Market Segmentation Strategies

- Targeting a brand only to specific groups of consumers who share well-defined and relevant characteristics
- Marketers need to understand the wants and needs of different consumer segments.
- Market segmentation is an important aspect of consumer behaviour.
- Consumers can be segmented according to many dimensions, including product usage, demographics (the
objective aspects of a population, such as age and sex), and psychographics (psychological and lifestyle
characteristics).
- Emerging developments, such as the new emphasis on relationship marketing and the practice of database
marketing, mean that marketers are much more attuned to the wants and needs of different consumer
groups.

Use of Market Segmentation

an organisation targets its product, service, or idea only to specific groups of consumers rather than to
everybody which could also mean that other consumers who don’t belong to this target market aren’t attracted
to it.

Lifestyle segmentation typologies research projects that cluster a large group of consumers into a set of
distinct lifestyle groups

A general lifestyle segmentation study places a large sample of respondents into homogenous groups
based on similarities of their overall preferences.

A product-specific segmentation study tailors questions to a product category. For example, if a researcher
wants to conduct research for a stomach medicine, she might rephrase the item, “I worry too much” as, “I get
stomach problems if I worry too much.” This allows her to more finely discriminate among users of competing
brands.

Cultural Segmentation
- Dividing the market based on cultural segments to tailor marketing strategies more effectively.
- e.g. Malaysia as a multicultural country; customised products and marketing campaigns that reflect their
cultural heritage and preferences.

​The Consumption Situation

- A consumption situation includes a buyer, a seller, and a product or services, as well as many other
factors such as the reason we want to make a purchase and how the physical environment makes us feel.
- Marketers need to understand the patterns of purchasing specific items for specific time, occasions and
feelings, in order to coincide with situations in which consumers are most prone to purchase.
- If we systematically identify important usage situations, we can tailor market segmentation strategies to
ensure that our offerings meet the specific needs these situations create
Positioning Strategy (Under Brand Meaning CH3)
- A fundamental component of a company’s marketing efforts as it uses elements of the marketing mix (i.e.,
product design, price, distribution, and marketing communications) to influence consumers’ interpretation of
its meaning in the marketplace relative to its competitors
- Brand Meaning live in consumer’s mind; Customers are not just buying a product or service, but also they
are buying a story
- This meaning- making may be more important to consumers than colour, packaging or styling

Perceptual Positioning (Under Perception)

Consumer Perception
- consumers interpret a product base on their past experiences and knowledge of the product category and
existing brands
- Perception includes both functional attributes (features, price) and symbolic attributes (brand image and
status).

Market Position
- A brand’s market position is the perceived image and value of the brand in the mind’s of consumers relative
to its competitors.
- this perception often influences consumer preferences more than the actual functionality of the product.

Marketing Mix
- the marketing mix includes product design, price, distribution and marketing communications.
- marketers use these elements to shape consumer perceptions and create a desired market position.

Various Dimensions to carve out a brand’s position in a market place

- Lifestyle
This dimension associates the brand with a particular way of life or values. Brands positioned by lifestyle
appeal to consumers’ aspirations and self-image, aiming to align the brand with the lifestyle they want to
project.
Example; Apple markets its products, especially the iPhone, as part of a sophisticated and innovative
lifestyle. The brand appeals to consumers who value cutting-edge technology, sleek design, and a
modern, connected lifestyle.

- Price Leadership
This dimension focuses on offering the best value for the price. Brands positioned as price leaders
appeal to cost-conscious consumers looking for affordability without compromising on quality.
Example: L’Oréal sells its Noisôme brand face cream in upscale beauty shops at a high price, while its
Plenitude brand is available at a lower price in discount stores. Despite having the same chemical
formula, the price difference creates different perceptions of quality and exclusivity.
- Attributes
This dimension highlights specific features or benefits of a product. Brands positioned by attributes
emphasise what makes their product superior or unique compared to others.
Example1: Dyson positions its vacuum cleaners as technologically advanced with superior suction
power and innovative design. The tagline “The only vacuum with no loss of suction” highlights its key
attribute.
Example2: Volvo is positioned as the safest car brand in the world. Their marketing emphasises
features like advanced safety technologies and robust construction, appealing to consumers who
prioritise safety.

- Product Class
This dimension defines the brand within a specific category or class of products. It emphasises the
product’s role or use, differentiating it from other classes.
Example; Tesla positions its vehicles as electric cars that are not only environmentally friendly but also
high-performing and luxurious. This appeals to consumers looking for a combination of sustainability and
prestige.

