INTERNATIONAL JOURNAL

OF RETAIL &
DISTRIBUTION MANAGEMENT

Targeting, Segments
and Positioning
Sally Dibb and Lyndon Simkin
Warwick Business School, UK

MARKET SEGMENTATION movement, consumers have been targeted

High-growth companies succeed by identifying with products like unleaded petrol,
and meeting the needs of certain kinds of increasingly branded separately from the
customer, not all customers, for special kinds major petroleum companies' leading brands.
of products and service, not all products or all The market for high volume products has
services. Business academics call this market moved with the times: the classic case is salt,
segmentation. Entrepreneurs call it common with low sodium substitutes being offered to
sense[1]. satisfy the increasingly health conscious. In
retailing, one of the last bastions of mass
Different consumers have varying desires and marketing, Woolworths, gave in to targeting
interests: witness the extensive array of and focusing during the 1980s.
products on supermarket shelves. This variety The rationale for using market
stems from diverse buying practices and basic segmentation has attracted considerable
variations of customers' needs and the interest in both the popular and academic
benefits they seek from products. It is almost marketing press[2-6]. Many companies, such
impossible to satisfy all customers in a as Aldi, British Shoe Corporation, Burtons,
market with a single product or service. Next, Oddbins, Toys R Us and TSB have
Companies have responded by offering a demonstrated that the effective
proliferation of products and brands. implementation of market segmentation and
Increasingly, therefore, companies have found subsequent targeting leads to success. By
it essential to move away from mass itself, effective segmentation does not sustain
marketing towards a target marketing strategy success — Sock Shop and Next testify to
where the focus is on a particular group of that — but it is a necessary prerequisite!
customers. This identification of target
customer groups is market segmentation, The Segmentation Process
where customers are aggregated into groups The process by which segmentation takes
with similar requirements and buying place consists of three main elements:
characteristics. The Henry Ford Model "T" segmentation, targeting and positioning[7].
philosophy — you can have any colour as Figure 1 gives an overview of these elements.
long as it is black — is no longer an From a tactical view point, positioning
appropriate one! represents the "sharp end" for marketers: the
Even some of the last remaining bastions product's image relative to its competitors in
of mass marketing have fallen, adopting — the consumer's view[8]. The challenge here is
for a variety of reasons — a target marketing to translate the needs and wants of the
approach based on clearly defined market targeted customers into a tangible mix of
segments. Boots used to have a uniform product, price, promotion, distribution and
concept; now there is Boots Pharmacy versus service levels with maximum appeal. The
Boots Health and Beauty versus the Boots number of segments being targeted will, of
variety store. With the advent of the "green" course, vary from market to market, for
different products, and from company to
company. It is critical, though, that the
impact on those segments selected is high
International Journal of Retail & Distribution Management, Vol. 19 No. 3, 1991,
pp. 4-10, © MCB University Press, 0 9 5 9 0 5 5 2 . and well defined[9].

