Consumer Behaviour

1
Week 11: The utility of segmentation,
targeting and positioning
East, Wright & Vanhuele (2009)
Sharp 2012

1 BHO2434 Week 11
Review of market segmentation, targeting
and positioning
Understanding why marketers segment,
target and position their brands in the market
Challenging the need for segmentation,
targeting and positioning
2 BHO2434 Week 11
Refresh
Using an example, briefly describe in
your own words:
1. Segmentation
2. Targeting
3. Positioning
3 BHO2434 Week 11
Identify
segmentation
bases
1. Market
Segmentation
2. Market
Targeting
3. Market
Positioning
Develop
profiles of
segments
Develop
positioning for
segments
Develop
marketing mix
for segments
Measure
segment
attractiveness
Select
target
segments
4 BHO2434 Week 11
Identify
segmentation
bases
1. Market
Segmentation
2. Market
Targeting
3. Market
Positioning
Develop
profiles of
segments
Develop
positioning for
segments
Develop
marketing mix
for segments
Measure
segment
attractiveness
Select
target
segments
5 BHO2434 Week 11

Few organisationshave either the
resources or the inclination to be a
significant force within a loosely defined
market. The sensible option, therefore is to
look more closely at the market and find
ways of breaking it down into manageable
parts, and then to concentrate effort on
serving the needs of one or two groups
really well, rather than trying to be all things
to all people
(p. 180, Brassington & Pettitt,
2003)
6 BHO2434 Week 11
Consumer Behaviour
2
Mass Marketing
Offering the same product and marketing mix to all
consumers
Mass Marketing Issues
Appropriate if all consumers respond to a similar
marketing mix
Benefits are that it is a low cost marketing strategy
one advertising and promotional strategy targeted to a
single market for a generic product.
7 BHO2434 Week 11
Market Segmentation Issues
Allows producers to avoid head on confrontation
By differentiating by price, styling, packaging,
promotional appeal, usage, and distribution.
Increased costs of segmentation
i.e. Shorter production runs, different promotional
campaigns, consumer research
8 BHO2434 Week 11
Enables the organisation to achieve a better
understanding of itself and its environment

To guide the redesign and repositioning of
existing products
Products/services fit more closely what customers
want
To find new market segments.
9 BHO2434 Week 11
Customers may feel more responsive and
loyal to organisations that speak directly to
them
and tailor their products accordingly.

Enables organisations to define shopping
habits.

To shape advertising and promotional
campaigns

10 BHO2434 Week 11
Geographic location
Demographic characteristics
Psychographic
Behavioural and attitudinal characteristics
Profitability

11 BHO2434 Week 11
Identification
Relevant characteristics (eg: demographics,
lifestyle, benefits sought)
Sufficiency
Sufficient number of people
Stability
Stable and likely to grow
Accessibility
Economical to reach
12 BHO2434 Week 11
Consumer Behaviour
3
Segmentation Exercise
In a small group your task is to segment the
market of consumers who buy food.
Particularly concentrate on the differences youd
expect to find between customers of the following:
Coles
Woolworths
Aldi
IGA
BiLo

13 BHO2434 Week 11
Segmentation Exercise Part 2
Quick survey
In your households, who has the following
loyalty cards:
Fly Buys?
Any others?
14 BHO2434 Week 11
Risk of poor definition and implementation of
segmentation.
Knowing where to stop
Cluster analysis driven by analyst!
Assumption that customers only fit into one
segment
Assumption that it is profitable to tailor
products to each segment
15 BHO2434 Week 11
Assumptions:
1. Customers only fit into
one segment

2. Customers of
competing brands are
different


3. Segmentation based on
attitudes is stable
Research shows:
1. Business travellers also
take holidays
fit into both segments

2. Kennedy & Ehrenberg
(2003) found on average
only 2% difference across
segmentation bases

3. Attitudes are usually not
stable over time
e.g. Dallmo Riely et al,
(1997)
and segments based
on them can not be
stable over time!
16 BHO2434 Week 11
BHO2434 Week 11 17
2009 2011
Proportion by gender Deviation by gender Proportion by gender Deviation by gender
Male Female Male Female Male Female Male Female
Commonwealth Bank 49 51 1 -1
50 50 1 -1
ANZ Bank 50 50 3 -3
50 50 1 -1
Westpac 50 50 2 -2
50 50 1 -1
National Australia Bank 50 50 2 -2
49 51 0 0
St George 46 54 -1 1
47 53 -2 2
BendigoBank 43 57 -4 4
48 52 -1 1
Suncorp Metway 47 53 0 0
47 53 -2 2
BankWest 49 51 2 -2
50 50 1 -1
ING 44 56 -3 3
47 53 -2 2
Bank of Queensland 45 55 -2 2
48 52 -1 1
Total 47 53
49 51

