MKTG101 Marketing Fundamentals
Week 6 Market Segmentation, Targeting and Positioning
MKTG101 2005 Week6 1
The „works‟
• Assume you are a Product Manager for Nike in their Footwear division; suggest a SEGMENTATION program to the company‟s top management that includes all potential buyers and users of Nike footwear. On what basis would you begin the segmentation process??
MKTG101 2005 Week6 2
Segmenting footwear in the leisuresports category – your tasks are …
• Profiling the potential DEMOGRAPHIC element of segmentation to include: • Profiling the potential GEOGRAPHIC element of segmentation to include: • Profiling the potential PSYCHOGRAPHIC element of segmentation to include: • Profiling the potential BEHAVIOURAL element of segmentation to include:
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Profiling the potential DEMOGRAPHIC element of segmentation includes:
– Age – Gender – Income – Occupation & Education levels – Life cycle stage
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Profiling the potential GEOGRAPHIC element of segmentation includes:
– North, South, East and West – Metro and non-metro – Metro, Regional and Rural – State – Domestic and International – Regional: Asia-Pacific, East Asia, Europe, North America etc…
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Profiling the potential PSYCHOGRAPHIC element of segmentation includes:
• Achievement oriented • Outdoor type • Socially conscious • Family oriented • Health conscious • Environmentally aware
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Profiling the potential BEHAVIOURAL element of segmentation includes:
– Social – Reparative (making amends) – Situational – Experimental – Traditional
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So now profile a “teenager” segment using the segmentation bases
• Demography would include:
– Ages > – Gender > – Edu levels >
• Geography would include
– Anywhere in Australia
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So now profile a “teenager” segment using the segmentation bases
• Psychography would include:
– Health conscious – Outdoor-environment oriented – Achievement oriented
• Behavioural would include:
– Social – Experimental
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Now suggest HOW to Target the segment
• Mktg Mix management – 4P‟s + 2 • Integrated Mktg Communications Mix – Advertising, Personal selling, Sales Promo, On-Line comms strategies, PR • Sponsorships • Testimonials from experts • Media usage and utilisation
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Finally suggest HOW to best “Position” Nike in the minds of the segment.
• This uses clever „psych tools‟ that address the segment‟s attitudes to the Nike product in terms of their perceptions. • These tools are designed to „fabricate‟ positive perceptions by increasing the positive „spin‟ about product attributes, benefits that flow to the users, the way to use the product, how they see it to be different from or close to a rival or competitor.
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Stages in Market Orientation
Simplest – non-specific Mass Marketing
Letterbox drops
More focussed
Product-Variety Marketing
Using product width & depth
B2C
Target Marketing
Highly specific and complex
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MKTG101 2005 Week6
Stages in Market Orientation
Mass marketing: - same message all targets seller mass produces product, mass distributes this product and mass promotes this standard product to ALL buyers
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Stages in Market Orientation
• Product-variety marketing: choice is main advantage seller produces two or more products that have different attributes – see also “differentiation” giving consumers choice – a form of „market coverage‟ e.g., features, styles, quality, sizes
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Stages in Market Orientation
Target marketing: seller identifies market segments, selects one or more of them, and develops a marketing mix and usually an IMC Mix tailored to each segment
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Marketing concepts
Market: usually all the current and potential customers for a product or service that meet in a real or virtual place to contemplate exchange. (Includes Business Markets) Market segment: a smaller part or portion of a total market in which the firm is interested.