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Adams
Originally an independently owned private family
company, Adams is now the chidren's wear
division of the mighty Sears. From being a loss
making "me too" in a market dominated by
Conran's Mothercare, Woolworth and Boots,
Adams has emerged as market leader in its sector
and one of the few retailers in the UK to be
improving on its financial performance during the
current retailing recession. In 1987/88 net sales
were £18 million. Now they are approaching a
four-fold increase and by 1991/92 year end, sales
are projected to be £180 million. During the same
1987/92 period, the number of outlets is likely to
rise from 126 to around 285 giving full national
coverage. The company is now evaluating the
viability of franchising its brand and expanding
overseas.
What has led to the success and turnaround of
Adams? Clear thinking and the development of a
marketing strategy have enabled the management
to take advantage of range omissions in Marks &
Spencer and BhS and of the managerial and
financial troubles of Mothercare. Adams examined
its market, evaluating each competitor to determine
The search for effective positioning needs to the positioning of the major players. This analysis
be tempered: there is sometimes a tendency was in the light of extensive market research
designed to understand the needs and expectations
to forget that it is the customer's wants and of consumers; children up to the age of eight and
expectations which are the key. The particular their parents/grandparents — a clearly defined
product, service or retail brand itself may be market segment.
of low importance; what matters is the Traditionally Adams' differential advantage had
been price but the company knew that "price
particular need satisfied and the benefit alone will not be sufficient differential advantage
offered (e.g. a typewriter ribbon by itself is to take Adams forward to market leadership".
of low value, but the finished document is of Adams opted to focus on design (of stores and
merchandise), quality, value and convenience.
importance; painkillers, where the product is Consumer research revealed that product quality
unimportant but pain relief is the focus; the and durability dominate the buyers' decision
Harrods shopping experience). The product making: the company's in-house Quality Control
or brand positions will depend on the Department is well resourced and increasingly sets
industry standards. Young mothers often lack time
company's capabilities, on the tangible and and mobility — convenience of location and store
practical nature of the product or service in layout is a key choice determinant. Adams has also
question, and on how well the competition geared up to catering for the relatively
inexperienced shopper, with an emphasis on
can match the targeted segment's customer service and extensive training facilities
requirements. Success, after all, depends on and programmes for all personnel. Through
how customers prefer one particular product product choice and design, customer service, store
design and image, Adams has created a distinctive
or retail brand, its marketing strategy and positioning, catering for a specific segment.
perceived image, to those products offered by
competing companies.
Careful segmentation of a market can
identify distinct market opportunities. How to Segment the Market
Tactical insight as to how these opportunities In the case of Adams, customer
can be exploited comes from the improved demographics and the product benefits
understanding of customer needs in the sought were used as the basis for segmenting
the market. This is one of the many ways in
targeted group. For example, more which customers can be grouped. In
appropriate product styling or promotional consumer markets, general characteristics like
activity, different price points or service levels customer age, sex and personality are often
may be introduced. Benefits like these are used[10]. A more comprehensive breakdown
clearly demonstrated by the case of Adams of options for the marketer of consumer
Childrenswear. goods is shown in Table I.

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Basic Customer Characteristics Sketchley

