Segmenting the Orange; Segmentation, Targeting and Positioning – Week 5

During our lecture, Ruth showed us a PowerPoint presentation on perceptual maps. At first it looked very scary and confusing as shown below. However, the theory behind this is followed.

You can click on the diagrams above to view them larger.

A vital decision, which can affect a product’s life length and its flexibility in a market over time, concerns their position. This requires thinking in the context of the competitive segment it occupies in its market, defined in terms of traits that matter to the target market. The important criterion is how close to the ideal on each of those features, compared with competing products, yours is to be judged by the target market. For example, Harrods in London is positioned as a high-class and high-quality and exclusive huge department store. In order to reinforce their positioning with their target market, they ensure that their product ranges, staff expertise, displays and overall store atmosphere are all of a high quality for their consumers.

Perceptual maps help to offer an insight into suitable competitive actions. For example, an essential decision could be whether to try and “meet the competition head-on or to differentiate your product away from them”. They can show just how far away from the competition your product is shown to be and where its weaknesses and strengths lie, directing to an understanding of the marketing tasks involved in improving the product which is being offered. If the purpose is to differentiate, the map can point out whether your product is sufficiently different in terms of characteristics that matter and whether nick markets exist that your product could be adapted to fit into. (Brassington and Pettitt)

By identifying the key aspects and then asking individuals to segment competitors within the perceptual map space, marketers can answer some fundamental strategic questions, such as which substitutes are seen by consumers as similar or dissimilar, and what opportunities exist for new products that hold attributes not represented by current brands. The perceptual map below shoes the iconic Burberry brand, showing its “old” position from the 1980s and 1990s, and the shift in perceptions of the brand in more recent years. (Solomon et al, 2010)

You can click on the diagram above to view it larger.

In addition to this, Ruth showed us her version of her perceptual map of biscuit brands, shown below. As a class, we all thought up more brands that could be added to our map. This then turned into a mini debate about the “best biscuits” – Jaffa cakes. Are they biscuits or cakes? J

You can click on the diagram above to view it larger.

We were then set a task to create our own perceptual map of jeans brands in small groups. The map that my group came up with is shown below.

You can click on the diagram above to view it larger.

Overall, a perceptual map can be used to “establish a customer’s viewpoint of the organisation relative to its competitors” (Egan, 2007). It also a form of a market research technique which consumer’s views about a product is traced or mapped on a chart. The product is analysed in terms of it performance, packaging, price, size, etc. to figure out where to segment them on the map. “These answers are transferred to a chart (called a perceptual map) using a suitable scale, and the results are employed in improving the product or in developing a new one.” (businessdictionary.com, 2010)

Main prep for this week was to complete my first assignment ready for submission during week 6. This required me to read through various textbooks, journals, reports and websites to find useful information that I could include and reference thoroughly within my work. I was also required to produce a poster analysing a type of packaging. The packaging that I chose was Muller Stars yoghurts which mainly appealed to young children due to the use of bright colour and cartoon imagery used.

We were also expected to read Brassington and Pettitt (Chapter 4) as outside reading. After reading and highlighting the important points within the chapter, I found that “Segmentation techniques are split into both macro and micro variables. Macro includes organisation characteristics, such as size, location and purchasing patterns, and product or service applications, defining the ways in which the product or service is used by the buyer. Micro leads to the definition, in some cases, of segments of one customer, and focus on the buyer’s management philosophy, decision-making structures, purchasing policies and strategies, as well as needs and wants.”

In marketing, five main categories of segmentation are defined as the following: geographic, demographic, geodemographic, psychographic and behaviour based. Each of these points cover a full range of characteristics which can be perceived as “descriptive”, “measurable”, “tangible” or “intangible”, “relating to the buyer”, “lifestyle” and “relationship with the product”. In practice, a multivariable approach to segmentation is likely to be put into practice, classifying a range of applicable characteristics from all categories to suit the market that is under consideration.

The implications of segmentation are extensive. The possibilities range widely. For example, from a niche strategy (which specialises in one particular segment), to a differentiated strategy (which targets two or more segments with different marketing mixes). The undifferentiated strategy hopes to cover the whole entire market with only one main marketing mix, is becoming more and more less suitable as consumers become more demanding recently, and although it does appear to assist the managerial burden, it is very exposed to competition.

Segmentation offers a variety of benefits to the consumer and to the business involved. Consumers get an offer that is better adapted to their exact needs, as well as the pleasure of feeling that the market is offering them a broader range of products for them to choose from.

The business can also use their segmentation as a basis for building a strong competitive upper hand, by understanding their customers on a meaningful psychological level and reflecting that in its marketing mix or mixes. This then forms bonds between the business and its product and/or service and customers that are very difficult for competition to break. There are, however, some dangers in segmentation, if it is not done properly. Weak definitions of segments, badly chosen selections of significant variables or inadequate analysis and performance of the outcomes of a segmentation application can all be unsuccessful and disastrous. There is also a danger that if competing marketers become too enthusiastic and keen in trying to “outsegment” one other, “the market will fragment to an unviable extent and consumers will become confused by the variety of choice open to them.”

In addition to this, I found some useful websites on the internet which explained segmentation, targeting and positioning very well.

http://www.consumerpsychologist.com/cb_Segmentation.html

http://www.scribd.com/doc/6356725/MARKET-SEGMENTATION-TARGETING-POSITIONING-By-Subha-Rudra

http://www.da-group.co.uk/index.php?option=com_content&view=article&id=30%3Asegmentation-targeting-and-positioning&catid=2%3Amarketing-lectures&Itemid=3

Please read my next post about ice-cream brands in relation to perceptual mapping.

Hope to hear back from you.

Erica.