The Truth on Segmentation

Market Segmentation & Positioning

How would a breakfast cereals

manufacturer identify which consumers to

target for a muesli product?

Principles of STP & segmentation Characteristics & differences between

market segmentation & product differentiation

Segmentation in B2C & B2B markets Different targeting strategies Concept of positioning Use of perceptual maps as a positioning tool

Market Segmentation & PositioningSession Outlines

Segmentation, Targeting and Positioning STP

Market Segmentation

Brand Positioning

Similar Customer

Groups

Customer Group

Selection

Value Proposition

Male/Female. Fashion

Apparel. Aged 18-25, 26-35,

36-45 etc

Female 18- 25, 26-

30

Affordable and fast changing fashion

Target Market

The Advantages of STP

Enhances competitive positioning

Generates & develops new customers & product uses

Targets resources effectively

Non price based competition

? What is market segmentation & What is product differentiation

New Segment

New SegmentProduct Differentiation

Market Segmentation

Market Segmentation & Product Differentiation

PRIORIClassification Procedures

POST HOC(Post Research

Studies)

SIC Group Product attribute preferences,

Geography regions Product purchase patterns

Demography classifications

Product usage patterns

Life Style Systems Benefits / Values sought,

Geodemographic method

Lifestyles,

Purchase groups Brand preferences,

Price sensitivity

Segmentation Principles & Criteria

CONSUMER CRITERIA

BEHAVIOURALWho, How,

Where & When

PSYCHOLOGICAL Why & Who

PROFILEWho & Where

Transaction Lifestyle Demographic

Consumption Usage

Personality Socioeconomic

Media Usage Perceptions Geographic

Technology usage

Attitudes

Motives

Benefits sought

Segmenting Consumer Markets

Using PROFILE Criteria in Market Segmentation

What criteria would a financial investment fund use to

identify attractive market segments?

Variable• Beauty Products, Magazines (Cleo, FHM), Hair Products,

Clothing (H&M, Zara) • Some for both genders fragrances (Calvin Klein), watches (Tag)• Sun protection (Nivea), Breakfast cereals (Kellogg's) Drinks

(Petits Filous Plus)• Affluent income earners (Channel, Bentley) / low income

segments (Aldi, Lidl), Tesco (Finest; Value Strategies)• Disposable income , needs & spending priorities change over

time & vary by marital status, household composition & children.

• Tastes vary by region. Low income regions (Low cost retail formats)

• Combine demographic & census data with geographic variables ACORN ; classification of neighbourhoods by 5 lifestyle categories to help define demand for p/s

Profile Criteria

Gender

Geodemographic

Age

Income

Lifecycle

Geographic

PSYCHOGRAPHIC BENEFITRelies on understanding ATTITUDES, INTERESTS & OPINIONS (AIO) of customers & their VALUES

Meet customer wants with the BENEFITS they derive from the use of a p/s

Accor Hotel Group use value base segmentation• Economy (Ibis Budget)• Midscale (Novotel – efficiency)• Upscale (Grand Mecure)• Luxury (Sofilel)

Benefits comprise, convenience, accessibility, durability, value, novelty, innovation, multi-functionality

Nivea purchasers are based on the benefits users derive from sun care products; luxury, convenience, appearance, comfort etc.

Psychological Criteria

Psychological Criteria

How does Gap’s segmentation strategy differ form that used by Supermarkets for children's wear?

Is their an alternative?

VariableFrequency /volume of use; HIGH, MEDIUM & LOW lead to an appreciation of how products are used, when & what context family (Bisto), cameras (Olympus) http://www.youtube.com/watch?v=prSQv6aTfDI

EPOS tracks consumer purchasing data, viz quantities, incentives, region, seasons for different p/s & different segments to gain customer understanding. (Application by Dunhumby) http://www.youtube.com/watch?v=HgKthEm4afQ

Segmenting on the basis of media usage determines responsiveness to advertising, consumption & behaviour

Profile Criteria

Usage

Transaction

Media

COMPANY CRITERIA

ORGANISALTIONAL BUYERSize: MLC, Large, SME, Micro indications of order size, rates etc

DMU Structure

Location: Needs may be different area by area

Choice Criteria : types of p/s bought, selection/tendering processes form basis of clustering companies (NHS, PC by graphical or educational need)

Industry (SIC) Purchase Situation: buying situation, first time, early/late stage in buying decision, structure (centralised or other)

Segmenting Business Markets

What segmentation criteria would you suggest a

specialist restaurant use to help it expand its London

based operation into other regions of the UK

Hybrid Market Segmentation

How would you measure the attractiveness of any one

of a number of new segments to target?

Target MarketsDeciding Between New Segments

Measurable

Accessible

Substantial

Differentiable Compatible

Profitable

Size

Competition

Target MarketsDeciding Between New Segments

Rating

1. Weight each Criteria

2. Rate each Criteria

High 10-7

Medium 6-4

Low 3-0

3. Multiply Weighting by Rating Score per Segment

4. Derive a total of all the scores

Evaluation Criteria

One Product

Multiple ProductsFor Multiple (or

Single) Segments

One Product for a Single Segment

Product-Segment Decisons

Undifferentiated Marketing

Target MarketApproaches

CustomisedMarketing

DifferentiatedMarketing

FocussedMarketing

HP, Black & Dekker

Jordan’s, Ryan

Electronic gear for each user group

Olympics,Common parts for different cars

Target Marketing Strategies

Positioning

The means by which P/S:

Offer functionality & capability , Convey a promise of value

relative to competing offers Meet & satisfies customer

expectations Can be communicated Occupy a place in consumers’

minds relative to competing products

Perceptual Map for US Fragrance Market

www.perceptualmaps.com/example-maps/

Perceptual Mapping

Competitive Positioning Repositioning

FUNCTIONAL EMOTIONALProduct features: or benefits (Jordans, Redbull, Volvo)

TM User: (Pepsi Max for men, men & women, women, Hotels for particular breaks, John Smiths ‘No nonsense’)

Price & Quality: (Stella Artois, ‘reassuringly expensive’)

Benefit: Experience, feeling, emotion offered. (Times ;‘Join the debate,’ Car, toothpaste)

Use: When / how. (After Eight mints, Kellogg's cereals)

Heritage: used to symbolize experience (Konenbourg ; ‘Established since 1803’)

Product Positioning Strategies

A Value Statement?

To target a specific customer need with a unique offer of value to create a point of difference, e.g. No nonsense Life goes on The drive of your life The ultimate driving machine

http://www.youtube.com/watch?v=zFSLUJ8SIbc

4 Ways to Reposition a Product or Service1 Change the tangible attributes of the

product for the same market2 Change the communications of the

same product TMBisto, Oxo, Mars

3 Change the TM & deliver the same product

Lucozade, Pegasus tour operators

4 Change both product (attributes) & TM Boddingtons from beer to retail & hospitality

Repositioning

Market Segmentation & PositioningSeminar Case Study

easyJet

Define the basis of easyJet’s market segmentation

What was easyJet market positioning

How did easyJet’s rivals’ position in the low cost air travel segment? How can easyJet exploit their

positioning What lessons can we learn from easyJet

to take away and apply elsewhere?

easyJet