Session # 3
Segmentation
Targeting - Selecting Target
Markets
Positioning
Today
S.T.P.
• Segmentation (variables)
• Targeting / SOCC
• Selecting Target Markets
• Positioning
2
3
The marketing strategy process
4
S-T-P process
STP - Marketing
Segmentation Targeting Positioning
Step Step Step
•1 The potential
4 Evaluation of
7 Where does the
market segments (SOCC company
•2 Relevant
segmentation analysis) differentiate itself?
(What is unique about the
criteria
5 Chose a target product, services, personal,
– Define if it is on the group(s) image, distribution etc (what
B-t-B or B-t-C are its strengths/competitive
market (different (make sure there is a link to
the segmentation criteria) advantages)
criteria!)
•3 Make the
6 Target marketing
segmentation
8 Positioning map
strategies
using the Undifferentiated What is the USP
segmentation marketing,
9
of the
criteria Differentiated
– Make a profile of
marketing, company/brand?
Focused marketing,
each segment One to one marketing How should they positioning
or Customized themselves/what differential
marketing) advantages should they use
in their communication?
STP - Marketing
Segmentation
Step
•1 The potential
market
•2 Relevant
segmentation
criteria
– Define if it is on the
B-t-B or B-t-C
market (different
criteria!)
•3 Make the
segmentation
using the
segmentation
criteria
– Make a profile of
each segment
Segmentation
The potential market:
What is Potential Market Size?
Market size is defined as the total
number or value of potential buyers
for your product or service.
There are many ways that you can define a market but the
most typical ways are by geography (eg. Germany), or by by
sector (eg. medical devices), or by a combination of these two
factors.*
(*) [Link]
STP - Marketing
Segmentation
Step
•1 The potential
market
•2 Relevant
segmentation
criteria
– Define if it is on the
B-t-B or B-t-C
market (different
criteria!)
•3 Make the
segmentation
using the
segmentation
criteria
– Make a profile of
each segment
Segmentation
Why segment a market:
To identify and target groups – that
are not the same
To optimize on use of marketing mix
– the 4 P’s - (i.e. to minimize
waste)
Efficient media choice (Cost vs.
Impact)
Marketing mix can, where needed or
efficient, be tailor-made to each
Objective:
Build a tailor-made Marketing Mix for each target
group, based on different needs/price
sensitivities/buying behaviours etc. etc.
IIIIIIIIIIIII
XXXXXX
XXXXXX
YYYY
OOOOOO
OOOOOO
UUUUUU
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The Process of Market
Segmentation
and Target Marketing
The disaggregated The segmented The target
market market market
c1 1 2 3 1 2 3
c3
c2 c1 c3 c1 c3
c4
c6 c5 c2 c4 c5 c2 Marketing mix c4
c5 targeted at
c7 c8 c7 c6 c8 c7 c6 segment 3
c8
The characteristics of individual Customers are grouped into Segment 3 is judged to be most
customers are understood. segments on the basis of having attractive and a marketing mix
similar characteristics. is designed for that target
market.
Segmentation process
Identify segmentation variables
(what are the factors which
characterize each group AND at the
same time make them different)
Identify segments which are
internally similar and externally
different
Determine size and potential of
individual segments
Segment requirements
Segments must be
measurable
substantial
accessible
differentiable
actionable
Segmentation variables*
Found through market analysis
1. Background customer
characteristics (”stable”)
2. Customer attitudes
3. Customer behaviour
(*) Business segmentation will not be dealt with in the presentation
but is covered in the book under the same headlines.
