14s2_lect5

MARK1012: Lecture 5: RazzaqueMarket Segmentation, Targeting and Positioning

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RAZZAQUE:UNSW L5-1

MARK1012: LECTURE 5 MOHAMMED ABDUR RAZZAQUE

RAZZAQUE:UNSW L5-2

Lectureobjectives1. Explainmarketsegmentation,andidentifyvarious

possiblebasesforsegmentingmarkets.2. Explaintherequirementsforeffectivesegmentation:

measurability,accessibility,substantiality,actionability.3. Outlinetheprocessofevaluatingmarketsegmentsand

suggestsomemethodsforselectingmarketsegments.4. Illustratetheconceptofpositioningforcompetitive

advantagebyofferingspecificexamples.5. Discusschoosingandimplementingapositioning

strategy,andcontrastpositioningbasedonproduct,service,personnelandimagedifferentiation.


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RAZZAQUE:UNSW L5-3

SometruthsaboutMarketsAllmarketers bothB2CandB2B recognisethattheycannot(i)appealtoallbuyersinthosemarkets,or(ii)appealinthesameway.

Ratherthantryingtocompeteinanentiremarket,oftenagainstsuperiorcompetitors,eachcompanymustidentifythepartsofthemarketthatitcanservebest.

Buyersaretoonumerous,toowidelyscatteredandtoovariedintheirneedsandbuyingpractices.

Differentcompaniesvarywidelyintheirabilitiestoservedifferentsegments

ofthemarket.

RAZZAQUE:UNSW L5-4

Designingacustomerdrivenmarketingstrategy

SegmentationDivide the total market into smaller segments

DifferentiationDifferentiate the market

offering to create superior customer value

TargetingSelect the segment or

segments to enter

PositioningPosition the market offering

in the minds of target customers

Create value for targeted customers

Selectcustomerstoserve Decideonavalueproposition


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RAZZAQUE:UNSW L5-5

the process of dividing the total market for a good or service into several smaller groupssuch that the members of each group are similar with respect to the factors that influence demand.

Evaluates each segments attractiveness and selects one or more segments to enter.

A target market is a group of customers ( people or organisations) for whom a seller designs a particular marketing mix.

Segmenting Target Marketing

RAZZAQUE:UNSW L5-6

Segmentationisnecessarybecausecustomersinamarkethave: Differencesinbuyinghabits

Differencesinthewaythegoodorserviceisused

Differentmotivesforbuying.

Copyright 1997 by The McGraw-Hill Companies, Inc.

Segmentation

Markets are segmented by: Intuition based on experience

and judgment Mimicking competitors and

earlier market entrants Performing a structured

analysis that includes Identifying the current and

potential wants that exist within a market

Identifying the characteristics that distinguish segments

Finally, determining who has each want.


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RAZZAQUE:UNSW L5-7

1. Identify Bases for Segmentation

2. Develop Profiles of Segments

3. Develop Measures of Attractiveness

4. Select Target Segment(s)

6.DevelopMarketingMixforEachSegment MarketPositioning

Market Targeting

Market Segmentation

StepsinSegmentation,Targeting,PositioningandDifferentiation

5. DevelopPositioningforEachSegment

ProductDifferentiation

7.Decideonavalueproposition

RAZZAQUE:UNSW L5-8

Geographic country, region populationdensity

populationsize,

climate

Demographic Ageandlifecycle

Gender Income Education Occupation Religion Nationality

Psychographic Socio-

economic Status Values - AIO Personality

Bases for Segmenting Consumer Markets

Behavioural Purchaseoccasion

Benefitssought Usersought Userrate Loyaltystatus Readinessstage Attitudetowardsproduct


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RAZZAQUE:UNSW L5-9

Colgate offers benefits to consumers

RAZZAQUE:UNSW L5-10

Geo-demographic Segmentation

GeographicSegmentationVariables

(e.g.,SEAsia,City,Kensington)

DemographicSegmentationVariables

(e.g.,Male,LowIncome,seniorcitizens)

GeodemographicSegmentationVariable(e.g.,SEAsianMales;Low

incomeCitydwellers;SEAsianLowIncomeearners;SeniorCitizensofKensingtonetc.)


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RAZZAQUE:UNSW L5-11

ColourdiscriminationOlderpeoplehavedifficultydistinguishingpastelsandthegreenbluevioletpartofthecolourspectrum.Thishaveimpactonpackaging,brochuresanddisplays.

