Segmentation, Targeting

and Positioning

Week 3 Lecture
Learning Outcomes
 Understand the concepts of segmentation targeting and

positioning.

 Understand the benefits of STP.

 Critically analyse the relevance of STP in light of current trends.

 Analyse the apply the most suitable STP strategy.

STP Overview (Baines et al, 2011)

Targeting
Segmentation Positioning
Identify which
Identify similar Create a concept
groups of
groups of to appeal to the
customers are target market.
customers.
aimed for.
Market Segmentation
Segmenting Business Markets
 In addition to the same segmentation variables as
consumers, business can also be segmented by:
 Customer-operating characteristics
 Purchasing approaches
 Situational factors
 Personal characteristics

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Bat Trang ceramic
Bat Trang ceramic
Bat Trang ceramic
Segmentation
 Division of the market into smaller
groups based on their different needs
and wants (FOR WHAT?)
 Basis for successful marketing
strategy.
 Particularly useful when you have
limited resources or the market is
volatile
WHY DIFFERENT PEOPLE
HAVE DIFERENT NEEDS AND
WANTS??? --> SEGMENTATION
BASIS
Market Segmentation
Types of Segmenting Consumer Markets
 Geographic
 Demographic
 Psychographic
 Behavioral

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Market
Segmenting Consumer Markets
Segmentation

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Rights Reserved.
 Types of Segmentation
(Adapted from Baines et al, 2011)
High

Behavioral
Ease & Cost of Measurement.

Psychological
Profile
(Geographic &
Demographic)

Low
Low High
Predictability of a consumer choice behavior.
Profile
(WHO & WHERE)

 Demographic (age, gender etc) e.g.

L’Oreal Men Expert
Discussion: Millennials – are they still a
viable segment?
 Socioeconomic e.g. income. Bentley
and High Net Worth Individuals.
 Geographic e.g. Christmas Campaigns
or cultural differences.
 Can you think of any examples?
Psychological Segmentation
(WHY & WHO)
 Lifestyle e.g. Joules
 Personality – based on personality
characteristics
 Perceptions/Attitudes – e.g. Politics
and Brexit vote and immigration
(British Social Attitudes Survey).
 Motivations e.g. Shao et al (2015)
Facebook: Devotee, Agnostic,
Socializer and Finder.
 Benefits Sought e.g. Supermarket
Shoppers (Convenience vs Price).
 Aggregated Measures such as VALS
(Values, Attitudes, Lifestyles)
Behavioral Segmentation
(WHO, HOW, WHERE & WHEN)

 Purchase/transaction e.g. Tesco

Club Card or Amazon Account Data.
 Consumption/Usage e.g. Superusers
and co-creation vs. light usage.
 Media Usage/Technology Usage
e.g. Facebook
https://www.theguardian.com/techn
ology/2018/feb/12/is-facebook-for- ol
d-people-over-55s-flock-in-as-the-
young-leave
Facebook UK users 2018 v 2017
Age 12 to 17 2.2m, down 300,000
Age 18 to 24 4.5m, down 400,000
Age 25 to 34 7.2m, flat
Age 35 to 44 5.9m, flat
Age 45 to 54 5.6m, up 100,000 users
Age 55 to 64 3.5m, up 200,000 users
Age 65-plus 2.9m, up 300,000 users
Please select the market segmentation variables that the following brands
are using:
Products Geographic Demographic Psychological Behavioural

Canifa
Uniqlo
Cong Coffee
Winmart
Travel.com.vn
How and why among many segmentation variables, a brand
can choose one or several of them for segmentation?? What
is the basis for selection?
 Market
Segmentation
Requirements for Effective Segmentation

Evaluate the following market segmentation:

- Divide the computer mouse market into 3 segments: left-handed people / right-
handed people / and ambidextrous people
- Divide the market of people who are dieting according to 15 different diet schools
- Segmentation of milk/diaper market by sex
- Segmenting the market for wedding wear/wedding services into groom/bride group