BHO2434 Week 11 18
2009 2011
Proportion by gender Deviation from mean Proportion by gender Deviation from mean
Male Female Male Female Male Female Male Female
HeraldSun
52 52 -5 4 53 47 -4 3
The Age
55 45 -2 1 52 48 -5 4
Mighty V Regionals
52 48 -5 4 47 53 -9 9
mX
59 41 2 -3 54 46 -2 2
The Australian
63 38 6 -6 63 37 7 -7
The Financial Review
71 29 14 -15 70 30 14 -14
The Geelong Advertiser
44 57 -13 13 51 49 -5 5

57 44 56 44
Consumer Behaviour
4
BHO2434 Week 11 19

2009 2011

Deviation fromaverage brand for age group Deviation fromaverage brand for age group

14-17 18-24 25-34 35-49 50-64 50-64 14-17 18-24 25-34 35-49 50-64 50-64
Commonwealth Bank 2 5 1 -3 -4 0 2 7 1 -5 -3 -3
ANZ Bank 0 1 3 2 -3 -4 0 2 3 1 -3 -3
Westpac 0 -1 0 2 0 0 -1 0 -3 2 1 0
National Australia Bank -1 -2 -1 2 0 0 0 -1 0 1 1 -1
St George 0 0 -1 1 0 1 0 -2 -2 2 1 1
BendigoBank 1 -1 -5 -3 4 5 0 -1 -7 -3 4 7
Suncorp Metway 0 -2 -2 1 1 2 -1 -3 -2 2 1 2
BankWest 0 2 3 -2 -4 1 0 3 2 2 -3 -2
ING -2 0 7 1 0 -6 -3 0 10 2 -3 -5
Bank of Queensland -1 -2 -4 -1 6 2 -1 -3 -6 -1 8 2
BHO2434 Week 11 20
2009 2011

Deviation from average brand for age group Deviation from average brand for age group


14-
17
18-
24
25-
34
35-
49
50-
64 65+ 14-17 18-24
25-
34
35-
49
50-
64 65+
HeraldSun
1 -4 -4 0 2 6 0 -2 -2 -1 0 5
The Age
1 -4 -4 -1 5 3 1 -2 -3 -3 5 2
Mighty V
Regionals
3 -5 -6 -1 4 6 2 -3 -4 -1 2 4
mX
0 22 16 -8 -14 -14 3 17 15 -4 -14 -16
The Australian
-1 3 -1 -1 0 1 -2 0 -4 -2 4 5
The Financial
Review -3 -7 5 13 2 -10 -3 -9 4 15 1 -8
Geelong
Advertiser
1 -6 -6 0 3 9 -2 -1 -3 -2 2 6
2. Market
Targeting
Measure
segment
attractiveness
Select
target
segments
3. Market
Positioning
Develop
positioning for
segments
Develop
marketing mix
for segments
Identify
segmentation
bases
1. Market
Segmentation
Develop
profiles of
segments
21 BHO2434 Week 11
Marketing Mix Whole Market
Segment 2
Segment 1
Segment 3
Marketing Mix 1
Marketing Mix 2
Marketing Mix 3
Mass Marketing/ Undifferentiated
Marketing
Target marketing
Concentrated/Focused Marketing
Segment 2
Segment 1
Segment 3
Marketing Mix
22 BHO2434 Week 11
Many businesses use profitability
segmentation to target profitable consumers
Airlines
E.g. Business travellers get priority check in & baggage
Banks
High value customers get their own 0800 number or
are recognised by input of client number
23 BHO2434 Week 11
Heavy Users
20+ trips p.a.
Executive Users
4-20 trips p.a.
Business Travellers
VFR Travellers Holiday Travellers
Leisure Customers
All customers
24 BHO2434 Week 11
Consumer Behaviour
5
LHR-MEL
$7,500
LHR-MEL
$1500
BHO2434 Week 11
Targeting high value customers?
Using an airline example
What are the benefits to the company of
profitability segmentation and targeting?
What are the risks of profitability
segmentation and targeting?
26 BHO2434 Week 11
1. Do specific segments really differ from
other segments in their purchasing
patterns?
2. Does focussing on segments (i.e., targeting)
really produce a better ROI?

