SummaryMarketing

MARKET SEGMENTATION

1 – DEFINITION

The process of grouping individuals of interest together in such a way that those who belong to the same group respond
relatively similarly to a marketing offering and those in different groups respond relatively differently. Variation within
groups is less than variation across groups on the relevant customer characteristics.
Market segmentation would guide companies in tailoring their product and service offerings to the groups most likely to
purchase them.
The essence of marketing strategy is depended on identifying segments that were potentially receptive to a particular brand
and product category.

Where to play affects the outcome more than how to play.
Traditional market segments are identified using characteristics such as:

• Demographics
• Psychographics
• Behavioral activities
• Technical knowledge
• Usage and purchase situations
• Benefits sought from the products

2 – TYPES OF MARKET SEGMENTATION

2.1 – Demographic Segmentation

Demographic segmentation sorts a market by demographic elements such as age, education, income, family size, race,
gender, occupation, nationality, and more. Demographic segmentation is one of the simplest and most used forms of
segmentation because the products and services we buy, how we use those products, and how much we are willing
to spend on them is most often based on demographic factors.

2.2 – Behavioral Segmentation

Behavioral segmentation divides markets by behaviors and decision-making patterns such as purchase, consumption,
lifestyle, and usage. For instance, younger buyers may tend to purchase body wash, while older consumer groups may lean

towards soap bars. Segmenting markets based off purchase behaviors enables marketers to develop a more targeted
approach.

2.3 – Psychographic Segmentation

Psychographic segmentation takes into account the psychological aspects of consumer behavior by dividing markets
according to lifestyle, personality traits, values, opinions, and interests of consumers

2.4 – Geographic Segmentation

Geographic segmentation creates different target customer groups based on geographical boundaries. Because potential
customers have needs, preferences, and interests that differ according to their geographies, understanding the climates
and geographic regions of customer groups can help determine where to sell and advertise, as well as where to expand your
business.

3 – BENEFITS FROM SEGMENTATION

Segmentation enables us to focus on specific customers, designing better offers, producing superior products, aligning
communications programs to reach those customers. Making more efficient and effective use of our scarce resources.

3.1 – Effective Segmentation

An effective segmentation, according to the question you are aiming to answer, will shows which benefits and features
matter to your customers. Or which customers are willing to pay higher prices or demand lower ones. Or the relative
advantages and disadvantages customers identify in your existing offerings.
You can use qualitative research to explore underlying motives and needs propelling current purchases and use
quantitative research to understand competitive strengths and vulnerabilities.
You can then fashion segments that are both revealing and applicable. Such segments will answer to:

• Reflect the company’s strategy. Which of the company’s strategic decisions would benefit from the guidance of a
segmentation?

• Which customers drive profits? A segmentation must identify groups that matter to a company’s financial
performance. To start, companies can rank their own customers by profitability (price willing to pay x dimension of
the cluster. A company should understand what makes its best customers as profitable as they are and then seek
new customers who share at least a couple of those characteristics. This is a fundamental issue that if it is treated
in the wrong way, it may lead to a wrong market segmentation.

• Which attitudes matter to the buying decision? To identify consumers’ values, attitudes, and beliefs as they relate
specifically to product or service offerings. It is important to match the psychographics traits with the
product/service provided. These characteristics can be expected to change along with customers.
MARKET SEGMENTATION IS A DYNAMIC PROCESS.

• What are my customers actually doing? Focus on actual customer behavior, in particular on their usage of the
product/service, loyalty and profitability. From historical data it is possible to understand a lot of information by
customer’s behaviors and needs. To confirm the trajectory that historical data are suggesting it is worth to conduct
a laboratory simulation to which special analytic techniques can be applied. CONJOINT ANALYSIS involves
presenting consumers with combinations of features. It then asks the consumers how willing they would be to
purchase the product in question if particular attributes were added or removed, or if the price changed. The
consumers then are segmented according to their degree of price sensitivity and desire for convenience

• Make sense to top executives. Failing to make itself understood by its internal constituency: senior management.
• Accommodate or anticipate changes in markets or consumer behavior. Effective segmentations are DYNAMIC.

First, they concentrate on consumers’ needs, attitudes, and behavior, which can change quickly rather then just
personality that is a more stable characteristic. Second, they are reshaped by market conditions, such as fluctuating
economics, emerging consumer niches, and new technologies.

