Module 4

Chapter 4: Market Segmentation and Brand Positioning

- The world can be interpreted into markets and categories; however, new products
and services are constantly challenging those interpretations. While segmentation
and positioning are important, it is critical to expand your thinking about markets
and reflect on how the world is changing
- Segmenting current customers and targeting prospective customers allow marketers
to effectively deliver their marketing messages to a defined market segment, by not
wasting media coverage on people who are not part of that target market segment
- A market segment is a group of consumers who have very similar needs, wants and
consumption behaviours. Each segment of the target market must have similar
demographics, values and lifestyles, and behavioural characteristics
- Selecting target segments that have measurable, accessible, profitable and
actionable characteristics is the critical first step in developing effective and efficient
marketing communication objectives and strategies. Each market segment must
therefore be large enough, in terms of sales volumes and value, to support
customised communication strategies
- Market segmentation requires marketers to adopt four sequential actions:
1. Separate all consumers in the general market with similar product and
service-related needs
 Product-related needs reflect the fact that many products satisfy
more than one need
 Consumer needs are not limited to product features – they also
include product price, the retailers who sell it and the image of the
manufacturing company
2. Identify those consumers with similar needs and wants
3. Group those consumers according to their demographics, values and
lifestyles, and behavioural characteristics so that marketers can communicate
with each group
 To determine the media for each respective group, the marketers
must understand the reasons for consumers’ attitudes towards the
product, why they purchase it, and their media habits
4. From those groups, select those consumer groups that are large enough to
support customised marketing communications strategies
 Encompasses the selection of the target market
 Sometimes different market segments will require a different set of
the marketing mix, including the product, or even a different
marketing message or media channel
- Ethical dilemmas may arise if marketing communications are targeted at vulnerable
consumers e.g. disease-awareness advertising
- Demographic Segmentation:
 The broad demographic variables that define various groups of
consumers include the age structure and growth rate (or decline) of
the population, the changing composition of households, the
geographic distribution of Australia’s population and ethnic
population groupings
  Groups are often called subcultures or ‘tribes’. They tend to have
similar characteristics, stick together and can be classified by
marketers
 The more personal demographic variables of consumers in a
particular segment include their objective characteristics such as age,
income, family composition, life cycle and ethnicity
 Geo-demographic segmentation includes a combination of
demographic and lifestyle characteristics of consumers within
geographic localities, such as census collection districts or postcode
areas. Marketing research organisations have developed
classifications known as clustering systems, which identify relatively
homogenous geo-demographic segments of consumers
2. The changing age structure:
 One of the most important features of the Australian and New
Zealand populations is the rate of ageing, which is primarily due to
women having fewer children, which, over time, has led to a decline
in the number of residents, as well as people in the western world
living longer
 Children and tweens – include children ages 6 to 14 who
directly influence the purchase of everyday products. They are
influential in their parents’ choice of clothing, magazines,
music and brand choice of products such as toothpaste and
breakfast cereals
 Middle- and mature-age consumers – middle age can be
considered as starting at age 35 and ending at age 54, at which
point maturity is reached. Mature people are classified as
those that are 55 and over.
o These people do not necessarily want to retire as they
do not want to be seen as old, and thus it is important
to focus on youthful aspects to be successful with this
older age group. They have relatively higher levels of
discretionary income. They retain many youthful
consumption habits, such as cosmetic surgery, luxury
goods and exercise machines and thus advertisements
should portray them as being active, busy and
concerned with looking healthy and attractive
3. Generations:
 For marketing communicators, it is convenient to define adults born
between certain time periods
 Millennials/Generation Y – born between 1980s – mid-1990s
and comprise 20 per cent of the Australian population. They
are the first of the digital natives, being the generation that
has been socially and technologically connected since birth,
knowing nothing but the internet. Manu will not own a car,
music or luxury goods, and will rent instead of owning their
own home
 o They are said to be encumbered with debt and have
different priorities than previous generations. They are
highly educated, entrepreneurial and big-picture
thinker, and technology has allowed this generation to
be mobile and have a work-from anywhere mentality.
