TOPIC 4.

-SEGMENTATION & POSITIONING

4.1-SEGMENTATION
1.-Definition
-Market segmentation involves dividing a market into smaller groups of buyers with distinct
needs, characteristics, or behaviors that might require separate marketing strategies.
-Market segmentation: identification of individuals or organizations with similar characteristics
that have significant implications for the determination of marketing strategy.

2.-Levels of market segmentation

Segment marketing
-A market segment consists of groups of customers who share similar set of needs and wants.

Niche marketing
-Niche: is a more narrowly defined customer group seeking a distinctive mix of benefits. Usually
a subsegment.

Local marketing
-Target marketing is leading to marketing programs tailored to the needs and wants of local
customer groups.
-Global companies fails to address local needs or local culture, but a brand overall image might
be diluted if the product and message are different in different localities.

Individual marketing
-Today customers are taking more individual initiative in determining what and how to buy. In
many cases, design the product they want (Internet).
-Customization is not for every company. It may be difficult to implement for complex products.
-This level of segmentation requires One-to-one marketing strategies.

3.-Segmenting consumer markets

Behavioral
Benefits sought
-Group buyers according to the different benefits that they seek from the product or service:
-Requires finding the major benefits people look for in the product class.
-Examples: durability, performance, low price, luxury, relax, prestige,…
Purchase occasion
-Buyers can be grouped according to occasions when they get the idea to buy, actually make
their purchase, or use the purchased product.
-This kind of segmentation can help companies build up product usage.
-Example: Most consumers drink orange juice in the breakfast, but companies have promoted
drinking orange as a cool at other times of the day.

Purchase behavior
-It may be segmented from:
• Some buyers are totally brand loyal, buying only one brand in the product group.
• Some customers may have a tendency to buy an specific brand, but also buy two or
three other brands
• Most customers practice brand-switching behavior.
• Others might show no loyalty to any individual brand, but switch brands on the basis of
special offers, or they are variety seekers.

Usage
-Markets can also segmented into light, medium and heavy product users. And, also, by
nonusers, ex-users, potential users, first-time users, and regular users.

Perceptions and beliefs

-It may be segmented from perceptions and beliefs of a product.

Pshychographic
Lifestyle
-This kind of segmentation aims to categorize people in terms of their way of life, as reflected in
their activities, interest and opinions (conservatives, sophisticates, trendsetters, live-to-cook,
cook-to-live,..).

Personality
-According to personality traits (compulsive, gregarious, ambitious, extrovert,….).

Profile
Demographic
-Divides the market into groups based on variables such as age, gender, family size, family life
cycle, education, social class,….

Socio-economic
-Many companies have used income segmentation to attract specific groups of customers.
Geographic
-This segmentation calls for dividing the market into different geographical units, such as
nations, regions, cities, neighborhoods,…
-An, also, urban, suburban, rural,…

4.-Segmenting organizational markets

-We can segment business markets with some of the same variables we use in consumer
markets (benefits sought, geography, usage), but business markets also use other variables
such as:

Organizational size
-Large organizations differ from medium-size and small organizations in having greater order
potential, more formalized buying and management processes, specialization, and special
needs.

Industry
-Different industries may have unique requirements from products.
-Example: Software applications companies market their products to various sectors (banking,
manufacturing, education, healthcare,…).

Choice criteria
-The basis is the key criteria used by buyers when they are evaluating supplier offerings (price,
productivity, service).

Purchasing organization
-Another segmentation variable is that of decentralized versus centralized purchasing, because
of its influence on the purchase decision.
This organization changes the way to sell them:
• The centralized segment could be served by a national account sales force.
• The decentralized segment might be covered by territory representatives.
5.-Criteria for successful segmentation
EFFECTIVE
-The segments identified should consist of customers whose needs are relatively homogeneous
within a segment, but significantly different from those in other segments.

MEASURABLE
-It must be possible to identify customers in the proposed segments, and to understand their
characteristics and behavior patterns.

ACCESSIBLE
-The market segments can be effectively reached and served.
-The company must be able to formulate effective marketing programs for the segments that it
identifies.

ACTIONABLE
-The company must have the resources to exploit the opportunities identified through the
segmentation scheme.

PROFITABLE
-The segments must be profitable.