3.2 – Gravity of decision Spectrum

By evaluating the expectations consumers bring to a particular kind of transaction. These can be located on a gravity
of decision spectrum, which will tell you how deeply you need to probe consumers’ motives, concerns, and even
psyches. Knowing how important a product or service is to your customers will help you decide which of their
expectations are most likely to reveal their willingness to purchase your product. For functional products it is
important to investigate factors as price sensitivity and brand loyalty of potential purchasers. If customers are facing
life-altering choice it is important to inquire deeply their held and beliefs.

3.3 – Segmentation OUTPUT

Segmentation enables us to focus on specific customers, designing better offers, producing superior products,
aligning communications programs to reach those customers. Making more efficient and effective use of our scarce
resources.

INTEGRATION OF DATA LEADS TO BETTER SEGMENTATION, re marketing (re targeting) is an instrument in this
sense. The main segment selection criteria are:

At the end of your market segmentation study, your results should meet 4 tests of actionability: measurable,
accessible, substantial and actionable.

MEASURABLE

You must be able to identify segmentation variables that are related to purchase of the product and develop a
descriptive profile of the market segment using a combination of variables.

ACCESIBLE

In addition to being able to identify the market segment, you must be able to reach them in an efficient and cost-
effective manner. Do they belong to specific chat groups, newsgroups, or subscribe to online publications? Perhaps
they subscribe to one or more computer magazines or have purchased from a specific catalog.

SUBSTANTIAL

The market segment must have the ability to purchase. For example, almost all college seniors want to have a new
Porsche or Corvette, but few can purchase such an expensive sports car.

ACTIONABLE

The market segment must produce the differential response when exposed to the market offering. That is, they must
be willing to purchase.

4 – CONCLUSIONS

Which method of market segmentation is most effective? Of course, it depends on the specific product or service
being considered. The preparation of content for advertisements or web pages would rely heavily on benefit
segmentation. The design of an economical automobile for a young single woman would, of course, rely heavily on
demographics as well as psychographics.
Once you understand the various market segments you are dealing with, the next step is to conduct product concept
tests that optimize your product to be fully appealing to your segments.

BRAND POSITIONING

1 - INTRODUCTION

Each brand tries to stake a particular claim of superiority that resonate with a particular type of consumer. The consumer’s
choice will depend on how strongly she perceives that a particular brand offers the best solution to her needs, in fact each
brand is positioned to appeal to a different customer need.

Brand positioning is the art of staking out a particular piece of mental space for a brand in the consumer’s mind by crafting
and communicating a differentiated positioning statement. It provides a strategic roadmap for creating powerful, resonant
and unique messages to help a company’s products and services stand out amid in the huge amounts of products in the
market.

2 – ESSENTIAL READINGS

2.1 - Brand Positioning

“Positioning is not what you do to a product. Positioning is what you do to the mind of a prospect” - The Battle for Your
Mind - Al Ries, Jack Trout

A Brand’s position represents its location vis-à-vis its competitors in the mental maps that consumers construct to represent
the range of possible solutions to their problems. Brand positions are a powerful tool that can help consumers to categorize
brands according to their similarities and differences. To be more precise brand positioning statement express how a
company whish to be perceived because at the end consumers define the position of a brand or product. It is comprised of
the key qualities and values that are synonymous with your company.

2.2 – Crafting a Positioning Statement

A strategic document that communicates the unique value the brand would offer to a particular target market segment. A
provocative positioning statement can make the difference between a brand’s getting lost in the sea of choices and standing
out as the best solution for the consumer.

It is a document developed for internal managerial audience in order to guide the tactical execution of the brand and it may
be the starting point for developing the marketing message. Positioning statement contains 4 essential components:

• For whom, for when, for where? An explicit description of the target market segment that helps consumers easily
discern which brands directly address their specific needs. This question needs to highlight:
▪ A particular type of person.
▪ A particular usage situation.
▪ A particular usage location.

• What VALUE? A simple, straightforward description of the unique value claim the brand offers, written from the
consumer’s viewpoint. There are 4 types of value that consumers can derive from a product or service:
▪ Economic value.
▪ Functional value
▪ Experiential value (intangible psychological and emotional values)
▪ Social value

• Why and How? Evidence that provides consumers with reasons to believe the brand’s claims.
• Relative to Whom? An explicit description of the competitive set in which the brand classifies itself and the

alternatives consumers may be considering.

The four components of positioning statements can be summarized in this general format:

For [target market], Brand X is the only brand among all [competitive set] that [unique value claim] because [reasons to
believe].

For [upscale consumers looking to make a design statement with their choice of water], Voss is the only brand among all
[bottled waters] that offers [the purest and most distinctive drinking experience] because [it derives from an artesian source
in southern Norway and is packaged in a stylish, iconic glass bottle].

