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Marketing Segmentation Targeting And Positioning Case Studies Pdf

marketing segmentation targeting and positioning case studies pdf

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TARGETING, SEGMENTS AND POSITIONING

Market segmentation is a process of dividing a heterogeneous market into relatively more homogenous segments based on certain parameters like geographic, demographic, psychographic, and behavioural. It is the activity of dividing a broad consumer or business market , normally consisting of existing and potential customers , into sub-groups of consumers known as segments based on some type of shared characteristics.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments — that is, those segments that are likely to be the most profitable or that have growth potential — so that these can be selected for special attention i.

Many different ways to segment a market have been identified. Business-to-business B2B sellers might segment the market into different types of businesses or countries. While business-to-consumer B2C sellers might segment the market into demographic segments, lifestyle segments, behavioural segments, or any other meaningful segment.

Market segmentation assumes that different market segments require different marketing programs — that is, different offers, prices, promotion, distribution, or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments, but also to develop profiles of key segments in order to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning.

That is, a market is segmented, one or more segments are selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets. Market segmentation is the process of dividing up mass markets into groups with similar needs and wants.

The business historian, Richard S. Tedlow , identifies four stages in the evolution of market segmentation: [4]. The practice of market segmentation emerged well before marketers thought about it at a theoretical level.

Retailers, operating outside the major metropolitan cities, could not afford to serve one type of clientele exclusively, yet retailers needed to find ways to separate the wealthier clientele from the "riff raff". One simple technique was to have a window opening out onto the street from which customers could be served. This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century, was to invite favored customers into a back-room of the store, where goods were permanently on display.

Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients. Samuel Pepys, for example, writing in , describes being invited to the home of a retailer to view a wooden jack. Evidence of early marketing segmentation has also been noted elsewhere in Europe.

A study of the German book trade found examples of both product differentiation and market segmentation in the s. Contemporary market segmentation emerged in the first decades of the twentieth century as marketers responded to two pressing issues. Demographic and purchasing data were available for groups but rarely for individuals and secondly, advertising and distribution channels were available for groups, but rarely for single consumers.

Between and , George B Waldron, working at Mahin's Advertising Agency in the United States used tax registers, city directories, and census data to show advertisers the proportion of educated vs illiterate consumers and the earning capacity of different occupations, etc. Thus, segmentation was essentially a brand-driven process.

Wendell R. Smith is generally credited with being the first to introduce the concept of market segmentation into the marketing literature in with the publication of his article, "Product Differentiation and Market Segmentation as Alternative Marketing Strategies. However, with the advent of digital communications and mass data storage, it has been possible for marketers to conceive of segmenting at the level of the individual consumer.

Extensive data is now available to support segmentation at very narrow groups or even for the single customer, allowing marketers to devise a customised offer with an individual price which can be disseminated via real-time communications. The limitations of conventional segmentation have been well documented in the literature. Market segmentation has many critics. But in spite of its limitations, market segmentation remains one of the enduring concepts in marketing and continues to be widely used in practice.

One American study, for example, suggested that almost 60 percent of senior executives had used market segmentation in the past two years. A key consideration for marketers is whether to segment or not to segment. Depending on company philosophy, resources, product type, or market characteristics, a business may develop an undifferentiated approach or differentiated approach. In an undifferentiated approach, the marketer ignores segmentation and develops a product that meets the needs of the largest number of buyers.

In consumer marketing, it is difficult to find examples of undifferentiated approaches. Even goods such as salt and sugar , which were once treated as commodities, are now highly differentiated. Consumers can purchase a variety of salt products; cooking salt, table salt, sea salt, rock salt, kosher salt, mineral salt, herbal or vegetable salts, iodised salt, salt substitutes, and many more.

Sugar also comes in many different types - cane sugar, beet sugar, raw sugar, white refined sugar, brown sugar, caster sugar, sugar lumps, icing sugar also known as milled sugar , sugar syrup, invert sugar, and a plethora of sugar substitutes including smart sugar which is essentially a blend of pure sugar and a sugar substitute. Each of these product types is designed to meet the needs of specific market segments. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods.

