Principles of Marketing PDF

 Chapter 6 Segmentation, targeting and positioning Learning outcomes Explain the concept of market segmentation. Describe how marketers can segment a market. Outline the prerequisites and bases for effective market segmentation. Explain target marketing, the criteria for selecting t...

 Chapter 6 Segmentation, targeting and positioning Learning outcomes Explain the concept of market segmentation. Describe how marketers can segment a market. Outline the prerequisites and bases for effective market segmentation. Explain target marketing, the criteria for selecting targeted markets and targeting approaches. Explain the concept of positioning. 3 Learning outcomes (continued) Discuss the bases, process and methods of positioning. Apply a perceptual map to a product or service offering. Describe the notion of repositioning. Demonstrate your grasp of the theory discussed in this chapter by providing appropriate practical examples to illustrate any marketing principle or concept. Provide a marketing management solution related to any of the above outcomes. 4  Introduction Firms must ensure that they establish themselves in the minds of their customers as distinct and unique in what they stand for, what the sell or do. Segmentation, targeting and positioning (STP) Managerial approach that focuses on identifying sub-markets of customers, considering specific market segments, deciding which segments will be targeted and differentiating the firm’s product or service offering from its competitors Segmentation The process of dividing the total market for a particular product or product category into relatively homogeneous segments or groups Targeting Evaluating each market segment to determine its attractiveness and whether it offers opportunities that match the firm’s capabilities and resources Positioning A marketing strategy that focuses on the distinct position that a product or brand occupies in the minds of consumers in a market segment relative to competing brands 5 The nature of consumer markets Market A group of individuals or firms that have a desire or need for products in a product class and have the ability, willingness and authority to purchase those products. Product class A group or range of products that may serve as substitutes for one another. Categories of consumer markets: Consumer markets 6 Business markets Segmentation Market segmentation Mass marketing Differentiated marketing Niche marketing One-to-one marketing. 7 Criteria for market segmentation Identifiable and Substantial Accessible measurable Viable and Responsive sustainable 8  Bases for segmentation Bases for segmentation of consumer markets Needs and Demographic Geographic Psychographic Behaviouristic benefits segmentation segmentation segmentation segmentation segmentation 9 Demographic segmentation Demographic segmentation divides markets into segments using gender, income and education as criteria. Demographic information is readily available, and relatively easy to measure. 1 0 Geographic segmentation Firms often find that their customers are geographically concentrated. The market may be mainly located in a specific region, city or suburb. Geographic segmentation often plays a significant part in developing market segments. Reasons why consumer goods firms segment their market based on geographic criteria: They need to find new ways to generate sales due to slow developing or competitive markets. Checkout scanner data enable retailers to determine which brands sell best in a particular region. Packaged goods manufacturers can introduce new regional brands that appeal to local preferences. 1 It allows consumer goods firms to react quickly to competition. 1 Psychographic segmentation Combines psychological and lifestyle criteria Based on consumers’ values and daily routines Based on the following variables: Personality - traits, attitudes and habits Motive - emotional motives Lifestyle - how a person spends their time and the things that are of importance to them Geodemographics - neighbourhood lifestyle categories that combine geographic, demographic and lifestyle elements 1 2 Psychographic segmentation (continued) 1 3 Behavioural segmentation Uses consumer behaviour or product usage to draw distinctions between different market segments Based on analysing what and where customers buy, and includes patterns of actual purchase behavior Approaches: Product category segmentation Brand segmentation Product category user segmentation Occasion Buyer readiness Consumer attitudes Laggards or non-adopters. 1 4 Behavioural segmentation (continued) Approaches (continued): Rate of new product adoption Innovators Early adopters Early majority Late majority Laggards or non-adopters. Loyalty segmentation Hard-core loyals Split loyals Shifting loyals Switchers. Price-point segmentation Distribution outlet segmentation 1 5 Behavioural segmentation (continued) 1 6 Needs and benefits of segmentation Categories of benefits Functional benefits Psychological benefits Relationship benefits Process benefits. Effectiveness of benefit segmentation depends on the following conditions: Must be identifiable Must be able to divide the market into distinct, recognisable segments Must be responsive to the firm’s marketing efforts 1 7 Segmentation process Evaluating the Identifying and Positioning the segment’s profiling customers firm’s market offer attractiveness 1 8 Segmentation process (continued) 1 9 Segmentation process (continued) The difficulties of segmentation: Selecting too many criteria Selecting too few criteria Segments may look attractive in the immediate future, but can change significantly or even disappear in the longer term Developing a fit between the firm’s vision, capabilities and culture for long-term sustainability. The benefits of segmentation: Differentiate products and services to meet customer needs and desires and wants more effectively. Product design can be improved. Marketing is more effective. Segmentation can lead to increased brand loyalty. Unprofitable market segments can be avoided. Marketing resources can be optimised. 2 0 Targeting Target market selection strategies: Concentrated targeting Product specialisation Market specialisation. Differentiated targeting Undifferentiated targeting 2 1 Targeting (continued) 2 2 Positioning Considerations when developing a brand positioning strategy: What product offerings will be needed to address the needs of each of the targeted segments? How will these products be positioned in the minds of the target market? What integrated marketing mix strategy can be used to support the brand positioning? Differentiation: offering consumers something they value that competitors cannot offer 2 3 Perceptual maps Constructing a perceptual map: The overall similarity method The attribute rating method. 2 4 Perceptual maps (continued) Constructing a perceptual map: The overall similarity method The attribute rating method. 2 5 Positioning process 1. Identify the position that the brand and its competitors currently occupy in the minds of the target market consumers. 2. Identify the position that perfectly matches the target market’s ideal or sought-after attributes for the product category. 3. Decide whether to continue or modify the current positioning strategy. 4. Develop a positioning statement to be used as a blueprint to realise the desired brand position. 2 6 Positioning bases and strategies Attribute Technolog Benefit y Price and Origin quality Positionin g bases Use or Competito applicatio r n Product Product class user 2 7 The need for repositioning The product was originally not positioned correctly. Competitors have positioned products nearby. Customer tastes and preferences have shifted. Factors in the macro environment may have an influence. Research and technology create a breakthrough. 2 8 Need for repositioning (continued) The repositioning process for any firm or brand should consider four factors: Can the firm manufacture and market the product that consumers will perceive as having the combination of desired attributes? Can the firm manufacture and market the product at a price consumers will be prepared to pay? What is the cost of repositioning the brand to the required position or new market segment? What income will the product earn in the new position? 2 9 The influence of the digital world on segmentation, targeting and positioning 3 0 Digital perspectives A marketing manager must be aware of the relationship between the offline marketing strategy and the online marketing strategy Several positioning options for a strategy are available: Base positioning on features/services that they are perceived as the best Positioning on the benefits that they offer to their customers Using a specific usage occasion as a positioning strategy. 3 1 Summary Use segmentation, targeting and positioning to remain competitive. Adapt to changing environments. 3 2