3. Segmentation, Targeting and Positioning PDF

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Marketing Principles MAN Lecture 324/02/3. Segmentation, Targeting and PositioningSegmentation = dividing a market into distinct groups with distinct needs, characteristics or behaviours Targeting = process of evaluating each market segment’s attrac tiveness and selecting one or more segments to ent...

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Marketing Principles MAN1075 Lecture 3 24/02/2020

3. Segmentation, Targeting and Positioning Segmentation = dividing a market into distinct groups with distinct needs, characteristics or behaviours Targeting = process of evaluating each market segment’s attractiveness and selecting one or more segments to enter Positioning = arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers Process of market segmentation and target marketing Disaggregated market - characteristics of individual customers are understood Segmented market - customers are grouped into segments on the basis of having similar characteristics Target market - One segment is judged to be most attractive and a marketing mix is designed for that target market Segmentation - Advantages of market segmentation ➔ Target market selection ➔ Tailored marketing mix ➔ Opportunities and threats ➔ Differentiation - Base of segmentation ➔ Behavioural ● Purchases/transaction ● Consumption/usage ● Technology usage ● Media usage ➔ Psychographic ● Lifestyle ● Social class ● Personality ● Perceptions ● Attitudes ● Motives ➔ Demographic ● Age ● Socio-economic ● Gender ➔ Geographic ● Region - Behavioural - dividing a market into groups based on consumer knowledge, attitude or response to a product - Psychographic - dividing a market into groups based on social class, lifestyle or personality characteristics ➔ Costly ➔ Difficult to identify segment ➔ Time consuming - Demographic - dividing the market into groups based on demographic variables - Geographic - dividing a market into different geographical units such as nations, regions, counties, cities or districts

Marketing Principles MAN1075 Lecture 3 24/02/2020

Targeting - Process of evaluating each market segment’s attractiveness and selecting one or more segments to enter - A target market is a set of buyers sharing common needs or characteristics that the company decides to serve Market coverage strategies - Undifferentiated ➔ A firm chooses to ignore market segments and goes after the whole market with one offer ➔ ‘One size fits all’ - focuses on what is common between buyers, rather than what is different ➔ Advantages: ● Cost savings ● Quantity over quality ➔ Disadvantages: ● More exposed to competitors - Differentiated ➔ A firm decides to target several market segments and designs separate offers for each ➔ Advantages: ● Stronger position with each market segment ● Typically creates more sales than undifferentiated marketing ➔ Disadvantages: ● Increased costs due to number of different products ● Separate market plans for separate segments (packaging, promotions, channels) -

Concentrated (niche) ➔ A firm goes after a large share of one or a few markets ➔ Appeals: ● When resources are limited ● When firm has experience or expertise in marketing to these segments ➔ Downside: ● Vulnerable to changes

Positioning - Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers - Understanding and influencing the place that the product occupies in the mind of the consumer relative to competing products - Common points of differentiation: ➔ Price ➔ Quality ➔ Branding ➔ Store location - Perceptual mapping = a product positioning tool that uses multidimensional scaling of consumers preferences to portray the psychological distance between products and services...