MCD2050

Marketing 1
Lecture 3 - Segmentation
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Icons

Pages
6 - 10

Prescribed
Pages
6 - 10

Recommended Class Activity – Case Study - Watch the

!
Important
reading. Refer reading. Refer Answer the Real world video via the point to
to textbook to textbook question example link remember

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Important Information

 Please note that this lecture and the related tutorial content is
based on the following text;
 Marketing, 9th Edition, Kotler et al, (2013), Pearson Australia.

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Overview

 Outline the steps in segmentation, targeting and positioning

 Understand why and how organisations segment markets (both consumer

and business)
• Understand what characteristics are likely to be shared by consumers
and be meaningful to marketers
• Understand how to describe these groups (segmentation variables)
• Understand what makes a segment effective

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Customer-driven marketing strategy

Insert Figure 9.1

in here

© Commonwealth of Australia, reproduced by permission

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Defining Segmentation and Why it is Completed

Definition:
Dividing a market into groups based on certain
shared characteristics.

Why bother with segmentation?

 Allows an organisation to more efficiently
allocate their scarce resources.
 Allows an organisation to effectively meet
customer needs and wants.

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Targeting & Positioning

 Once an organisation segments/divides the market, they will then:

– Select target market/s to focus their efforts towards
– Choose a positioning strategy, to ensure consumer view their
offering in a particular way.

 Lets now commence with the first step of the process Segmentation.

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Segmenting consumer markets

Geographic • Mobile marketing; Location-based

marketing
segmentation
There is no single Demographic • Age and life-cycle stage; Gender; Income;
way to segment a
segmentation Multivariate demographic segmentation
market, however
these are the four
main variables used Psychographic • Personality; Values; Lifestyle;
for segmenting the Socio-Economic Status (SES)
consumer market
segmentation

•Purchase occasions; Benefits sought;

Behavioural User status; Usage rate; Loyalty
status; Buyer-readiness stage;
segmentation Attitude towards product; Online
behaviour

© Commonwealth of Australia, reproduced by permission

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Geographic

 Geographic: Dividing a market into different geographical units such

as nations, regions, states, municipalities, cities or neighbourhoods.

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Examples of McDonalds Geographic Segmentation

McDonald’s understands that people in different locations have different needs and wants,
therefore they consider this when offering their products.
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Activity: 2 Minutes

 Identify the country where each of these are being offered.

Bubur Ayam McD

McSpicy Paneer

McBurrito
McFalafel

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Activity: 2 Minutes

 Identify the country where each of these are being offered.

INDIA
INDONESIA

Bubur Ayam McD

McSpicy Paneer

MEXICO

ISRAEL

McBurrito
McFalafel

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Demographic

 Demographic: Dividing the market into groups based on variables

such as age, gender, family size, family life cycle, income, occupation,
education, religion, race and nationality.

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Demographic

 Age and life-cycle stage: consumer needs

and wants change with age, so some
companies use age and life-cycle
segmentation which divides a market
based on age and life-cycle groups.

 Gender: long used in clothing, cosmetics

and magazines. Other opportunities
include finance and cars, amongst others.

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Demographic

 Income: used in goods and

services such as cars, boats,
clothing and travel.

 Multivariate demographic: most

companies segment a market by
combining two or more
demographic variables.

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Example of Demographic Segmentation: Gender

https://www.youtube.com/watch?v=wafe6kDBb6c 17
Example of Demographic Segmentation: Income

https://www.youtube.com/watch?v=9P9LUqDnlBM 18
Psychographic

 Psychographic: buyers are divided

into different groups based on
psychological/personality traits,
lifestyle or values. People in the
same geodemographic group can
have different profiles.
 Often used to more clearly identify
a target market.
 Lifestyle segmentation is common.

Identical products targeted at different lifestyles

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Behavioural

 Behavioural: divides buyers into groups based on their knowledge of

the product, their attitude towards it, the way they use it and their
responses to it.
 Common variables within behavioural include:
– Benefits sought
– User status
– Usage rate
– Buyer-readiness stage
– Attitude towards the product

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Behavioural

 Benefits sought: buyers are segmented according to the different benefits

they seek from the product.
 User status: many markets can be segmented into non-users, ex-users,
potential users, first time users and regular users of a product.
 Usage rate: markets can also be segmented into light, medium and heavy
user groups.
 Buyer-readiness stage: there are different stages of readiness to buy a
product. Some people are aware, some are informed, some are interested,
some want the product, and some intend to buy.
 Attitude towards the product: people can be enthusiastic, positive,
indifferent, negative or hostile.
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Examples of Behavioural Segmentation

Benefits sought Usage Rate

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Activity: Which behavioural segmentation variable is Uber trying
to address in this clip?

https://www.youtube.com/watch?v=3mFIeQGRD0Q 23
Requirements for effective segmentation

 Measurable – The size and purchasing power of the segments

must be measured.
 Accessible – The segments must be able to be effectively Measurable Accessible
reached and served.
 Substantial – The segment must be large enough and
profitable enough to serve. Actionable Substantial

 Differentiable – The segments must be conceptually

distinguishable and respond differently to different marketing Differentiable

mix elements and programs.

 Actionable – Effective programs must be able to be designed
for attracting and serving the segments. Things to consider when creating
market segments

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Segment Profile

 A segment profile is a description of a typical group of customers

(similar to a character description from a game or movie). It describes
the consumer segments demographics, psychographics, behaviour and
geographics (if applicable).