2.3 – Staking out a UNIQUE SELLING PROPOSITION

Brand managers should craft positioning statements to focus on a single, most important claim that distinguishes the
product from the competition, rather than to include a list of all the attributes, benefits, and values offered by the brand.
Simple messages increase brand recall and receptivity.
A unique selling proposition is a type of value claim that offers a prospective customer a specific, unique, and superior
reason to purchase a product. A successful product had to be better than its competitors, even if cleaver advertisement can
convince customers at the beginning, the disappointing customer experience thereafter would eventually doom the product
to failure. Therefore, a unique selling proposition must hinge on a specific benefit that competitors could not copy.
In the ‘40s and ‘50s (rational advertising strategy) there was the believed that customers would chose the product according
to reasonable and logical argumets.
Since the ‘60s marketers realized that, when making purchasing decisions, consumers often rely on their “irrational”
emotions, memories, intuitions, dreams, and aspirations. This creative revolution in positioning strategies used creativity,
wit, intelligence, and storytelling to capture consumers’ imaginations.
Choosing whether to use a rational or emotional positioning appeal requires insight into three interacting factors:

• How customers chose and use the product.
• How competitors use rational or emotional appeals.
• How the firm’s brand and other product can support the positioning statement.

2.4 – The Three Cs Model

The Three Cs model of brand positioning encourages managers to analyze three key dimensions of their market situation
consumers, competition and company before deciding on a single most important claim regarding their product or service.

Consumer Analysis – RELEVANCE

Strong value claims should be relevant to consumers, addressing their fundamental needs or the jobs that they need the
product or service to accomplish. Therefor it is important to understand consumers need and behaviors. Relevance is also
established by clearly specifying a target market in the positioning statement and aligning the value claim with the specific
needs of that target market.

Consumer Analysis – RESONANCE

Strong value claims should resonate with consumers, providing them with a narrative that feels personally meaningful.
Claims can be made at three levels:

• Feature or Attribute-based – focus on a special feature, ingredient or capability of the product.
• Benefit-based – focus on the specific benefits customers receive from using the product.
• Value-based – focus on helping consumers achieve the values they hold to be important

For example, Harley-Davidson achieved iconic status by positioning its motorcycles as an antidote to the tedium and lack of
adventure that comes with being an upstanding citizen and professional.

Brands that are culturally resonant today will likely to be obsolete tomorrow. Managers should always be aware of that and
they must scan the social, cultural, economic, and competitive environments in order to understand when important
elements of the culture may change to reposition the brand to bridge new trends.

Consumer Analysis – Be REALISTIC

Finally, strong value claims should be realistic. Many positioning statements use exaggeration or other kinds of
overstatement that makes their claims less believable. Offering specific evidence to support a claim provides consumers
with reasons to believe it. Gillette uses computer animation to demonstrate how its razors lift and cut hairs, leaving skin
smoother with less irritation. Reliable recommendations are another form of evidence.
Evidentiary support for a value claim should help narrate the story the brand is trying to tell. Thus, for benefits- or values-
based claims, sometimes emotional or social evidence is more effective than hard, scientific evidence.

Competitive Analysis – Being DISTINCTIVE

“You do not merely want to be considered just the best of the best. You want to be considered the only ones who do what
you do.” – Jerry Garcia

Products and services generally contain 3 types of attributes that can be transformed into value claims and leveraged for
brand positioning:

• Unique Attributes – characteristics that are unique of that specific product made by that specific firm.
• Shared Attributes – characteristics of the product in common with competitors’ products (Points of Parity).
• Irrelevant Attributes – distinguishing characteristics of the product that provide consumers with no actual

economic, functional, experiential, or social value. For example, silk shampoo

An analysis of the relevant competitive set allows managers to discern which of their products’ attributes are distinctive and
which merely mimic those offered by its competitors. Points of Parity often represents characteristics shared with most
competitors. Consumers perceive them as must have features. Points of difference are those product or brand attributes,
benefits, or values that are unique to a particular competitor. To command a price premium over competitors a brand’s
position must contain a point of difference that is large enough to justify the higher cost to the consumer.

Two types of strategies allow managers to leverage their product or service’s points of difference:

• Vertical Positioning: highlights attributes that are shared among brands but stresses a particular brand’s superior
performance on those attributes. For example, an internet connection that is faster than competitors.

• Horizontal Positioning: adding new attributes, benefits, or values to attract customers. For example, organic food.

Marketers can visually represent the positions of their brands using a tool called perceptual mapping, a two-dimensional
or multidimensional graphical representation of how consumers perceive the brands in a product category.

