Segmentation

Marketing: Asian Edition Oxford University Press 2013.
All rights reserved

The New Generation Marketing Text!
Definitions of Research in
Marketing I
The International Chamber of Commerce (ICC)/European Society for
Opinion and Market Research (ESOMAR) multipart definition of marketing
research stresses that:

Marketing research is a key element within the total field of marketing
information. It links the consumer, customer and the public to the
marketer through information which is used to identify and define
marketing opportunities and problems; generate, refine and evaluate
marketing actions; improve understanding of marketing as a process and
of the ways in which specific marketing activities can be made more
effective. Marketing research specifies the information required to
address these issues; designs the method for collecting information;
manages and implements the data-collection process; analyses the
results; and communicates the findings and their implications
(ESOMAR, 1995).
Marketing: Asian Edition Oxford University Press 2013. All rights reserved
Learning Outcomes
Describe the principles of market segmentation and the STP
process.
Explain the characteristics of and differences between market
segmentation and product differentiation.
Explain how market segmentation can be undertaken in both
consumer and business-to-business markets.
Describe different targeting strategies.
Explain the concept of positioning.
Illustrate how the use of perceptual maps can assist the
positioning process.
Case I nsi ght Adani Wi lmar Li mi ted
Adani Wilmar Limited (AWL) is one of
the largest edible oil turned integrated
agri-based company.
AWL tasted success with its flagship
brand Fortune.
After a successful stint with sunflower
oil and regional oil variants, the company
launched Fortune Plus, which is
targeted at fitness freaks.
By getting into the premium category
after the launch of Fortune Plus, does
the company risk losing touch with its
traditional customer base?
STP Process
Method by which whole markets are subdivided into
different segments
Three activities that should be undertaken, usually
sequentially, if segmentation is to be successful:
Segmentation
Targeting
Positioning
STP Process
Benefits of STP Process
Enhancing a companys competitive position by
providing direction & focus for marketing strategies.

Examining and identifying market growth
opportunities through identification of new
customers, growth segments or new product uses.

More effective and efficient matching of company
resources to targeted market segments promising the
greatest ROMI.
Market Segmentation
Market segmentation is the division of a market into
different groups of customers with distinctly similar
needs and product/service requirements.

Purpose of market segmentation:
Leverage scarce resources.
To ensure that the elements of the marketing mix are
designed to meet particular needs of different customer
groups.
Allows organisations to focus on specific customers needs in
the most efficient and effective way.
Marketing Segmentation
Market Segmentation and Product Differentiation

Process of Market
Segmentation
There are two main approaches to segmenting
markets:

Breakdown Method: Adopts the view that the
market is considered to consist of customers which
are essentially the same, so the task is to identify
groups which share particular differences.

Build-Up Method: Considers a market to consist of
customers that are all different, so here the task is
to find similarities.
Process of Market
Segmentation
The aim is to identify segments where:
identifiable differences exist between segments (segment
heterogeneity).
similarities exist between members within each segment
(members homogeneity).

Segmenting Consumer Markets
Segmentation Bases/Criteria

Profile Criteria - Who my market are and where are they?

Behavioural Criteria - Where, when, and how does my
market behave?

Psychological Criteria - Why does my market behave that
way?
A Pri ori and Post Hoc Segmentati on
Approaches
Segmenti ng Consumer Markets
Segmenti ng Consumer Markets
Source: Integrated Marketing Communications in Advertising and Promotion (AISE, 7
th
edn. by Shimp
(2007). Reprinted with permission of South-Western, a division of Thomson Learning
Kantar Medi a- TGI Li festage
Segmentati on Groups
Source: Reproduced with kind permission of Kantar Media
Example: Hybri d Segmentati on Model
Segmenti ng Busi ness Markets
Organi zati onal Characteri sti cs
Buyer Characteri sti cs
Decision Making Unit
Policy factors
Purchasing strategies
Attitudes towards vendors and toward risk

Choice Criteria
What specifications of product/service they choose

Purchase Situation
Structure of the purchasing procedures
Type of buying situation
Stage in the purchase decision process
Targeti ng
To determine which, if any, of the segments uncovered
should be targeted

Evaluation of Market Segments DAMP
Distinct is each segment clearly different from other
segments?
Accessible can buyers be reached through appropriate
promotional programmes and distribution channels?
Measurable is the segment easy to identify and measure?
Profitable is the segment sufficiently large to provide a
stream of constant future revenues and profits?
Segment Attracti veness Factors
Rating approach for different segment attractiveness
factors:
Market growth
Segment profitability
Segment size
Competitive intensity within the segment
Cyclical nature of the industry

Each of these attractiveness factors is rated on a
scale of 0-10 and loosely categorized as high,
medium or low in attractiveness.
Segment Attracti veness Factors
Source: McDonald and Dunbar (2004). Reproduced with kind permission.
Segment Attracti veness Evaluati on
Matri x
Source: McDonald and Dunbar (2004). Reproduced with kind permission.
Targeti ng Approaches
Posi ti oni ng
The act of designing the companys offering and
image so that they occupy a meaningful and distinct
competitive position in the target customers minds.

Two fundamental elements:
Physical attributes the functionality and capability that a
brand offers.
Communication the way in which a brand is
communicated and how consumers perceive the brand
relative to other competing brands in the market place.
Example of a Perceptual Map
Posi ti oni ng Strategi es
Reposi ti oning Strategi es
The following four ways outline how to approach repositioning a product,
depending on the individual situation facing a brand. In some cases, a brand
might need to be adapted before relaunch.
1. Change the tangible attributes and then communicate the new
proposition to the same market.
2. Change the way a product is communicated to the original market.
3. Change the target market and deliver the same product.
4. Change both the product (attributes) and the target market.

Semi nar Exerci se: Market
Segmentati on
Using the information in the
Table 6.8 on the Champagne
market, and a suitable
calculator, determine what
are the most potentially
profitable segments in the
marketplace.

What other data do we need
to determine the size of the
market (market potential)?

In a group with other colleagues from your seminar/tutor group, discuss
answers to the following questions:
Summary
Described the principles of market segmentation and
the STP process.
Explained the characteristics and differences between
market segmentation and product differentiation.
Explained how market segmentation can be
undertaken in both consumer and business-to-business
markets.
Described different targeting strategies.
Explained the concept of positioning.
Illustrated how the use of perceptual maps can assist
the positioning process.

Segmentation

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