Segmentation
Targeting
Positioning
Dr. Vesselin Blagoev
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Segmentation->
Targeting-> Positioning
Define the task for segmenting the market(s)
Select the bases for segmentation
Segment the market(s)
Select the target segments
Product positioning
Develop and execute the marketing programs
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2 basic approaches:
Mass marketing
 Segmented marketing

The basic choice of a company is
to pursue either a mass marketing
strategy or a segmented strategy.
Mass marketing is also known as
aggregated marketing and
undifferentiated marketing.
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Segmented marketing
The basic requirements of the
segmented marketing are:


At least one homogeneous
segment is found
A marketing mix is devised
specifically for the segment(s)
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A procedure for
segmenting markets
1. Broadly specify area of interest
2. Generate a list of segmentation variables
3. Qualitative analysis
4. Quantitative analysis
5. Apply size, accessibility and
marketing mix control criteria
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Segmentation variables
Heterogeneous demand
Segments relating to
Customer characteristics
Segments relating to
Customer behaviour
Demographic Psychological &
& Geographic
Sociological
variables
variables
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Consumer segmentation
Profile
Demographic
Socio-economic
Geographic
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Behavioral Psychographic
Benefits
sought
Usage
Purchase
behavior
Purchase
occasion
Perceptions
and
beliefs
Lifestyle
Personality
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Bases for segmentation
1 Geographic
National/regional differences in
taste and product usage
2 Demographics Can differences be
distinguished between groups
Age
in each of those categories
Lifecycle
that reflect differences in
Education
propensity to purchase, or in
Sex
product usage?
Family
composition
Are consumption or media exposure
3 Socioeconomic and related to social grad or income
level?
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income
Bases for segmentation
4
Geodemographics Does where we live condition how
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Benefits sought
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Usage rate and
brand loyalty
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Psychographics
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we live, and consequently relate to
what we buy?
Are there differences in the benefits
sought by different people in the
same product?
Are these who consume a lot of a
product different from those who
consume a little?
Is consumption better considered in
the context of ‘lifestyle’ groups?
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Bases for segmentation
8 Situation
Does the situation in which
consumption or purchase
takes place vary? If so can
individuals be grouped
according to their situations?
9 Responsivene Do people respond differently
ss
to aspects of marketing
activity? Do they use different
distribution channels?
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Profile: Demographic &
Geographic variables







Size
•Family life cycle
Age
•Family size
Sex
•Marital status
Destination
Geographic area•Income
Socioeconomic
class
Race
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•Occupation
•ACORN group
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Profile:
Socio-economic
segmentation
Class
Description
A
Upper Middle Class
High managerial/administrative/Professional,
I.e. company director or established doctor
B
Middle Class
Intermediate managerial/administrative/ or
professional
C1
Lower Middle Class
Supervisory/clerical/junior managerial
C2
Skilled Working Class
Skilled manual workers
D
Working Class
Semi-skilled or unskilled workers
E
Pensioners, casual workers and others
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ACORN
a Geodemographic segmentation
ACORN stands for ‘A
classification of residential
neighborhoods’. It segments
the consumers according to the
type of area in which they live
into 12 major groups, further
refined into 39 types.
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ACORN
Group
ACORN groups in Great Britain
%
A
Modern family housing with manual workers
9.6
B
Modern family housing, higher income
7.4
C
Older housing of intermediate status
10.4
D
Very poor quality, older, terraced housing
9.2
E
Rural areas
5.8
F
Urban local authority housing
20.6
G
Housing with most overcrowding
2.9
H
Low income areas with immigrants
4.2
I
Students and high status non-family areas
4.3
J
Traditional high status suburbia
19.1
K
Areas of elderly people, often resorts
6.4
Unclass
Other
0.2
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ACORN
ACORN groups
%
A
Agricultural areas
3.4
B
Modern family housing, higher incomes
16.2
C
Older housing of intermediate status
17.6
D
Poor-quality older terraced housing
4.3
E
Better-off council estates
13.
F
Less well-off council estates
9.4
G
Poorest council estates
7.6
H
Multiracial areas
3.9
I
High-status non family areas
4.2
J
Affluent suburban housing
15.9
K
Better-off retirement areas
3.8
U
Unclassified
0.7
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Population
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Benefits sought
segmentation
(a Behavioural segmentation)
It is axiomatic in marketing that
customers buy benefits, not
features. Some toothpaste
users want white teeth, others
fresh breath and others
protection from dental decay.
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Benefit segmentation
for tooth paste
Segment
Sensory
Benefit required Other characteristics
Flavor+appearance Usually children
Social
Sound bright teeth Outgoing and active, young,
sometimes smokers
Worrier
Decay prevention
Independent
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Low prices
Heavy users, families
Predominantly male, little
loyalty, brand on offer
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Benefit segmentation
for cars
Pleasure seekers: driving is all about
pleasure (freedom, enjoyment, well
being)
Image seekers: driving is all about
self-image. The car provides feelings of
power, prestige, status and selfenhancement. Driving is secondary.
Functionality seekers: driving is
only a means of getting from point A to
B.
Convenience matters.
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Benefit segments
In the less expensive camera market:

