market segmentation and positioning

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  • Market Segmentation and Positioning


  • The Marketing Communication Matrix

    2-way communication An interactive

    approach (listening & learning including informal dialogue initiated by planned messages)

    With Integrated mix of

    planned messages & interactive communication eg F2F,database, viral, WOM

    Between Dialogue based on

    trust,learning & adaptation with creative outcomes eg communities of interest, internal marketing via work teams

    1-way communication Conventional mass


    To Planned persuasive

    messages aimed at brand loyalty Eg positioning via


    For Planned persuasive

    messages on augmented offerings for targeted markets eg loyalty programs

    Mass Market Segmented/Mass Individual Customisation

    Ballantyne, Luxton, Powell (2004) Introduction to Marketing: A value exchange approach ed Gabbott, Pearson:381

  • Steps in the Target Marketing Process

  • Why Globalised Targeting is not Typically Undertaken

    Targeting everyone is: Expensive Wasteful Nearly impossible

    A more sensible approach:

    Identify smaller segments who are most likely to consider your brand (segmentation) and target them with specifically designed MC messages


  • Rationale for segmentation

    Cannot communicate 1to1 with all Segmentation aggregates the audience &

    creates growth opportunities by showing: how to compete better in more places in the

    market how to cut the market a different way to

    identify brand relationship opportunities Segmentation is about

  • The 7 Steps of Segmenting (Fig. 7-2)

  • Segmenting Current Customers

    Segment size. Spending patterns. Relationship maintenance costs. Questions asked: Are they high or low volume customers? How long ago did they purchase (recency)? How frequently do they purchase (frequency)? How much do they spend (monetary)?

  • Segmentable database

    Fusion of behaviour, relationship, demographic, psychographic & benefits data

    IMC activities designed to initiate, maintain & increase loyalty (maybe switching)

    True IMC

  • Segmenting Consumer Markets

    Segmentation variables can slice up the market Demographic,

    psychological, and behavioral differences

  • Segmenting by Demographics Age: Generational Marketing

    Children Teens/tweens Generation Y: born

    between 1977 and 1994 Generation X: born

    between 1965 and 1976 Baby boomers: born

    between 1946 and 1964 Older consumers

  • Segmenting by Demographics Gender

    Many products appeal to one sex or the other

    Metrosexual: a man who is heterosexual, sensitive, educated, and an urban dweller in touch with his feminine side

  • Segmenting by Demographics (contd)

    Family Structure Income Social Class Race and Ethnicity

    Irish Australian Asian Australian Aboriginals

  • Segmenting by Geography

    Geodemography: combines geography with demographics

    Geocoding: Customizes Web advertising so people who log on in different places see ad banners for local businesses

  • Segmenting by Psychographics

    Psychographics: The use of psychological, sociological and anthropological factors to construct market segments.

    AIOs: Psychographics segments consumers in terms of shared activities, interests, and opinions.

  • Segmenting by Behavior

    Segments consumers based on how they act toward, feel about, or use a product

    80/20 rule: 20 percent of purchasers account for 80 percent of a products sales

    Heavy, medium, and light users and nonusers of a product

    Usage occasions

  • Behavioural/demographic segments

    How do the conventional segmenting variables apply? They can also be part of the target audience


    25 to 34 years old

    Primary Target Audience Existing light category 25 to 34 year old drinkers who are sophisticated individuals that lead an urban lifestyle

    Sophisticated Urban lifestyle

    Current light category drinkers

  • Segmenting Business-to-Business Markets

    By organizational demographics By production technology used By whether customer is a user/nonuser of

    product By Australian Classification System (ASIC)

  • 3 Key Benefits of Segmenting a Market

    Costs Less to Sell to Existing Customers

    Some Customers Are More Profitable

    Some Customers Are More Profitable

    Costs Less to Sell to Existing Customers

    Key Benefits

    Knowing Whos in Your Segment Can Lead You to

    Others in the Same Group

    For use only with Duncan texts. 2005 McGraw-Hill Companies, Inc. McGraw-Hill/IrwinBrands

  • Benefit Based Snack Food Segments Nutritional snackers,

    Weight watchers

    Guilty Snacker

    Party snackers

    Indiscriminate snackers

    Economical snackers

    % Snackers 22 14 9 15 15 18

    Value / benefits sought

    Nutritious, no artificial ingredients, natural

    Low calorie, quick energy

    Low calorie, good tasting

    Good to serve to guests, goes well with beverages

    Good tasting, satisfied hunger

    Low price, best value for money

    Demographics Better educated, have younger children

    Younger, single

    Younger / older females, lower socio economic

    Middle aged, non-urban

    Teens Larger families, better educated

    Psychographics Self assured, controlled

    Outdoor types, influential, adventurous

    High anxiety, isolated

    Sociable Hedonistic Self assured, price oriented

    Behaviour (usage level)

    light Light heavy average heavy Average

    Behaviour (product Choice)

    Fruits, vegetables, cheese

    Yoghurt, cheese

    Yoghurt, crackers, biscuits, confection

    Nuts, potato chips, pretzels, crackers

    Confectionary, Ice-cream, Biscuits Potato chips pretzels

    No specific focus

    (Source, Reed et al, 1994)

  • Segmentation process in action

    Define Market Australian Snack Food Consumers (adults 16 yo above)

    Select Basis for segmentation

    Value/benefit sought from consumption Products favoured and consumed Lifestyle characteristics Demographic characteristics Media use

    Conduct research (use an agency if discovery oriented)

    Random (statistical) sample of 2000 Australian adults. Data subjected to factor analysis, cluster analysis, and discriminant analysis Both analytical and intuitive methods combined

    Profile segments

    Segments are profiled around key bases employed above (value/benefits sought as primary clustering)

    Segments are named to best represent their benefits sought / profile, eg nutritional, weight watchers, guilty, party, indiscriminate, economical snackers

  • Types of Targeting

    Message Targeting

    Focus only on those with best profit potential

    Profitability Targeting

    The smaller the segment, the more the message can target and speak to that group

    Message Targeting B2B Targeting

    NAICS codes are very helpful

  • Examples of targeting

    Retail shopping centre

    Magazine publishing

    BMW & Saab magazines

  • Positioning Strategies

    Category positioning how it fits in Image positioning what it means Unique product feature positioning

    technical differences Benefit positioning what it can do Brand

  • Positioning

    Positioning is the way in which the brand is seen in the mind of the target audience Eg Listerine


  • Listerine is..

    the mouth wash that tastes unpleasant but thats how it kills germs and so its worth it if you are the kind of person who doesnt mind suffering for your health

    dynamite against germs

  • Brand awareness Dependant upon how the purchase

    decision is entered into Two main types of choice situations in

    buyer behaviour Recall Recognition

    2 distinct strategies for creating/maintaining brand awareness

  • Brand attitude

    the buyers evaluation of the brand with respect to its perceived ability to meet a currently relevant motivation As communicators, we try to create, increase, maintain,

    modify or change attitudes Motivations may be

    negative (informational) or positive (transformational)

  • Brand purchase intention The buyers self instruction to purchase the

    brand Low involvement brand choice + a favourable

    attitude = purchase at next buying opportunity High involvement brand choice + favourable

    attitude may not necessarily create a buying opportunity Explicit brand purchase intention is necessary

  • Summary

    We must understand: Who to communicate to/with/for/between

    ie segmenting & targeting and What to communicate ie positioning /


  • You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice!/b2bwhiteboard