Market segmentation and

positioning
Angelika Brix
Bartosz Konior
Stephan Richter

November 2006

Overview:

z Market segmentation
z Consumer Markets
z Organizational Markets
z Evaluation of segments
z Target Market
z Positioning and Repositioning

(c) Brix, Konior, Richter 2

What is Market segmentation?

„...the identification of individuals or

organizations with similar characteristics
that have significant implications for the
determination of marketing strategies.“¹

(c) Brix, Konior, Richter ¹ soucre: Jobber, p.210 3

What is Market segmentation?

„Market segmentation is the process in

marketing of dividing a market into
distinct subsets (segments) that behave
in the same way or have similar needs.
...to respond with appropriate marketing
strategies that satisfy the different
preferences of each chosen segment.“²

(c) Brix, Konior, Richter ² source: Wikipedia 4

Benefits from market segmentation

Target market
selection

Market Tailored
Differentiation
segmentation marketing mix

Opportunities
and threats

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 5

Benefits from market segmentation

Target market selection Tailored marketing mix

ƒ Chosen segment of market ƒ Grouping of customers

ƒ Similar characteristics of ƒ Tailoring marketing mix

customer package

ƒ Single marketing mix ƒ Implementation of the

strategy marketing concept

(c) Brix, Konior, Richter 6

Benefits from market segmentation

Differentiation Opportunities and

threats

ƒ Dividing into sub-segments ƒ Rarely static markets => new

segments emerge
ƒ Target more than one
segment ƒ Chance of being the first

ƒ Differentiate its offering ƒ Threat of faster competitors

(c) Brix, Konior, Richter 7

The process of market segmentation

and target marketing
The disaggregated The segmented market The target market
market

1 2 3
c1 c3 Marketing
c2 c1 c3 c1 mix c3
targeted at
segment 3
c4 c6 c5 c2 c4 c5 c2 c4
c5
c8 c7 c6 c7 c6
c7 c8 c8

The characteristics of Customers are grouped Segment 3 is judged to

individual customers are into segments on the be most attractive and a
understood basis of having similar marketing mix strategy is
characteristics designed for that target
market

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 8
The process of market segmentation
and target marketing - example
The disaggregated market

(c) Brix, Konior, Richter 9

The process of market segmentation

and target marketing - example
The segmented market according to type of buyer
Convenience &
Sport & image Adventure
security

(c) Brix, Konior, Richter 10

The process of market segmentation
and target marketing - example
The target market
Sport & image

Convenience &
Adventure
security

This segment is
judged to be
most attractive
(c) Brix, Konior, Richter 11

Segmenting markets

Market
segmentation

Consumer Organizational
segmentation segmentation

(c) Brix, Konior, Richter 12

Segmenting consumer markets
Benefits
Behavioural
sought

Purchase
occasion
Consumer
Psychographic
segmentation Purchase
behaviour

Usage
Profile
Perception
and beliefs

(c) Brix, Konior, Richter 13

Segmenting consumer markets

¾Benefits sought
Functionality Pleasure Image

ƒ Simple ƒ 1.3 megapixel camera ƒ Display with Sapphire

Crystal screen
ƒ Lack of sophisticated ƒ High quality video streaming with sound
features ƒ Stainless steel keys with
ƒ Active TFT display jewelled bearings
ƒ Convenient ƒ Bluetooth, USB ƒ High price
ƒ XHTML browsing and email over TCP/IP
ƒ MP3 player and FM radio
ƒ ...
Source: www.nokia.com;
(c) Brix, Konior, Richter www.vertu.com 14
Segmenting consumer markets

Behavioural

Lifestyle
Consumer
Psychographic
segmentation
Personality

Profile

(c) Brix, Konior, Richter 15

Segmenting consumer markets

Behavioural

Consumer
Psychographic
segmentation
Demographic

Socio-
economic
Profile

Geographic

(c) Brix, Konior, Richter 16

Segmenting organizational markets

Organizational
Macrosegmentation
size

Industry

Geographic
Organisational
location
segmentation

Microsegmentation

(c) Brix, Konior, Richter 17

Segmenting organizational markets

Choice Criteria
Macrosegmentation
Decision-making
unit structure
Decision-making
Organisational Process
segmentation
Buy class

Purchasing
organization
Microsegmentation
Organizational
innovativeness

(c) Brix, Konior, Richter 18

Evaluating market segments
Market attractiveness

Political, social and

Market factors
environmental factors
ƒsegment size Competitive factors ƒpolitical issues
ƒsegment growth rate ƒsocial trends
ƒnature of competition
ƒsegment profitability ƒenvironmental issues
ƒnew entrants
ƒprice sensitive
ƒcompetitive differentiation
ƒbargaining power of customers
ƒbargaining power of suppliers
ƒbarriers to market segment entry
ƒbarriers to market segment exit

(c) Brix, Konior, Richter 19

Company’s capability to compete

Exploitable
marketing assets

Managerial
Capability to
capability and Cost advantages
compete
commitment

Technological
edge

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 20
Target marketing strategies
Undifferentiated marketing

Marketing mix Whole market

Differentiated marketing
Focused marketing
Marketing mix 1 Segment 1

Marketing mix 2 Segment 2 Marketing mix

Marketing mix 3 Segment 3

Customized marketing

Marketing mix 1 Customer 1

Marketing mix 2 Customer 2

Marketing mix 3 Customer 3

Source: Jobber, D. "Principles and
(c) Brix, Konior, Richter practice of marketing" 21

Positioning

Key issues of positioning

z Market segmentation
z Target market
Where we want to compete?
z Differential advantage
How we wish to compete?

(c) Brix, Konior, Richter 22

Successful positioning

Clarity

Successful
Credibility Consistency
positioning

Competitiveness

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 23

Perceptual mapping
High price
z Identify a set of competing
brands A
z Identify important attributes B
C
z Conduct quantitative D
marketing research
Wide Narrow
z Plot brands on a two- product G product
dimensional maps range range
F
X
E

Low price

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 24
Repositioning strategies

Product

Same Different

Same Image Product

Target repositioning repositioning
market
Different Intangible Tangible
repositioning repositioning

Source: Jobber, D. "Principles and

(c) Brix, Konior, Richter practice of marketing" 25

References:
1 David Jobber, Principles and Practice of Marketing, 4th Edition, page 210
2 Wikipedia, http://en.wikipedia.org/wiki/Market_segmentation
3 Nokia, http://www.nokia.co.uk/nokia/0,,71691,00.html
4 Vertu, http://www.vertu.com/

(c) Brix, Konior, Richter 26

Market segmentation and
positioning

Thank you for your attention!

Angelika Brix
Bartosz Konior
Stephan Richter

(c) Brix, Konior, Richter 27