(Wright, 1996)
27 BHO2434 Week 11
Consumers commonly buy from a repertoire
of brands
(Ehrenberg, 2004)
Consumers attitudes are not stable
attitudinal segmentation not stable!
(Dallmo Riley et al, 1997)
Kennedy & Ehrenberg (2001) found on
average only 2% difference across
segmentation bases
(Ehrenberg)
28 BHO2434 Week 11
Assumption that targeting consumers will
lead to more efficient advertising spend

But consumers not only have a repertoire of
brands, they also have a repertoire of media
habits
29 BHO2434 Week 11
? ?
Target audience
No waste = efficient?
DJ effect
More people
More of the time
2x freq!
Consumer Behaviour
6
Before targeting specific segments you
should be able to prove an improved ROI
For each advertising $ do you get
More reach?
More frequency?
31 BHO2434 Week 11
Thinking back to your product
Could you be sure that a greater ROI
would be achieved by segmentation and
targeting a particular group?
32 BHO2434 Week 11
Identify
segmentation
bases
1. Market
Segmentation
3. Market
Positioning
Develop
profiles of
segments
Develop
positioning for
segments
Develop
marketing mix
for segments
2. Market
Targeting
Measure
segment
attractiveness
Select
target
segments
33 BHO2434 Week 11
First appeared in the Advertising Age
Reis and Trout (1972)
Now in every marketing textbook
Seen as a fundamental aim of marketing
Yet not scientifically tested
Position brand in consumers minds
Make it the preferred brand for your brands target
market
34 BHO2434 Week 11
The objective is to position a product in the
mind of the consumer:
Differentiated from competition
own an image

Positioning ishow you differentiate yourself in
the mind of the prospect
(Reis & Trout, 2001)
35 BHO2434 Week 11
Volvo brand is
positioned on Safety
While the BMW brand
is positioned on
Driving.
(Reis and Trout, 2001)

36 BHO2434 Week 11
Consumer Behaviour
7

Oddbins position
on quality without
snobbery

While Sainsburys
often position their
wine sales on
price

38 BHO2434 Week 11
1. Brand image varies with usage
(e.g. Barwise & Ehrenberg, 1985)
2. Attributes that are prototypical are
prototypical for every brand
(e.g. Romaniuk & Sharp, 2000; Rosch, 1978)
3. Attitudes are fickle on an individual level
but remains stable at an aggregate level
(e.g. DallmoRiley et al, 1997)
4. Consumers have repertoires of brands
(e.g. Sharp, Wright & Goodhardt, 2002)
5. There is no brand segmentation
(e.g. Kennedy & Ehrenberg, 2001)
39 BHO2434 Week 11
Barwise, T. P. and A. S. C. Ehrenberg (1985). "Consumer Beliefs and
Brand Usage." Journal of the Market Research Society 27(No. 2,
April): 81-93.

Brassington, F. & Pettitt, S. (2003). Princples of Marketing (3rd Ed).
Prentice Hall: London

Dall'Olmo Riley, F., A. S. C. Ehrenberg, et al. (1997). "The Variability of
Attitudinal Repeat-Rates." International Journal of Research in
Marketing 14(No. 5): 437-450.

Ehrenberg, A.S.C. (2004). What brand loyalty can tell us. Admap,
October, 36-38.
Kennedy, R. & Ehrenberg, A.S.C. (2001). There is no brand
segmentation. Marketing Research, 13(1).

Ries, A. and J. Trout (2001). Positioning: The Battle for Your Mind. NY,
McGraw Hill.
40 BHO2434 Week 11
Romaniuk, J. and B. Sharp (2000). "Using Known Patterns in Image Data to
Determine Brand Positioning." International Journal of Market Research
42(Issue 2, Spring/Summer): 219-230.

Rosch, E. (1978). Principles of Categorization. Cognition and Categorization. E.
Rosch and B. B. Lloyd. Hillsdale, N.J., L. Erlbaum Associates: 27-48.

Sharp, B., M. Wright and G.J. Goodhardt (2002). "Purchase loyalty is polarised
into either repertoire or subscription patterns." Australasian Marketing
Journal 10(3): 7.

Wright, M & Esslemont, D. (1994). The logical limitations of target marketing.
Marketing Bulletin, 5, 13-20.

Wright, M. (1996). The dubious assumptions of segmentation and targeting,
Management Decision, 34(1), 18-24.

Winchester, M.K.& Sharp, B. (2002). Arguments against brand
positioning. Professional Marketing Research Society
Conference/Association Professionelle de Recherche en Marketing,
Nottawasaga, Canada.
41 BHO2434 Week 11