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04 Market Segmentation &amp Positioning RAC

This document discusses market segmentation and positioning in marketing management. It describes the STP process of segmentation, targeting, and positioning. It explains how to segment consumer and business markets, evaluate market segments for targeting, and use perceptual maps to assist with product positioning strategies. The goal is to identify distinct customer groups and design the product and brand image to occupy a meaningful position in their minds.

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Sabeeh -ul -Hassan
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99 views

04 Market Segmentation &amp Positioning RAC

This document discusses market segmentation and positioning in marketing management. It describes the STP process of segmentation, targeting, and positioning. It explains how to segment consumer and business markets, evaluate market segments for targeting, and use perceptual maps to assist with product positioning strategies. The goal is to identify distinct customer groups and design the product and brand image to occupy a meaningful position in their minds.

Uploaded by

Sabeeh -ul -Hassan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Marketing Management

Market Segmentation and


Positioning

Lecture 04
Ian McPhee

“Positioning is not what you do to a product; it is


what you do to the mind of a prospect” (Ries and
Trout, 1972)
Learning Outcomes

• Describe the principles of market segmentation and


the STP process.
• Explain the characteristics and differences between
market segmentation and product differentiation.
• Explain how market segmentation can be undertaken
in both consumer and business to business markets.
• Describe different targeting strategies.
• Explain the concept of positioning.
• Illustrate how the use of perceptual maps can assist
the positioning process.
Underlying Assumptions

• Not all buyers are alike


• Sub-groups can be identified
– With similar behaviour, background, values
and needs
– Smaller & more homogeneous
• Easier to satisfy a small group than larger
(Zikmund & D’Amico, 1995)
Levels of Analysis

Environmental

Organizational

Departmental

Group or team

Individual
Maslow’s Hierarchy of Needs

(Abraham
(Abraham
Maslow)
Maslow)
Case Insight - Stagecoach

• One of the largest bus operators in


the UK
• Operate express and local bus
services across the country
• Comprehensive network of intercity
operations under the Megabus brand
• So how do Stagecoach identify who
their customers are and where they
might want to access their services?
STP Process

• Method by which whole markets are


subdivided into different segments
• Three activities that should be undertaken,
usually sequentially, if segmentation is to
be successful:
– Segmentation
– Targeting
– Positioning
STP Process
Benefits of STP Process

“80% of profits usually derived by 20% of customers”


Pareto’s Principle

• Enhancing a company’s competitive position by


providing direction & focus for marketing strategies.

• Examining and identifying growth opportunities in the


market through the identification of new customers,
growth segments or new product uses.

• More effective and efficient matching of company


resources to targeted market segments promising the
greatest ROMI.
Market Segmentation

• Market segmentation is the division of a market into


different groups of customers with distinctly similar needs
and product/service requirements.

• Purpose of market segmentation:


– Leverage scarce resources.
– To ensure that the elements of the marketing mix are designed
to meet particular needs of different customer groups.
– Allows organisations to focus on specific customers needs, in
the most efficient and effective way.
Marketing Segmentation
• Market Segmentation & Product Differentiation
Process of Market Segmentation

• There are two main approaches to segmenting markets:

• Breakdown Method: Adopts the view that the market is


considered to consist of customers which are essentially
the same, so the task is to identify groups which share
particular differences.

• Build-Up Method: Considers a market to consist of


customers that are all different, so here the task is to find
similarities.
Process of Market Segmentation

• Aim is to identify segments where:


– identifiable differences exist between
segments (segment heterogeneity).
– similarities exist between members within
each segment (members homogeneity).
Segmenting Consumer Markets

• Segmentation Bases/Criteria

– Profile Criteria - Who my market are and where


are they?

– Behavioural Criteria - Where, when, and how


does my market behave?

– Psychological Criteria - Why does my market


behave that way?
Segmenting Consumer Markets
Segmenting Consumer Markets
Segmenting Business Markets

• Segmentation Bases/Criteria

– Organisational Criteria – e.g.,


Organisational size and location

– Buyer Characteristics – e.g., Choice criteria,


purchase context
Organisational Characteristics

Source: McDonald and Dunbar (2004). Reproduced with kind permission.


Buyer Characteristics

• Decision Making Unit


– Policy factors
– Purchasing strategies
– Attitudes towards vendors and toward risk

• Choice Criteria
– What specifications of product/service they choose

• Purchase Situation
– Structure of the purchasing procedures
– Type of buying situation
– Stage in the purchase decision process
Targeting

• To determine which, if any, of the segments uncovered


should be targeted

• Evaluation of Market Segments - DAMP


– Distinct – is each segment clearly different from other
segments?
– Accessible – can buyers be reached through appropriate
promotional programmes and distribution channels?
– Measurable – is the segment easy to identify and measure?
– Profitable – is the segment sufficiently large to provide a stream
of constant future revenues and profits?
Segment Attractiveness Factors

• Rating approach for different segment attractiveness


factors:
– Market growth
– Segment profitability
– Segment size
– Competitive intensity within the segment
– Cyclical nature of the industry

• Each of these attractiveness factors is rated on a scale


of 0-10 and loosely categorized as high, medium or low
in attractiveness.
Segment Attractiveness Factors
Targeting Approaches
Positioning

• The act of designing the company’s offering and image


so that they occupy a meaningful and distinct
competitive position in the target customers’ minds.

• Two fundamental elements:


– Physical attributes - the functionality and capability that a brand
offers.
– Communication - the way in which a brand is communicated and
how consumers perceive the brand relative to other competing
brands in the market place.
Perceptual Maps
Represent a geometric comparison of how competing
products are perceived
Positioning Strategies

• Position a brand either functionally or expressively


(symbolically)

• Functional
– Features
– Quality
– Use
• Expressively
– User
– Benefit
– Heritage
Repositioning Srategies

1. Change the tangible attributes and then communicate


the new product to the same market

2. Change the way a product is communicated to the


original market

3. Change the target market and deliver the same product

4. Change both the product (attributes) and the target


market
Summary

• Described the principles of market segmentation and the


STP process.
• Explained the characteristics and differences between
market segmentation and product differentiation.
• Explained how market segmentation can be undertaken
in both consumer and business to business markets.
• Described different targeting strategies.
• Explained the concept of positioning.
• Illustrated how the use of perceptual maps can assist the
positioning process.

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