Glare Glareinpackaging,postersandfloorsinretailstoresshouldbetoneddownoreliminated.

Hearing25%ofpeopleover65experiencehearingloss;marketersusingaudiocommunicatorsshouldselectspokespersonswhohavedeepertones.

Tastesensitivity Byage80,twothirdsofourtastesensitivityislost(mostforsweettastes,leastforsourtastes).Marketersshouldconsiderodouramplificationtoenhancethepalatabilityoffoodsandbeverages.

Touch Atage65,a5degreechangeintemperatureisneededtoequalthesensitivitya30yearoldwouldhavefora1degreechange.

WhyUseAgetoSegment?Consider these bodily changes that accompany ageing:

RAZZAQUE:UNSW L5-12

1.FashionStatementsmostaffluentandeducated,usecreditcards,expecttobetreatedwellbyretailpersonnel.

2.WannabuyssimilartoFashionStatementsbutwithlessincome.Enjoybuyingonimpulse.

3.FamilyValuesrepresentlargefamilies,oftenareprofessionals,buyingfocusesonchildrenorthehome.

4.DowntoBasicsmostlikelytohavechildren,notcollegeeducated,carefulspenders,prefernottousecredit,likecoupons.

5.Matriarchsolder,oftenretired,theylikedepartmentstoresbutareriskaverseandhavefewpurchaseplans.

ASEGMENTATIONEXAMPLEFemale department store shoppers have been classified into 5 types, based on demographics, values and attitudes. The groups and their descriptive names are:


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RAZZAQUE:UNSW L5-13

Identifying and Analysing Business Market Segments

Demographic Operating variables Purchasing approaches Situational factors Personal characteristics

for SegmentingBases

for SegmentingBusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingVariables

PurchasingApproaches

RAZZAQUE:UNSW L5-14

Signode CorporationsFourSegments

Programmed Buyers. This group buys products as a routine purchase, pays full price, and accepts below average service. This segment is highly profitable.

Relationship Buyers. This group views Signodes packaging as moderately important. They are knowledgeable about competitors offerings. They remain loyal if prices are competitive. Typically, they receive a small discount and a modest level of service.

Transaction Buyers. This group sees Signodes products as very important to their business. They are price and service sensitive. They receive above average service and a 10% discount. They will switch for a better price.

BargainHunters.ThisgroupseesSignodes productsasveryimportanttotheirbusinessanddemandthedeepestdiscountandhighestlevelofservice.Theyknowtheirsuppliersandbargainhard.Theirlargevolumeisneededbuttheyarenotveryprofitable.Les

s

M

ore

Prof

itabl

e

Pro

fitab

le


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RAZZAQUE:UNSW L5-15

SegmentingInternationalMarkets

Political/Legal

Cultural

Intermarket

Economic

Geographic

Factorsfor

SegmentingInternationalMarkets

SouthAsiaMiddleEastAustralasia

NIEOECDECM

Politicallyvolatile

CommonLanguageReligionCustoms

SegmentingconsumerswithsimilarneedsandbuyingbehavioreventhoughtheyarelocatedindifferentgeographicalLocations.

RAZZAQUE:UNSW L5-16

Requirementsforeffectivesegmentation

RequirementsForeffectivesegmentation

Actionable

Shouldbelargeenoughtobeprofitable

Themarketsegmentcanbeeffectivelyreachedandserved

Organizationmustbeabletodistinguishthesegmentandrespondtoitsneedsdifferently

Organizationmustbeabletoidentifyand

measureeachsegment

Marketersshouldbeabletodesign

effectiveprogramstoserve

themarket

Measurable

Actionable

Differentiable Substantial

Accessible


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RAZZAQUE:UNSW L5-17

EvaluatingMarketSegmentsI

SizeandGrowth

StructuralAttractiveness

CompanyObjectives

andResources

Segmentationrevealsthemarketsegmentopportunitiesfacingafirm.Thefirmhastoevaluatethevarioussegmentsandchoosetheonestoserve.

Select the segment with the right size growth.

[e.g., go for the Niche market]

Desirablesizeandgrowthdoesnotensurehighprofitability.Structuralfactors[competition,substitutes,powerofbuyer/sellers]areimportant

Companymustevaluateitsownobjectives,resources,constraints,strengthsandweaknesses

RAZZAQUE:UNSW L5-18

Evaluating Market Segments II

Segmentsizeandgrowth collectandanalysedataoncurrentdollarsales,projectedsales

growthratesandexpectedprofitmarginsforthevarioussegmentstoselectsegmentsthathavetherightsizeandgrowthcharacteristics,butrightsizegrowthisarelativematter.