They have been criticised for being hard to manage in
the workplace
 Generation X – born between the mid-1960s - 1980s. They are
hard workers and many came from divorced parents (more
than any generation before)
 The Baby-Boomer Generation – born between the mid-1940s
– 1960. Population booms occurred in the period following the
end of World War 2 in 1945 and persisted during nearly two
decades during economic growth and prosperity
o This is an attractive market for a variety of products
ranging from pharmaceuticals to high-tech products
such as tablets and smartphones
o They are relatively affluent and therefore represent a
general target market for imported motor vehicles,
financial investments (life insurance real estate,
superannuation) and ‘grown-up toys such as iPads and
home theatre systems
o They have approximately 40 per cent of the nation’s
wealth, are worth on average more than $1 million per
household, and are enjoying a period of financial and
personal freedom. They do not want to finish work and
retire
4. Population growth and geographic dispersion:
 The Australian population is predicted to reach about 28 million by
2026. Since the start of the 20th century, the population has grown
significantly across all age brackets, but it has also aged. Since the
latter part of that century, the size of Australian families has
decreased, reflected in the proportion of children in the population
falling, with the proportion of the population aged 65 and over having
risen
 One of the interesting aspects of the Australian population is the shift
that has taken place in geographic distribution
5. Changing composition of households:
 The ageing of the population has an impact on family composition
 The economic wellbeing of households is primarily determined by
their command over economic resources, such as regular income.
Cash income level can be used as an indicator of the standard of living
for most of the population
 Levels of income across the various segments of the Australian
population reflect the different life cycles of each segment, which
typically begins with childhood and progresses through early
adulthood to the formation and maturing of families. As young people
 enter relationships, the level of income rises due to more income
earners contributing
 For couples, birth of the first child and its early years result in
fall in income as labour force participation decreases
6. Ethnic groupings:
 Australia is linguistically and culturally diverse, with influences from
over 160 spoken languages, and the Australian identity is continually
evolving
 Language – after English, Greek, Italian, Mandarin,
Vietnamese, Cantonese and Arabic are the most commonly
spoken languages. This has major implications for what
communication and cultural strategies are employed by
marketing communications specialists
- Geo-Demographic Segmentation:
1. The premise underlying geo-demographic segmentation is that people who
reside in particular areas, such as residents in rural areas of Australia, also
share demographic and lifestyle similarities. Hence, knowing where people
live can also provide information regarding their general marketplace
behaviours
- Values and Lifestyle Segmentation:
1. Consumers’ values and lifestyles include their activities, interests and
opinions (AIO), and have a greater influence on consumers’ buying behaviour
than demographics as they explain why a consumer buys one product in
preference to another
2. Now marketers use a combination of demographic data and values and
lifestyle variables to develop a deeper understanding of a more dynamic –
and often digital – marketplace and the differences in consumer behaviour
and media usage, allowing them to customise their messages for their
product categories and brands to suit the needs of particular consumer
segments
3. Ray Morgan Values Segments – a conceptual framework that consists of 10
values segments that represent consumers’ price expectations, attractiveness
to innovation, perceived progressiveness, life satisfaction, quality expectation
and individualism:
 Basic Needs – retired pensioners and social security recipients. They
are focused on ‘getting by’ on a day-to-day basis
 A Fairer Deal – pessimistic and cynical consumers who struggle
financially. They feel they get a ‘raw deal’ out of life
 Real Conservatism – conservative and cautious about accepting new
things and ideas. Generally, they are part of ‘the establishment’, and
are concerned about maintaining a disciplined, predictable and safe
society
 Look at Me – most often associated with youthful behaviour, which
may include rebellion from the family or household. They are often
teenagers seeking fun and freedom, but can be any age
  Traditional Family Life – older, highly conventional consumers that are
generally empty nesters. Their values are centred around the
significant events in their personal and family lives
 Conventional Family Life – middle mainstream consumers. They are
focused on family life, live in suburbia and rates highly the great
Australian dream of owning your own home in the suburbs and
driving a good solid car
 Visible Achievement – successful and confident consumers that have
visible successful stories. They have ‘made it’ in their field and are
confident in their own abilities and position to manage any situation
 Socially Aware – community minded and active with a strong sense of
social responsibility. They are ‘information vacuum cleaners’ in that
they are always searching for something new and different and new
things to learn
 Something Better – competitive, individualistic and ambitious. They
want a bigger, better deal out of their life and overextend themselves
financially, purchasing things that will demonstrate their success to
others
 Young Optimism – young and idealistic consumers. They are
associated with people who are optimistic and who are looking to
improve their prospects in life to find a respected place in society
4. Recently, the system has been updated to reflect the technologically and
connected world in which we live. Ray Morgan Helix Personas is a geo-digital
psychographic segmentation that combines sophisticated psychographic and
behavioural data to classify the Australian population into 56 personas and 7
communities using a combination of Roy Morgan Singe Source data and
third-party data sources. This information is used to understand future
buying intentions and media consumption patters that can be easily
integrated with third part datasets
- Behavioural Segmentation:
1. Customers’ past behaviour profiles allow marketers to know which people
are likely to be responsive to a sale on items that they have or have not
previously purchased
2. Values and lifestyles (or behavioural) segmentation is based on how people
behave (with respect to a product) rather than in terms of their attitudes and
lifestyles (psychographics); their age income or ethnicity (demographics); or
where they live (geodemographics)
3. With the increased use of digital marketing communications channels to
transmit marketing messages, traditional behavioural targeting criteria are
being replaced by online behavioural targeting methodology, allowing
companies to increasingly track visitors’ online site-selection behaviour on
their websites
 Based on the data, visitors are put into a target segment. It is
assumed that based on previous behaviour, there is a greater level of
interest and intent for a particular product or service that is being
offered, and that the digital marketing communication is more likely
to attract the viewers’ attention
 4. There are three simple and effective ways to help find a target market and
demographic audience:
 Geotargeting – identifies roughly from where a user is surfing the
Internet based on their IP address, thus allowing for the offering of
special promotions
 Dayparting – occurs when displayed advertisements are restricted to
potential customers, usually in accordance with the time of day they
spend online. However, this may be ineffective if the target
demographic is small or keeps odd hours
 Domain management – when you look after your information and
data from your website
 Additionally, behavioural advertisers use tools to collect
information about your browsing activity, typically through the
use of cookies
- Brand Positioning:

1. An essential preliminary activity in developing successful marketing

communication strategies
2. A company’s brand is the target market’s perception of the product’s image,
benefits and attributes – it is what consumers have learnt about the brand.
