Lecture 5:

Market Segmentation, Positioning, & Forecasting Markets;

Developing New Products & Services

• Why Segment Markets?

• Steps In Segmenting & Targeting Markets
• Positioning The Product

• What Are Products & Services

• New Product & Why They Succeed Or Fail
• The New Product Process
Why Segment Markets?
For business firms
To respond more effectively to the wants of
groups of potential buyers & thus increase sales
& profits

Not-for-profit organisations
To satisfy client needs more effectively while
achieving the organisation’s goals
Why people do segmentation for the same reason whether it is for business or non-
profitable organization:
Is to a lot more effective in crafting my marketing efforts, it is all for the purpose of
effectiveness whether or not they lead to profitability

e.g.
Grouping things together that are similar so that the groups are distinct from the other
groups that are different from several aspects
Why Segment Markets?

What Market Segmentation Means

• gathering of buyers into groups that have

common needs / wants / benefits sought &
thus, similar response to a marketing action

• within each segment, there’s relatively

similar consumption behaviour
Elaboration of what is segmentation:
Group people so that they are similarly classified and they are dissimilar from
those that are belonging to a disparate segment
Why Segment Markets?

What Market Segmentation Means

Existence of segments led firms to use a

marketing strategy of differentiation
(different marketing mix)

You want to segmentation so that you do differentiated marketing strategy

Because there is no way that you can sell the same thing to everyone in the same
way
It is not possible at all
Because the market is different in all aspects
Therefore, companies needs to adopt differentiated marketing strategy
Why Segment Markets? ** NOT TESTED**

How to Segment Markets

1 product & multiple market segments
• can avoid developing & production costs

Market segment 1

Product 1 Market segment 2

Market segment 3
Why Segment Markets? ** NOT TESTED**

How to Segment Markets

Multiple products & multiple market segments
• effective if it meets customers’ needs better,
maintains quality/price, increases revenues & profits
Market segment 1
Product 1
Market segment 2
Product 2
Market segment 3
Product 3 Market segment 4
Why Segment Markets? ** NOT TESTED**

How to Segment Markets

Segments of One: mass customisation
• every customer is unique
• strategy is aided by flexible production &
marketing processes

Product
Individuals
variations
Steps In Segmenting & Targeting Markets
1. Group potential buyers into segments

Criteria to form segments

• Potential for increased profits
• Similarity of needs of buyers within a segment
• Difference of needs of buyers among segments
• Potential of a marketing action to reach a segment
• Simplicity & cost of assigning potential buyers to
segments
Steps In Segmenting & Targeting Markets
How do we segment (steps that we go through)

Potential for increased profits:

Of course by the end of the day, it must bring you money

Similarity and dissimilarity:

Must be rather distinct and distinguishable (must be able to tell them apart)

Reach a segment:
Meaning that the segment must be accessible to reach out
No point having a segment that is totally out of your reach physically

Assigning cost:
You must be able to cater to their needs at an affordable range

e.g. of forming a distinctive segment in an effective manner

Busy consumers:
Push up of sales of cup noodles, frozen meals
Socialites: Tai tai, social life
Whose calendars are filled with afternoon tea, nails
The segments are very distinctive, dissimilar and very reachable

e.g.
The doctor is in for Japanese patients only:
Profits – It is a segment that will definitely bring you money as there are enough Japanese nationalities living here
Similarity within segment: Because they speak Japanese
Different among segments: Different from you and I because their cultural background is different from the average Singaporean
Potential to reach segments: Reaches out to Japan Embassy there will be a whole lot of name and households are available
Simplicity and cost of forming segment: It is quite simple to assign and reach out to them
Steps In Segmenting & Targeting Markets

1. Group potential buyers into segments

Ways to segment consumer markets

Customer • Geographic
characteristics • Demographic
• Psychographic
 Steps In Segmenting & Targeting Markets
How do I then target and how do I select?

