Segmentation, Targeting, and Positioning

• Segmentation, Targeting, and Positioning fall under Week 6, Topic 5.

Segmenting Consumer Markets (DEFINED)

• A market comprises people or organizations possessing requirements or desires, coupled with the capacity and intent to procure.
• A market segment is a subgroup within a population or group, distinguished by shared traits that lead to similar product needs.
• Market Segmentation involves pinpointing particular individual or organizational features which influence marketing techniques

Segmenting Consumer Markets

• Market segmentation offers benefits such as:
  • Enhanced opportunities for growth.
  • Increased profitability.
  • Improved matching of customer needs.
  • More effective targeting of communications.
  • Improved customer retention.
  • Opportunities for segment dominance.

Variables in Segmenting Consumer Markets

• Consumer segmentation includes:
  • Behavioural segmentation.
    • Benefits sought.
    • Purchase occasion.
    • Purchase behaviour.
    • Usage.
  • Psychographic segmentation.
    • Lifestyle.
    • Personality.
    • Perceptions and beliefs.
  • Profile segmentation.
    • Demographic.
    • Socio-economic.
    • Geographic.

Profile Segmentation

• Profile Segmentation focuses on demographic and socio-economic criteria:
  • Age and life stage.
  • Generation.
  • Race & culture.
  • Gender.
  • Social Class.
  • Income

Geographic & Geodemographics

• Market division is based on geographical units like nations, regions, states, counties, cities, and even neighborhoods.
• Geodemographic segmentation combines location with specific demographic & socio-economic traits to categorise consumers.
• Focus includes household characteristics and marketing mix decisions.

Psychographic Segmentation

• Lifestyle is a important factor driving consumer behaviour.
• Lifestyle includes activities, interests, and opinions.
• Lifestyle includes media habits.
• Personality reveals long-lasting behavioral patterns.
• Personality suggests, "Birds of a feather flock together".
• Personality can be difficult to access and measure.

Behavioral Segmentation

• Purchase Occasion divides the market based on when consumers consider buying, actually buy, or use the item.
• Purchase Behaviour divides the market by degree of consumer loyalty toward the brand.
• Purchase Behaviour considers brand loyalty versus brand-switching behaviours.
• Purchase Behaviour aligns with Pareto Principle: 80/20 rule.

Usage

• Market is segmented by the degree of product or brand consumption with classifications of non-users, ex-users, potential users, first-time users, and regular users.
• Markets are also segmented into light, medium, and heavy product/service users.

Multi-Segment Marketing

• Multiple Segmentation helps in pinpointing more refined target demographics.
• Multiple Segmentation supports more targeted market strategies and communications to meet individual customer demands.

Successful Segmentation Criteria

• For market segments to be constructive, they must be:
  • Measurable.
  • Accessible.
  • Profitable.
  • Effective.
  • Actionable.
• Effective segments are composed of customers who share similar needs, yet differ significantly from other segments. Revisions to the segmentation strategy are needed should buyer needs across different segments becomes too similar.
• Measurable proposes that identifying customers inside the planned segment, along with understanding their traits is feasible.
• Accessible suggests a company needs to have the ability to create efficient marketing plans for the identified segments.
• The chosen segment should allow transparent approaches about advertising strategies

Actionable & Profitable Criteria

• Actionable segmentation requires a company to possess the resources needed to harness the possibilities uncovered by the segmentation strategy.
• Certain segments may be attractive yet beyond reach due to resource or expertise limitations.
• Profitable demands that segments have sufficient size and potential revenue to justify serving them.
• Segment profitability can be re-evaluated with advancements in production and distribution.

Targeting: Market Coverage

• A target market encompasses a group sharing typical needs and characteristics chosen by an organization to serve.
• Evaluation criteria includes segment size and growth, segment structural attractiveness, and company objectives and resources.

Targeting Strategies

• Four targeting strategies:
  • Micro Marketing
  • Niche Marketing
  • Differentiated Marketing
  • Mass Marketing

Undifferentiated Marketing

• Aimed at the entire market using a single strategy.
• Focuses on common customer’s needs instead of differences.
• Relies on mass marketing strategies.

Differentiated Marketing

• Targets multiple market sectors via customized offers.
• The goal is increased sales and a stronger market position.
• It carries a higher cost compared to undifferentiated marketing.

Focused Marketing

• Targets a narrow segment within a larger market.
• Requires focused company resources and market knowledge.
• Is usually more effective and efficient.

Customized Marketing

• Tailors services and marketing strategies for unique people and locations.
• Includes individual marketing approaches like mass customization, one-to-one marketing, and personalization.

Choosing a Target Market

• Choice depends upon:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitors’ marketing strategies

Market Positioning

• A Perceptual Map, sometimes called a Positioning Map is a visual which plots products, brands, and product groups by customer point of view.
• Perceptual diagrams shows awareness of brands in comparison to competitors.

Differentiation

• Differentiation is a promotional technique to set apart one product from the competition with real or apparent differences which present as:
  • Important.
  • Distinctive.
  • Superior.
  • Communicable.
  • Pre-emptive.
  • Affordable.
  • Profitable.

Repositioning

• Involves altering consumer brand perception against its competition.
• Is used due to changing consumer tastes, due to poor sales, or due to mistakes in brand image.