Sugars marketed to consumers appeal to different usage segments — refined sugar is primarily for use on the table, while caster sugar and icing sugar are primarily designed for use in home-baked goods. A number of factors are likely to affect a company's segmentation strategy: [31]. The process of segmenting the market is deceptively simple. Seven basic steps describe the entire process including segmentation, targeting, and positioning.

In practice, however, the task can be very laborious since it involves poring over voluminous data, and requires a great deal of skill in analysis, interpretation, and some judgment.

Targeting comprises an evaluation of each segment's attractiveness and selection of the segments to be targeted. Positioning comprises the identification of optimal position and development of the marketing program. The market for a given product or service known as the market potential or the total addressable market TAM. Given that this is the market to be segmented, the market analyst should begin by identifying the size of the potential market.

For existing products and services, estimating the size and value of the market potential is relatively straightforward. However, estimating the market potential can be very challenging when a product or service is totally new to the market and no historical data on which to base forecasts exists.

A basic approach is to first assess the size of the broad population, then estimate the percentage likely to use the product or service and finally to estimate the revenue potential. Another approach is to use a historical analogy. To support this type of analysis, data for household penetration of TV, Radio, PCs, and other communications technologies is readily available from government statistics departments.

Finding useful analogies can be challenging because every market is unique. However, analogous product adoption and growth rates can provide the analyst with benchmark estimates, and can be used to cross-validate other methods that might be used to forecast sales or market size.

A more robust technique for estimating the market potential is known as the Bass diffusion model , the equation for which follows: [34]. The major challenge with the Bass model is estimating the parameters for p and q. However, the Bass model has been so widely used in empirical studies that the values of p and q for more than 50 consumer and industrial categories have been determined and are widely published in tables.

A major step in the segmentation process is the selection of a suitable base. In this step, marketers are looking for a means of achieving internal homogeneity similarity within the segments , and external heterogeneity differences between segments. In addition, the segmentation approach must yield segments that are meaningful for the specific marketing problem or situation.

For example, a person's hair color may be a relevant base for a shampoo manufacturer, but it would not be relevant for a seller of financial services. Selecting the right base requires a good deal of thought and a basic understanding of the market to be segmented.

In reality, marketers can segment the market using any base or variable provided that it is identifiable, substantial, responsive, actionable and stable.

For example, although dress size is not a standard base for segmenting a market, some fashion houses have successfully segmented the market using women's dress size as a variable.

Marketers normally select a single base for the segmentation analysis, although, some bases can be combined into a single segmentation with care. For example, geographics and demographics are often combined, but other bases are rarely combined. Given that psychographics includes demographic variables such as age, gender, and income as well as attitudinal and behavioural variables, it makes little logical sense to combine psychographics with demographics or other bases.

Any attempt to use combined bases needs careful consideration and a logical foundation. The following sections provide a detailed description of the most common forms of consumer market segmentation. Geographic segmentation divides markets according to geographic criteria. In practice, markets can be segmented as broadly as continents and as narrowly as neighborhoods or postal codes.

The geo-cluster approach also called geodemographic segmentation combines demographic data with geographic data to create richer, more detailed profiles. They classify residential regions or postcodes on the basis of census and lifestyle characteristics obtained from a wide range of sources. This allows the segmentation of a population into smaller groups defined by individual characteristics such as demographic, socio-economic, or other shared socio-demographic characteristics.

Geographic segmentation may be considered the first step in international marketing, where marketers must decide whether to adapt their existing products and marketing programs for the unique needs of distinct geographic markets. Tourism Marketing Boards often segment international visitors based on their country of origin.

A number of proprietary geo-demographic packages are available for commercial use. Geographic segmentation is widely used in direct marketing campaigns to identify areas that are potential candidates for personal selling, letter-box distribution, or direct mail.

Geo-cluster segmentation is widely used by Governments and public sector departments such as urban planning, health authorities, police, criminal justice departments, telecommunications, and public utility organisations such as water boards.

