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Segmentation
Targeting Positioning
Dr. Vesselin Blagoev
Segmentation-> Targeting-> Positioning
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Define the task for segmenting the market(s)
Select the bases for segmentation
Segment the market(s)
Select the target segments
Product positioning
Develop and execute the marketing programs
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2 basic approaches:
Mass marketing Segmented marketing
The basic choice of a company is to pursue either a mass marketing strategy or a segmented strategy.
Mass marketing is also known as aggregated marketing and undifferentiated marketing.
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Segmented marketing
The basic requirements of the segmented marketing are:
At least one homogeneous segment is found
A marketing mix is devised specifically for the segment(s)
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A procedure for segmenting
markets1. Broadly specify area of interest
2. Generate a list of segmentation variables
3. Qualitative analysis
4. Quantitative analysis
5. Apply size, accessibility and marketing mix control criteria
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Segmentation variables
Heterogeneous demand
Segments relating toCustomer characteristics
Segments relating toCustomer behaviour
Demographic& Geographic
variables
Psychological &Sociological
variables
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Consumer segmentation
Profile Behavioral Psychographic
Demographic
Geographic
Socio-economic Purchaseoccasion
Perceptionsand
beliefs
Usage
Benefitssought
Purchasebehavior Lifestyle
Personality
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Bases for segmentation
1 Geographic National/regional differences in taste and product usage
2 DemographicsAgeLifecycleEducationSexFamily composition
Can differences be distinguished between groups in each of those categories that reflect differences in propensity to purchase, or in product usage?
3 Socio-economic and income
Are consumption or media exposure related to social grad or income level?
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Bases for segmentation
4 Geodemographics
Does where we live condition how we live, and consequently relate to what we buy?
5 Benefits sought Are there differences in the benefits sought by different people in the same product?
6 Usage rate and brand loyalty
Are these who consume a lot of a product different from those who consume a little?
7 Psychographics Is consumption better considered in the context of ‘lifestyle’ groups?
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Bases for segmentation
8 Situation Does the situation in which consumption or purchase takes place vary? If so can individuals be grouped according to their situations?
9 Responsiveness
Do people respond differently to aspects of marketing activity? Do they use different distribution channels?
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Profile: Demographic &
Geographic variables
Size Age Sex Destination Geographic area Socioeconomic
class Race
•Family life cycle
•Family size
•Marital status
•Income
•Occupation
•ACORN group
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Profile: Socio-economic segmentation
Class Description
A Upper Middle Class High managerial/administrative/Professional, I.e. company director or established doctor
B Middle Class Intermediate managerial/administrative/ orprofessional
C1 Lower Middle Class Supervisory/clerical/junior managerial
C2 Skilled Working Class
Skilled manual workers
D Working Class Semi-skilled or unskilled workers
E Pensioners, casual workers and others
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ACORN a Geodemographic
segmentation
ACORN stands for ‘A classification of residential neighborhoods’. It segments the consumers according to the type of area in which they live into 12 major groups, further refined into 39 types.
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ACORNGroup ACORN groups in Great Britain %
A Modern family housing with manual workers
9.6
B Modern family housing, higher income 7.4
C Older housing of intermediate status 10.4
D Very poor quality, older, terraced housing 9.2
E Rural areas 5.8
F Urban local authority housing 20.6
G Housing with most overcrowding 2.9
H Low income areas with immigrants 4.2
I Students and high status non-family areas
4.3
J Traditional high status suburbia 19.1
K Areas of elderly people, often resorts 6.4
Unclass
Other 0.2
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ACORNACORN groups % Populatio
n
A Agricultural areas 3.4
B Modern family housing, higher incomes
16.2
C Older housing of intermediate status
17.6
D Poor-quality older terraced housing 4.3
E Better-off council estates 13.
F Less well-off council estates 9.4
G Poorest council estates 7.6
H Multiracial areas 3.9
I High-status non family areas 4.2
J Affluent suburban housing 15.9
K Better-off retirement areas 3.8
U Unclassified 0.7
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Benefits sought segmentation (a Behavioural segmentation)
It is axiomatic in marketing that customers buy benefits, not features. Some toothpaste users want white teeth, others fresh breath and others protection from dental decay.