By having a clear positioning statement, marketers can determine what the
marketing communication should say about the brand and what media
vehicles and message arguments should be used to reach the target market
3. Conceptually, the term positioning suggest that the marketer must create a
specific meaning for the brand and clearly establish that meaning in the
consumer’s memory, which is then compared to what they know and think
about competitive brands in the same product or service category
4. Strategically and tactically, positioning is a word or short statement that
represents the message that the marketer wants to imprint in the minds of
customers and prospects
5. A positioning statement for a brand represents how a marketer wants
customers and prospects to think and feel about a particular brand. A
successful positioning statement should reflect a brand’s competitive
advantage and motivate customers to action
6. Brand attributes include product-related and non-product-related attributes
7. Brand benefits consist of ways in which a brand satisfies customers’ needs
and wants, Generally, a brand can be positioned by focusing on the product’s
attributes, or its functional, symbolic or experiential benefits
8. A brand can be positioned on the basis of a product’s features or attributes,
provided that the specific attributes represent a competitive advantage and
can motivate customers to purchase that brand rather than a competitive
offering
9. Product-related attributes include attributes such as innovative product
design, superior materials and more features
10. Brands can be positioned in terms of their unique usage symbolism or with
respect to the kinds of people who use them. User imagery therefore
becomes the brand’s hallmark; the brand and people who use it are
portrayed as being virtually synonymous, and thus the people who are seen
in advertisements are portrayed as being the typical users of the brand
11. Positioning with respect to a brand’s benefits can be accomplished by
appealing to any of the three categories of basic consumer needs: functional,
symbolic or experiential
12. The distinction between needs and benefits is that consumers have needs,
while brands have attributes or features that satisfy those needs (benefits)
13. A brand positioned in terms of functional needs attempts to provide solutions
to consumers’ current consumption-related problems, or potential problems,
by communicating the specific benefits capable of solving their problems that
the brand possesses
 In B2B marketing, for example, salespeople typically appeal to their
customers’ functional needs for high-quality products, fast delivery
time or better customer service
 Consumer goods marketers regularly appeal to consumers’ needs for
convenience, safety, good health and cleanliness
14. Other brands are positioned in terms of their ability to satisfy psychological
desires. Appeals to symbolic needs include those directed at consumers’
desire for self-enhancement, group membership, affiliation and belonging
 Marketers of brands in categories such as personal beauty products,
jewellery, alcoholic beverages and motor vehicles frequently appeal
to symbolic needs
15. Consumers’ experiential needs represent their desires for products that
provide sensory pleasure, variety and, in a few product circumstances,
cognitive stimulation.
 Positioning directed at these promote brands as being out of the
ordinary and high in sensory value (looking elegant, feeling wonderful,
tasting or smelling great, sounding superb or being exhilarating) or
rich in the potential for cognitive stimulation (exciting, challenging or
mentally entertaining).
16. It is important to recognise that brands often offer a mixture of functional,
symbolic and experiential benefits, or some combination of these benefits.
Generally speaking, however, successful brand positioning requires a
communication strategy that satisfies a single type of consumer need rather
than attempting to be something for everyone – that is, a generic brand
image. Brand are difficult to manage because:
 They compete against more brands (those focussing purely on one
need as well as mixed images)
  It may be difficult for consumers to readily understand what it stands
for and its defining characteristics
17. The dynamic marketing environment means that marketers must continually
assess a brand’s position. Brand mapping – using perceptual maps – may
highlight the need to reposition the brand against its competitors, or with
new attributes and benefits