How would a
breakfast cereals manufacturer
identify which consumers to target
for a muesli product?
Market Segmentation & Positioning
Session Outlines
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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
Segmentation, Targeting and Positioning STP
Market
Segmentation
Target Market
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, 2630
Affordable
and fast
changing
fashion
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
Market Segmentation & Product Differentiation
Product Differentiation
Market Segmentation
New
Segment
New
Segment
Segmentation Principles & Criteria
PRIORI
Classification 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
Segmenting Consumer Markets
CONSUMER CRITERIA
BEHAVIOURAL
Who, How,
Where & When
PSYCHOLOGICAL
Why & Who
PROFILE
Who & Where
Transaction
Lifestyle
Demographic
Consumption
Usage
Personality
Socioeconomic
Media Usage
Perceptions
Geographic
Technology usage
Attitudes
Motives
Benefits sought
Using PROFILE Criteria in Market Segmentation
What criteria would a
financial investment fund use to
identify attractive market segments?
Profile
Criteria
Gender
Variable
• Beauty Products, Magazines (Cleo, FHM), Hair Products,
Clothing (H&M, Zara)
• Some for both genders fragrances (Calvin Klein), watches (Tag)
Age
• Sun protection (Nivea), Breakfast cereals (Kellogg's) Drinks
(Petits Filous Plus)
Income
• Affluent income earners (Channel, Bentley) / low income
segments (Aldi, Lidl), Tesco (Finest; Value Strategies)
Lifecycle
Geographic
Geodemographic
• 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
Psychological Criteria
PSYCHOGRAPHIC
BENEFIT
Relies 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
How does Gap’s segmentation strategy differ
form that used by Supermarkets for children's wear?
Is their an alternative?
Profile
Criteria
Variable
Usage
Transaction
Frequency /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
Media
Segmenting on the basis of media usage determines
responsiveness to advertising, consumption & behaviour
Segmenting Business Markets
COMPANY CRITERIA
ORGANISALTIONAL
BUYER
Size: 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)
Hybrid Market Segmentation
What segmentation criteria
would you suggest a specialist
restaurant use to help it expand
its London based operation into
other regions of the UK
Target Markets
Deciding Between New Segments
How would you measure the
attractiveness of any one of a
number of new segments to
target?
Target Markets
Deciding Between New Segments
Evaluation Criteria
Rating
1. Weight each Criteria
Differentiable
Compatible
2. Rate each Criteria
High
Profitable
Substantial
Measurable
Size
Accessible
Competition
10-7
Medium
6-4
Low
3-0
3. Multiply Weighting by
Rating Score per
Segment
4. Derive a total of all the
scores
Product-Segment Decisons
One Product
Multiple Products
For Multiple (or
Single) Segments
One Product for a
Single Segment
Target Marketing Strategies
Olympics,
Common parts for
different cars
Undifferentiated
Marketing
Electronic gear for
each user group
Customised
Marketing
Target Market
Approaches
Differentiated
Marketing
HP, Black & Dekker
Focussed
Marketing
Jordan’s, Ryan
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
Perceptual Mapping
Competitive Positioning
Repositioning
www.perceptualmaps.com/example-maps/
Product Positioning Strategies
FUNCTIONAL
EMOTIONAL
Product 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’)
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
Repositioning
4 Ways to Reposition a Product or Service
1
Change the tangible attributes of the
product for the same market
2
Change the communications of the
same product TM
Bisto, 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
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?
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