping social change
Table The forces shaping social change Source: L. Hasson (1995) Monitoring social change, International Journal of Market Research, 37(1), 69–80. Copyright © 1995 Market Research Society ( Reproduced with permission

19. SINUS typology
Table SINUS typology

20. The VALS system
Figure The VALS™ segmentation system: an eight-part typology Source: VALS™. Copyright © SRI Consulting Business Intelligence. Reproduced with permission

21. Behavioural segmentation: decision roles
Initiator
Influencer
Decider
Buyer
User

22. Behavioural segmentation: behavioural variables
Occasions
Benefits
User status
Usage rate
Buyer-readiness
Loyalty status
Attitude
John Kelly makes the case for behavioural segementation in this video clip:

23. The brand funnel illustrates variations in the buyer-readiness stage
Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used

24. Figure Brand funnel

25. Loyalty status
Hard-core
Split loyals
Shifting loyals
Switchers

26. Attitudes about product purchases
Enthusiastic
Positive
Indifferent
Negative
Hostile

27. Behavioural segmentation breakdown
Figure Behavioural segmentation breakdown

28. The conversion model Nonusers Users Convertible Shallow Average
Entrenched
Nonusers
Users
Strongly
unavailable
Weakly
unavailable
Ambivalent
Available

29. Segmenting for business markets
Demographic
Operating variable
Purchasing approaches
Situational factors
Personal
characteristics

30. Steps in segmentation process
Needs-based segmentation
Segment identification
Marketing-mix
strategy
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test

31. Effective segmentation criteria
Measurable
Substantial
Accessible
Differentiable
Actionable

32. Patterns of target market selection
Figure Five patterns of target market selection Source: Adapted from D. F. Abell (1980) Defining the Business: The Starting Point of Strategic Planning, Upper Saddle River, NJ: Prentice Hall, Chapter 8, pp. 192–6. Copyright © Reproduced with permission from Pearson Education, Inc.

33. Patterns of target market selection (continued)
Figure Five patterns of target market selection (continued) Source: Adapted from D. F. Abell (1980) Defining the Business: The Starting Point of Strategic Planning, Upper Saddle River, NJ: Prentice Hall, Chapter 8, pp. 192–6. Copyright © Reproduced with permission from Pearson Education, Inc.

34. Patterns of target market selection (continued)
Figure Five patterns of target market selection (continued) Source: Adapted from D. F. Abell (1980) Defining the Business: The Starting Point of Strategic Planning, Upper Saddle River, NJ: Prentice Hall, Chapter 8, pp. 192–6. Copyright © Reproduced with permission from Pearson Education, Inc.

35. Figure 10.6 Segment-by-segment invasion plan

36. What is positioning?
Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.
For an interesting bookmercial for Ries and Trout watch this video:

37. Examples of Value propositions
Table Examples of value propositions Source : M. R. V. Goodman, Durham University

38. Defining associations
Points-of-difference (PODs)
Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand.
Points-of-parity
(POPs)
Associations that are not necessarily unique to the brand but may be shared with other brands.

39. Establishing category membership
Announcing category benefits
Comparing to exemplars
Relying on the product descriptors

40. Consumer desirability criteria for PODs
Relevance
Distinctiveness
Believability

41. Deliverability criteria for PODs
Feasibility
Communicability
Sustainability

42. Negatively correlated attributes and benefits
Table Examples of negatively correlated attributes and benefits

43. Addressing negatively correlated PODs and POPs
Present separately
Leverage equity of another entity
Redefine the relationship

44. Understanding competitive structure of a market
How do customers view the brand?
Which competitive brands do customers perceive to be their closest competitors?
What market offering and company attributes are most responsible for these perceived differences?

45. What is perceptual mapping?
Perceptual (or positioning) mapping is a marketing tool that enables marketers to plot the position of their offering against those of the competition?
For advice on how to do a perceptual map go to the following video clip:
Figure Example positioning map of the UK chocolate block sector market Source : M. R. V. Goodman, Durham University

46. Differentiation strategies
Product
Personnel
Channel
Image

47. Product differentiation
Product form
Features
Performance
Conformance
Durability
Reliability
Reparability
Style
Design
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance

48. Recap: can you explain?
How can a company divide a market into segments?
How should a company choose the most attractive target markets?
What are the requirements for effective segmentation?

49. Recap: can you explain? (continued)
How can a firm create, develop and communicate a successful positioning strategy?
How can companies seek to positively differentiate their offerings in today’s market conditions?
When might companies need to reposition their market offerings and what are the main inherent risks of such a strategy?