Marketers can also construct a perceptual map not by directly questioning consumers, but rather by observing their daily
interactions with brands. The market research agency The Nielsen Company has developed a tool that scans the web for
consumer conversations about brands and then plots the words and phrases that most closely correlate with a particular
brand.

A visual inspection of a perceptual map allows managers to:

• To identify gaps in the market, represented by pieces of mental real estate to which no brand has yet laid claim.
• To understand how close or far away competitors’ positions are and identify which rivals may encroach on their

territory.

Competitive Analysis – Choosing DEFENSIBLE Terrain

To discern whether a particular product value claim is defensible, marketers need to think about which competitors must
be overcome and whether the company has the resources to occupy and hold that position over time. Brands can stake
defensible claims by:

• Being first to be positioned in a certain area, becoming “the original” (Levi’s).
• Being the most authentic in representing a value.
• Being louder than competitors.

Value claims at the features and attributes level leaves brands vulnerable to quick competitive imitation, leaving the brand
with an undifferentiated positioning. To know the customers means also to understand which are the unique benefits a
product can deliver and hinge the value claim on that unique benefit that competitors cannot deliver.

Competitive Analysis – Being DURABLE

Durable brand positions, whose appeal lasts over prolonged periods of time, provide continuity to a brand.

Company Analysis – Being FEASIBLE

Some positions are better than others from the company’s perspective. Managers should assess the feasibility of various
positioning statements to determine which ones the company can deliver against in its everyday practices. For a brand
positioning that must embrace the whole company it has to be lived and perceived in all its activities (Apple new HQ).

Company Analysis – Being FAVORABLE

Managers should also evaluate the relative favorability of various value claims to judge which ones allow the company to
capture more value in the marketplace. The company must create a direct and reinforcing link between what it says and
what it does. Living a particular positioning statement may require operational changes, organizational culture changes,
staff retraining, and investment in new areas—all of which add costs.

On the revenue side some positioning statements may offer the firm the opportunity to capture more value, while others
may offer less.

Company Analysis – Being FAITHFUL

An authentic brand demonstrates genuineness in the brand’s claimed position; its messaging, assertions and behaviors are
all supportive and aligned. Brand position is often co-created by customers (word of mouth), by its owners and other cultural
influences working together.

2.5 – Brand Repositioning

As markets change, or as unanticipated events occur, a company may need to reposition its brand. Brand repositioning is
changing the position of a brand in the minds of consumers vis-à-vis its competitors.

Balancing Consistency and Change

• For whom, for when, for where? Changing the target market, expanding the usage situation, or finding new places
where consumers can purchase or consume the product can often be a way to increase sales.

• What VALUE? Most repositioning efforts involve adding new value claims to resonate with changing consumer
needs. Managers need to be careful that new claims do not conflict with or undermine the brand’s existing
meaning, but rather build on it.

• Why and How? A brand repositioning can leave the fundamental value claim in place but offer more persuasive
evidence through the inclusion of a new ingredient or upgraded feature.

• Relative to Whom? Sometimes brand repositioning involves comparing the product or service to a new set of
competitors.

Repositioning an Identity Brand

Identity brands allow consumers to create and recreate themselves by communicating important things about their
aspirational attributes. Therefore, when a brand is repositioned, its existing customers may feel that their personal identity
is threatened, and the new target market value claim may not match with the previous one.

Gender bending – a strategy for repositioning a brand that has historically targeted one gender to attract the other.

Repositioning an identity brand can be dangerous and can play out in several negative ways:

• Existing consumers will leave the brand because it is no longer communicating the identity they wish to present.
• Existing consumers will fight against the brand’s repositioning by co-creating their own meaning for it, thereby

changing its position in the minds of other consumers.
• Existing customers will stay with the brand but devalue it due to its loss of identity.
• New customers will not be attracted to the repositioned brand because the memory trace of the old brand

positioning is too strong and unappealing.

To mitigate these risks, managers can use strategically the brand architecture:

• Gender Bending: Gillette to protect its masculine identity made “Gillette for Woman”
• Sub-Branding: for reaching out new target markets (Marc by Marc Jacobs; Coca-Cola Zero)

The real key to successful brand positioning is to find ways to seamlessly fit into consumers’ lives, rather than conquer their
minds. It is important to perceive and to persuade and to keep in mind understanding customers’ needs. Marketers need
to understand competitors and identify gaps that need to be filled; they need to understand the product technologies to
create a competitive advantage and to understand the best way to deliver that experience.

