Segmentation and Positioning

Segmentation and Positioning

Why do we need to segment?

• Because different consumer groups needs are different

• To maintain focus on the customer target segment

• To customise advertising according to target segment

Segmentation is Done

• Concentrated marketing

• Differentiated marketing

• Mass marketing

• Niche marketing

Basic Focus Strategies for Services

BREADTH OF SERVICE OFFERINGS

NUMBER OF MARKETS SERVED

Narrow

Many

Few

Wide

Service Focused

Unfocused (Everything

for everyone)

Market Focused

Fully Focused (Service and

market focused)

Source: Robert Johnston

Fully focused

• A fully focused organization provides a very limited range of services to a narrow and specific market segment

Market Focused

• A Market Focused concentrates on a narrow market segment but has a wide range of services

Service Focused

• The service focused firms offer a narrow range of services to a fairly broad market.

Unfocused

• Many organizations fall under the category of unfocused because they try to serve broad markets and provide a wide range of services.

Choosing a Segmentation Strategy • Adopting a fully focused strategy presents both

risks and opportunities.

• Developing recognized expertise in a well defined niche may provide protection against would be competitors and allow firms to charge a premium price.

• On the other hand, the market may be very small to generate the volume of business needed for the financial success.

Service Focused

• One reason that firms with a narrow Service line elect to serve multiple segment is to create a portfolio of customers that hedge against such risks.

• However as new segments are added , the firm needs to develop expertise in serving each segment, which may require a broader sales efforts and greater investment.

Market Focused • Offering a broad Service line to a narrowly

defined target segment often looks attractive because it offers the potential of selling multiple services to a single purchaser.

• But before adapting a market focused strategy the mangers need to ensure that their firms have operational capability to do an excellent job of each of the services selected

Contd….

• Managers also need to understand customer purchasing practices and preferences.

• When trying to cross sell additional services to the same client in a B2B context, many firms have been disappointed to find that decision on purchasing the new services are made by entirely different group of people within the client organization.

Segmentation Strategy

• Demographic

• Usage

• Brand Loyalty

• Attitudes and benefits

• Psychographic or lifestyle

• Culture and ethnic subculture

Positioning

• What the Services stands for?

• Mind-share

Positioning and segmentation strategies must have fit. A brand must be positioned to be maximally effective in attracting the desired target segment.

Positioning strategies

• Identify competitors

• Determine how competitors are perceived and evaluated

• Determine the competitors positions

• Analyze the customers

• Select the position

• Monitor the position

Role of positioning in Marketing Strategy

• Provides a useful diagnostic tool for defining and understanding the relationships between services and market

• Indentify market Opportunities for---

a) Introducing new product

b) Redesigning the existing product

c) Eliminating product

• Make other marketing mix decisions to respond to competitive moves.– Distribution– Pricing – Communication

Developing a

Market Positioning Strategy- Size- Composition- Location- Trends

MarketingAction Plan

MARKET ANALYSIS

INTERNAL ANALYSIS

- Resources- Reputation- Constraints - Values

COMPETITIVEANALYSIS

- Strengths- Weaknesses- Current Positioning

Define, AnalyzeMarket Segments

Select Target Segments

To Serve

ArticulateDesired Position

in Market

Select Benefitsto Emphasize to Customers

Analyze Possibilities forDifferentiation

Source: Adapted from Michael R. Pearce

Positioning of Hotels in Belleville:Price vs. Service Level

Expensive

Shangri-LaHigh

Service Moderate Service

Grand

Regency

Sheraton

Italia

CastleAlexander IV

Airport Plaza

PALACE

Atlantic

Less Expensive

Positioning of Hotels in Belleville:

Location vs. Physical Luxury (Fig.

3.5)

High Luxury

Shopping District and Convention Centre

Shangri-La

Moderate Luxury

Financial District

Inner Suburbs

Grand Regency

Sheraton

ItaliaCastleAlexander IV

Airport Plaza

PALACE

Atlantic

Positioning after New Hotel Construction:

Price vs. Service Level (Fig. 3.6)

Expensive

Shangri-LaHigh

Service Moderate Service

HeritageMandarin

New GrandMarriott

Continental

Regency

Sheraton

Italia

Alexander IVAirport Plaza

PALACE

Atlantic

No action?

Action?

Less Expensive

Castle

Positioning Decision

• Economic analysis should guide the decision• Segmentation commitment• Not change for change sake. To stick with the

advertising if it is working.• Make it easy for customers to remember/recall.

Use symbols, logos, etc. as a memory aid.• Be honest.