- Competitors
This dimension positions the brand directly against its competitors, often highlighting advantages or
unique selling points that differentiate it from the competition.
Burger King - By positioning itself against McDonald’s with the slogan “Have it Your Way,” Burger King
emphasises its customization options and flame-grilled taste, differentiating itself from its main
competitor.
Pepsi positions itself against Coca-Cola with campaigns like “The Pepsi Challenge,” suggesting that
consumers prefer Pepsi’s taste in blind taste tests. This strategy highlights direct competition.
H&M vs. Cotton On - H&M focuses on trendy, affordable fashion for all ages, offering the latest styles
quickly. Cotton On, on the other hand, emphasises casual, comfortable, and affordable everyday
clothing. Both are found in similar retail spaces, but H&M targets trend-conscious shoppers, while Cotton
On appeals to those looking for laid-back and budget-friendly basics.

- Occasions
This dimension associates the brand with specific times or situations when it is most appropriate or
desirable to use the product. Brands positioned by occasions target consumers' specific needs during
those times.
Example; 100 Plus - Marketed as the ideal drink for rehydration and replenishment during and after
sports activities. The brand emphasises its effectiveness in restoring electrolytes and energy, making it
the go-to beverage for athletes and active individuals.

- Users
This dimension targets a specific group of users or consumers. Brands positioned by users focus on the
characteristics, preferences, and needs of their target audience.
Example: Nike targets athletes and active individuals of all ages, with a particular focus on young and
professional athletes. The slogan “Just Do It” inspires and motivates users to push their limits.
- Quality
This dimension emphasises the superior quality or premium nature of the product. Brands positioned by
quality appeal to consumers looking for the best performance, durability, or craftsmanship.
Example; Bose - Known for high-quality audio products, Bose emphasises superior sound quality and
cutting-edge technology, appealing to audiophiles and tech enthusiasts who want the best listening
experience.
Mercedes-Benz positions its vehicles as high-quality, luxury cars with the slogan “The Best or Nothing.”
This emphasises their commitment to superior engineering, luxury, and performance.

A lifestyle defines a pattern of consumption that reflects a person’s choices of

how to spend his or her time and money, and these choices are essential to
define consumer identity.
A consumer’s lifestyle refers to the ways he or she chooses to spend time and money and how his or her
consumption choices reflect these values and tastes. Lifestyle research is useful for tracking societal
consumption preferences and also for positioning specific products and services to different segments.
Marketers segment based on lifestyle differences; they often group consumers in terms of their AIOs
(activities, interests, and opinions). We associate interrelated sets of products and activities with social roles
to form consumption constellations. People often purchase a product or service because they associate it
with a constellation that, in turn, they link to a lifestyle they find desirable. Geodemography involves a set of
techniques that use geographical and demographic data to identify clusters of consumers with similar
psychographic characteristics.

Psychographics go beyond simple demographics to help marketers

understand and reach different consumer segments.
Psychographic techniques classify consumers in terms of psychological, subjective variables in addition to
observable characteristics (demographics). Marketers have developed systems to identify consumer “types”
and to differentiate them in terms of their brand or product preferences, media usage, leisure time activities,
and attitudes toward broad issues such as politics and religion.

How do we put products in to Categories

- Consumers evaluate products based on what they already know about similar items.
- The category in which a product is placed affects how it’s compared to others.
- Categories influence decision-making, as seen in a study where "low-calorie" labels led to fewer
healthy choices because of negative associations with the label.

Superordinate Level Basic Level Subordinate Level

- This is the most abstract and - This is a more specific level - This is the most specific
broad level of categorization. than the superordinate level level of categorization. It
It includes a wide range of and includes items that are includes items that are
items that share a very similar in more concrete closely related and often
general characteristic. ways. It’s typically the most refers to individual brands or
 - Example: Dessert. This useful level for categorising specific types of products.
category includes all products because it groups - Example: Ice cream cone.
kinds of sweet foods items that are perceived to Within the ice cream
that can be eaten after have a lot in common, category, an ice cream cone
a meal, such as cakes, making it easier for is a specific type of ice
ice cream, pies, and consumers to understand and cream that is served in a
cookies. compare. cone rather than a bowl or
- Example: Ice cream. Within as a sundae.
the broad category of
desserts, ice cream is a more
specific type of dessert. It
includes various forms of
frozen, creamy desserts.

Strategic Implications of Product Categorisation

1. Position a Product
● Positioning strategy involves convincing consumers to see the product within a specific category.
● Example: Orange juice tried to be positioned as an all-day drink. Soft drinks tried to position
themselves as breakfast drinks, but Pepsi a.m. failed because it was too strongly associated with
morning only

2. Identify Competitors
● At the broad level, many different products can compete for consumers' money (e.g., bowling vs.
ballet as forms of entertainment).
● Creating overlapping categories can help consumers make comparisons (e.g., both symphony and
ballet as “cultural events”).