Segmentstructuralattractiveness desirablesizeandgrowthmaynotprovideattractive

profitability.Thecompanymustexamineseveralmajorstructuralfactorsthataffectlongrunsegmentattractiveness.

Marketingorganisationobjectivesandresources positivesizegrowthandstructuralattractivenessmustmatch

thecompanysownobjectivesandresourcesinrelationtothatsegment.Someattractivesegmentscouldbequicklydismissedbecausetheydonotmeshwiththecompanyslongrunobjectives.


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RAZZAQUE:UNSW L5-19

MarketTargetingStrategiesI

Undifferentiatedmarketing

Differentiatedmarketing

Concentratedmarketing

Micro-marketing

MassMarketing

SegmentedMarketing

NicheMarketing

LocalorIndividualMarketing

Targeting Targeting broadly narrowly

Afterevaluatingdifferentsegments,thecompanymustdecidewhichandhowmanysegmentsitwilltarget.Atargetmarketconsistsofasetofbuyerswhosharecommonneedsthatthecompanydecidestoserve.

RAZZAQUE:UNSW L5-20

MarketTargetingStrategiesII

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

CCompany Mix 1

CCompany Mix 2

CCompany Mix 3

Market

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Ignoremarketsegmentation;focusonwhatiscommonratherthanwhatisdifferent.Designaproductandmarketingprogramthatappealstolargestnumberofbuyers.Steel,Applesareexamples.

Targetseveralmarketsanddesignseparateofferforeach.Caterforeverypurse,price,andpersonality(Toyota).Examples:ColesMyerSupermarket,Bilo,Myerstores

Goforlargeshareofoneorfewsubmarketsratherthanforsmallsharesofmanymarkets.DELL[PC],CRAY[Mainframe],APOLLO[Workstation]


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RAZZAQUE:UNSW L5-21

CUSTOMSEGMENTATIONAspecialversionofconcentratedmarketing

Ideally,marketersshouldbeabletodefinesegmentssopreciselythattheycanofferproductsandservicesthatexactlymeettheuniqueneedsofeverycustomer.Commonfordoctors,lawyersandhairstylists.

Doesnothappeninreality;itisneitherpracticalnorpossible.ParticularlytrueforB2Borindustrialmarkets.

Theygoforcustommarketingstrategyandusecustomsegments.

In customsegmentationmanufacturerstendtoworkwithoneorafewlargeclientsanddevelopproductsorservicesthatonlythesecustomerswoulduse.

RAZZAQUE:UNSW L5-22

ChoosingaMarketCoverageStrategy

Factors

Decisions

FactorsAffectingStrategy

Decisions

CompanyResources

CompetitorsStrategies

MarketVariability

ProductVariability

Stage inLife Cycle

Limitedresource?Goforconcentrated

Uniformproducts?Undifferentiated.Manyproducts?Differentiated.

Anewproductintroducedinthemarket?Goforundifferentiatedorconcentrated

Buyershavethesametaste?Goforundifferentiated

Competitorusessegmentation?Cannotuseundifferentiated.


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RAZZAQUE:UNSW L5-23

MarketPositioningoftheProductAfterdecidingwhichsegment(orsegments)ofthemarkettoenter,thefirmmustdecidewhichpositionitwantstooccupyinthosesegments.Positioningiscustomerperceptionsofaproductimageorbenefitsversuscompetitionsproducts.

Productposition isthewaytheproductisdefinedbyconsumersonimportantattributes.Drive ispositionedasanallpurposefamilywashingdetergent;Softlyasawashingdetergentfordelicatefabricssuchaswool.

Positioningisdifferentfromproductdifferentiation.Differentiatedvalueiscreatedbythevaluepropositionusedbymarketersforthesegmentedmarket. Valuepropositionreferstothefeaturesthatdifferentiateaproductfromcompetitorsofferings

RAZZAQUE:UNSW L5-24

ChoosingaDifferentiationandPositioningStrategyAthreestepprocess1. Identifyingasetofdifferentiatingcompetitiveadvantagesuponwhichtobuildaposition

2. Identifyingandchoosingtherightcompetitiveadvantages3. Selectinganoverallpositioningstrategy.Step1:IdentifyingasetofdifferentiatingcompetitiveadvantagesuponwhichtobuildapositionCanbedonethoughperceptualmappinganalysis.Perceptualmapisamultidimensionalmapwhichidentifiesfactorsthatdiscriminatebetweenbrands.

