Market Segmentation and Positioning

Overview

The Marketing Communication Matrix

2-way communication An interactive

approach (listening & learning including informal dialogue initiated by planned messages)

With Integrated mix of

planned messages & interactive communication eg F2F,database, viral, WOM

Between Dialogue based on

trust,learning & adaptation with creative outcomes eg communities of interest, internal marketing via work teams

1-way communication Conventional mass

marketing

To Planned persuasive

messages aimed at brand loyalty Eg positioning via

advertising

For Planned persuasive

messages on augmented offerings for targeted markets eg loyalty programs

Mass Market Segmented/Mass Individual Customisation

Ballantyne, Luxton, Powell (2004) Introduction to Marketing: A value exchange approach ed Gabbott, Pearson:381

Steps in the Target Marketing Process

Why Globalised Targeting is not Typically Undertaken

Targeting “everyone” is: § Expensive § Wasteful § Nearly impossible

A more sensible approach:

•  Identify smaller segments who are most likely to consider your brand (segmentation) and target them with specifically designed MC messages

Teenagers

Rationale for segmentation

•  Cannot communicate 1to1 with all •  Segmentation aggregates the audience &

creates growth opportunities by showing: – how to compete better in more places in the

market – how to ‘cut’ the market a different way to

identify brand relationship opportunities •  Segmentation is about ……

The 7 Steps of Segmenting (Fig. 7-2)

Segmenting Current Customers

§  Segment size. §  Spending patterns. §  Relationship maintenance costs. Questions asked: §  Are they high or low volume customers? §  How long ago did they purchase (recency)? §  How frequently do they purchase (frequency)? §  How much do they spend (monetary)?

Segmentable database

•  Fusion of behaviour, relationship, demographic, psychographic & benefits data

•  IMC activities designed to initiate, maintain & increase loyalty (maybe switching)

•  True IMC

Segmenting Consumer Markets

•  Segmentation variables can slice up the market – Demographic,

psychological, and behavioral differences

Segmenting by Demographics Age: Generational Marketing

•  Children •  Teens/tweens •  Generation Y: born

between 1977 and 1994 •  Generation X: born

between 1965 and 1976 •  Baby boomers: born

between 1946 and 1964 •  Older consumers

Segmenting by Demographics Gender

•  Many products appeal to one sex or the other

•  Metrosexual: a man who is heterosexual, sensitive, educated, and an urban dweller in touch with his feminine side

Segmenting by Demographics (cont’d)

•  Family Structure •  Income •  Social Class •  Race and Ethnicity

–  Irish Australian – Asian Australian – Aboriginals

Segmenting by Geography

•  Geodemography: combines geography with demographics

•  Geocoding: Customizes Web advertising so people who log on in different places see ad banners for local businesses

Segmenting by Psychographics

•  Psychographics: The use of psychological, sociological and anthropological factors to construct market segments.

•  AIOs: Psychographics segments consumers in terms of shared activities, interests, and opinions.

Segmenting by Behavior

•  Segments consumers based on how they act toward, feel about, or use a product

•  80/20 rule: 20 percent of purchasers account for 80 percent of a product’s sales

•  Heavy, medium, and light users and nonusers of a product

•  Usage occasions

Behavioural/demographic segments

How do the conventional segmenting variables apply? •  They can also be part of the target audience

measure

25 to 34 years old

Primary Target Audience Existing “light” category 25 to 34 year old drinkers who are sophisticated individuals that lead an urban lifestyle

Sophisticated Urban lifestyle

Current “light” category drinkers

Segmenting Business-to-Business Markets

•  By organizational demographics •  By production technology used •  By whether customer is a user/nonuser of

product •  By Australian Classification System (ASIC)

3 Key Benefits of Segmenting a Market

Costs Less to Sell to Existing Customers

Some Customers Are More Profitable

Some Customers Are More Profitable

Costs Less to Sell to Existing Customers

Key Benefits

Knowing Who’s in Your Segment Can Lead You to

Others in the Same Group

For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/IrwinBrands

Benefit Based Snack Food Segments Nutritional snackers,

Weight watchers

Guilty Snacker

Party snackers

Indiscriminate snackers

Economical snackers

% Snackers 22 14 9 15 15 18

Value / benefits sought

Nutritious, no artificial ingredients, natural

Low calorie, quick energy

Low calorie, good tasting

Good to serve to guests, goes well with beverages

Good tasting, satisfied hunger

Low price, best value for money

Demographics Better educated, have younger children

Younger, single

Younger / older females, lower socio economic

Middle aged, non-urban

Teens Larger families, better educated

Psychographics Self assured, controlled

Outdoor types, influential, adventurous

High anxiety, isolated

Sociable Hedonistic Self assured, price oriented

Behaviour (usage level)

light Light heavy average heavy Average

Behaviour (product Choice)

Fruits, vegetables, cheese

Yoghurt, cheese

Yoghurt, crackers, biscuits, confection

Nuts, potato chips, pretzels, crackers

Confectionary, Ice-cream, Biscuits Potato chips pretzels

No specific focus

(Source, Reed et al, 1994)

Segmentation process in action

Define Market Australian Snack Food Consumers (adults 16 yo above)

Select Basis for segmentation

Value/benefit sought from consumption Products favoured and consumed Lifestyle characteristics Demographic characteristics Media use

Conduct research (use an agency if discovery oriented)

Random (statistical) sample of 2000 Australian adults. Data subjected to factor analysis, cluster analysis, and discriminant analysis Both analytical and intuitive methods combined

Profile segments

Segments are profiled around key bases employed above (value/benefits sought as primary clustering)

Segments are named to best represent their benefits sought / profile, eg nutritional, weight watchers, guilty, party, indiscriminate, economical snackers

Types of Targeting

Message Targeting

Focus only on those with best profit potential

Profitability Targeting

The smaller the segment, the more the message can target and speak to that group

Message Targeting B2B Targeting

NAICS codes are very helpful

Examples of targeting

ü Retail shopping centre

ü Magazine publishing

ü BMW & Saab magazines

Positioning Strategies

•  Category positioning – how it fits in •  Image positioning – what it means •  Unique product feature positioning –

technical differences •  Benefit positioning – what it can do •  Brand Positioning.mov

Positioning

Positioning is the way in which the brand is seen in the mind of the target audience Eg Listerine

is………….

Listerine is…..

the mouth wash that tastes unpleasant but that’s how it kills germs and so it’s worth it if you are the kind of person who doesn’t mind suffering for your health

… dynamite against germs

Brand awareness •  Dependant upon how the purchase

decision is entered into •  Two main types of choice situations in

buyer behaviour – Recall – Recognition

•  2 distinct strategies for creating/maintaining brand awareness

Brand attitude

•  “…the buyer’s evaluation of the brand with respect to its perceived ability to meet a currently relevant motivation –  As communicators, we try to create, increase, maintain,

modify or change attitudes •  Motivations may be

negative (informational) or positive (transformational)

Brand purchase intention •  The buyer’s “self instruction” to purchase the

brand •  Low involvement brand choice + a favourable

attitude = purchase at next buying opportunity •  High involvement brand choice + favourable

attitude may not necessarily create a buying opportunity Ø Explicit brand purchase intention is necessary

Summary

We must understand: •  Who to communicate to/with/for/between

ie segmenting & targeting and •  What to communicate ie positioning /

value

You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice http://www.linkedin.com/pub/nigel-bairstow/6/41b/726 http://www.b2b.whiteboard.com

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