Segmentation variables
Background customer characteristics
Demographical
Socio-economic
Consumer life cycle
Life style
Segmenting consumer
markets I
Consumer segmentation
Behavioural Psychographic Profile
Benefits sought
Lifestyle Demographic
Purchase occasion
Personality Socio-economic
Purchase behaviour
Geographic
Usage
Perceptions and beliefs
Jobber & Chadwick-Ellis, “Principles and Practice of Marketing, Ninth Edition" 17
Segmenting consumer
markets II
Exercise
• Define segmentation criteria for these
products:
Stages of the family life cycle
Stages of the family life cycle
Empty Nest 1
Mini-Risc Analysis Minerva
(Life style)
Modern
Group Individual
orientation orientation
Traditional
Various institutions and agencies have worked out
different segmentation strategies. The Mini-Risc
Analysis, worked out by market research firm
ACNielsen/AIM, features consumer market
Segmentation variables
Customer attitudes
Benefit segmentation
Perceptions and preferences
Segmentation variables
Customer behaviour
Purchase behaviour
Consumption behaviour
Communication behaviour
Response to elements of the
marketing mix
Relationship-seeking characteristics
Rate of adoption / product diffusio
- how many get on board when? (also for segmentat
Example Amazon
[Link]
STP - Marketing
Targeting
Step
4 Evaluation of
segments (SOCC
analysis)
5 Chose a target
group(s)
(make sure there is a link to
the segmentation criteria)
6 Target marketing
strategies
Undifferentiated
marketing,
Differentiated
marketing,
Focused marketing,
One to one marketing
or Customized
marketing)
Choice of Target Group
An evaluation of each segment
before
choosing which segments to
approach
• An analysis of each segment, and
• Evaluating each segment in regard to the
company’s internal situation – the company’s
internal strength and weaknesses
• eg. good at making quality products and /or a company with a high service
level(strength)
• A more attractive segment is the one needing high quality product
including high service level
Choice of Target Group
An evaluation of the segment before
choosing which segments to approach
Choice of target group depends on SOCC analysis:
– S – Size and growth of the segment
– O – Opportunities - Our chance of making a
marketing mix that the segment finds attractive
(our core compentencies)..or opportunity to
influence the target group
– C – Cost needed in order to confront the
segment and create preferences
– C – Competition How intensive is the
competition towards this particular segment.
Selecting Target Markets
To select your target market you must
analyse the Attractiveness of the market
and your potential Competitive strength
Attractiveness Relative Competitive Strength
Simplified check list for Market
Attractiveness
Always consider industry specific
factors
5
r ’s
rt e
P o c es L
for STE
PE
Figure 9.3 Factors affecting market segment attractiveness
Competitive / Business
Strength Factors
– assesment of resources, capabilities and
competencies
Figure 9.4 Factors affecting business strength
The General Electric – McKinsey
Market Attractiveness & Competitive
Strengths model
Figure 9.5 Target market selection
Implications of the G.E. model
CORE ILLUSION
DEAD-
PERIPHERAL
END
[Link]
Positioning - Managers decide
- or do they?
”To put it simply, managers don’t like to choose. There are
tremendous organisational pressures towards imitation and
matching what the competitor does. Over time this slowly but
surely undermines the uniqueness of the competitive position.”
”They start off with a clear position, and over time they’re
drawn into a competitive convergence where they and their
rivals are all basically doing the same thing. Those kind of
competitions become stalemates”
Michael Porter*
(*) Hooley p. 216
STP - Marketing
Targeting
Step
4 Evaluation of
segments (SOCC
analysis)
5 Chose a target
group(s)
(make sure there is a link to
the segmentation criteria)
6 Target marketing
strategies
Undifferentiated
marketing,
Differentiated
marketing,
Focused marketing,
One to one marketing
or Customized
marketing)
Alternative marketing strategies
Figure 9.7 Alternative marketing strategies
STP - Marketing
Positioning
Step
7 Where does the
company
differentiate itself?
(What is unique about the
product, services, personal,
image, distribution etc (what
are its strengths/competitive
advantages)
8 Positioning map
9 What is the USP
of the
company/brand?
How should they positioning
themselves/what differential
advantages should they use
in their communication?
Positioning defined
’Develop the company’s market
offerings and image with the
intention of positioning the company
in a
special place in the consciousness
of the target market’
Positioning -
must be in line with company’s overall
strategy
Company’s overall strategy:
Porter’s 3 generic strategies:
Overall cost leadership Hard to be the
cheapest over time
Differentiation
Often hard to distinguish
Focus / niche
ard to grow here
Easy to get ’caught in the middle’
Positioning – many possible
attributes
Features / benefits (directly related to product)
Parentage / halo effect (porche making
sunglasses
Manufacturing process
Ingredients
Endorsements
Comparison
Environmentally conscious / ethics
Value for money
Etc. etc. etc.
Positioning – demands
Communicable
Credible – and true
Actually appreciated by customers
Preemptive
Affordable (by customers)
Profitable (to company)
Different from your competitors
No overpositioning or underpositioning
It is broader and more fundamental than
differentiation
Positioning – hard to get right
STP - Marketing
Positioning
Step
7 Where does the
company
differentiate itself?
