Chapter 5 –Segmentation and product positioning

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Market Segmentation

it is the process of dividing a

market into groups of similar

consumers.



Benefits of Market

Segmentation : It enables the company to develop a positioning and

marketing mix strategy that can satisfy a smaller,more focused range of customer¶s needs and wants

It leads to a more efficient use of resources,especially in communications and distribution.

It reduces competitive pressures because the firm isfocused on its niche or a combination of niche

groups seeking similar benefits It enables the company to have a better

understanding of its target market and employ thebest ways to reach them instead of trying to serve all

or different markets at the same time.



The Market Segmentation and

Positioning Process: Scan the Firm¶s Situation

Determine consumer needs and wants

Segment the market Develop product positioning

Choose segmentation strategy

Implement

Segmentation

Strategy

Undertake periodic Evaluation



Scan the firm·s current situation

In undertaking this phase , the firm has to lookinto strengths and weaknesses and consider opportunities and threats

Competitors have to be studied closely in thecontext of the global, local, and industrydynamics currently interplaying.

The firm has to look into its grand goals andfunctional objectives vis-a-vis human, financial,technology and information resources and

operational implementation.



Determine Consumer Needs and

Wants Accurate knowledge of consumer needs and wants

are critical to the adoption of valuable marketing

strategies.

Consumer needs and wants are evolving and will

be commonly used for segmentation purposes.

Changes in lifestyles. Adjustments in group norms

and revolution in technology are some significant

modifiers of cosumer needs and wants.



Segment the MarketThe market segmentation process The process of segmenting the market may be

conducted by using either or both general ways.

Approaches: A priori Segmentation - the marketing manager

established a criterion for marketsegmentation even before any marketresearch has been conducted.

Post hoc Segmentation ± involves initially undertakingmarket research where the bases of marketsegmentation will be from the results of research findings.



Bases for Market Segmentation :

Benefits Segmentation

Psychographic Segmentation



Traditional Segmentation Bases

of Consumer Needs:Segmentation

Base

Examples of Market Segments

Geographic

Continents Asia, North America, South America, Europe and Africa

Regions Southeast Asia, Caribbean, Eastern Europe

Type of

Economy

Developed, Developing, underdeveloped

Cities Florida, London, Manila, Tokyo, Singapore

Provinces Cebu, Davao, Ilocos Norte, Samar, Butuan

Type of

Settlement

Urban, Rural



Demographic

Gender Male, Female, ³In-between´

Civil Status Single, Married, divorced, separated, widow/ widower,Single

Parent

Age Infant, Toddler, Teenager, Work Beginner, Yuppies, Middle Age,Matured, Retirees

Income A, B, C, D, E

Education Illiterate, Grade school, high school, vocational, college,

masters/ doctoral

Profession Unemployed, White color worker, executive, farmer, teacher,

retirees, OFW, Housewife, mother,

Blue color worker, owner, military , student, religious

Family Size Bachelor, Small family, Husband and Wife , Big Family

Social

Religion Catholic, Iglesia ni Kristo, Buddhist, Protestant, Born-again,

Muslims

Social Class Upper, middle, lower middle class

Race Brown, yellow, whiteNationality Filipino, Chinese, Japanese, American, Indonesian, Greek,



Benefit Segmentation

-it is often believed that customers largely buy andpatronize a product or service in terms of thevalue that they can derive from such items.

-Benefits refer to the worth of an item in themarket.

-Benefit may be exhibited in different forms likeadvantage gained, help given, profit earned, pluspoints added to, significance presented,

usefulness provided, and convenience enjoyed.



Benefit

Segmentation

Variables

Examples of Market Segments

Sensory Segment Practical Segment

Principal Benefit

Desired

Gentle to the

hands

Fragrant

Needs very little

washing

Cleans clothes

Demographic

Users

Housewives Working mothers

Brands Favored Tide, Surf Generic

Physical Form of

detergent

Bar Liquid

Acceptability of

Price

Competitive Cheap



Psychographic Segmentation

It centers on the personal attributes of

the consumers.

It includes beliefs, attitudes, thoughts,

feelings, opinions, activities, hobbies



Example of Psychographic Segmentation:Actualizers -are consumers who have the highest incomes.

-they have high self-esteem and abundant resources that they can indulgein any or all self-orientations.

-image is important to them as an expression of taste, independence and

character.

Fulfilleds -are consumers who belong to the high-resource group.

-They are principle oriented.

-They are mature, responsible and well-educated professionals.

-Their leisure activities center on their homes but they are well-informed about

what goes on in the world.

-They are open to new ideas and social change.

-They have high incomes but are practical consumers.

Believers -consumers who belong to the low-resource group but are principle-oriented.

-They are conservative and predictable consumers who favor American

products and established brands.

-Their lives are centered on family, church, community and nation.

-They have modest (not large) income.



Achievers -are consumer who belong to the high-resource group.

-They are status-oriented.

-They are successful and work-oriented people who get

their satisfaction from their job and families.

-They are politically conservative who respect authority

and status quo.

-They favor established products and services that show

off their success to their peers.

Strivers -are consumers who belong to the low-resource group and

status-oriented.

-they have values very similar to the achievers but have

fewer economic, social, and psychological resources.

-Style is extremely important to them as they strive to

emulate people they admire and wish to be like.



Experiencers -are consumers who belong to high-resource group.

-They are action oriented.

-They are the youngest of all segments with a median age of 25.

-They have lots of energy which they pour into physical exercise and social

activities.-They are avid consumers spending heavily on clothing, fast food, music

and other youthful favorites with particular emphasis on new products

and services.

Makers -are the consumers who belong to the low-resource group.-They are action-oriented and practical people who value self-sufficiency.

-They are focused on family, work and physical reaction.

-They have little interest in the broader world.

-They appreciate practical and functional products.

Strugglers -are the consumers who have the lowest income.

-They have too few resources to be included in any consumer slef-orientation.

-They are the oldest of all the segments with a median age of 61. ±Within their

limited means, they tend to be brand-loyal consumers.



Develop Product Positioning

At this point, firm should have an idea of the marketsegment it wants to capture with its product.

Several positioning strategies can be adopted:

1. Prestige

2. Flashy image3. Efficiency

4. Economy

5. Quality

6. Versatility

One of the progressive ways of product positioning isreaching out to every customer. It involves customizingthe product to each customer.



Choose Segmentation Strategy

Four alternatives in choosing appropriate

segmentation strategy

The company may decide not to join the

market.

The firm may decide not to segment at all but

instead to simply mass market.

The firm may decide to market to one segment

It may want to market to more than one

segment.



Implement Segmentation Strategy and

Undertake Periodic Evaluation

Documents

Chapter 5 –Segmentation and product positioning