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Snack Food Segments
Nutritional Weight Guilty Party Indiscriminate Economical
snackers watchers snackers snackers snackers snackers
% Snackers 22 14 9 15 15 18
Value / benefits Nutritious, no Low calorie, Low calorie, good Good to serve to Good tasting, Low price, best
sought artificial ingredients, quick energy tasting guests, goes well satisfied hunger value for money
natural with beverages

Demographics Better educated, Younger, Younger / older Middle aged, non- Teens Larger families,
have younger single females, lower urban better educated
children socio economic

Psychographics Self assured, Outdoor types, High anxiety, Sociable Hedonistic Self assured, price
controlled influential, isolated oriented
adventurous

Behaviour light Light heavy average heavy average

(usage level)
Behaviour Fruits, vegetables, Yoghurt, Yoghurt, crackers, Nuts, potato chips, Confectionary, No specific focus
(product cheese cheese biscuits, pretzels, crackers Ice-cream,
confection Biscuits
Choice)
Potato chips
pretzels

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Two profiles (segments) with potential

Party Snackers Indiscriminate Snackers

Demographics: Middle aged non-urban Demographics: Teens
Psychographics: Sociable Psychographics: Hedonistic (pleasure seeking)
Behaviour (benefits sought): Snacks that are good to Behaviour (benefits sought): Anything that tastes
serve to guests, that goes well with drinks good and satisfies hunger
Behaviour (usage level): Average Behaviour (usage level): Heavy
Behaviour (product choice): Nuts, potato chips, Behaviour (product choice): Sweets, Ice Cream,
pretzels & crackers Biscuits, Pretzels and Potato Chips

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MCD2050

Marketing 1
Lecture 3 – Targeting & Positioning
Market Targeting

 Market segmentation identifies the opportunities that exist within a

market.

 Targeting is the process by which the firm selects groups to devote

resources to and focus their efforts upon.

 Targeting involves the following:

1. Evaluating the segments identified
2. Selecting the target segments and choosing a targeting strategy

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Evaluating market segments

 Three factors to be looked at before selecting a target market/s

Segment size and growth

Segment structural attractiveness

Company objectives and resources

© Commonwealth of Australia, reproduced by permission

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Evaluating market segments

 Segment size and growth – Firms want to select segments that

have the right size and growth characteristics.
 Segment structural attractiveness – The firm should analyse
the following, Current and potential competitors, threat of
substitute products, the power of buyers and the power of
suppliers.
 Company objectives and resources – Segment must be
consistent with the organisations goals.

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Evaluation of market segments in action

https://www.youtube.com/watch?v=MevKTPN4ozw 32
Selecting market targeting strategies

Insert Figure 9.3

in here

© Commonwealth of Australia, reproduced by permission

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Undifferentiated Targeting Strategy

 Undifferentiated: The company decides to ignore market

segment differences and goes after the whole (entire) market
with one market offer.

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Differentiated (Segmented) Targeting Strategy

 Differentiated Marketing: A market coverage strategy where a

company decides to target several market segments and
designs separate offers for each.

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Concentrated (Niche) Targeting Strategy

 Concentrated (Niche) Marketing: A market coverage strategy

where a company goes after a large share of one (or a few)
submarkets i.e. one particular segment.

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Micromarketing Targeting Strategy

 Micromarketing: Tailoring
products and marketing
programs to the needs and
wants of specific
individuals.
 There’s another example of
micromarketing on the next slide:

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Example of Micromarketing:

https://youtu.be/FlaTU12q2js 38
Activity: Identify the coverage strategy used:

Identify which coverage strategy is being used by the following firms

(videos are in the following slides).

 Razor Computers

 Kellogg’s

 Nurses Cornflour

 Eoniq Watches

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Activity: Identify which coverage strategy is being used by Razor:

https://youtu.be/kfFHghqiIAU 40
Activity: Identify which coverage strategy is being used by Kellogg’s:

https://youtu.be/q-rsSEz4Y4I 41
Activity: Identify which coverage strategy is being used by Nurses:

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Activity: Identify which coverage strategy is being used by Eoniq:

https://youtu.be/Ysc4tn24leI 43
Positioning

 Positioning describes how the target market perceives the

organisation’s offer relative to competing offers. It is how the
customers distinguish a company, it’s brands and products
from competitors when they are selecting from available
alternatives.

Colin Kaepernick – NFL Quarterback Pharrell Williams – Musician/Producer Selena Gomez – Actor/Musician

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Positioning Map Example: Brand Positioning (Sports Footwear)
High Price

Performance

Based on brand positioning, Adidas Fashion

identified an opportunity in the
market

Low Price 45
Activity: Draw a product positioning map

Lets draw a positioning map for one of these products.

We must include at least three (3) competitor products.

1. Spacetalk Kids Smart watch 2 – Zoom 3 – Parker IM Fountain Pen (Gold Trim)

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Summary

 Firms need to place a boundary around the market so

that they can direct their efforts to understanding it
 Firms then need to investigate that market in order to
derived segments to target with offers of value
 To be useful, there are a number of characteristics that
segments must have

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Online Weekly Quiz

 Reminder to complete the online weekly quiz on Moodle.

 Quiz will close 5pm Saturday

 The test is open book – you can refer to your lecture notes and
textbook(s)

 The test is timed – 60 minutes to complete from when you start it.

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