6 Segmentation Lecturing and Positioning

What is Market Segmentation?

Grouping buyers into distinct groups with similar needs and similar responses to marketing actions

Why segment a market?

• Identify homogeneous groups

• Align marketing mix with customer demands

• Allocate resources efficiently

Four major bases of segmentation

Geographic, Demographic, Psychographic, Behavioural

Geographic segmentation examples

Country, region, climate, population size, community (urban/suburban/rural)

Demographic segmentation examples

Age, gender, education, income, occupation, marital status, family life cycle

Psychographic segmentation definition

Dividing the market by social class, lifestyle, personality traits

sychographic segmentation examples

Interests, activities, opinions, lifestyle, personality traits

Behavioural segmentation definition

Grouping buyers based on attitudes, response, or usage of a product

Behavioural segmentation examples

• Usage level (nonuser, regular)

• Occasion (personal, social)

• Loyalty status

• Benefits sought (emotional, physical)

Multi-base segmentation

Using combinations of bases (geo-demo-psychographic), e.g., PRIZM lifestyle groups

PRIZM example

Latte Life = young urban renters; Boomer Bliss = middle-aged suburbanites

Segment Requirements (6 criteria)

Measurable, Meaningful, Accessible, Substantial, Differentiable, Marketable/Actionable.

Mass marketing (Undifferentiated)

One product for the entire market; typically commodities

Differentiated marketing

Different products for several segments

Concentrated (Niche) marketing

Focusing efforts on one specific segment

Micromarketing

Tailoring products to individuals or local areas (mass customization)

Targeting strategy considerations

Market variability, competitor strategies, product variability, resources, social responsibility

Product Positioning definition

The place a product occupies in consumers' minds relative to competitors

Two types of positioning approaches

• Head-to-head (direct competition)

• Differentiation positioning (less competitive market)

Cost/Price-based positioning

Being the lowest-cost option; requires economies of scale + experience curve

Attribute-based positioning

Positioning based on product attributes (durability, reliability, quality)

Augmented-based positioning

Positioning through extra benefits (warranty, customer service, delivery, financing)

Perception-based positioning

Competing on perceived differences; “perception is reality.”

Value-based positioning definition

Positioning based on the mix of benefits at a given price

“More for more”

High-quality product at a high price (luxury, status)

“More for the same/less”

Higher-end offer at a lower or same price to attack a competitor

“Same for less”

Same brands at lower prices (category killers).

“Less for much less”

Lower performance/quality at very low price