West, Ford, & Ibrahim
Strategic Marketing, 3rd edition
Chapter 5: Segmentation,
targeting, and positioning
strategies
© Douglas West, John Ford, and Essam Ibrahim, 2015. All rights reserved.
A. INTRODUCTION
1. Overview and Strategy Blueprint
2. Marketing Strategy: Analysis &
perspectives
C. WHERE DO WE WANT TO BE?
B. WHERE ARE WE NOW?
3. Environmental & Internal Analysis:
Market Information & Intelligence,
Financial Analyses
4. Strategic Marketing Decisions,
Choices & Mistakes
5. Segmentation, Targeting
& Positioning Strategies
6. Branding Strategies
7. Relational & Sustainability
Strategies
D. HOW WILL WE GET THERE?
E. DID WE GET THERE?
14. Strategy Implementation, Control
& Metrics
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution Strategies
11. Marketing Communications Strategies
12. International Marketing Strategies
13. Social and Ethical Strategies
Segmentation
Targeting
Positioning
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Perceptual Mapping
Learning Objectives
 To understand the ways in which companies can segment
markets
 To discern how marketers can measure the effectiveness of
identified target segments
 Be able to differentiate among the various ways in which
marketers can reach the identified market segments
 Be able to explain the importance of positioning the product in
the head of the target consumer
 To know how to use important tools for perceptual mapping
 To know how to achieve a powerful position within the mind of the
target consumer
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Introduction
• Market segmentation is vital for company
success
• Dividing the market into reasonable segments is
the starting point
• Develop a series of strategic goals & strategies
to reach the identified target
• This chapter will present possible foundations
for effective segmentation & mechanisms
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Foundations for effective segmentation
• It is unlikely for any company to appeal to an entire
market
• Identify segments of consumers
• Tailor offerings to meet the wants & needs of that
particular group of consumers
• Market segmentation involves the identification of
subgroups of consumers with similar wants and
buying requirements
• This helps the firm configure its marketing mix
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
Behaviouristic
Psychographic
Geography
Demographic
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
Geography
• Focuses on the where issue
• Local segmentation often used by small firms
• Keeps the market confined to a manageable area
• Global segmentation : The company sees the entire
world as its appropriate playing field
– Potential for cultural inappropriateness
• Need to also consider topography
– Costs of overcoming physical obstacles
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
Demographic
• Using a series of demographic variables
– Gender
– Age
– Cohorts of society
• Moments and events in late adolescence / early adulthood (17-23 yrs)
• This may not work globally
– Level of Education
– Level of Income
– Occupation
– Religion
– Ethnicity
– Family size
– Family life cycle stage
• Life conditions that have a potential impact of product/service purchase
decisions
– Social class/status
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
Psychographic Bases
• Perceptual issues
• Combining individuals who are psychologically similar in their orientation
• Excellent potential for effective targeting segments, understanding how the
segments live their daily lives
• Lifestyle
– The ways in which individuals choose to live their lives
•
Personality
– Similar personality types
– Kotler (2003) lists four main variations of personality: compulsive, gregarious,
authoritarian and ambitious
•
Core Values
– Match its core values with those of the segments, building positive associations
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
VALS Typology
• A multi-based approach to segmentation incorporating both
psychological & demographics is developed by SRI International
• For the US market SRI identified eight separate groups for
segmentation purposes
–
–
–
–
–
–
–
–
Actualizers (10 % of population)
Fulfilleds (11% of population)
Experiencers (13% of population)
Achievers (14% of population)
Believers (17% of population)
Strivers (12% of population)
Makers (12% of population)
Strugglers (12% of population)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Criteria for identifying segments
Behaviouristic
• Grouping consumers having similar uses for, and
responses to particular products or services
– Usage rate
– Loyalty level
• Brand insistence, brand loyalty, split loyalty, shifting loyalty, no
loyalty
– Creation of special events
– Benefits segmentation
• In terms of key benefits that consumers seek from the use of some
product/service
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Cross-border segmentation and
international challenges
• A variety of new challenges faced by companies going
outside their country borders
–
–
–
–
Culture is single biggest challenge
Study individual segments to determine choice drivers
Combine secondary data with on-the-ground observations
Phenomenology – studying consumers as they go through daily
activities
– Localization often depends on how similar are the uses of the
product in the new context to the home uses
– Diaspora marketing – using immigrants from the home country
as targets in new international markets
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.1 - Principles of Market Segmentation
Who
buys
Market Segments
Size?
Access?