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Benefit segmentation for
tooth paste
Segment Benefit required Other characteristicsSensory Flavor+appearance Usually children
Social Sound bright teeth Outgoing and active, young,
sometimes smokers
Worrier Decay preventionHeavy users, families
Independent Low prices Predominantly male, littleloyalty, brand on offer
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Benefit segmentation
for cars
Pleasure seekers: driving is all about pleasure (freedom, enjoyment, well being)
Image seekers: driving is all about self-image. The car provides feelings of power, prestige, status and self-enhancement. Driving is secondary.
Functionality seekers: driving is only a means of getting from point A to B. Convenience matters.
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Benefit segmentsIn the less expensive camera market:
Do-it-yourselfer (25%) Great pride in good pictures Gratification from making settings and
adjustments Pride in a complex camera Regards a good picture the results of
expertise
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Behavioral segmentation
The most obvious approach when we use behaviouristic characteristics is to study usage rates and brand loyalty:
Heavy users (say every day) Medium users (maybe once a week)
Light users (say once a month) Occasional users Non-users (never used brand)
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Behavioral segmentation
Other behaviouristic criteria include:
Loyalty levelsPurchase occasionUser statusReadiness status
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Psychological & Sociological
variables
ValuesNeedsLife styleGroup membership
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Psychographic segments
Psychographics classify consumers according to their personal traits such as sociability, self-reliance, assertiveness, lifestyles, which cover attitudes, interests and opinions.
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Lifestyle segmentation (a Psychographic segmentation)
It tells the marketer about the sort of lifestyle his customer leads, the beliefs and the opinions he holds, the type of interest he has and the background he is from.
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Lifestyle segmentation (a Psychographic segmentation)
It is expensive to conduct – a large number of personal interviews with up to 600 questions being asked.
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Lifestyle segmentation
Activities Interests Opinions Demography
Work Family Selves Age
Hobbies Home Social issues
Education
Social events
Job Politics Income
Vacation Community
Business Occupation
Entertainments
Recreation
Economics Family size
Club membership
Fashion Education Dwelling
Community
Food Products Geography
Shopping Media Future City size
Sports Achievements
Culture Family life style
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Psychographic segments
Young sophisticates (15%) : Extravagant, experimental, non-traditional, young; A, B and C1 social classes, educated, affluent, sociable,cultural interests, owner-occupiers, in full-time employment, interested in new products
Cabbages (12%) : Conservative, less quality-conscious, demographically average but more full-time housewives, middle class, average income and education, lowest level of interests in new products, home-centered, indulging in little entertaining
Traditional working class (12%):
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Psychographic segments
Coronation Street housewives (14%) : Quality-conscious, conservative, traditional and obsessional, D and E social classes, live relatively more in Lancashire and Yorkshire ITV areas, less educated, lower incomes, part-time employment, lower level of interest in new products, not sociable
Self-confident (13%) : Self-confident, quality-conscious, not-extravagant, young and well educated, owner-occupiers, average income
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Taylor Nelson’s Monitor
1. Self-explorer: youthful, independent, tolerant,comfortably situated, often female
2. Social register: older, resist change, high need for control
3. Experimentalist: independent, unconventional, energetic, work-oriented, often men in their late 20s and early 30s
4. Conspicuous consumer: conformist, materialistic, lacking self-confidence
5. Belonger: mature, stable, settled
6. Survivor: dependent on protection of authority but sceptical of its intentions, identify with country and family, tend to be male, unskilled or skilled manual workers
7. Aimless: goal-less, uninvolved, alienated, unable to improve their position
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SAGACITYa combination of Life Style + Occupation + Income
SAGACITY combines a number of demographic variables to produce 12 segments of consumers ‘at a similar stage of their (family) life cycle, and with similar disposable income and cultural characteristics’.