3 – SUPPLEMENTARY READING

3.1 – Positioning Differently

Managers should break out of unprofitable positioning patterns by considering three unique positioning strategies:

• Reverse Positioning: stripping away the expected points of parity in their product category and offering consumers
something less, and, at the same time, something more in their positioning statements (EasyJet removed meals
and services to deliver a cheaper flight)

• Breakaway Positioning: when brands find themselves stuck in low-opportunity product categories; this positioning
strategy provides a way to escape by leaping into a new category. Swatch attracted customer attention by
positioning the brand as a fashion accessory instead of as a functional object.

• Stealth Positioning: allows brands to conceal the true nature of their products by associating them with a different
category; AIBO robot by Sony was not reliable enough to assist consumers in their daily activities and Sony
repositioned it as pet. With this “low-expectations” positioning, consumers were delighted.

4 – KEY TERMS

breakaway positioning A strategy for positioning a reverse positioning A strategy for positioning a
product or service by deliberately disassociating it product or service in which managers strip away
from its normal product category and associating it attributes consumers expect in a mature product and
with a different one. add some surprising new ones.

gender-bending A strategy for repositioning a brand stealth positioning A strategy for positioning a
that involves taking a brand that has historically been product or service by associating a tainted product
positioned to appeal to one gender and repositioning with a category consumers embrace in order to
it for the other gender. overcome consumer resistance.

horizontal positioning Adding new attributes, unique selling proposition (USP) A type of value claim
benefits, or value for customers to consider. that offers a prospective customer a specific, unique,
and superior claim about a product or service that
identity brand A brand that derives most of its value provides a reason to purchase it.
from what it symbolizes and how it helps consumers
present their identities. Repositioning an identity value proposition The suite of benefits that a firm
brand is difficult because its consumers rely on it to promises to deliver to its customers to produce value
present their identities to others. in their lives.

irrelevant attributes Those things that are vertical positioning Highlighting attributes that are
distinguishing attributes of the product, but that shared among brands, but stressing a particular
ostensibly offer consumers no economic, functional, brand’s superior performance on those attributes,
experiential, or social value. using superlatives such as smaller, faster, and cheaper
to delineate a natural pecking order among brands.

INDEX

MARKET SEGMENTATION .....................................................................................................................................1
1 – DEFINITION .......................................................................................................................................................1
2 – TYPES OF MARKET SEGMENTATION ............................................................................................................1

2.1 – Demographic Segmentation ........................................................................................................................1
2.2 – Behavioral Segmentation.............................................................................................................................1
2.3 – Psychographic Segmentation ......................................................................................................................2
2.4 – Geographic Segmentation ...........................................................................................................................2
3 – BENEFITS FROM SEGMENTATION.................................................................................................................3
3.1 – Effective Segmentation ................................................................................................................................3
3.2 – Gravity of decision Spectrum.......................................................................................................................4
3.3 – Segmentation OUTPUT ...............................................................................................................................5

MEASURABLE..................................................................................................................................................6
ACCESIBLE ......................................................................................................................................................6
SUBSTANTIAL..................................................................................................................................................6
ACTIONABLE ...................................................................................................................................................6
4 – CONCLUSIONS .................................................................................................................................................6
BRAND POSITIONING.............................................................................................................................................7
1 - INTRODUCTION .................................................................................................................................................7
2 – ESSENTIAL READINGS ....................................................................................................................................7
2.1 - Brand Positioning..........................................................................................................................................7
2.2 – Crafting a Positioning Statement .................................................................................................................7
2.3 – Staking out a UNIQUE SELLING PROPOSITION ......................................................................................8
2.4 – The Three Cs Model ....................................................................................................................................9
Consumer Analysis – RELEVANCE .................................................................................................................9
Consumer Analysis – RESONANCE ................................................................................................................9
Consumer Analysis – Be REALISTIC ............................................................................................................ 10
Competitive Analysis – Being DISTINCTIVE ................................................................................................. 10
Competitive Analysis – Choosing DEFENSIBLE Terrain .............................................................................. 11
Competitive Analysis – Being DURABLE ...................................................................................................... 11
Company Analysis – Being FEASIBLE.......................................................................................................... 12
Company Analysis – Being FAVORABLE ..................................................................................................... 12
Company Analysis – Being FAITHFUL.......................................................................................................... 12

2.5 – Brand Repositioning ................................................................................................................................. 13
Balancing Consistency and Change .............................................................................................................. 13
Repositioning an Identity Brand ..................................................................................................................... 13

3 – SUPPLEMENTARY READING ....................................................................................................................... 14
3.1 – Positioning Differently ............................................................................................................................... 14

4 – KEY TERMS .................................................................................................................................................... 14
INDEX .................................................................................................................................................................... 15