Differentiated?
customer /
client
characteristics
Values
“soft”
“hard”
Psychographics
Attitudes
Lifestyle
Socio-economic &
demographic
Geography
Benefits
Subjective
Perceptions
Preference trade-offs
What is
bought
and why
customer /
client
behaviour
Usage
Price sensitivity
Objective
Source: Palmer & Millier (2004)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Promotional response
Loyalty/ repeat purchase
Segmentation Tools
Cluster Analysis
Conjoint Analysis
Discriminant Analysis
Multidimensional Scaling
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Segmentation Tools
• Main tools used are cluster analysis, conjoint
analysis, discriminant analysis and perceptual
mapping
• Cluster Analysis
– It is a multivariate technique
– Within-group differences are minimized and the betweengroup differences are maximized
• Conjoint Analysis
– Uses a series of possible product/service attribute
combinations
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Segmentation Tools
• Discriminant Analysis
– Identify a series of variables that help to discriminate the
members of one or more groups
• Multidimensional Scaling
– Visually demonstrate how particular consumers view the
various offerings
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Targeting
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Targeting
• This involves deciding on the segment to serve and the
best action plans to reach the identified segment
• As per Derek F Abell (1980) the firm faces the following
choices
–
–
–
–
–
Single segment concentration
Selective specialization
Product specialization
Market specialization
Full market coverage
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Measuring effectiveness of target segments
• As per Kotler (2003) segments must be
–
–
–
–
–
Measurable
Accessible
Substantial
Differentiable
Actionable
• Trade off - production and marketing
– Unrestrained marketing
– Production mentality
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Targeting improvement
• Before identifying segments, consider whether
collective segment traits can be profitable:
– Self-selection – most appropriate for large customer
bases with small individual sales
– Scoring models – development of questions that allow
scoring to categorize customers
– Dual-objective segmentation – covert unreachable
segments into actionable groups through
reclassification
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Positioning
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Positioning
•
•
•
•
Perceptual position within the mind of the consumer
Target consumer has a clear & distinctive image in mind
Keep the brand name at the top of the choice
Al Reis and Jack Trout - ladder inside every consumers
head for each and every product & service
• Get to the top rung
• Being on the top of the ladder allows the firm to enjoy
consumer franchise
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Consumer Franchise
• The ability for the firm to keep its
product/brand/company name foremost in the
mind of the target consumer
• It is considered as bankable asset
• Consumer franchise has two components
– Behavioral
– Attitudinal
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
The Positioning Statement
• The positioning statement serves as the
foundation for all of the positioning efforts
• The three key components:
– (1) the audience and context
– (2) the value proposition, and
– (3) the action components that will be used by the company to
deliver the value proposition to the audience in the context
identified.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.2 - Sample Positioning Statement
[Convince] To business managers and professionals
engaged in making time sensitive decisions about
international business,
[That] DHL delivers on time
[Because] its pickup, transportation and delivery
system is wholly-owned and managed by DHL
personnel, not by third party providers.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.3 - The 4 C‘s of Positioning
• Clarity: in terms of target market and
differential advantage
• Consistency: maintain a consistent message
• Credibility: in the minds of the target customer-they must believe the claim
• Competitiveness: the differential advantage
should offer the customer something of value
competitors cannot provide (competitors should
be named if possible)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.4 - Examples of Positioning
Statements
Apple offers …. the best personal
computing experience to students,
educators, creative professionals
and consumers around the world
through its innovative hardware,
software and Internet offerings.
The Chrysler PT Cruiser is an
inexpensive, small car, that is
versatile, fun to drive, and will
appeal to active singles and young
couples with children who
otherwise would have bought an
SUV or a minivan.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.5 - Perceptual Mapping: Mars
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Figure 5.6 - Perceptual Map UK
Confectionery Brands
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Perceptual Mapping
• It is the visual representation of the different
competitive brand offerings/objects of interest in
perceptual space
• It represents a map of various offerings within
the minds of the target consumers
• “Perception equals reality”
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Positioning and the importance of
consistency
• The key strategic issue associated with
positioning is to present a clear and consistent
message to the target audience
• The company that constantly tinkers with image
stands the chance of confusing its target market
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Latest Thinking: Real-Time Experience
Tracking (RET) – Macdonald et al. 2012)
•
•
•
•
•
•
•
Ethnography is an effective tool involving observations and personal
shadowings of consumers to gain behavioural insights.
Customer fills out a survey at beginning of the month about a particular
product group and brands in the group.
Customers use their mobiles to record brand interactions throughout the
month.
Four-character codes are used for customer texts reflecting positivity of
each experience.
Customers then fill out an online diary with greater detail about experiences.
The last step involves a second survey reflecting any changes in the brand
resulting from the interactions.
This allows the development of touchpoint impact matrices.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Latest Thinking: The Building of
Superconsumers (Yoon et al. 2014)
• This approach involves companies targeting their best consumers
for further growth to become superconsumers.
• Avid customers are passionate and interested in new variants.
• Builds on the Pareto Principle (80-20 Rule).
• Superconsumers are heavy users who engage with the brand
economically as well as attitudinally.
• These consumers are valuable because they are already buying the
products so they are easy to reach, they are particularly open to
digital marketing efforts, and they are a rich focus for new product
development.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Conclusion
• Companies that approach the process of segmentation, processing
and positioning as a series of logical steps, enhance their chance of
success.
• The company must find appropriate target consumers, understand
them, effectively reach them and grab a position inside their heads.
• The company must also avoid the lure of change for the sake of
change and focus on consistency.
• This requires keeping up with the perceptions of consumers and
continuing to build and maintain consumer franchise.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition