Lecture 5 Segmentation and Positioning

Strategic Marketing Management
Semester 1, 2024
12th
April
Lecture 5
Segmentation research;
Targeting and Positioning
Agenda
1. Segmentation research (we’ve discussed Segmentation

principles before the in-semester break)
2. Targeting
3
Recap – 1) Background characteristics
• Demographic characteristics (e.g., age, gender, location, subculture)
• Socio-economic characteristics (e.g., income, occupation, terminal education, social

class)
• Personality characteristics (e.g., Big Five, Minnesota Multiphasic Personality

Inventory [MMPI], Myers-Briggs Type Indicator [MBTI])
• Lifestyle characteristics (e.g., VALS, Activities, self-perception & roles, political &
moral opinions )
2) Attitudinal characteristics 3) Behavioural characteristics
• Benefit segmentation • Purchase behaviour
• Innovators
• Perceptions and preferences • Brand loyalty levels
• Those who view products in a • Consumption behaviour
similar way • High/Medium/Low usage
• Communication behaviour
• Opinion leaders, formers, followers
• Response to marketing
• Deal-sensitive groups, high
advertising sensitivity
• Relationship-seeking behaviour
• Those seeking transaction
versus
more collaborative
relationships
TOPIC 1 – SEGMENTATION SEARCH
3
Segmentation: principles
Criteria
• Distinct
• Meaningful
o
Demand difference
o
Communication difference
• Identifiable/Measurable
• Attractive
• Isolated
CRICOS code 00025B 7

Benefits of
segmentation
for marketing
It enables company capabilities to be matched with market opportunities or vice versa. This is particularly
important for small companies that have strengths which do not appeal to larger or wider markets e.g.
furniture upholsterers
It enables larger companies to design and target particular products more accurately, building a
stronger competitive position. e.g. bank’s range of financial services
Enable firms to split and identify growing & declining areas to help target business e.g. cruise
operators growing top-end or coffee shops offering more expensive specialist drinks
It avoids targeting one ‘standard’ products to customers who want something better tailored (as
competitors may offer. Eg. pink telephones)
CCRRIICCOSOS ccooddee 0000002255BB
A model for segmentation

research
Source: Based on Maier and Saunders (1990).

Clustering of objects in two-dimensional space
Multivariable Segmentation
Positioning
Criteria
• Importance
• Distinctive/pre-emptive
• Superior
• Communicable
• Affordable
• Profitable
CRICOS code 00025B 10

The positioning research process
Value proposition and competitor differentiation
The Value Proposition is…
• The promise we make to customers that encapsulates the position we
wish to take compared with competitors
We competitively position…
• To differentiate what we do from our competitors
We can differentiate what we do by offering benefits that are…

• Important to the customer
• Distinctive, and so can’t be easily copied by competitors
• Better somehow than competitors (quality, speed, size etc.)
• Able to be communicated to customers (e.g. visible or easily describable)
• Offered at an affordable difference in price
• Profitable to the company
More on differentiation later
Positioning is
about the
product/service Positioning Approaches
Quantitative Methods
Product attributes, price, value, quality level
Multidimensional scales show a combination of different values of
attributes and how this places competitors/brands in relation to one
another
Multidimensional scaling (MDS) is a means of visualising the level
of similarity of individual cases of a dataset. Sometimes known as
perceptual maps
This can be used with computers to attempt to reveal attributes
that cluster (as in data mining & big data)
However, you have to guess at the dimensions

Positioning
Differentiation may be on
design/quality, price,
distribution method, or anything
that can (logically) be put on a
continuum.
The end labels make the

dimension look like a dichotomy
– in most cases, however, the
dimension is truly a continuum.
Multi Dimensional Scale
based on quantitative data
Perceptual map of UK leisure centres
Perceived similarity
Perceptual map of leisure centres with dimensions identified
Perceptual map of leisure centres with dimensions identified and
segment ideal locations CCRRIICCOSOS ccooddee 0000250025BB
Perceptual map – example
TOPIC 2 – TARGETING
3
Summary - Marketing Strategy process
& underpinning analysis & support
Sequence of ‘competitive positioning’ process
Segment
• using the most appropriate method(s)
Target
• based on the attractiveness of segments
Competitive Positioning
• Determine how plan to differentiate and position
against competitors’ company, product or brand
Review
• Re-examine segmentation and attractiveness of
segments and possibly reposition
Market attractiveness and competitive position
CRICOS code 00025B

Targeting – the four basic questions (steps)
1. How do we define the market – what is its scope and constitution?
2. How is the market segmented into different customer groups?
3. How attractive are the alternative market segments?
4. How strong a competitive position could we take – where do our current

or potential strengths lie?
17
The process of targeting – a simplified process
Company’s
Market current and
Segment potential
Attractiveness strength
Target
Segment
Choice
S(tep)1 – Market structure
1. Customer-defined markets. Focusing beyond products that are ‘substitutes in kind’
(i.e., the same technology) to ‘substitutes in use’ (i.e., all the products and services
that may meet the same customer needs and problems). Example: Airbnb vs. Novotel
2. Competitor-defined markets. Focusing on all the competitors that could

possibly serve the needs of a group of customers, and reflects technological similarity,
relative production costs and distribution methods
Example: Novotel vs. Hilton
17
Market structure: the

product–customer matrix
• Products (offerings)
• Customers (segments)
©2017 Pearson Australia

S2 – Deciding on segmentation
1. Products or services offered
2. Market or markets served
3. Marketing to communities
17
S3: Factors affecting market segment attractiveness
→Porter 5 Forces
→Understanding PESTLE
customers
→PESTLE
→Porter 5 Forces
S4 - Factors affecting business strength
→SWOT
CRICOS code 00025B

S5-Target market selection
CRICOS code 00025B

Evaluating market targets for a hypothetical company
No
Alternative marketing strategies
SWOT
– consider strategic implications of target
market selection
This directly informs the strategic

options open to the organisation
• Where to deploy strengths
• Where to acknowledge/address
weakness
SWOT helps us to decide on

the target markets best suited
to our organization
What we will do next week:
• Assessment 2 (individual; case study report) briefing

• Check the A2 rubric and instruction/guidelines
• Suggestions and tips
• Marking rubric
• Group presentation starts from next week!

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Strategic Marketing Management

1. Segmentation research (we’ve discussed Segmentation

• Demographic characteristics (e.g., age, gender, location, subculture)

• Socio-economic characteristics (e.g., income, occupation, terminal education, social

• Personality characteristics (e.g., Big Five, Minnesota Multiphasic Personality

CRICOS code 00025B 7

A model for segmentation

Source: Based on Maier and Saunders (1990).

CRICOS code 00025B 10

We can differentiate what we do by offering benefits that are…

However, you have to guess at the dimensions

The end labels make the

CRICOS code 00025B

1. How do we define the market – what is its scope and constitution?

2. How is the market segmented into different customer groups?

3. How attractive are the alternative market segments?

4. How strong a competitive position could we take – where do our current

2. Competitor-defined markets. Focusing on all the competitors that could

Example: Novotel vs. Hilton

Market structure: the

©2017 Pearson Australia

1. Products or services offered

2. Market or markets served

CRICOS code 00025B

CRICOS code 00025B

This directly informs the strategic

SWOT helps us to decide on

• Assessment 2 (individual; case study report) briefing

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