Geographic: Where they are located

e.g. sizes of appliances for different countries (they are vary based on geographic market)
Having a giantic kitchen Island in North America as there are plenty of land
But if you try to sell to Taiwan market or Japanese market, everything will become small due
to the space that they have
Shoppers here like colorful pens and larger, sportier watch faces, says Montblanc
Demographic: Based on age, gender, income, etc (human population)
e.g.
Age:
Nature farm’s revamped store @ Parkway Parade:
Sampling bar because old people like to sample things before they buy
Wider Aisles because old people are coming in with wheelchair or walking sticks as you
don’t want to have a collision with the shelves
Seating Area because they cant stand or walk for too long)
Psychographic: Their attitude towards things, their lifestyles (how they
live), their values
How people living their and you catch on the trend
Something that you want but it is still in the market place because
someone else wants it because someone has different lifestyle from you
altogether.
e.g.
Wet markets go upmarket: “Singaporeans are well-travelled, educated
and tech savvy. They want variety
e.g.
Puppy love breeds more pet services: “See dogs as more affectionate
and loyal”, “Small dogs have always been popular people live in flats:

e.g.
Online retailer Haf Box’s product:
Necklace pendant that are also magnifying glasses
Foldable walking sticks that can fit into handbags

e.g.
Gender differences:
Loreal having both men and women
Selling cars to different gender (guys goes for performance, girls go for aesthetics)
US food ads targeting male grocery shoppers article: Men do not look closely at prices, do
not carry a coupon book, want to get in and out of store quickly)
Steps In Segmenting & Targeting Markets

1. Group potential buyers into segments

Ways to segment consumer markets

Buying • Outlet type

responses • Benefits sought
• Usage / patronage
• Awareness / intentions
• Behaviours
Steps In Segmenting & Targeting Markets
Buying responses: What they look for, Where they go, how they buy things

Outlet Type:
e.g.
SingTel Shops
Apple Shops

Benefits sought: advantages that you seek, why did you buy some particular thing
e.g.
Clorox: strong cleaning power
Green Works (Clorox): for whose who do not want harsh chemicals
Sweden’s Doro: Large buttons, east to use and read
Australia’s KISA: for kids and users whit arthritis

Usage / Patronage: Based on specific benefits for a small group of users

e.g.
Payphone can be found in Chinatown & at Tekka Centre

Awareness / Intention (who are not aware and may have intention to go for healthcheck
E.g.
PC SHOW 2018

Behaviors
People who are quick shopper vs people who takes their time to shop
 Steps In Segmenting & Targeting Markets

1. Group potential buyers into segments

Consumer mkt Organisational mkt
Customer • Geographic • Geographic
characteristics • Demographic • Demographic
• Psychographic

Buying • Outlet type • Nature of good

responses • Benefits sought • Purchase location
• Usage / patronage • Type of buy
• Awareness / intentions
• Behaviours
Steps In Segmenting & Targeting Markets
Buying responses: What they look for, Where they go, how they buy things

Outlet Type:
e.g.
SingTel Shops
Apple Shops

Benefits sought: advantages that you seek, why did you buy some particular thing
e.g.
Clorox: strong cleaning power
Green Works (Clorox): for whose who do not want harsh chemicals
Sweden’s Doro: Large buttons, east to use and read
Australia’s KISA: for kids and users whit arthritis

Usage / Patronage: Based on specific benefits for a small group of users

e.g.
Payphone can be found in Chinatown & at Tekka Centre

Awareness / Intention (who are not aware and may have intention to go for healthcheck
E.g.
PC SHOW 2018

Behaviors
People who are quick shopper vs people who takes their time to shop
Steps In Segmenting & Targeting Markets

2. Group products to be sold into categories

After you segment customers but you also have to group them

e.g.
Consumer market: personal use
Organizational market: car rental firms, hotels, govt

e.g. Mercedes Bens

Provide Cars and Lorries and Buses
So Organization Market, they are targeting only on organizational market and
likely to be in logistics and transports
 Steps In Segmenting & Targeting Markets
3. Develop a market-product grid &
estimate the size of markets

