Chapter 5 Identifying market segments and targets+Positioning

STP(segmentation.targeting.position)--linking Strategy with Tactics

Market Segmentation

Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Groups of customers with similar needs or wants and priorities and who because of this seek same benefits and attach same importance to their satisfaction.

Segmentation ~ it’s so simple

Divide the market into groups

Whose members are as similar as possible to each other

That are as different as possible from other groups

Measurability: The degree to which the size, purchasing power and profiles of a market segment can be measured.

Accessibility: The degree to which a market segment can be reached and served.

Substantiality: The degree to which a market segment is sufficiently large and profitable.

Differentiability: The degree to which a market segment is conceptually distinguishable and responds differently to a different marketing mix.

Actionability: The degree to which effective programs can be designed for attracting and serving a given market segment.

STP

Segmentation:Identify variables that allow the market to be
segmented

Targeting:Evaluate the attractiveness of each segment and
choose a target segment

Positioning:Identify positioning concepts for each target segment,select the best, communicate.

Bases for Segmenting Consumer Markets

Major segmentation variables

Geographic segmentation

Psychographic segmentation

Demographic segmentation

Behavioral segmentation

consumer: region, climate

business: region, market, HQ, branch

consumer: age, cender, income, family size/stage, education

business: industry, assets, sales, of employees, age

consumer: social class, lifestyle(VALS)

business: corporate culture, power structure

consumer: benefits, usage occasion, usage rate, brand lotalty

business: applications, order urgency, order size, existing relationships

Geographical units:Nations, states, regions, counties, cities, or
neighborhoods

Geoclustring:Which neighborhoods or postcodes contain our most valuable customers? How deeply have we already penetrated these segments? Which distribution channels and promotional media work best in reaching our target clusters in each area?

Demographic segmentation divides the market into segments based on variables such as age, life- cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.They are the most popular bases for segmenting customer groups

Even when marketers first define segments using other bases, such as benefits sought or behavior, they must know a segment’s demographic characteristics to assess the size of the target market and reach it efficiently.

Buyers are divided into groups on the basis of their values, attitudes, and lifestyle

Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product

Principles of market segmentation

who buys/ customer&consumer characteristics

soft/psychographics

value

attitudes

lifestyle

hard/socio-economic&demographic+geography

what is bought and why/customer&consumer behaviour

subjective

benefits

perceptions

preference trade-offs

objective

usage

price sensitivity

promotional response

loyalty/repeat purchase

Using Multiple Segmentation Bases

Multiple segmentation is used to identify smaller,
better-defined target groups.

VALS is a psychometric method that measures predictive attitudes—in conjunction with behaviors and demographics—for developing countrywide typologies that persist through decades.

Customer segments: Danger of describing........and not understanding customers

Benefit Segmentation

Benefits sought represent consumer needs

People buy a product to satisfy a particular need

Important for positioning

Needs differ across consumers

People assign different weights to
different needs

Market Targeting

Factors for Selecting Target Segments

Structural attractiveness:

Size

Growth rate

Profitability

Nature of competition

Bargaining power of buyers

Reputation

Fit with company objectives and resources:

Strategic fit with long-term objectives

Core competencies and capabilities

Desired relationship with customer

The Multiple Criteria Matrix

row: Structural attractiveness

clomn: company objectives and resources

high/medium/low

Selecting Target Market Segments

Market-Targeting Strategies

targeting broadly

undifferentiated(mass) marketing

differentiated(segmented) marketing

concentrated(niche) marketing

micromarketing(local or individual marketing)

targeting narrowly

Undifferentiated marketing targets the whole market with one offer.

Mass marketing

Focuses on common needs rather than what’s different

Differentiated marketing targets several different market segments and designs separate offers for each.

Goal is to achieve higher sales and stronger position

More expensive than undifferentiated marketing

Concentrated marketing targets a large share of a smaller market.

Limited company resources

Knowledge of the market

More effective and efficient

Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Market Position

Developing a Brand Positioning

The act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market

Positioning Statement Format

convince:customer segment

That:the value we offer

Because:differential benefit

frame of reference

Defines which other brands a brand competes with and which should thus be the focus of competitive analysis

Identifying and analyzing competitors

points of difference

Attributes/benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand

points of parity

Attribute/benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands

Market targeting

Steps in the Segmentation Process

1, Needs-Based Segmentation----Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem

2, Segment Identification----for each needs-based segment, determine which demographics, lifestyle, and usage behaviors make the segment distinct and identifiable(actionable)

3, Segment Attractiveness----using predetermined segment attractiveness criteria(such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.

4, Segment Profitability----Determine segment profitability

5, Segment Positioning---For each segment, create a "value proposition" and product-price position strategy based on that segment's unique customer needs and characteristics

6, Segment "Acid Test"-----Create "segment storyboard" and test the attractiveness of each segment's positioning strategy.

7, Marketing-Mix Strategy----Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place.