Itisausefultoolforplottingmovesovertimebycompetitorsaswellastheresultsofafirmsownbrandpositioningstrategy.


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RAZZAQUE:UNSW L5-25

PerceptualMappingBaseduponresearchusingexistingorprospectiveconsumers:managementdeterminesthosedimensionsmostimportanttoconsumersinevaluatingbrands;and

howconsumersseecompetitiveproductsintermsoftheirperformanceonthesedimensions.

Perceptualmapsarevaluablein: determiningconsumerperceptionsofexistingproducts; offeringinsightstonewproductopportunities; gapsintheperceptualspacemaysuggestpositionsfornewofferingsinthemarket.

RAZZAQUE:UNSW L5-26

Perceptual Mapping and Positioning Decisions

Conservative Sporty

Upscale, Classy

Practical, Affordable

Mercedes

CadillacLincoln

PorscheVolvo

Saab

FordDodge

ChevroletToyota

ChryslerBuick

Cost-Performance

Gap

Nissan

BMW

Honda

PlymouthHyundai


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RAZZAQUE:UNSW L5-27

Brandpositionofdepartmentstores

High perceived quality and status

Extensive personalised service

Low perceived quality and status

Limited service Less personal

David Jones

Myer

Target

Kmart

RAZZAQUE:UNSW L5-28

Step2.IdentifyingandchoosingtherightcompetitiveadvantageI

Consumerschooseproductsandservicesthatoffergreatestvalue.Competitiveadvantagecanbeprovidedby:

ProductdifferentiationHighlystandardisedproducts(e.g.,chicken,steel,aspirin)vs.highlydifferentiatedproducts,(e.g.,motorcars,furniture,camera). Features,performance,style,design,consistency,durability,reliabilityandreparabilityareallareasofpossibledifferentiation.

Servicesdifferentiationdifferentiate theservicesthataccompanytheproduct.

e.g.,intermsofdelivery,installation,repairandcustomertrainingservices.


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RAZZAQUE:UNSW L5-29

Step2.IdentifyingandchoosingtherightcompetitiveadvantageII

PersonneldifferentiationByhiringandtrainingbetterpeoplethantheircompetitors.Requiresacompanytoselectitscustomercontactpeoplecarefullyandtrainthemwell.

ImagedifferentiationWorktoestablishimagesthatdifferentiatethemfromcompetitors.Acompanyorbrandimageshouldconveyasingularanddistinctivemessagethatcommunicatestheproductsmajorbenefitsandpositioning.

Symbolscanprovidestrongcompanyorbrandrecognitionandimagedifferentiation.

Acompanycanalsocreateanimagethroughthetypesofeventitsponsors..

RAZZAQUE:UNSW L5-30

Step2.IdentifyingandchoosingtherightcompetitiveadvantageIII

Mustavoidthreemajorpositioningerrors: Underpositioning failingtopositionthecompanyatall.

Overpositioning givingbuyerstoonarrowapictureofthecompany.

Confused positioning leavingbuyerswithaconfusedimageofthecompany.

Criteriafor

DeterminingWhich

Differencesto

PromoteAAffordable Superior

Profitable

PPre-emptive

DDistinctive

Important

Commun-icable

Howmanydifferencestopromote?Whichdifferencestopromote?


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RAZZAQUE:UNSW L5-31

WhichDifferencestoPromote?Adifferenceisworthestablishingtotheextentitsatisfiesthefollowingcriteria:Important thedifferencedeliversahighlyvaluedbenefit.Distinctive competitorsdonotofferthedifference.Superior thedifferenceissuperiortootherwaysinwhichthecustomersmayobtainthesamebenefit.

Communicable thedifferenceiscommunicableandvisibletobuyers.

Preemptive competitorscannoteasilycopythedifference.Affordable thebuyerscanaffordthedifference.Profitable thedifferencecanbeintroducethedifferenceprofitably.