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All

Rights Reserved.
Measurable
Subtantial
Differentiable
Accessible/Actionable
 Market
Segmentation
Requirements for Effective Segmentation

Measurable Accessible Substantial

Differentiable Actionable

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All

Rights Reserved.
Characteristics of Good Segmentation
(Gavett, 2014)
1) Identifiable
Should be able to identify customer in each
segment and measure their characteristics.
E.g. customer behavior https://www.you
tube.com/watch?v=qjtBd owd5uo
2) Sustainable
Segment should have long term viability
e.g. banks and rail cards.
3) Accessible
Have to be able to communicate with
your customer group. E.g. SAGA
Holidays
Characteristics of Good Segmentation
(Gavett, 2014)
4) Stable
Method has to be long term and
strategically focused. E.g. Hipsters
5) Differentiable
Segments needs must be different from
other segments.
6) Actionable
Have to be able to actually deliver value to
the customer group. E.g. John Lewis and
middle class Britain.
Factors affecting choice of target market strategy

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 Targeting Strategies
 Segmentation targeting is the decision about which market
segment(s) an organisation decides to prioritise for its sales and
marketing efforts
 Undifferentiated strategy
 When a company targets an entire market for a product with a single
marketing mix
 Concentrated strategy (niche)
 A process by which an organisation directs its marketing effort towards
a
single tiny market segment through one marketing mix
 Differentiated strategy
 A strategy by which an organisation directs its marketing efforts towards two
or more market segments by developing a marketing mix for each
Targeting strategies
Analyze the
advantanges/disadvantages of
each strategies?

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Market Targeting
Choosing a Targeting Strategy
Depends on:
 Company resources
 Product variability
 Product life-cycle stage
 Market variability
 Competitor’s marketing strategies

7-16
 Target Market Attractiveness and Opportunity
Selection
 A market may be targeted because of its future potential, not just

because of current sales

 For-profit businesses inevitably will be driven by likely financial

rewards, but often these result from other factors, such as:
 Competitor intensity
 Customer loyalty
 The ability to achieve differentiation

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 Targeting
 Of the segments you have identified, which is the most appealing to target?
 Need to conduct a detailed analyze of segment attractiveness.
High
INVEST
INVEST FOR
Market Attractiveness

SELECTIVELY FOR
GROWTH
GROWTH

Plotted
INVEST SELECTIVELY HARVESTING
points
FOR GROWTH STRATEGY
Total market
size and
share
HARVESTING
DIVEST
STRATEGY

Low
Strong Weak https://www.youtube.com/watch?v=1tnQ1kNHq9k
Competitive Position
 Target Market Attractiveness and Opportunity
Selection
Market attractiveness factors adopted by UK companies

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 Activity 1
Compare the target markets and targeting strategies
of the following pairs of companies and provide
reasons for their selection:
Canifa, Uniqlo, and Decao
Buffet Sen, Tue Tam Buffet Chay, Com Binh Dan
Iphone, Xiaomi, and Masstel FAMI

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Positioning

 Positioning is the process of creating an image for a

product in the minds of target customers

 Determining a positioning
 Perceptual mapping is a tool used to visually depict
consumer perceptions and prioritising of brands and their
perceived attributes

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Positioning

 This is the place a product occupies in the market

 Usually referred to as where it fits in the consumers ‘perceptual map’

 By understanding where it fits the business can make slight changes

to reposition and gain advantage

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Positioning
People position a product based on:

 Top of the range – the most expensive or best

 Value for money

 Reliability

 Country of origin

 Brand name

 Service

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 Positioning (Perceptual) Mapping

 A perceptual map is a visual representation of how target customers view the

competing alternatives in a market place.