Do-it-yourselfer (25%)
Great pride in good pictures
 Gratification from making settings and
adjustments
 Pride in a complex camera
 Regards a good picture the results of
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
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Behavioral
segmentation
The most obvious approach when we use
behaviouristic characteristics is to study
usage rates and brand loyalty:
 Heavy users (say every day)
 Medium users (maybe once a
week)
 Light users (say once a month)
 Occasional users
 Non-users (never used brand)
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Behavioral
segmentation
Other behaviouristic criteria include:
Loyalty levels
 Purchase occasion
 User status
 Readiness status

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Psychological &
Sociological variables
Values
 Needs
 Life style
 Group membership

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Psychographic segments

Psychographics classify
consumers according to their
personal traits such as
sociability, self-reliance,
assertiveness, lifestyles, which
cover attitudes, interests and
opinions.
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Lifestyle
segmentation
(a Psychographic segmentation)
It tells the marketer about the
sort of lifestyle his customer
leads, the beliefs and the
opinions he holds, the type of
interest he has and the
background he is from.
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Lifestyle
segmentation
(a Psychographic segmentation)
It is expensive to conduct –
a large number of personal
interviews with up to 600
questions being asked.
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Lifestyle segmentation
Activities
Work
Interests
Family
Opinions
Selves
Demography
Age
Hobbies
Home
Social issues
Education
Social events
Job
Politics
Income
Vacation
Community Business
Occupation
Entertainments
Recreation
Economics
Family size
Club membership
Fashion
Education
Dwelling
Community Food
Products
Geography
Shopping
Media
Future
City size
Sports
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Achievements Culture
Family life style
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Psychographic segments



Young sophisticates (15%) :
Extravagant, experimental, non-traditional,
young; A, B and C1 social classes, educated,
affluent, sociable,cultural interests, owneroccupiers, in full-time employment, interested
in new products
Cabbages (12%) : Conservative, less
quality-conscious, demographically average
but more full-time housewives, middle class,
average income and education, lowest level
of interests in new products, home-centered,
indulging in little entertaining
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Traditional
working class (12%):
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Psychographic segments


Coronation Street housewives
(14%) : Quality-conscious, conservative,
traditional and obsessional, D and E social
classes, live relatively more in Lancashire and
Yorkshire ITV areas, less educated, lower
incomes, part-time employment, lower level
of interest in new products, not sociable
Self-confident (13%) : Self-confident,
quality-conscious, not-extravagant, young
and well educated, owner-occupiers, average
income
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Taylor Nelson’s Monitor
1.
Self-explorer: youthful, independent,
2.
Social register: older, resist change, high need for
3.
Experimentalist: independent, unconventional,
4.
Conspicuous consumer: conformist, materialistic,
5.
6.
7.
tolerant,comfortably situated, often female
control
energetic, work-oriented, often men in their late 20s and
early 30s
lacking self-confidence
Belonger: mature, stable, settled
Survivor: dependent on protection of authority but
sceptical of its intentions, identify with country and family,
tend to be male, unskilled or skilled manual workers
Aimless:
goal-less, uninvolved, alienated, unable to
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improve their position
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SAGACITY
a combination of
Life Style + Occupation + Income
SAGACITY combines a number of
demographic variables to produce
12 segments of consumers ‘at a
similar stage of their (family) life
cycle, and with similar disposable
income and cultural characteristics’.
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SAGACITY classification
scheme
Dependent Pre-family
Family
Better off
Late
Better off
Worse off
Blue
White
Worse off
Blue
White
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White Blue White Blue White Blue
White
Blue
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Requirements for a
usable segment
The useful segment must be:
Definable
Sizeable
Reachable
Relevant

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Definable
To be able to describe the main
characteristics
 A degree of homogeneity (in a
heterogeneous market)
 To be able to measure it’s size
and define the boundaries

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Sizeable
To be big enough to make
possible to achieve the
required turnover and
profit
 A trend to grow

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Reachable
There must be a way of
reaching the segment
both effectively and
efficiently
 Marketing communication
 Distribution channels

