segmentation, positioning and forecasting

8/3/2019 Segmentation, Positioning and Forecasting

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Segmentation, Positioning andSegmentation, Positioning and

ForecastingForecasting

Prof. Rushen Chahal



PsychologicalPsychological

SegmentationSegmentation

yy personality characteristicspersonality characteristics definitely influenceconsumer behaviour; but personality is not a veryeffective basis for segmentation

y consumer lifestylelifestyle has become a more widely usedbasis for segmentation, as consumers tend to buyproducts and services that are consistent with theirlifestyles

yy psychographic segmentationpsychographic segmentation employs a varietyof psychological and behavioural descriptors

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PsychographicPsychographic


y involves the identification of segments of themarket, based upon differences on a variety of measures

y these include valuesvalues; the principles that guidehow we live our lives, but the relative importanceof which vary across individuals

y other measures often used in psychographic

research include attitudes, opinions, interests, andvarious behavioural measures such as media usageand leisure-time activities

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Relationship SegmentationRelationship Segmentation

y A new approach for defining marketsbased on the kinds of relationships that

customers want with firms: Friendship feeling

Business (arms-length) association

Frequent contact

Less frequent contact

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BehaviouralBehavioural


y marketers often segment markets based onhow consumers interact with the product

y different consumers will seek different benefitsbenefits

from a product or service and will associate itwith different occasions

yy benefitsbenefits arise not only from the product butfrom the process of acquiring it

y marketers must determine exactly whatbenefits are important to the customer

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More AboutMore About BehaviouralBehavioural

SegmentationSegmentationy many marketers are now segmenting markets on

the basis of the occasionsoccasions that customers

associate with use of the product

y a widely-used approach to segmentation involvesdividing the market on the basis of usage rates;usage rates;

many marketers target the ́ heavy halfµ (i.e. those

who are heavy users)

y once segments have been identified, profilesprofiles of

segment members should be prepared

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Selecting TargetSelecting Target

MarketsMarketsy target segments should be compatible with the

organization·s goals and image

y the market opportunity represented by the

segment must match the company·s resourcesy the segment must represent an opportunity to

generate enough sales to generate a profit

y the company should select target segments

where it can enjoy a competitive advantage

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TargetTarget MarketMarket

StrategiesStrategiesyy market aggregation:market aggregation: target the product or service

to a mass market with little differentiation

yy singlesingle--segment segmentation:segment segmentation: selecting a single

segment to target; if the segment is small, this maybe considered a ́ niche· strategy

yy multiplemultiple--segment segmentationsegment segmentation: identifying two ormore segments as target markets; involves

developing a different marketing approach foreach

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Implications of Implications of

SegmentationSegmentationy market aggregationaggregation is really a production-

oriented strategy; it requires that the firm findsome way to differentiate its product or service

y

increasingly, firms are turning to superiorserviceservice as their differentiating strategy

yy multiplemultiple--segmentsegment marketing requires that thefirm develop different versions of the product

offering for each segment; or it may simplymean different approaches to serving segments

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yy PositioningPositioning is the image of your brand held by

the public and especially, your segment.

y Usually try to position on attributes consumer

sees as important, such as speed, convenience,

safety.

yy PositioningMapsPositioningMaps help see how key players in a

market are viewed by consumers. Helps to see

competitive clusters and market gaps.

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Positioning for the Market Segment



Niche MarketingNiche Marketing

y this is a specific form of positioningpositioning

y the company decides to occupy a market nichewhere it can be distinct and competition weak

y

identify segments that are not well servedy determine how to gain a competitive advantage

y expand the niche by meeting consumer needs

y defend the niche position by improving product

and service offerings

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Positioning StrategiesPositioning Strategies

yy Against Competition:Against Competition: ´We·re as good or betterµCola Wars, battery-bashers.

yy Market Gap:Market Gap: Find spot others missed.Nicheproducers make vinyl records.

yy Set Brand ApartSet Brand Apart: Stress your differences and avoidhead-to-head competition. ́ Nothing runs like aDeere.µ

yy Leadership:Leadership: Be the one others follow. Used by

President·s Choice, Sony.yy Lifestyle Segment AppealsLifestyle Segment Appeals: Use lifestyle to define.

Some buy fancy cameras to take creativephotography, others to impress.

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RepositioningRepositioning

This is a variation of a positioningpositioning

strategystrategy that involves changing the

market position of a brand or store inresponse to changes taking place in the

broader market environment.

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The Sales ForecastThe Sales Forecast

A sales forecastsales forecast is an estimate of

probable sales for one company·s brand of

the product during a stated time period ina specific market segment and assuming

the use of a predetermined marketing plan.

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The Sales ForecastThe Sales Forecast

It is based on a specific marketing plan.

It can be expressed in dollars or product units.

It is best prepared after market potential and sales

potential have been estimated. It typically covers a 1-year period.

Marketing goals and broad strategies must beestablished before a sales forecast is made.

Once it is made, it becomes a key controllingfactor in all operational planning throughout thecompany.

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Basic Forecasting ApproachesBasic Forecasting ApproachesTop Down: Develops a forecast of economic conditions and industry trends.

Determines the market potential for a product.

Determines the sales potential for the product.

Measures the share of this market the firm is currently getting orplans to capture.

Forecasts the firm·s sales of the product.

Bottom Up:

Generates estimates of future demand from customers or the

company·s salespeople. Combines the estimates to get a total forecast.

Adjusts the forecast based on managerial insights into theindustry, competition, and general economic trends.

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Demand Forecasting:Demand Forecasting:

Key TermsKey Termsyy Market factor/index:Market factor/index: Something that is related to the

product you sell -- new home starts and appliances.

yy Market potential:Market potential:Total volume by all firms in market.

yy

Sales PotentialSales Potential:Y

our piece of market = your share.yy Sales Forecast:Sales Forecast: Estimated sales during defined period

assuming certain marketing plan and environment.

y The forecast allows firms to estimate future revenuesand becomes an important part of the planning process.

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Demand ForecastingDemand Forecasting

MethodsMethodsyy MarketMarket--factor analysisfactor analysis: Demand for a product is

assumed to be related to the factor-- housing starts andappliances.

Direct Derivation:Direct Derivation: See what determines sales-- roofing firms

look for 15-year-old houses for business. Correlation Analysis:Correlation Analysis: Statistical analysis that shows two things

are linked-- perhaps pets in an area and dog food sales.

yy Survey of buyer intentions:Survey of buyer intentions:A sample of current or

potential customers are asked how much of a particularproduct they would buy at a given price during aspecified future time period.

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More Forecasting More Forecasting

MethodsMethodsyy Test marketing:Test marketing: A firm markets its product in a limited

geographic area, measures sales, and then projects thesales over a larger area.

yy Past sales and trend analysis:Past sales and trend analysis: A flat percentage increase

is applied to the volume achieved last year or to theaverage volume of the past few years. Trend analysismore sophisticated, uses more statistical analysis.

yy Salesforce composite:Salesforce composite: A bottom-up method consisting

of collecting estimates of sales for the future periodfrom all salespeople.

yy Executive judgement:Executive judgement: Obtaining opinions regardingfuture sales volume from one or more executives.

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segmentation, positioning and forecasting

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