6.-Selecting target market segments

Single-segment concentration
-Through concentrated marketing, the company gains a strong knowledge of the segments
needs and achieve a strong market presence.
-The company enjoy operating economies through specializing its production, distribution, and
promotion.
-Risk: A competitor may invade the segment. A segment can go unless.

Selective specialization
-A company selects a number of segments, each objectively attractive and appropriate. There
may be little or no synergy among the segments, but each promises to be profitable.
-Different products and programs for each segment.
-Sales improved by greater diversification of products and channels.
-Increases costs (/production, administration, promotion, R&D.).
-Example: Eat & Out:

Product specialization
-The company makes a certain product and sells it to several different market segments.
-Risk: The product may be supplanted by an entirely new technology (example: towels were
replaced by electric hand dryer).
Market specialization
-The company concentrates on serving many needs of a particular customer group.
-Risk: the customer group may suffer budget cuts or shrink in size.

Full market coverage

-The company attempts to serve all customer groups with all the products they might need.
-The company operates in several market segments and designs different products for each.
-Only very large companies can undertake a full market coverage strategy (Coca-Cola,
Microsoft, Volkswagen,..).

4.2-POSITIONING
1.-Definition
-The act of designing the companies offering so that it occupies a meaningful and distinct
position in the target customer´s mind.
-A product´s position is the place the product occupies in consume´s minds relative to
competing products.
-The goal is to locate the brand in the minds of consumers to maximize the potential benefit to
the firm.
-So, two words are important: Differentiation and positioning

2.-Strategy
Choosing a differentiation and positioning strategy
-3 steps:
1. Identifying a set of differentiating competitive advantages upon which to build a
position
2. Choosing the right competitive advantage
3. Selecting an overall positioning strategy

Identifying a set of differentiating competitive advantages upon which to build a position

-Product differentiation: versions, standardization (uniformity), quality, durability, reliability,
reparability, style,…
-Services differentiation: delivery, installation, training, technical assistance
-Differentiation through people who provide services: professionalism, courtesy, credibility,
trust, responsibility.
-Differentiation through brand image: atmosphere, symbols, events (sponsorship), advertising.
Choosing the right competitive advantage
-It must decide how many differences to promote and which ones.
-How many differences to promote. Two possibilities:
• Only one benefit: A very powerful benefit to be communicated aggressively.
• More than one differentiator: This may be necessary if two or more companies are
claiming on the same attribute (differentiator).
-Which differences to promote:
• Not every differences makes a good differentiator. A difference is worth establishing to
the extent that it satisfies:
o Important: the difference delivers a value to buyers.
o Distinctive: competitors do not offer this difference.
o Superior: the difference is superior to other ways that customers might obtain
the same benefit.
o Communicable: the difference is visible to buyers.
o Preemptive: competitors cannot easily copy.
o Affordable: buyers can afford to pay for the difference.
o Profitable: the firm introduce the difference profitably.

Selecting an overall positioning strategy

-It is the answer to the customer´s question: Why should I buy your brand?:
-The full mix of benefits upon which the brand is differentiated and positioned:
• Only one benefit: A very powerful benefit to be communicated aggressively. Unique
selling proposition (Reeves)
• More than one differentiator: This may be necessary if two or more companies are
claiming on the same attribute (differentiator).

Communicating and delivering the chosen position

-All the company´s marketing mix efforts must support the positioning strategy.
-Positioning company calls for concrete action:
• Example: If the company decides to build a position on better quality and service, it
must first deliver that position.
-Designing the Mk-mix involves working out the tactical detail of the positioning strategy.
-Establishing a position or changing one usually takes a long time. In contrast, positions that
have taken years to build can quickly be lost.
3.-Keys to successful positioning statement
-Clarity: the idea must be perfectly clear, both in terms of target market and differential
advantage.
-Consistency: A consistent message is required. Use the same positioning to avoid confusion.
-Credibility: The selected differential advantage must be credible in the minds of target
customers.
-Competitiveness: It should offer something of value to the customer that the competition is
failing to supply.

4.-Repositioning
-Frequently, perhaps because of changing customer tastes or poor sales performance, a
product or service need to be repositioned.
-Repositioning involves changing the target markets, the differential advantage, or both.