Because of the ease with which information concerning Sketchley is the largest UK dry cleaning
basic customer characteristics can be obtained and operation, with over 500 retail outlets in the
measured, the use of these variables is widespread. Midlands and South East of the country. It had
Demographics an up-to-date retail image with high street shops
Age aimed at the middle market male and female
Sex user. Market research, examining customer types
Family and usage behaviour, showed that the only
Race growth likely in the marketplace — a begrudged
Religion consumer activity — was from executives, wearers
The family life-cycle concept is an imaginative way of of business suits. The current high street
combining demographic variables[11]. The impact of operation was not convenient in terms of location
family life cycle can be seen in markets ranging from or opening hours for such users. Sketchley
tourism to housing and financial services. developed a free-standing separate retail
Socioeconomics operation, initially in London, called Sketchley
Executive, with a narrow product range, premium
Income pricing, longer opening hours and different
Occupation
Education service levels. Pitched clearly at commuters and
Social class office workers, the retail concept allowed the
company to target specifically the major segment
Different income groups have different aspirations not in the marketplace gaining non-users of dry
only in terms of the products they buy, but also in the cleaners and users of competing operations.
shopping locations which they visit.
Sketchley's mainstream operation now also caters
Geographic location for the growth segment on a national scale.
Country
Region
Type of urban area (conurbation — village)
Type of housing (affluent suburbs — inner city)
Dry cleaning company Sketchley recognised
Personality, motives and life style the particular needs of a certain customer
Holiday companies often use life style[12], to segment group in its market. In this case, the segment
the market. Club Med, for example, concentrates on
young singles while other tour operators cater especially identified could be distinguished primarily in
for senior citizens or young families. terms of socioeconomic factors.
Product-related Behavioural Characteristics
Purchase behaviour Uses of Effective Segmentation
Marks & Spencer shoppers may be highly brand loyal, Market segmentation can be used by minor
Kwik Save shoppers probably shop purely on the basis
of price. players in the market to gain a foothold in a
particular niche; i.e. by identifying an
Purchase occasion
A motorist making an emergency purchase of a opportunity not directly concentrated on by
replacement tyre, while on a trip far from home, is less the brand or market leaders (e.g. Ecover
likely to haggle about price than the customer who has washing-up liquid or Tie Rack). However,
chance to "shop around". Distress purchases of this
kind rely particularly on fast distribution and even market leaders, whether Burtons or
availability. Sainsbury, use market segmentation
Benefits sought profitably and effectively. There are four
When customers buy toothpaste they seek different types of product and market opportunities
benefits[13]. For some, fresh breath and taste are
essential while for others, fluoride protection is the key. which can be pursued:
The product Macleans Sensitive caters for a minority
group which requires protection for sensitive teeth. (1) Market penetration: increasing the
Consumption behaviour and user status percentage of sales in present markets by
Examining consumption patterns can indicate where taking sales from competitors (the
companies should be concentrating their efforts. Light
or non-users are often neglected. The important development of the Range Rover as a
question to ask is why consumption in these groups is yuppie vehicle or the strategy of Burtons,
low.
Sainsbury or Ratners).
Attitude to product
Different customers have different perceptions and (2) Product development: offering newer,
preferences of products on offer. As all retailers do, car improved products to current markets,
manufacturers, from Skoda to Porsche, are in the
business of designing their total offering, from the through the expansion of the product
product itself, to the retail showroom in which it is range (launch of the Land Rover
displayed, to match preferences, changing perceptions
as necessary. Discovery, the introduction of squeezy
Heinz ketchup containers, Sears' clothes
TABLE I. and shoes).
Variables for Segmenting Consumer Markets

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(3) Market development: selling existing Once segments have been identified,
products to new markets by finding new decisions about how many and which
applications (the offering of Evian customer groups to target can be made[14].
mineral water in a mist spray — a new Options include:
concept in skin care, Ryman stationery, ● concentrating on a single segment with
Dixons' business computers). one product/retail brand
(4) Diversification: moving into new markets ● offering one product/retail brand to a
by offering new products (the once number of segments
consumer-oriented Amstrad launching ● targeting a different product/retail brand
office equipment such as fax machines, at each of a number of segments.
Marks & Spencer into housewares and
furniture, Dixons into office equipment). The choices which companies make must
take into consideration the resource
implications of following a particular
A Note of Caution
strategy. The actions of Adams and Sketchley
described above confirm that it is not always
Segmentation can undoubtedly help to possible or appropriate to target the whole of
identify a diversity of market opportunities, a particular market. The success of Body
but haphazard implementation will lead to Shop, one of the fastest growing niche
failure. To be effective, segmentation must retailers, is based on a single segment
satisfy several criteria[7]. Segments must be: strategy. By focusing resources on a well-
● identifiable — easy to define and defined customer group the company has
measure; been able to develop a concept and mix of
offerings with particularly strong appeal.
● viable — large enough to be potentially
profitable;
● marketable and controllable — easy to Body Shop
pinpoint with sales and promotional
effort; From a single shop in Brighton, financed with a
£4,000 loan, Body Shop has grown to a company
● stable — remain the same long enough valued at around £450 million, with close to 550
for action to be taken. stores in nearly 40 countries. The original Body
Shop sold just 15 products. Today, the shops
It is also essential to avoid the dangers of stock more than 300 soaps, gels, scrubs and the
tunnel vision. Companies must recognise that like. Described in 1984 by investors Chronicle as
cashing in "on the trendy phobia that the major
there is rarely only one "right" way to brands of shampoo, soap and make-up contain
segment a particular market. It is inevitable, nasty chemicals that do more harm than good",
too, that changing consumer trends and Body Shop has shown that as a niche retailer the
stagnant sales sometime signal the need for fate of Tie Rack or Sock Shop is not inevitable.
a change in targeting policy. Led by Anita Roddick, Body Shop has become
the most successful of the "green" retailers, based
on the ethos, "the most honest cosmetics
company in the world".
TARGETING Roddick believes the cosmetic industry is run
by men who create needs that do not exist,
Having identified market segments, marketers making women feel incredibly dissatisfied. The
must decide which, if any, they intend to Body Shop philosophy is based on healthy
enter. A marketing programme which covers products, rather than their purely cosmetic value.
all elements of the marketing mix can then It is also one of the few companies that has put
issues such as acid rain, waste and pollution as
be designed to suit the particular shop window issues to educate its customers.
requirements of those segments targeted. Body Shop has always used recycled paper for
Sears-owned British Shoe Corporation packaging, and is a corporate member of Friends
dominates the UK footwear retailing sector, of the Earth.
mainly through medium- and budget-priced The Body Shop ethos includes a determination
chains such as Dolcis, Saxone, Freeman to cut out hype and packaging. Using natural
products, it aims to promote health rather than
Hardy Willis. The company realised it was glamour. Based on a clear understanding of
not catering for the upper end of the market certain customers' needs and a very distinctive
which had lower volumes but higher unit positioning strategy, Body Shop is one of the
margins. Cable & Co. was duly launched to world's fastest growing and most successful niche
cater for this segment of the market. retailers.