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Relevant
Segment life cycle (durability)
 Price level to customization
costs (incl. entry investment)
 Extent of overlap or
interdependency with other
segments

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Segmentation for
organizational markets
Demographics for organizational
markets include:




Geographic location (some
businesses are regionally concentrated)
Primary business of industry (SIC)
Size (number of employees or sales)
Type of buying situation (tenders)
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Organizational
market
Macrosegment 1
(large companies)
Macrosegment 2
(medium-sized
companies)
Macrosegment 3
(small companies)
Microsegment 1 Microsegment 2 Microsegment 3
st
st
1 criterion:
Reliability
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1 criterion:
Convenience
1st criterion: Price
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Organizational
segmentation
Macrosegmentation
Organizational
size
Industry
Geographic
location
Microsegmentation
Choice
criteria
DecisionMaking
structure
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DecisionMaking
process
Buy
class
Purchasing
organization
Innovativeness
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SIC
Food, drink and tobacco manufacturing : code 4.2
Soft drinks: code 42.8
Mineral waters and soft
drinks (carbonated and
stiff) : code 4283.1
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Fruit and vegetable
juices : code 4283.2
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To segment or not to
segment ?
Factor
Mass
End user wants
Similar
Niche
1 2 3 4 5
Different
Product market size Small
1 2 3 4 5
Large
Product market
structure
Simple
1 2 3 4 5
Complex
Market share
High
1 2 3 4 5
Low
Resources of
company
High
1 2 3 4 5
Low
Image
High
1 2 3 4 5
Low
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Segmentation strategies
Targeting
Marketing
mix
Mass
Market
(undifferentiated)
marketing
Marketing mix 1
Differentiated Marketing mix 2
marketing
Marketing mix 3
(multi-segment)
Segment 1
Segment 2
Segment 3
Concentrated
Segment 1
Segment 2
Segment 3
marketing
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Marketing mix
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Analysis of
customer behaviour
2 major theories:
Rational customer who
always seeks to maximize his
satisfaction or utility
 Psycho-socio customer:
family, culture affects

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Targeting
What does it mean?
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Product
Positioning
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Different options need
different strategies
Target
segments
Customer
behavior
Product
adaptation
Marketing
budget
Different marketing options & strategies
Mktg Mix 1
(Strategy 1)
Segment 1
Segment 1
Mktg Mix 2
(Strategy 2)
Segment 3
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Market positioning
A products’ position is the place the
product occupies in consumers’
minds relative to competitors.
Market positioning is arranging
for a product to occupy a clear,
distinctive, and desirable place
relative to competing products in
the minds of target consumers.
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Key tasks in positioning
Positioning is the choice of :

Target market : where we want
to compete

Differential advantage : how
we wish to compete
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Some basis for positioning
Corporate positioning
Product positioning
The organization could strive to
attain and to maintain leadership in
terms of one or more of:
The product’s positioning
might emphasize:

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
market share
quality
service
technology
innovation
variety
integrity
community service
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

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
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
cost/economy/value
product features
product range
product quality
services/customer care
customer types
customer problem solved
use/application type
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disassociation
Keys to successful
positioning
Clarity
Consistency
Successful
positioning
Credibility
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Competitiveness
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Clarity
The positioning idea must be clear
in terms of both target market and
differential advantage:


BMW : The Ultimate Driving Machine
Mars : Good Food Costs Less at Sainsbury
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Consistency
Too many messages bombard
the customers.
Consistent message is required.
If it is quality this year, it must be
quality next year too.
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Credibility
The differential advantage which is
chosen must be credible in the
minds of the target customers
Example: The ad of Lada as an exiting,
sporty car by showing it slaloming through
dirt tracks in Africa failed – a lack of
consonance between image and reality.
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Competitiveness
The differential advantage
should have a competitive
edge. It should offer something
of value to the customer which
the competition is failing to
provide.
Example: Apple iPhone, iPad
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Positioning map
Excellent image
Amstel
Kamenitza
Low
Brand
Awareness
Zagorka
Pirinsko
pivo
High
Brand
Awareness
Ariana
Poor image
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How do we position
the product?
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Marketing mix
Quality, Features, Options, Style,
Brand name, Packaging, Sizes, Warranties
Product
List price, Discounts,
Allowances, Payment
Terms, Credit terms
Price
Marketing
mix
Channels, Locations,
Inventory, Transport Place
Target
market
Promotion
Advertising, Personal selling,
Sales, Promotion, PR
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7P of Customer Service
& Mktg Mix
Product
Price
Promotion
Place
Customer
Service
Physical
Evidence
People
Processes
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford:
Butterworth Heinemann
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How do we position
the brand?
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