3. Create and Exemplar Products

● A product that is a good example of a category is easily recognized and sets the standards for that
category (e.g., apple pie for pies).
● Exemplars influence how all other products in the category are perceived.

4. Locate Products in a Store

● Proper categorization affects where consumers expect to find products.
● Misplaced products can confuse consumers and hurt sales (e.g., frozen dog food failed because it
was placed in the frozen foods for people section).
Discussion Question in textbook
This chapter observes that some marketers find “greener pastures” when they target low-income people. How
ethical is it to single out consumers who cannot afford to waste their precious resources on discretionary
items? Under what circumstances should we encourage or discourage this segmentation strategy?
(consumers in their social cultural settings - sections, chapter income and social class)

Answer:
Targeting low-income consumers can be a contentious issue in marketing ethics. Here's a detailed analysis of
the ethical implications, with a focus on consumer behaviour, marketing strategy, and segmentation, targeting,
and positioning (STP):

Ethical Considerations

1. Vulnerability:

● Exploitation Risk: Low-income consumers are often more vulnerable to marketing tactics due
to their limited financial resources. This makes it easier for marketers to exploit their situation by
pushing discretionary items that may not be essential.
● Informed Decision Making: These consumers might lack access to information or the financial
literacy needed to make informed purchasing decisions, increasing the likelihood of being
misled by marketing messages.

2. Needs vs. Wants:

● Essential Goods: Targeting low-income consumers with essential goods and services that can
genuinely improve their quality of life is generally seen as ethical.
● Discretionary Items: Marketing non-essential items to this demographic can be seen as
unethical, especially if it encourages unnecessary spending or debt.

3. Social Responsibility:

● Corporate Social Responsibility (CSR): Companies have a responsibility to consider the

social impact of their marketing strategies. Focusing on helping low-income consumers meet
their basic needs and improve their financial situation aligns with CSR principles.

Consumer Behaviour

1. Buying Behaviour:

● Rational vs. Emotional Purchases: Low-income consumers may prioritise rational

decision-making due to their constrained budgets. Marketers should respect this by providing
clear, honest information about the product's value and necessity.
● Brand Loyalty: This demographic may exhibit strong brand loyalty if they find a brand that
offers good value for money, reliability, and trustworthiness.
 2. Decision-Making Process:

● Information Search: Low-income consumers might rely more on word-of-mouth and

community recommendations due to limited access to diverse information sources.
● Post-Purchase Evaluation: Satisfaction is crucial. Negative experiences can have a more
significant impact due to the higher relative cost of mistakes.

Marketing Strategy

1. Product Development:

● Affordable Quality: Develop products that are affordable yet high-quality, ensuring they meet
the genuine needs of low-income consumers without compromising on safety or durability.
● Essential Services: Focus on products and services that can improve their living conditions,
such as affordable healthcare, education, or financial services.

2. Pricing Strategy:

● Fair Pricing: Ensure pricing strategies are fair and transparent, avoiding hidden costs or fees
that could exploit the consumer's financial situation.
● Value-Based Pricing: Offer products at a price point that reflects their value to the consumer,
taking into account their limited resources.

3. Distribution Strategy:

● Accessible Channels: Use distribution channels that are easily accessible to low-income
consumers, such as local stores, community centres, or mobile units.
● Partnerships: Collaborate with non-profits or government programs to reach and support
low-income communities effectively.

Segmentation, Targeting, and Positioning (STP)

1. Segmentation:

● Behavioural Segmentation: Segment based on purchasing behaviour, focusing on needs and

values rather than merely income level.
● Geographic Segmentation: Consider the geographical areas where low-income consumers
live, addressing local needs and preferences.

2. Targeting:

● Selective Targeting: Target low-income consumers with products and services that address
their specific needs, ensuring that marketing messages are respectful and honest.
● Inclusive Targeting: Avoid exclusionary practices that could marginalise these consumers
further. Ensure that marketing efforts promote inclusion and accessibility.
 3. Positioning:

● Value Proposition: Position products as offering the best value for money, emphasising quality,
durability, and necessity.
● Ethical Branding: Build a brand image centred around trust, reliability, and social responsibility,
which resonates well with low-income consumers.

Encouraging vs. Discouraging the Strategy

Encourage When: Discourage When:

● The products or services genuinely improve ● The strategy exploits vulnerabilities or

the quality of life. promotes unnecessary spending.
● The marketing is transparent, ethical, and ● The marketing practices are deceptive or
respects the consumer's financial constraints. manipulative.
● There is a focus on education and ● The products or services do not provide real
empowerment, helping consumers make value or address essential needs.
informed decisions.