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Marketing concepts
Market segmentation: the process of dividing a heterogeneous market into a number of smaller, more homogeneous customer groups Target market: the segment that the firm believes is most likely to respond to the organization‟s marketing mix
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Steps in Segmentation, Targeting and Positioning
Increases in complexity
6. Develop Marketing Mix for Each Segment 5. Develop Positioning for Each Segment 4. Select Target Segment(s)
Market Positioning
Stage 3
Market Targeting
3. Develop Measures of Attractiveness 2. Develop Profiles of Segments
1. Identify Bases for Segmentation
Stage 2
Market Segmentation
Stage 1
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Bases for Segmenting Consumer Markets
C H A R A C T E R I S T I C S
1. Demographic
Segmentation Variables
3. Behaviour
2. Geographic
4. Psychographic
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Demographic
Demography: the way marketers describe (usually using numbers) the population they wish to target. Demographic characteristics include:
– Age – Gender – Income – Occupation & Education levels – Life cycle stage
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Geographic
Geography: relates to physical location. (Sometimes absorbed in Demographics) Geographic segments can include:
– – – – – – North, South, East and West Metro and non-metro Metro, Regional and Rural State Domestic and International Regional: Asia-Pacific, East Asia, Europe, North America
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Behaviour
Behaviour: refers to habits, preferences & choices of the population in the target market. Behaviour can be related to situation - an example of „drinkers‟ in Oz:– – – – – Social Reparative (making amends) Situational Experimental Traditional
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Behaviour
Behaviour can also relate to how customers develop… Loyalty
– Brand loyalty – c also price sensitivity – Category loyalty – Purchase frequency or BPI – brand purchase intention
Benefits customers perceive may include:
– Nutrition – Health – Economy – Taste Prestige Performance Style Service
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Psychographic
Lifestyle: a combination of what we want to do (mainly psychological factors) and what we can do (mainly demographic factors).
– Categories include:
• Achievement oriented • Socially conscious • Health conscious Outdoor type Family oriented Environmentally aware
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Effective Segmentation elements
Measurable
Actionable
Requirements for Effective Segmentation
Accessible
Substantial
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Market segmentation
• Measurable: the method must facilitate identifying and counting segment membership ie population DENSITY
• Accessible: the segment must be able to be reached efficiently with message and product strategies.
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Market segmentation cont.d
• Substantial: the segments must be large enough to justify treating it as distinct/separate markets • Actionable: the firm believes it can do something about this market - each segment should respond to a unique marketing mix.
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Evaluating a Segment
• Size (numbers) and growth (potential)
– Current and projected
• Structural/operational attractiveness –
– Profitability – return on investment
– Competitive situation – see BCG matrix
• How well the segment meets the firm‟s corporate objectives and resources
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Market Coverage Strategies
Company Marketing Mix
A. Undifferentiated Marketing
Market
Company Mix 1 Company Mix 2 Company Mix 3
B. Differentiated Marketing
Segment 1 Segment 2 Segment 3
Company Marketing Mix
C. Concentrated Marketing
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Segment 1 Segment 2 Segment 3
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Choosing a market-coverage strategy
Competitors’ Strategies Factors Affecting Strategy Decisions Stage in Life Cycle
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Company Resources
Market Variability
Product Variability
Market positioning
Positioning: The way the company designs the product’s image so that it “sits” well in the consumer’s mind – consumers have a positive attitude to the company’s product(s). • Determined by the consumer‟s assessment of the product on important characteristics and in relation to what the competition may or are doing.
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Product positioning options
Based on one or more of these attributes
Product Class Away from Competitors Against a Competitor
Product Attributes
Benefits Offered
D
G H C A E B F
Usage Occasions
Users
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Identifying a position
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Re-Positioning
• Here the company attempts to change consumer‟s perceptions or their Expectations about the company‟s products on offer in relation to competitor‟s brands. • Sometimes this is difficult, costly and timeconsuming – often innovation and differentiation strategies are needed.
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Potential re-positioning directions – perceptual maps
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Identifying possible competitive advantage
Assumption: Consumers typically choose products and services that give them the greatest value.
If a company can position itself as providing superior value to selected target markets it gains competitive advantage
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Characteristics of viable advantages
Important Criteria for Determining Which Differences to Promote
Profitable
Distinctive
Affordable
Superior
Preemptive
Communicable
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Viable (sustainable) advantages
A difference is worth establishing if it satisfies the following criteria:
– Important: – Distinctive: The difference delivers a highly valued benefit to target buyers. Competitors do not offer the difference, or the company can offer it in a more distinctive way. The difference is superior to other ways that customers might obtain the same benefit.
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– Superior:
Viable (sustainable) advantages
– Communicable: – Pre-emptive: The difference is communicable and visible to buyers. Competitors cannot easily copy the difference. Buyers can afford to pay for the difference. The company can introduce the difference profitably.
– Affordable:
– Profitable:
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