part two: making sense of markets CHAPTER 4 MARKET SEGMENTATION, TARGETING AND POSITIONING an opening challenge You are the marketing director of a lossmaking brewery. You need to develop new products to revitalise the business but you do not have the resources to launch a full range. How will you choose what type of beer to sell and to whom? agenda • • • • market selection market segmentation targeting strategies positioning market attractiveness • market opportunity • competitive advantage • the objectives of the organisation segmentation, targeting and positioning market segmentation targeting positioning market segmentation and targeting: why do it? • many markets are demand-driven • consumers and customers are more demanding • few mass markets remain – markets are fragmenting what is market segmentation? ‘the process of dividing a total market into subgroups (segments) such that each segment consists of buyers and users who share similar characteristics but are different from those in the other segments’ (Masterson and Pickton, 2014) criteria for determining good market segments • • • • • • measurable homogeneous heterogeneous substantial accessible operational consumer segmentation bases • demographic – socio-economic or social grading • • • • • geographic geo-demographic psychographic mediagraphic behavioural life-stage segments (BRMB-TGI) • • • • • • • fledglings flown the nest nest builders mid-life dependents unconstrained couples playschool parents primary school parents • secondary school parents • hotel parents • senior sole decision makers • empty nesters • non-standard families • unclassified examples of behavioural segmentation bases • • • • • • • • • purchase occasion benefits sought usage rate user status readiness stage attitude to product involvement adopter type loyalty status using multiple segmentation variables AQ – re-set figure type organisational segmentation bases • macro-segmentation – geographic – type of organisation – industry grouping/business sector – customer size organisational segmentation bases • micro-segmentation – – – – – – – – user status trade category benefits sought loyalty status readiness stage adopter type purchasing practices buy class nested approach to B2B market segmentation AQ – re-set figure type target marketing (targeting) ‘the selection of one or more market segments towards which marketing efforts can be directed’ (Masterson and Pickton, 2014, glossary) targeting strategies AQ – re-set figure type evaluating a segment for targeting • • • • • sufficient current and potential sales/profits? potential for sufficient future growth? not over-competitive? no excessive barriers to entry or exit? unsatisfied needs that the company can serve well? positioning ‘the place a brand is perceived to occupy in the minds of the target market relative to other competing brands’ (Masterson and Pickton, 2010: 148) multi-attribute mapping AQ – re-set figure type perceptual mapping AQ – re-set figure type positioning strategies • • • • • • attributes/product features price/quality usage occasions benefits or needs user competitive – against another brand – a different product class re-positioning e.g. McDonalds have been trying to move to a healthier position in people’s perceptions (photo courtesy of Dave Pickton) five-stage process identify the total market identify market segments select target market segment(s) establish competitors’ positions establish own position summary • markets are people, not products • products should be targeted at specific market groups (segments) – use multi-variable segmentation – opportunities for differentiation • develop clear positioning reference Masterson, R. and Pickton, D. (2014) Marketing: An Introduction, 3rd edn. London: SAGE.