3.3.3 Making marketing decision: segmentation, targeting, positioning

Most markets can be subdivided in several different ways. Eg in WH Smith magazine racks, sections for men, women, children etc (more for women).

MS acknowledgement by companies that customers not all the same. Market can be broken down into smaller segmentations where customers share common cahracteristics eg age/gender.

Successful segmentation increases customer satisfaction + provide scope for increasing profits, as customers more likely to pay higher price if product focused purely on what they're interested in. Useful for small companies breaking into established market.

Large companies, MS involves 2 possibilities: 
 - add one niche product to portfolio
 - multiple segmentation, where wide portfolio of niche brands can add up to market leading position. 

1) Conduct research into different segments
2) See if they have common tastes/habits eg younger readers may be more focused on fashion
3) Identify segment you wish to focus on + conduct qualitative research into customer motivations + psychology
4) Devise prodcut designed for specific segment. May only achieve 1% market share, but if market is big enough, could be highly profitable

3 main benefits:
 1) Improved sales volumes. Eg, when Xbox 360 + PS3 about to be launched, Nintendo released Wii, aimed at families rather than young men. Ended up being new, differentiated mass market product. Huge sales volume.
 2) Increased prices. Eg, Center Parcs managed to identify segment in UK holiday market of "upmarket Butlins" + holiday camps, effectively became sole supplier for this.
 3) Increased diversification + therefore security. If sales slip due to fashion change in one segment, other products in different segments can keep sales revenue up. Eg shares in Crocs fell from $68 in Oct 2007 - $1.50 in Nov 2008 as Crocs went out of fashion. Would have been more 'comfortable' for bisiness if it had brands in several segments instead of one mass-market prodcut.

Demographic: eg daytime TV older demographic, later TV younger demographic.

Geographic: eg region/country. Eg, Irn Bru always been concentrated in Scotland. Following 3 year marketing push into England, by 2014 57% sales came from England + Wales.

Income: more relevant than ever, b/c income + wealth distribution more significantly unequal in recent decades. Eg market of eating out. In London, price of evening meal varies from £10 - £200 per person. Means businesses have to think about whether they want to be involved in every income segment, or just one. Eg Tragus operates 300 restaurants in £10-£20 per person segment, under brands such as Bella Italia + Cafe Rouge. D&D London - £50 per person segment. By specialising, can learn about their market + make fewer mistakes.

Behavioural: Eg for fasion, fashion leaders + fashion followers. To do this successfully, need to understand market extremely well.

Deciding which segment the business is going to target. Take into account own strenths, both real + based on image.

Also important to consider:
 - potential size of each segment (volume + value)
 - potential growth rate w/in each segment
 - whether there's rival business w/ better fit w/segment
 - whether an existing producer has alrady got foothold in segment
 - accessinbility of each possible target audience

Having decided which segment to target, move onto positioning. Decision may be made to aim for centre of segment, eg all young men. Or may be ot only target heavily committed gamers. Eg, for Apple, positioning was 'accessible + easy to use', rather than 'for geeks'.

Decision on positioning crucial. Me-too approach rarely works. Best approach to identify position w/in segment that will appeal strongly to minority as opposed to appealing a bit to the many.

Eg Aldi's position w/in UK's price-motivated segment of grocery market. About having a good time, not about 'low, low prices' compared to competitors eg Asda, Lidl + Iceland. Sensible rather than cheapskate.

Attempt to creat products/services that have univeral appeal. Aims product at whole market. Intention that everyone should be consumer of product eg Coca-Cola.

Ultimate prize of mass marketing is the creation of generic brands. These are brands that are entirely associated with the product that customers treat the brand name as the product category eg Coke or Hoover.

Very small segment of much larger market. Involves identifying the needs of the consumers that make up the niche. Specialised product/srvice then designed to meet the needs of these consumers. Tend to sell in low volumes - higher prices.

Small niche operators lack the economies of scale required to compete on price w/ larger, established operators. Instead, small firm could try to find small, profitable niche.

Sell specialised, differentiated products that are designed to appeal to their specific target market. Van exploit low price sensitivity created by product differentiation by raising price. Total revenue will rise after price increase as fall in sales volume less than price increase

Key issues: authenticity + ability to gain true understanding of niche.

Any evidence of growth in sub-sector of market migh encourage company to launch niche product now, even if sector is small, to establish sizeable market share in case sector expands.

Go where young go. Positions business at forefront of new tastes + habits. Sometimes will lead to short term fads, but other times company might find itself at centre of sales boom eg Crocs.

Follow young companies. Approach taken by 'once-young-but-now-cash-loaded' IT companies eg Google, Facebook + Twitter. Can easily set up next Snapchat or Whatsapp.