In this presentation our marketing guru at the Bizface UK business forum runs through the basics of segmentation. The presentation is equally applicable to online marketeers and tangible product manufacturers

1. Dr. Stephanie J. Morgan Lecture 3: Segmentation, targeting and positioning. Marketing Principles and Practice The full series will be available for download at: www.bizface.co.uk

4. 2 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill The advantages of market segmentation Understand The customer! Opportunities and threats Target market selection Market segmentation Tailored marketing mix Differentiation

6. 3 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill The process of market segmentation and target marketing The disaggregated market The segmented market The target market The characteristics of individual customers are understood Customers are grouped into segments on the basis of having similar characteristics Segment 3 is judged to be most attractive and a marketing mix strategy is designed for that target market 1 2 3 1 2 3 Marketing mix targeted at segment 3 c 1 c 5 c 7 c 2 c 6 c 3 c 4 c 8 c 1 c 5 c 7 c 2 c 6 c 3 c 4 c 8 c 1 c 5 c 7 c 2 c 6 c 3 c 4 c 8

7. 4 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Segmenting consumer markets Consumer segmentation Behavioural Benefits sought Purchase occasion Purchase behaviour Usage Perceptions and beliefs Lifestyle Personality Demographic Socio-economic Geographic Psychographic Profile

8. Benefit Segmentation Causal not Descriptive factors Identify each Segment by benefits sought Total Configuration Of benefits differentiates Continue segmentation within Has practical marketing implications, provides fresh insight Into markets, requires extensive research or insight

10. Psychographic Lifestyle Young sophisticates, Traditional working class etc. Personality Extroverts, Introverts… More likely to be useful when brand choice is a reflection of self expression – symbolic, linked to identity

11. 13 D Jobber, Principles and Practice of Marketing, © 1998 McGraw-Hill Life cycle stages At home single Young couple no children Young parents Middle-aged parents Empty nester married working Empty nester married retired Solitary retired Young divorced no children On own young Young divorced with children M-aged divorced no dep’nt children M-aged divorced with children Middle-aged married no children Middle-aged divorced no children On own middle-aged

12. 6 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Macro and micro segmentation of organizational markets Macrosegment 2 (medium-sized companies) Macrosegment 2 (prime choice criterion: convenience) Macrosegment 3 (small companies) Macrosegment 3 (prime choice criterion: price) Macrosegment 1 (large companies) Macrosegment 1 (prime choice criterion: reliability) Organizational market

13. 7 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Segmenting organizational markets Organizational size Industry Geographic location Macrosegmentation Organizational segmentation Microsegmentation Decision-making process Buy class Purchasing organization Organizational innovativeness Decision-making unit structure Choice

14. Alternative bases for segmenting Demographic: Industry, size, location Operating Variables: Technology, user status (heavy, light etc.,) customer capabilities Purchasing Approaches: Highly centralized/de-cent; Power structure (Eng/finance) Quality/service/price? Situational Factors: Need quick/sudden delivery Specific applications? Large/small orders? Personal Characteristics: Buyer-seller similarity? Risk Attitudes? Loyalty?

15. Evaluating Segments Market Attractiveness Market Factors: Growth, size, price sensitivity, barriers Competitive Factors : Type of competition, New entrants, differentiation Political, Social and Environmental Factors : Issues, Social Trends, public Concerns. Organizational Capability: Exploitable assets, Cost advantages, Technological edge, Managerial capabilities Balance

18. Utilitarian Customer Trendy- Casual Price shopper Mainstream Tradition- alist LEVI’s Marketing Mix 1 Marketing Mix 2 Marketing Mix 3 Marketing Mix 4 Marketing Mix 5 Example of Differentiated Strategy 12 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

20. Example of Customized Strategy Marketing Mix 1 Marketing Mix 2 Marketing Mix 3 Marketing Mix 4 Nissan Birdseye Heinz Levis Industrial Electronic Systems Supplier INDIVIDUAL MIXES ORGANISATION INDIVIDUAL CUSTOMERS 16 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

21. 17 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Key tasks in positioning Where and how we compete 1. Market segmentation 2. Target market 3. Differentiated advantage Positioning

22. 18 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Keys to successful positioning Successful positioning Clarity Consistency Credibility Competitiveness

23. 20 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill A perceptual map of supermarkets High price Low price Narrow product range Wide product range A B C D X G E F

24. 21 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Repositioning strategies Image repositioning Product repositioning Intangible repositioning Tangible repositioning Same Different Same Different Target market Product

27. Additional considerations? Ethics – social responsibility Unfair advantage of vulnerable or disadvantaged groups Segment interrelationships Segment by segment invasion plans Inter-segment co-operation

33. Car Industry Possible Examples ? ? Other? Morgan High Individualists Distinctiveness Catalytic Converters Environmental Compactness, good for Env. Mondeo Large family Space Sports cars Young males Performance BMW High income Status Punto Thrifty Economy Example Profile Benefits