(What is unique about the
product, services, personal,
image, distribution etc (what
are its strengths/competitive
advantages)
8 Positioning map
9 What is the USP
of the
company/brand?
How should they positioning
themselves/what differential
advantages should they use
in their communication?
Conceptual map of ladies retailers
Positioning map for bars/discos e
Price per beer and entrance fee
’Economic Ruin’
A ’Worth your money’
B
’I’ll never
’No joy’ leave”
C D
Trendy / best place to be seen / high chance of sco
57
A Spidergram Positioning Map
Functionality (10)
Our brand
Nearest competitor
Customisation (9)
Financing (3)
Price (4) Crisis help (9)
Installation (5)
Delivery (6)
After-sales (6)
58
Differentiation
A process by which a set of
meaningful and appreciated differences
is defined in order to separate the company’s
offer
from what is offered by the competition!
Dimensions/tools which can be influenced
The choice of target market(s)
+
Product
Distribution channels
Promotion
Prices
Differentiation variables
Products Service Manpower Channels Image
Form Ordering Competence Coverage Symbolics
Features Delivery Behaviour Expertise Media
Effect Installation Reliability Performance Ambience
Homogeniety Customer Resilience Events
Longevity training Ability to
Reliable Customer service Respond
Repairs Maintenance Communication
Style Other skills
Design
Differentiating
Examples of various ways of differentiating
Area Characteristic Examples
http://
Product Durability Miele washing machines [Link]/
Design George Jensen watch?v=xs6WW-
Accessory Nike and Ipod sport kit
C1JQE
Functionality Nike air with air pillows [Link]
m/watch?v=yl5jU7srXA
4
Services Quick delivery DHL Express
Installing Leasy (Peter from Leasy)
Geek squad
Personal Advices Jyske Bank,
nice way of treating the Apple shop
customers
Distribution mail order Den gamle skole legetøj
the internet [Link] (delivery next
sales driver morning)
Hjem is( Ice cream)
Image Symbol of freedom Harley Davidson
Prestige Mercedes, Rolex
Elegant Gucci and elegance
Differentiating
Examples of various ways of differentiating
Area Characteristic Examples
Product Accessory
Functionality
Services Quick delivery
Homedelivery
Personal Nice way of treating the
customers
Customizing
Distribution Sales driver
Reaching you at events
Image Sun and beach occasions
Understands “The Man”
inside you
The Positioning Process
Analyse of factors of relevance for the Benchmarking
customers (choice criteria in regard to the Key success Importance Your Competitor 1 Competitor 2
factors 1= very company
relevant product) important 1= very good 1= very good 1= very good
5= very 5= very bad 5= very bad 5= very bad
unimportant
Analysis of Competitors Factor 1
Factor 2
Factor 3
Factor 4
etc
Choice of advantages by own product
Focus on the Good
customer advice
Feel like an
important JB
customer
Making a Perceptual Map Good
information
Easy to DB
use the
Low service Internet High service
Bank
Nordea
Long queue
Choice of Positioning Platform
Less focus at
the customer
Communicating the company’s position
USP Make sure that you can live up to your USP
The Positioning
The Positioning
Opportunity
The Positioning
The Positioning
[Link]
STP - Marketing
Positioning
Step
7 Where does the
company
differentiate itself?
(What is unique about the
product, services, personal,
image, distribution etc (what
are its strengths/competitive
advantages)
8 Positioning map
9 What is the USP
of the
company/brand?
How should they positioning
themselves/what differential
advantages should they use
in their communication?
USP
• USP – Unique Selling Proposition
• Definition: “Buy this product and you will get
a specific benefit”
• The proposition must be strong
enough to pull new customers to the
product
• The proposition must be unique
– something competitors do not offer or
will not offer
• Urquell:
– Made in the same brewery, the same way with the
same local Czech ingredients.
Beer Advertising
What are the key words explaining the difference in positioning
Beer Advertising
”This is one of those moments that makes it a
great day”
What are the key words explaining the difference in positioning
Successful Positioning
4 Cs – Framework
People are bombarded with
The positioning must be messages daily – to break
clear in terms of both through this noise a
target market and consistency message is
differential advantages required
Clarity Consistency
Successful positioning
The differential advantages
should have a competitive edge –
should offer something of value
to customers that competitors is
failing to supply
The differential advantages
that is chosen must be
credible in the minds of the
consumers
Credibility
Competitiveness