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SAGACITY classification scheme
Dependent Pre-family Family Late
Better off
Worse off
Better off
Worse off
White
Blue
White
Blue
White Blue White Blue White Blue White Blue
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Requirements for a usable segment
The useful segment must be:
DefinableSizeableReachableRelevant
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Definable To be able to describe the
main characteristics A degree of homogeneity (in a
heterogeneous market) To be able to measure it’s size
and define the boundaries
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Sizeable
To be big enough to make possible to achieve the required turnover and profit
A trend to grow
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ReachableThere must be a way of reaching the segment both effectively and efficiently
Marketing communicationDistribution channels
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Relevant Segment life cycle (durability) Price level to customization costs (incl. entry investment)
Extent of overlap or interdependency with other segments
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Segmentation for organizational
markets
Demographics for organizational markets include:
Geographic location (some businesses are regionally concentrated)
Primary business of industry (SIC) Size (number of employees or sales) Type of buying situation (tenders)
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Organizational market
Macrosegment 1 (large companies)
Macrosegment 2(medium-sized
companies)
Macrosegment 3(small companies)
Microsegment 11st criterion: Reliability
Microsegment 21st criterion:
Convenience
Microsegment 31st criterion: Price
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Organizational segmentation
Macrosegmentation
Microsegmentation
Organizationalsize
Geographiclocation
Industry
InnovativenessPurchasing
organizationBuy class
Decision-Makingprocess
Decision-Makingstructure
Choice criteria
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SICFood, drink and tobacco manufacturing : code 4.2
Soft drinks: code 42.8
Mineral waters and soft drinks (carbonated and stiff) : code 4283.1
Fruit and vegetable juices : code 4283.2
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To segment or not to segment ?
Factor Mass NicheEnd user wants Similar 1 2 3 4 5 Different
Product market size Small 1 2 3 4 5 Large
Product market structure
Simple 1 2 3 4 5 Complex
Market share High 1 2 3 4 5 Low
Resources of company
High 1 2 3 4 5 Low
Image High 1 2 3 4 5 Low
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Segmentation strategiesTargeting
Marketing mix
Marketing mix 1
Marketing mix
Market
Segment 1
Segment 1
Marketing mix 2Marketing mix 3 Segment 3
Segment 2
Segment 3Segment 2
Mass (undifferentiated) marketing
Differentiated marketing (multi-segment)
Concentrated marketing
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Analysis of customer behaviour2 major theories: Rational customer who always seeks to maximize his satisfaction or utility
Psycho-socio customer: family, culture affects
Targeting
What does it mean?
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Product Positioning
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Different options need different
strategies
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Target segment
s
Customer
behavior
Product adaptatio
n
Marketing budget
Different marketing options & strategies
Mktg Mix 1
(Strategy 1)
Segment 1
Segment 1
Segment 3
Mktg Mix 2
(Strategy 2)
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Market positioningA products’ position is the place the product occupies in consumers’ minds relative to competitors.Market positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
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Key tasks in positioning
Positioning is the choice of : Target market : where we
want to compete Differential advantage :
how we wish to compete
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Some basis for positioning
Corporate positioning
Product positioning
The organization could strive to attain and to maintain leadership in terms of one or more of:
The product’s positioning might emphasize:
market share cost/economy/value quality product features service product range technology product quality innovation services/customer care variety customer types integrity customer problem
solved community service use/application type
disassociation
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Keys to successful positioning
Clarity
CredibilityCompetiti-
veness
Consistency
Successfulpositioning
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Clarity
The positioning idea must be clear in terms of both target market and differential advantage:
BMW : The Ultimate Driving Machine Mars : Good Food Costs Less at Sainsbury
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Consistency
Too many messages bombard the customers. Consistent message is required.
If it is quality this year, it must be quality next year too.
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CredibilityThe differential advantage which is chosen must be credible in the minds of the target customers
Example: The ad of Lada as an exiting, sporty car by showing it slaloming through dirt tracks in Africa failed – a lack of consonance between image and reality.
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CompetitivenessThe differential advantage should have a competitive edge. It should offer something of value to the customer which the competition is failing to provide.
Example: Apple iPhone, iPad
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Positioning map Excellent image
Poor image
Low Brand Awareness
High Brand Awareness
Amstel
Kamenitza
Pirinsko pivo
Zagorka
Ariana
How do we position the product?
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Marketing mix
Target market
Marketingmix
Product
Promotion
Price
Place
Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties
List price, Discounts,Allowances, Payment Terms, Credit terms
Channels, Locations,Inventory, Transport
Advertising, Personal selling, Sales, Promotion, PR
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CustomerService
Price
Promotion
PhysicalEvidence
Processes
People
PlaceProduct
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth Heinemann
7P of Customer Service & Mktg Mix
How do we position the brand?
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