Chapter 6: Segmentation, Targeting and Positioning

Chapter 6: Segmentation, Targeting and Positioning

1. (1) Establish Overall Strategy or Objectives

   • To articulate the vision or objectives of the company's marketing strategy clearly and must be derived from the firm's mission and objectives and its - strengths, weaknesses, opportunities and threats (SWOTS)
     • e.g. Coca Cola targeting healthy men with Diet Coke

2. (2) Segmentation Methods

   • Geographic Segmentation
     • Organises customers into groups based on where they live by country, region or areas.
   • Demographic Segmentation
     • Groups consumers according to easily measured, objective characteristics such as age, gender, income and education
       • Sex sells
       • Sometimes stereotypes based on demographics may not be useful
         • e.g. How SAMSUNG doesn't brand itself as a mobile phone company but rather a company that encompasses many technologies

3. (3) Psychographic Segmentation

   • How a consumer actually describes themselves. Studies how people self-select
     • Self values: Goals for life, not just a day. Causes people to develop self-images and purchasing behaviour in a certain way
     • Self concept: Ideal image people have of themselves. Marketers can use this particular self-concept through communication to promote how their products can achieve this
     • Lifestyles: How we live our lives to achieve goals. Governed by personal choices that affect segmentation, targeting and positioning strategies
       • Value and Lifestyle Survey (VALS) is an American tool to support such segmentation
         • Enables firms to identify target segments and their underlying motivations, enabling companies to prioritise
           • VALS are more useful at predicting consumer behaviour than demographics e.g. 30 year old married uni graduate are the same demographics but Simon might be risk-averse and Paul risk-taker
             • More expensive
     • Benefit Segmentation: Based on benefits they derive from goods or services
     • Behavioural Segmentation: Based on the basis of how they use it. Occassion vs loyalty
       • Occassion Segmentation: e.g. Apparel: workwear, homewear, basics and etc
       • Loyalty Segmentation: much more cost effective to retain loyal customers

4. (4) Using multiple segmentation methods

   • Most common approach
     • Geodemographic (geographic + demographic)

5. 6.2 Evaluate Segment attractiveness

   • Marketers first must determine whether the segment is worth pursuing using criteria
   • Identifiable
     • Identify who is within their market to be able to design goods + services to meet their needs. AND ensure segments are distinct from each other to prevent overlap
   • Substantial
     • Measure if market is too small or its buying power insignificant
   • Reachable
     • If market cannot be reached through persuasive communications and product distribution, the best product can have no impact.
   • Responsive
     • Customers in segment must react similarly and positively to the firm's offerings e.g. If want luxury, you don't go with Ford, you go with Porsche
   • Profitable

6. 6.3 Select Target Market

   • Undifferentiated Targeting Strategy or Mass Marketing
     • Used when everyone is considered a potential user of its product
   • Differentiated Targeting Strategy
   • Concentrated Targeting Strategy
     • Benefits start-ups, concentrated its targeting strategy on devoted runners
   • Micromarketing
     • One-to-one marketing/micromarketing where banners for items you previously looked at follow you
       • E.g. Phone consultations at Air Asia
     • Internet marketing use cookies to record visitor's browsers and provide unique identification of each potential customer who visits and details how the customer has searched the site
       • e.g. Amazon's algorithms

7. 6.4 Develop positioning strategy

   • Help communicate firm's value proposition
   • Can only be sustained in long term in monopoly

8. 6.5 Positioning Methods

   • The positioning stratefy can help communicate the firm's/product's value proposition.Firms hence position their goods/services according to value and salient attributes
   • Value: Popular positioning method because relationship of price to quality is among most important considerations for consumers when make purchase
   • Others include: Luxury e.g. Hermes and product attributes - safe conscious driver Volvo
   • Positioning using perceptual mapping
     • (1) Determine consumers' perceptions and evaluations of the product in relation to competitors
     • (2) Identify the market's ideal points and size
     • (3) Identify competitors' positions
     • (4) Determine consumer preferences
     • (5) Select the position
     • (6) Monitor the positioning strategy
     • Perceptual map: displays in 2 or more dimensions the position of products or brands in the consumer's mind

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