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Segmentation and Positioning
Why do we need to segment?
• Because different consumer groups needs are different
• To maintain focus on the customer target segment
• To customise advertising according to target segment
Segmentation is Done
• Concentrated marketing
• Differentiated marketing
• Mass marketing
• Niche marketing
Basic Focus Strategies for Services
BREADTH OF SERVICE OFFERINGS
NUMBER OF MARKETS SERVED
Narrow
Many
Few
Wide
Service Focused
Unfocused (Everything
for everyone)
Market Focused
Fully Focused (Service and
market focused)
Source: Robert Johnston
Fully focused
• A fully focused organization provides a very limited range of services to a narrow and specific market segment
Market Focused
• A Market Focused concentrates on a narrow market segment but has a wide range of services
Service Focused
• The service focused firms offer a narrow range of services to a fairly broad market.
Unfocused
• Many organizations fall under the category of unfocused because they try to serve broad markets and provide a wide range of services.
Choosing a Segmentation Strategy • Adopting a fully focused strategy presents both
risks and opportunities.
• Developing recognized expertise in a well defined niche may provide protection against would be competitors and allow firms to charge a premium price.
• On the other hand, the market may be very small to generate the volume of business needed for the financial success.
Service Focused
• One reason that firms with a narrow Service line elect to serve multiple segment is to create a portfolio of customers that hedge against such risks.
• However as new segments are added , the firm needs to develop expertise in serving each segment, which may require a broader sales efforts and greater investment.
Market Focused • Offering a broad Service line to a narrowly
defined target segment often looks attractive because it offers the potential of selling multiple services to a single purchaser.
• But before adapting a market focused strategy the mangers need to ensure that their firms have operational capability to do an excellent job of each of the services selected
Contd….
• Managers also need to understand customer purchasing practices and preferences.
• When trying to cross sell additional services to the same client in a B2B context, many firms have been disappointed to find that decision on purchasing the new services are made by entirely different group of people within the client organization.
Segmentation Strategy
• Demographic
• Usage
• Brand Loyalty
• Attitudes and benefits
• Psychographic or lifestyle
• Culture and ethnic subculture
Positioning
• What the Services stands for?
• Mind-share
Positioning and segmentation strategies must have fit. A brand must be positioned to be maximally effective in attracting the desired target segment.
Positioning strategies
• Identify competitors
• Determine how competitors are perceived and evaluated
• Determine the competitors positions
• Analyze the customers
• Select the position
• Monitor the position
Role of positioning in Marketing Strategy
• Provides a useful diagnostic tool for defining and understanding the relationships between services and market
• Indentify market Opportunities for---
a) Introducing new product
b) Redesigning the existing product
c) Eliminating product
• Make other marketing mix decisions to respond to competitive moves.– Distribution– Pricing – Communication
Developing a
Market Positioning Strategy- Size- Composition- Location- Trends
MarketingAction Plan
MARKET ANALYSIS
INTERNAL ANALYSIS
- Resources- Reputation- Constraints - Values
COMPETITIVEANALYSIS
- Strengths- Weaknesses- Current Positioning
Define, AnalyzeMarket Segments
Select Target Segments
To Serve
ArticulateDesired Position
in Market
Select Benefitsto Emphasize to Customers
Analyze Possibilities forDifferentiation
Source: Adapted from Michael R. Pearce
Positioning of Hotels in Belleville:Price vs. Service Level
Expensive
Shangri-LaHigh
Service Moderate Service
Grand
Regency
Sheraton
Italia
CastleAlexander IV
Airport Plaza
PALACE
Atlantic
Less Expensive
Positioning of Hotels in Belleville:
Location vs. Physical Luxury (Fig.
3.5)
High Luxury
Shopping District and Convention Centre
Shangri-La
Moderate Luxury
Financial District
Inner Suburbs
Grand Regency
Sheraton
ItaliaCastleAlexander IV
Airport Plaza
PALACE
Atlantic
Positioning after New Hotel Construction:
Price vs. Service Level (Fig. 3.6)
Expensive
Shangri-LaHigh
Service Moderate Service
HeritageMandarin
New GrandMarriott
Continental
Regency
Sheraton
Italia
Alexander IVAirport Plaza
PALACE
Atlantic
No action?
Action?
Less Expensive
Castle
Positioning Decision
• Economic analysis should guide the decision• Segmentation commitment• Not change for change sake. To stick with the
advertising if it is working.• Make it easy for customers to remember/recall.
Use symbols, logos, etc. as a memory aid.• Be honest.