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POSITIONING have a distinct image and position vis à vis

Companies must decide precisely how and its competitors, as in the Aldi example.
where in targeted segments to aim a product Product or retail brand differentiation is
or products, brand or brands. The needs and widely viewed as the key to successful retail
wants of targeted customers must be marketing; the brand must stand out and
translated into a tangible mix of product, have a clearly defined position[6].
price, promotion and distribution. The
consumers' view of the product and where it Determining a Position
is positioned relative to the competition is Positions are described by variables and
particularly critical. After all, the paying within parameters which are important to the
public does not always perceive a product or customers and which essentially are selected
brand in the way the manufacturer would by them. Price may be the key in grocery
like. Yugo and Lada cars are, to the chagrin shopping, service level in selecting a hotel,
of management, widely perceived with quality and reliability when purchasing an
ridicule by the car-buying public. Despite the electrical appliance such as a washing
efforts of Littlewoods Stores or BhS, the machine, value for money when choosing
retailers have yet to live up to analysts'
expectations.

□
Aldi Expansion
THE PRODUCT MUST BE As the major UK grocery retailers positioned
PERCEIVED BY THE SELECTED themselves increasingly middle/upmarket with
extensive ranges, own label goods, customer
TARGET CUSTOMERS TO HAVE service a priority and large stores with carefully
A DISTINCT IMAGE conceived facilities and atmospherics, the budget-
conscious sector of the market was left in the
□ hands of Kwik Save.
With only 2,500 lines, concentrating on
According to Wind[15], "a product's manufacturer brands, no frills service and small
supermarkets in town or in the suburbs, Kwik
positioning is the place a product occupies in Save has become one of the UK's most successful
a given market, as perceived by the relevant companies.
group of customers; that group of customers Now, however, the market is changing. Aldi,
is known as the target segment of the the German discounter, has already opened its
first branches in the Midlands. Already one of
market". Harrison[16] states that the position Europe's largest grocery retailers, Aldi offers no
of a product is, luxuries, no customer services and secondary sites
with no expense devoted to store design and
the sum of those attributes normally ascribed fitting out. Aldi concentrates on many of its own
to it by the consumers — its standing, its label products but they — along with
quality, the type of people who use it, its manufacturer brands — are displayed in their
strengths, its weaknesses, any other unusual or shipping containers — in boxes. A limited range
memorable characteristics it may possess, its of essentials for C2, D, E shoppers, where price
price and the value it represents. is the key, is the Aldi approach.
Discount grocery retailing has not been
Positioning starts with a product — a piece successful in the UK. Tesco is still shaking off its
former discount image. Supasave went into
of merchandise, a service, a company, an liquidation in 1982, Pricerite was carved up by
institution, or even a person. Positioning is Shoppers Paradise and Argyll. Shoppers Paradise
not what is done to the product or retail itself was devoured and rebranded by Gateway in
brand, it is what is created in the minds of 1986. The only success story has been Kwik Save.
the target customers; the product is For Aldi, however, UK grocery margins of 5-7
per cent are perceived as high, enticing Aldi into
positioned in the minds of these customers the UK. It remains to be seen if Aldi can create
and is given an image. There may be a few a network of branches large enough to give it the
"cosmetic" changes to the product/brand — necessary scale economies to trade on price. UK
to its name, price, packaging, styling or consumers have yet to accept the discount,
limited range positioning in a market led by such
location — but these are to facilitate the high profile retailers as Sainsbury, Tesco,
successful promotion of the image desired by Gateway, Argyll (Safeway), Asda and Marks &
the target customers. The product must be Spencer.
perceived by the selected target customers to