 It allows the organisation to:

• Plot the position of consumer preferences

• Provide a visual picture of how customers see
different competitors

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Perceptual Mapping

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Brand positioning map
Brand positioning map
Brand positioning map
Brand positioning map
 Differentiation and Positioning
Choosing the Right Competitive Advantages
 A difference is worth establishing to the extent
that it satisfies the following criteria:
• Important to WHOM??
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable

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Keys to Successful Positioning (Jobber, 2004)

Clarity Consistency

Successful
positioning

Credibility
Competitiveness
Positioning
 Steps in determining a positioning (perceptual) plan
1. Define the segments in a particular market.
2. Decide which segment(s) to target.
3. Understand what the target segment’s customers expect and believe to be
the most important considerations when deciding on the purchase.
4. Develop a product or products catering specifically for these needs and
expectations.
5. Evaluate the positioning and images, as perceived by the target
customers, of
competing products in the selected market segment or segments.
6. Select an image that sets the product(s) apart from the competing
products.
7. Inform target customers about the product, which is made readily
available at
 Building a value curve
Va l u e C u r v e s for N i e m a n M a r c u s , J.C. Penney, Sears

100

90

80

70
O
L

60

50

40
H
I

30

20

10

0
Positioning and Differentiation
 Positioning statements:
 To (target group and need) our (brand) is
(concept) that (point-of-difference)
 Example: To young, active soft-drink
consumers who have little time for sleep,
Mountain Dew is the soft drink that gives
you more energy than any other brand
because it has the highest level of
caffeine.
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Activities 2: Present a positioning
statement of your product or company

 Present/Design an old/ a new positioning

statement for:
- A fastfood brand
- A travel app
- A household appliance of your choice

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But is STP still relevant? What do you think?
A New Framework for Customer Segmentation
(Bayer and Taillard, 2013)
 Step #1: Identify the contexts in
which customers are using the
company’s products.
 Examples of such jobs in the mobile telco
realm might include: “being in touch with
family and friends while roaming,”
”choosing the best entertainment and
dining opportunities on the go over the
weekend”.
 Have to identify the different jobs.
 Lots of research will do this, could be
multiple.
 Extensive and expensive.
A New Framework for Customer Segmentation
(Bayer and Taillard, 2013)
 Step #2: Combine information about transactions
and customer behaviour in the contexts to describe
each of the jobs to be done.
 For our weekend entertainment example, we would look for a
combination of weekend searches for entertainment
information, searches for local restaurants, movie reviews
and social behaviour such as tweets about movies, concerts or
restaurants.
 The “becoming confident and secure” job might use data
from call centre interactions and detect unused features on a
new smartphone.
 The actual relevant data for each of the “jobs to be done” is
selected during the initial research as a function of the
different contexts to be explored and the data available.
 Different from traditional behavioural segmentation which
focuses on a wide set of individual variables such as the
percentage of voice calls.
A New Framework for Customer Segmentation
(Bayer and Taillard, 2013)
 Step #3: Map individual customers to jobs, using
the data.
 Each customer would be scored according to the
relevance for him or herself of each of the jobs done.
 A specific customer may need 20% of the entertainment job,
2% of the confidence job and 40% of the being-in-touch job.
The customer profiles would be spread across all jobs.
 From there it’s a simple step to cluster customers on their
mix of jobs to be done rather than on their “raw”
behaviour, demographics or attitudes.
 For each segment, there may be only three or four jobs to be
done that are crucial. This then allows the development of
specific solutions for each segment.
What are the limitations of this new approach?
Conclusion
 Understand the concepts of segmentation targeting and

positioning.

 Understand the benefits of STP.

 Critically analyse the relevance of STP in light of

current trends.

 Analyse the apply the most suitable STP strategy.

References

 Baines, P., Fill, C. and Page, K., 2011. Marketing (2nd Edition). Oxford University
Press.

 Bayer, J., and Taillard., 2013. A new framework for customer segmentation.
Harvard Business Review, viewed 15/08/19, https://hbr.org/2013/06/a-new-
framework-for-customer-s

 Gavett, G., 2014. What you need to know about Segmentation. Harvard Business
Review, 70, pp.5019-5028.

 Jobber, D., 2004. Principles and Practice of Marketing, McGraw Hill, London.
Keep working hard.