RAZZAQUE:UNSW L5-32

Various Possible Positioning Strategies

AgainstaCompetitor

UsageOccasions

AwayfromCompetitors

ProductAttributes

ProductClass

BenefitsOffered

Users

B

A

EEDD

CCHHGG

FF

Source: Kotler Brown Adam ArmstrongMarketing 5th Ed Copyright 2001 Pearson Education Australia


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RAZZAQUE:UNSW L5-33

ExamplesofPositioningStrategies

Position on specific product attributes [Hyundai Excel>>low price] on the benefits offered [Colgate>>cavity prevention] according to usage occasions [Sustagen>>replaces body fluids] for certain classes of users [Mothercare>> baby products] against a competitor [Tandy and Compaq vis--vis IBM] away from competitors [7-up, the un-cola >>vs Coke and Pepsi] for different product classes [Margarines vs butter; margarines

vs cooking oil] using combination strategies [J&Js affinity Brand is a hair

conditioner for women over 40 >> product class and user]

RAZZAQUE:UNSW L5-34

SelectinganOverallPositioningStrategy

Moreformorepositioninginvolvesprovidingthemostupscaleproductorserviceandchargingahigherpriceforhighercosts.

Moreforthesamecompaniescanattackacompetitorsmoreformorepositioningbyintroducingabrandofferingofcomparablequalityatalowerprice.

Thesameforless apowerfulvaluepropositionofferinggooddeals.

Lessformuchlessmeetsthedemandforproductsthatofferlessandcostless.

Moreforless awinningvaluepropositionbutmaybeimpossibletomaintaininthelongrun.

Thefullpositionofabrandistermedthebrandsvalueproposition.

Companyandbrandpositioningshouldbesummedupinapositioningstatement.


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RAZZAQUE:UNSW L5-35

PossibleValuePropositions

Moreformore

Moreforthesame

Moreforless

Thesameforless

Lessformuchless

Ben

efits

More

The Same

Less

More

The Same LessPrice

Winning value propositions

Losing value propositions

RAZZAQUE:UNSW L5-36

DevelopingapositioningstatementProductCompanyandbrandpositioningshouldbesummedupinapositioningstatementoftheform:To(targetsegmentandneed)our(brand)is(concept)that(pointofdifference).

Example:Tobusy,mobileprofessionalswhoneedtobealwaysintheloop,Blackberry isawirelessconnectivitysolution thatallowsyoutostayconnectedtodata,peopleandresourceswhileonthego,easilyandreliablymoresothancompetingtechnologies.


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RAZZAQUE:UNSW L5-37

Step3:Designmarketingprogramtocommunicatebenefitsandpersuadecustomers.

Afterselectingaposition,thecompany musttakestrongstepstodeliverandcommunicatethe

desiredpositiontotargetcustomers. Themarketingmixeffortsmustsupportthepositioning

strategy. Designingthemarketingmixinvolvesworkingoutthe

tacticaldetailsofthepositioningstrategy.Theposition mustbemonitoredandadaptedovertimetomatchchanges

inconsumerneedsandcompetitorsstrategies. shouldevolvegraduallyasitadaptstotheeverchanging

marketingenvironment.

RAZZAQUE:UNSW L5-38

The positioning statement

addresses three key questions:

1. Whoisthetargetcustomer?

2.Whyshouldthecustomerbuy?

3.Whatareweselling?

Six Questions to Ask When Applying a Positioning Strategy

1. Whatisourpresentpositionintheprospectsmind?

2. Whatpositionwouldweliketoown?3. Whichcompaniesposegreatest

challengeagainstthisposition?4. Dowehaveenoughfinancialsupportto

gainandholdthisposition?5. Dowehavethecouragetostickwith

oneconsistentpositioningconcept?6. Doesourcreativeapproach(4Ps)match

ourchosenpositioningstrategy?


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RAZZAQUE:UNSW L5-39

SomeConfusingTermstoNote

Customer perceptions of a product image or benefits versus competitions products.

Positioning

The features that make a product distinct from competitors offerings.

Differentiation

You have chosen a segment ..1. whose size can be determined.2. you know where your customers live, where

they shop, what media they are exposed to etc.

4. you have enough resource to get the product to the market.

3. you expect the segment to yield sufficient profit

MeasurabilityAccessability

Substantiality

Actionability

You are talking about

Company A sells an Deluxe range of matching products for kitchen.They are following a ____________ marketing strategy.

Company A also sells a basic range of different products for kitchen.They are following a ____________ marketing strategy.

Custom

Undifferentiated

14s2_lect5

Documents

unsw l51mark1012

unsw l52lectureobjectives1

total market

decideon l5

razzaquemarket segmentation

earlier market entrants

andcontrastpo lecture

target segments6