Segmentation, Positioning and Forecasting

Prof. Rushen Chahal

Psychological Segmentation
y

personality characteristics definitely influence

consumer behaviour; but personality is not a very effective basis for segmentation y consumer lifestyle has become a more widely used basis for segmentation, as consumers tend to buy products and services that are consistent with their lifestyles y psychographic segmentation employs a variety of psychological and behavioural descriptors

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Psychographic Segmentation
y

involves the identification of segments of the market, based upon differences on a variety of measures these include values the principles that guide values; how we live our lives, but the relative importance of which vary across individuals other measures often used in psychographic research include attitudes, opinions, interests, and various behavioural measures such as media usage and leisure-time activities
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Relationship Segmentation
y

A new approach for defining markets based on the kinds of relationships that customers want with firms:
Friendship feeling Business (arms-length) association Frequent contact Less frequent contact

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Behavioural Segmentation
marketers often segment markets based on how consumers interact with the product y different consumers will seek different benefits from a product or service and will associate it with different occasions y benefits arise not only from the product but from the process of acquiring it y marketers must determine exactly what benefits are important to the customer
y
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More About Behavioural Segmentation

many marketers are now segmenting markets on the basis of the occasions that customers associate with use of the product y a widely-used approach to segmentation involves dividing the market on the basis of usage rates; many marketers target the heavy half (i.e. those who are heavy users) y once segments have been identified, profiles of segment members should be prepared
y
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Selecting Target Markets

target segments should be compatible with the organizations goals and image y the market opportunity represented by the segment must match the companys resources y the segment must represent an opportunity to generate enough sales to generate a profit y the company should select target segments where it can enjoy a competitive advantage
y

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Target Market Strategies

y y

market aggregation: target the product or service to a mass market with little differentiation singlesingle-segment segmentation: selecting a single segment to target; if the segment is small, this may be considered a niche strategy multiplemultiple-segment segmentation identifying two or segmentation: more segments as target markets; involves developing a different marketing approach for each

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Implications of Segmentation
market aggregation is really a productionoriented strategy; it requires that the firm find some way to differentiate its product or service y increasingly, firms are turning to superior service as their differentiating strategy y multiple-segment marketing requires that the multiplefirm develop different versions of the product offering for each segment; or it may simply mean different approaches to serving segments
y

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Positioning for the Market Segment

y y

Positioning is the image of your brand held by the public and especially, your segment. Usually try to position on attributes consumer sees as important, such as speed, convenience, safety. Positioning Maps help see how key players in a market are viewed by consumers. Helps to see competitive clusters and market gaps.

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Niche Marketing
y y y y y y

this is a specific form of positioning the company decides to occupy a market niche where it can be distinct and competition weak identify segments that are not well served determine how to gain a competitive advantage expand the niche by meeting consumer needs defend the niche position by improving product and service offerings

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Positioning Strategies
y y y

y y

Against Competition: Were as good or better Cola Wars, battery-bashers. Market Gap: Find spot others missed. Niche producers make vinyl records. Set Brand Apart Stress your differences and avoid Apart: head-to-head competition. Nothing runs like a Deere. Leadership: Be the one others follow. Used by Presidents Choice, Sony. Lifestyle Segment Appeals Use lifestyle to define. Appeals: Some buy fancy cameras to take creative photography, others to impress.
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Repositioning
This is a variation of a positioning strategy that involves changing the market position of a brand or store in response to changes taking place in the broader market environment.

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The Sales Forecast

A sales forecast is an estimate of probable sales for one companys brand of the product during a stated time period in a specific market segment and assuming the use of a predetermined marketing plan.

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The Sales Forecast

It is based on a specific marketing plan. It can be expressed in dollars or product units. It is best prepared after market potential and sales potential have been estimated. It typically covers a 1-year period. Marketing goals and broad strategies must be established before a sales forecast is made. Once it is made, it becomes a key controlling factor in all operational planning throughout the company.
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Basic Forecasting Approaches

Top Down:
Develops a forecast of economic conditions and industry trends. Determines the market potential for a product. Determines the sales potential for the product. Measures the share of this market the firm is currently getting or plans to capture. Forecasts the firms sales of the product.

Bottom Up:
Generates estimates of future demand from customers or the companys salespeople. Combines the estimates to get a total forecast. Adjusts the forecast based on managerial insights into the industry, competition, and general economic trends.
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Demand Forecasting: Key Terms

y y y y y

Market factor/index: Something that is related to the product you sell -- new home starts and appliances. Market potential: potential:Total volume by all firms in market. Sales Potential Your piece of market = your share. Potential: Sales Forecast: Estimated sales during defined period assuming certain marketing plan and environment. The forecast allows firms to estimate future revenues and becomes an important part of the planning process.

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Demand Forecasting Methods

y

MarketMarket-factor analysis Demand for a product is analysis: assumed to be related to the factor-- housing starts and appliances.
Direct Derivation: See what determines sales-- roofing firms look for 15-year-old houses for business. Correlation Analysis: Statistical analysis that shows two things are linked-- perhaps pets in an area and dog food sales.

Survey of buyer intentions: sample of current or intentions:A potential customers are asked how much of a particular product they would buy at a given price during a specified future time period.
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More Forecasting Methods

y

Test marketing: A firm markets its product in a limited geographic area, measures sales, and then projects the sales over a larger area. y Past sales and trend analysis: A flat percentage increase is applied to the volume achieved last year or to the average volume of the past few years. Trend analysis more sophisticated, uses more statistical analysis. y Salesforce composite: A bottom-up method consisting of collecting estimates of sales for the future period from all salespeople. y Executive judgement: Obtaining opinions regarding future sales volume from one or more executives.
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