Market Segmentation, Targeting & Positioning

Identifies subgroups of the population based on demographic profile/specific characteristics:

• age
• gender
• religion
• race
• level of education

Example:

Abercrombie & Fitch are trying to reposition themselves to target 20-29 year olds in order to differentiate from their sister brand, Hollister. A&F hopes to be a premium label for those in their late twenties to give something for Hollister buyers to 'move onto' once they become 'too old' for Hollister.

Defining market categories based on where people live:

• regions
• cities
• countries

People in different geographical areas have different characteristics/needs, e.g.:

• McDonald's had to redesign its menu for India as people in Indian do not eat beef, so vegetarian options with spices has been introduced
• Aldi/Lidl supermarkets are more commonly found in poorer areas of the UK

Dividing the market in terms of income and profession

Uses socio-economic groupings

Examples:

Ford KA - Cheap, affordable

Ford Focus - Large, family car, targeted at families

Ford GT - Sleek, modern, expensive, for a niche market

Increase in disposable income has led to a huge increase in the popularity of luxury pet food, e.g. Lily's Kitchen

Splits market into groups based on patterns of the consumer, e.g.:

• Reasons for making purchases - emotional rewards
• Frequency of purchases - regular or one-off purchase
• Time of purchase - time of day, day in month, month in year
• Brand loyalty - reward cards
• Method of purchase - online, instore
• Triggers - response to marketing

Example:

Pret a Manger has launched Veggie Pret - a version of the brand that only sells vegetarian and vegan food. Started as a pop-up store but has led to three permanently opening as a result of its popularity.

Process of deciding which segment of the market to focus on

Influenced by:

• mission and objectives
• perceived level of demand
• degree of competition
• nature of the product
• understanding the needs/wants of a specific segment

Examples:

• Missguided target women in their late teens/twenties
• Marks & Spencer target women over 40
• Hasbro target children up to 12 years old, but also need to appeal to adults who buy the games
• Jack Daniels target men over 30 years old

When a firm targets a gap in a larger market (part of targeting process)

• May give a business first mover advantage
• Allows them to charge a premium price

Examples:

• Gluten free/lactose free food
• Unusual/extreme sporting equipment
• Mulberry
• Louis Voutton

When a firm targets a whole market rather than a specific segment.

• Can give a business a high volume of sales but often at a low price
• Customer needs/wants are less specific 
• Associated with economies of scale, e.g. higher production output

Examples:

• Cadbury
• Mars
• Unilever

Where a product is placed in the market in relation to its competitors. Can be achieved by changing elements of the marketing mix.

Influences include:

• internal constraints - budgets
• internal strengths - creativity, innovation
• market conditions - degree of competition
• external environment - state of economy

Concentrated:

• Involves targeting one or two segments
• Good for smaller businesses with limited funds/resources
• E.g. archery equipment store

Differentiated:

• Targets several segments
• Marketing Mix is adapted to appeal to each segment
• Only used by large companies due to high financial investment required
• E.g. colouring books

Undifferentiated:

• Segments ignored as company tries to target whole market with single product
• High sales volume and low marketing costs due to strong brand
• E.g. Cadbury, Coca Cola - widely used products