Segmentation according to demography is based on consumer- demographic variables such as age, income, family size, socio-economic status, etc. Typical demographic variables and their descriptors are as follows:. The use of multiple segmentation variables normally requires analysis of databases using sophisticated statistical techniques such as cluster analysis or principal components analysis.

These types of analysis require very large sample sizes. However, data collection is expensive for individual firms. For this reason, many companies purchase data from commercial market research firms, many of whom develop proprietary software to interrogate the data. The labels applied to some of the more popular demographic segments began to enter the popular lexicon in the s. Psychographic segmentation, which is sometimes called psychometric or lifestyle segmentation, is measured by studying the activities, interests, and opinions AIOs of customers.

It considers how people spend their leisure, [55] and which external influences they are most responsive to and influenced by. Psychographics is a very widely used basis for segmentation, because it enables marketers to identify tightly defined market segments and better understand consumer motivations for product or brand choice. While many of these proprietary psychographic segmentation analyses are well-known, the majority of studies based on psychographics are custom designed.

That is, the segments are developed for individual products at a specific time. One common thread among psychographic segmentation studies is that they use quirky names to describe the segments. Behavioural segmentation divides consumers into groups according to their observed behaviours.

Segmentation, Targeting, and Positioning

Customers have unique requirements, aspirations and satisfaction levels. Each customer group — or market segment — has specific expectations and retail marketers must develop retail brands and concepts which cater for the needs of the segment targeted. Having decided on which segment or segments to target, retailers position their brands with an image with which the targeted customers identify. Market segmentation, targeting and positioning is a fundamental process in modern retail marketing strategy. The key decisions and the steps necessary for successful implementation are examined. Dibb, S. Report bugs here.

Effective market segmentation requires an understanding of the market and the skilled art of finding the appropriate segments. TRC gives four examples of this method's application with results. Companies segment their markets to improve their competitiveness and profitability in fundamental ways:. Very often, companies shape their market segmentation using the results of market research and analysis. Market segmentation research is not designed to shape the market.


Only then a targeting strategy can be directed effectively for precise positioning to follow. The rationale of this study is to reveal the importance of market segmen-.


Market segmentation: Types, benefits and best practices

4 Types of Market Segmentation With Examples

Eight Benefits of Market Segmentation

Learn about the 4 most common types of market segmentation, plus some other ones that you may have missed. Market segmentation is an increasingly important part of a strong marketing strategy and can make all the difference for companies in competitive market landscapes, such as e-commerce. When up against a range of online competitors, effective communication is the best way to differentiate your business. Market segmentation offers an opportunity to pinpoint exactly what messaging will drive your customers to make a purchase. The 4 basic types of market segmentation are: 1. Demographic Segmentation 2. Psychographic Segmentation 3.

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By: Sunil Gupta. Abstract This Reading introduces two of the integral parts of any marketing strategy: segmentation and targeting. It covers, first, all of the methods, techniques, and variables with which a business first uncovers the full range of its potential customers and then distinguishes between them. It then takes up how a company judges the potential of each market segment, selects the segments worth pursuing, and designs marketing programs to serve them. The Reading includes two interactive illustrations. Both drive the students to think more carefully about segmentation and targeting.

Culture and Positioning as Determinants of Strategy pp Cite as. The three major steps of segmentation, targeting and positioning are widely considered to be central to the decision and planning process of marketing with the purpose of identifying and selecting potential buyers and communicating distinctive product benefits in the market. This chapter considers literature relating to segmentation, targeting and positioning, and finally, the strategic role of positioning in segmentation and targeting.

Decrease churn. Increase customer lifetime value. Reduce cost to serve.

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MARKET SEGMENTATION POSITIONING AND TARGETING

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3 Comments

  1. Jeff N.

    09.05.2021 at 03:10
    Reply

    This strategy involves dividing the market into segments and developing products or services to these segments. A target marketing strategy is.

  2. Falerina L.

    09.05.2021 at 19:58
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  3. Melony86

    16.05.2021 at 04:58
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    So, picking up correct product development and marketing strategy is vital for the company's success. Globalization has brought people together.

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