Segmentation Targeting Positioning

1. Segmentation Targeting Positioning Dr. Vesselin Blagoev

2. Segmentation-> Targeting-> Positioning 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

3. 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.

4. 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)

5. A procedure for segmenting markets 1. 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

6. Segmentation variables Heterogeneous demand Segments relating to Customer characteristics Segments relating to Customer behaviour Demographic & Geographic variables Psychological & Sociological variables

7. Consumer segmentation Profile Behavioral Psychographic Demographic Benefits sought Purchase behavior Lifestyle Socio-economic Usage Purchase occasion Personality Geographic Perceptions and beliefs

8. Bases for segmentation

9. Bases for segmentation

10. Bases for segmentation

11. Profile:Demographic & Geographic variables • Family life cycle • Family size • Marital status • Income • Occupation • ACORN group • Size • Age • Sex • Destination • Geographic area • Socioeconomic class • Race

12. Profile:Socio-economic segmentation

13. 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.

14. ACORN

15. ACORN

16. 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.

17. Benefit segmentation for tooth paste Segment Benefit required Other characteristics Sensory Flavor+appearance Usually children Social Sound bright teeth Outgoing and active, young, sometimes smokers Worrier Decay prevention Heavy users, families Independent Low prices Predominantly male, little loyalty, brand on offer

18. Benefit segmentationfor 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.

19. Benefit segments In 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

20. 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)

21. Behavioral segmentation Other behaviouristic criteria include: • Loyalty levels • Purchase occasion • User status • Readiness status

22. Psychological & Sociological variables • Values • Needs • Life style • Group membership

23. Psychographic segments • Psychographics classify consumers according to their personal traits such as sociability, self-reliance, assertiveness, lifestyles, which cover attitudes, interests and opinions.

24. 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.

25. Lifestyle segmentation(a Psychographic segmentation) It is expensive to conduct – a large number of personal interviews with up to 600 questions being asked.

26. Lifestyle segmentation

27. 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%):

28. 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

29. Taylor Nelson’s Monitor • Self-explorer: youthful, independent, tolerant,comfortably situated, often female • Social register: older, resist change, high need for control • Experimentalist: independent, unconventional, energetic, work-oriented, often men in their late 20s and early 30s • Conspicuous consumer: conformist, materialistic, lacking self-confidence • Belonger: mature, stable, settled • 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 • Aimless: goal-less, uninvolved, alienated, unable to improve their position

30. 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’.

31. SAGACITY classification scheme Dependent Pre-family Family Late Better off Better off Worse off Worse off Blue Blue White White White Blue White Blue White Blue White Blue

32. Requirements for a usable segment The useful segment must be: • Definable • Sizeable • Reachable • Relevant

33. 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

34. Sizeable • To be big enough to make possible to achieve the required turnover and profit • A trend to grow

35. Reachable • There must be a way of reaching the segment both effectively and efficiently • Marketing communication • Distribution channels

36. Relevant • Segment life cycle (durability) • Price level to customization costs (incl. entry investment) • Extent of overlap or interdependency with other segments

37. 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)

38. Organizational market Macrosegment 1 (large companies) Macrosegment 2 (medium-sized companies) Macrosegment 3 (small companies) Microsegment 1 1st criterion: Reliability Microsegment 2 1st criterion: Convenience Microsegment 3 1st criterion: Price

39. Organizational segmentation Macrosegmentation Organizational size Industry Geographic location Microsegmentation Choice criteria Decision- Making structure Decision- Making process Buy class Purchasing organization Innovativeness

40. SIC Food, 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

41. To segment or not to segment ?

42. Segmentation strategiesTargeting Marketing mix Market Mass (undifferentiated) marketing Marketing mix 1 Segment 1 Differentiated marketing (multi-segment) Marketing mix 2 Segment 2 Marketing mix 3 Segment 3 Segment 1 Marketing mix Concentrated marketing Segment 2 Segment 3

43. Analysis of customer behaviour 2 major theories: • Rational customer who always seeks to maximize his satisfaction or utility • Psycho-socio customer: family, culture affects

44. Targeting What does it mean?

45. Product Positioning

46. Different options need different strategies Target segments Customer behavior Product adaptation Marketing budget Different marketing options & strategies Segment 1 Mktg Mix 1 (Strategy 1) Segment 1 Mktg Mix 2 (Strategy 2) Segment 3

47. Market positioning A products’ position is the place the product occupies in consumers’ minds relative to competitors. Market positioningis arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

48. Key tasks in positioning Positioning is the choice of : • Target market : where we want to compete • Differential advantage : how we wish to compete

49. Some basis for positioning

50. Keys to successful positioning Clarity Consistency Successful positioning Credibility Competiti- veness