Market Products
segments Product 1 Product 2 Product 3 Product 4 Product 5
Segment 1 Est. mkt size
Segment 2
Segment 3
Segment 4
Segment 5
Steps In Segmenting & Targeting Markets
Market Size:
Pick the one that is big because big implies potentially more growth and more profits logically
e.g.
Courses to flight dear of flying take off
The airlines conduct training courses to help people to overcome their fear of flying

e.g.
Teochew festival
Teochew festival was extended because of the size as there are 560,000 (2nd largest dialect group)

Expected growth:
Pick the one that has exponential growth and not going down hill
Increasing and not on a decline

e.g. for market size and expected growth

Emerging markets drive budget smartphone boom
In developing countries as they maybe small but their economy is improving their purchasing power will become better overtime such as Myanmar, India

Competitive position:
Pick the one that I can competitive a lot more effectively, I have a chance to survive and thrive
Pick the one that you are good in

Cost of reaching the segment:

Pick the one that I can spend the least money to target

e.g. for market size, expected growth, cost of reaching the segment
In Singapore, the number of people ageing is increasing and it will continue and they are reachable. Therefore, it is easy to find them
If you flash your Pioneer card, you will get discount in buying cars

Compatibility with organization’s objectives and resources:

Pick the one that is aligned with what my company is trying to do (everything has to be in place)
Steps In Segmenting & Targeting Markets

4. Select target markets

Criteria to pick the target segments

• Market size
• Expected growth
• Competitive position
• Cost of reaching the segment
• Compatibility with organisation’s objectives
& resources
 Steps In Segmenting & Targeting Markets
5. Take marketing actions to reach target markets
Market Products
segments Product 1 Product 2 Product 3 Product 4 Product 5
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
You have to also which are the ones you want to target
e.g.
Big size clothing product are targeting at the larger size group of people
So how do they reach out to them?
Via magazines, using models equally the same size as them
Via having public fashion shows, promotional events
Positioning The Product

Product positioning
The place an offering occupies in consumers’ minds
on important attributes relative to competitive
products
Positioning in marketing means:
It is a mental image, it is personal feelings, it is much more emotive
Reaching out is one thing but my message must have a unique positioning

Approaches I must make you look at my brand in a way that I want you to look at my brand that I
desire

• Head-to-head positioning Head-to-head positioning: everyone does the same thing

e.g.

• Differentiation positioning
All baby powder are heading on Health sportifying and growth

Differentiation Positioning:
e.g. usually gym is for buff people with songs and nice equipments but some gyms wants
to stand out so…
Small and intimate, bare-bones space, Individual attention at premium price
Gyms offer customized help for Nsmen to ace new IPPT (something unique)
Inclusive gym for folks with disabilities
Positioning The Product
How do you position?
Phrase:
By using tact-line messages: e.g.
e.g. Swiss made, certified chronometer (pass a test)
POSB What does the test do:
”Neighbors first. Bankers second” Arrival in protected plastic capsules (to remove disruptive factors)
e.g. Lift to lab is hydraulic (to prevent jolts)
SIA Test in dust-free room (room temperature, air pressure and
“A great way to fly” humidity checked every 10 seconds)
Left it under severe different temperature and position
Messages:
e.g. After the watch pass then people would buy it
It pays to “get fresh”, farm group encourages youth
Why not a get a jon which lets you: Environment:
Enjoy nature e.g.
Immerse in kamping spirit” Henn-Na hotel
And expect market rate salaries The world’s first hotel to be staffed by humanoid robots

Picture:
e.g.
Navy poster with a girl
Positioning The Product
Positioning Statement

• Often deducible from taglines

• & messages, pictures, phrase, environment,
etc.
Positioning The Product ** NOT TESTED**

Using perceptual maps

To discover the perceptions in potential
customers’ minds

1. Identify important attributes for a product / brand class

2. Discover how target customers rate competing
products / brands on these attributes
3. Discover where the company’s product / brand is on
these attributes, in the minds of potential customers
4. Reposition the company’s product / brand
What are Products
• Good, service or idea, etc.

