Segmentation, Targeting & Positioning

(1)

Segmentation, Targeting &

Positioning

Prof. John Fahy, University of Limerick

What is meant by the core ideas of segmentation, targeting and positioning?

What Are You Going to Learn Today?

What is Market Segmentation

The identification of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy

(2)

Why Segment Markets?

Class

Passen. Price (£)

V. C. Rev. (£)

T. V. C. F. C. Profit (£) Undifferentiated Strategy

240 250 20 60,000 4,800 50,000 5,200

Differentiated Strategy

Econ. 144 250 20 36,000 2,880 Bus. 72 500 40 36,000 2,880 First 24 1,000 100 24,000 2,400

Total 240 96,000 8,160 50,000 37,840

Segmentation of Airline Passengers

Source: Doyle (1998)

(3)

The Challenge Tours!

• Gives amateur cyclists a chance to ride the same

course as the pros

• Slogan = ‘Ride with the pros’

• Different race lengths designed for inexperienced

to competitive cyclists

• Growing dissatisfaction with the experience

The Opportunity

• Registration information gives rich demographic,

geographic & behavioural data

• Different segments have different motives and

look for different rewards

• Segmentation allows for differentiated strategies

• Segmentation increases satisfaction & loyalty

The Grey Goose Story

(4)

• What kind of consumer is this product aimed at?

• What is its value proposition?

• Are there consumers that it is not aimed at?

The Grey Goose Story

• Company founded in 1996

• Develop a super-premium segment for vodka • French crafting in the Cognac region • Bottle design – smoked glass and silhouette • Launched at twice the price of Absolut • …….

• Sold to Bacardi Group in 2004 for US$2bn © John Fahy (2012)

Grey Goose Marketing

• Named the best tasting vodka in the world by the Beverage Testing Institute in 1998 • Event Marketing – Get it to the hottest people

in the hottest clubs in town • Placement in Sex and the City

(5)

Sidney Frank’s Marketing Genius

How: Core Bases For Segmenting

Consumer Markets

• Geographic

–Country, Urban/Rural etc • Demographic

–Age, Family Size, Income, Education, etc. • Psychographic

–Social class, lifestyle type, personality type, etc. • Behavioural

–Product usage, benefits, type of user, etc.

Segmenting Markets?

Segment any three markets of your choice using the criteria listed!

(6)

(7)

Benefit Segmentation

Decay Prevention

Fresh Breath

Taste _{White Teeth}

Criteria For Good Segmentation

• Effective

• Identifiable

• Profitable

• Accessible

• Actionable

• Diet Coke Advert

• Coke Zero Advert

Porsche’s Challenge

• Launched 911 in 1964

• Motor racing origins • Legacy,

performance & pricing

(8)

Porsche’s Differentiated Strategy

• 2004: Porsche SUV – the Cayenne

–Disliked by Porsche loyalists but grows to outsell the 911 in the US

• 2009: Panemera

–4-seater luxury car (BMW 7 series, etc)

–43,000 units sold since launch • 2011: Re-positioning the 911

–‘Everyday car’

Re-positioning the 911

Evaluate Porsche’s Strategy

(9)

• Positioning Strategy

Target marketing strategies

Undifferentiated marketing _{Differentiated marketing} Focused marketing Customized marketing

Target marketing strategies

Undifferentiated marketing

(10)

Target marketing strategies

Differentiated marketing

Marketing mix 1 Segment 1

Segment 2 Segment 3 Marketing mix 2

Marketing mix 3

Covering The Major Segments or ….

Low Average Above Average High

P

ric

e

High Low Quality Level

(11)

Target marketing strategies

Focused marketing

Segment 1 Segment 2 Segment 3

Marketing mix

To Exploit Opportunities

• Targets Up-Market Customers

• Focus on Product Quality

• Built a Brand Community

• High Quality ‘but not Rolls-Royce, more BMW’

Target marketing strategies

Customized marketing

Marketing mix 1 Customer 1

Customer 2 Customer 3 Marketing mix 2

(12)

Customised Marketing

• Mass Customisation • One-To-One Marketing

• Customer Relationship Marketing (CRM)

• http://www.mymms.com/

• http://www.bmw.co.uk/bmwuk/homepage/

(13)

Saab’s Positioning Problems

• Distinctive, high performance cars • GM takeover in 2000, cars made on the

same platform as Opel and Vectra • No clear positioning in market or GM

family

• Sales of 132,000 units in 2003 below 1987 • Skyper buys Saab for $74m in 2010 when

Saab had sales of 90,000 units and 3,400 employees

Why did Saab collapse so badly?

What Is Positioning?

‘The act of designing the company’s offering and image so that they occupy a meaningful and distinct position in the target customers’ minds’.

(14)

Why Is Positioning Important?

• We live in an over-communicated society –Consumers consciously attend to between 5 & 15% of

advertising

–Consumer recall of adverts had fallen from 34% in 1965 to 8% in 1990

–2007 study found consumers could recall 2.21 adverts ever seen

• Over-simplified messages are needed to get through to the prospect’s mind

• L'Oreal Advert

The Ladders in Your Customers’ Heads

• What we take in is related to what’s there

already

• We know only a few brands in any category

• These brands are ‘rungs on a ladder’

• New categories must relate to old ones

• Growing a brand means dislodging another

Source: Ries & Trout (1986)

Nike: Successful Positioning?

• Established in 1964

• Late entrant into the shoe market dominated by Adidas, Reebok, Puma, Brooks, Tiger

• Market leader in sportswear in the 1990s

• Built brand around sports celebrities & massive advertising expenditure

• Ad spending grew from $30m in 1987 to $500m in 1997

• ……..

(15)

Keys to Successful Positioning

Clarity

Credibility

Consistency

Competitiveness Successful

Positioning

Develop A Positioning Statement

• A plausible, memorable, image-enhancing

written summation of a product’s desired stature

• ‘The ultimate driving machine’

• ‘Because I’m worth it’

• ‘Probably the best lager in the world’

Positioning Strategy

• What space do we occupy in our customer’s

minds?

• Is it clear, credible, consistent, competitive?

(16)

Changing Mental Images!

• Cider

• A ‘recruitment’ drink

• ‘Cider parties’ • Anti-social

behaviour • Small, declining

Repositioning Cider!

• Target older

consumers

• Television advertising

• Rugby and golf

sponsorship

• Long necks v flagons

• Premium pricing

• Grew market share

from 3% to 15%

Bulmers Irish Advert

(17)

• Read Chapter 5 Foundations of Marketing

• Go To

http://highered.mcgraw-hill.com/sites/0077121902/student_view0/ind ex.html and take the chapter 5 online test

• Listen to the podcast at johnfahy.net

What To Do Next!

Write down your three key learning points from this section?