How would a breakfast cereals manufacturer identify which consumers to target for a muesli product? Market Segmentation & Positioning Session Outlines 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?