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1991

which theme park to visit. In-depth market

research (often focus group discussions) is
required to understand customer motivations
and expectations adequately in a particular
market. Management's intuition is not always
sufficient. For example, research revealed that
C1, C2, D, E social group consumers often
have to decide between replacement lounge
or dining room furniture and a family
overseas package holiday. Management at
most leading furniture retailers perceived
other furniture retailers to be their
competitors when in reality they were
additionally competing for consumers'
disposable income against other diverse
product areas. In this budget-conscious sector
of the furniture buying market, retailers
believed only price to be important. In-depth
research proved that value for money was personnel. Adams had successfully
perceived to be the main purchase repositioned its brand to move away from
consideration, which included product quality being perceived as a budget-oriented retailer.
and durability in addition to price.
Steps in Determining a Positioning Plan
□ (1) Define the segments in a particular
RESEARCH EXAMINES CONSUMER market.
PERCEPTIONS OF VARIOUS BRANDS (2) Decide which segment to target.
WHICH OPERATE IN THE MARKET (3) Understand what the target consumers
expect and believe to be most important
□ when deciding on the purchase.
(4) Develop a product or retail brand which
In-depth market research leads to an caters specifically for these needs and
understanding of how consumers perceive expectations.
products, which marketing variables they (5) Evaluate the positioning and images, as
believe to be most important and by what perceived by the target customers, of
magnitude. Such research examines consumer
perceptions of various brands — or
companies — which operate in the market
under scrutiny. Perceptual mapping is a tool
commonly adopted by marketers and market
researchers visually to depict such consumer
perceptions and "prioritising" of brands and
their perceived attributes. Figure 2 illustrates
an example where consumers thought product
range width and price were the key
characteristics of the market. X marks the
"ideal" position: high product range width
and above average price (typical of high
quality shopping goods such as cameras or
hifi systems). Brands (or companies) A and
C are perceived as relatively close to the ideal
— their pricing policy does not fully match
the image required — but brand (or
company) B is viewed as being too cheap
with inadequate product range width. Figure
3 illustrates how consumers of children's wear
in the UK realised that the positioning of
Adams had shifted to reflect the quality
improvements of merchandise, stores and

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competing products/retail brands in the revised and, if necessary, replaced to avoid

selected market segment (or segments). consumers growing tired with the brand and
(6) With knowledge of your product/brand, its perceived qualities[14].
the needs and expectations of target □
customers, their perception of competing
brands' positioning select an image which
sets your brands apart from the References
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image matches the aspirations of the Performance: How America's High Growth
target customers. The selected positioning Companies Succeed, Bantam Books, New
and imagery must be credible: consumers York, 1985.
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