• Comprise a bundle of tangible & intangible

attributes that satisfies consumers’ needs

• Received in exchange for money or

something else of value Marketing Mix of 4Ps:
Product
Place
Promotion
Position

Product:
Can be a physical object (things you see around us)
Can be a person (e.g. lady gaga as she is eye catching wearing weird outfit)
Can be an event (e.g. tomato festival)
Can be a place (e.g. Eiffel Tower)
Can be an organization (SBS, SPF)
Can be an Idea (e.g. Fight Dengue)
What are Products & Services
Classifying Products
Consumer products • Convenience
• Shopping
Purchased by • Specialty
ultimate consumers • Unsought

differ in terms of efforts spent,

attributes used, frequency of
purchase
What are Products & Services
Convenience Products:
Usually low cost
Things that you buy rather frequently
With very little thinking process
Widely available

Shopping Products:
Things that are relatively higher in price
Things that you buy occasionally
Found only at selected places
Involve in a bit more of a liberated decision thinking (you will search, you will debate, you will consider before making a purchase)

e.g. for Convenience + Shopping:

IKEA
Seeing a lot of things and some things are places strategically near the cashier that you grab and go

Specialty Products:
Usually luxury items
Highly expensive
Rarely bought
Thinking process is a lot more complex

Unsought Products:
Things that you will no think of buying on your own (something that you need to persuade you or remind you)

e.g. Blood Donation

What are Products & Services
Classifying Products
Business products • Components (part of
(B2B / industrial final product)
products)
• Support products
Purchased by (installations,
organisations to accessory equipment,
assist in providing supplies, industrial
other products services)
What are Products & Services

Components:
e.g.
RFID Chips (small as rice grains) are used in products

Support products/services:
e.g.
Having a class today, without a projector we still have a class
but having a projector make it a lot more enabling
What are Products & Services ** NOT TESTED**

Product Items, Lines & Width

Product Specific product that has unique brand, size or
Item price, with its stock keeping unit (SKU) number
Product A group that’s closely related: satisfy a class of
Line needs, are used together, sold to same
customer group, distributed through same type
of outlets, or are in same price range
Within each line is product variant (unique
colour, size, or price)
Product The number of product lines offered by a
Width company
New Products & Why They Succeed or Fail
What is a new product? ** NOT TESTED**

• Newness compared to existing product

• Newness from consumer’s perspective
o continuous innovation (no new learning required)
o dynamically continuous innovation (disrupts normal
routine but no totally new learning needed)
o discontinuous innovation (new learning & consumption
patterns needed)
• Newness from organisation’s perspective
o product line extension
o brand extension
o radical inventions
New Products & Why They Succeed or Fail
Marketing Reasons for New Product Failures
** NOT TESTED**
• Insignificant point of difference
• No economical access to buyers
• Incomplete market & product protocol before
development (protocol: identify well-defined
segment, specific customers’ needs / wants /
preferences, what the product will be & do to
satisfy customers)
New Products & Why They Succeed or Fail

Marketing Reasons for New Product Failures

• Not satisfying customer needs on critical

factors
• Bad timing ** NOT TESTED**

• Poor product quality

• Too little market attractiveness
• Poor execution of marketing mix (4 Ps)
The New Product Process
1. New product strategy development
o SWOT analysis + environmental scanning

2. Idea generation
o A pool of concepts to be candidates for new
products
o Sources of suggestions: employees,
customers, suppliers, R & D lab, competitors,
etc.
The New Product Process
**NO NEED TO MEMORIZE THE SEQUENCE OF THE “NEW PRODUCT PROCESS**

SWOT analysis:
Strength and weakness refer to internal competencies
Opportunities and Threats refer to external factors

Environmental Scanning:
What is happening out there

After scanning, you will have wild ideas, you brainstorm as you have a lot of wonderful things you
want to have

Idea generation:
No sensor ship, no limit (you can have ideas from different sources sometimes you can have
ideas from your customers)
The New Product Process
3. Screening & evaluation
o Internal & external approaches

4. Business analysis
o Specifies the product features, marketing
strategy, business fit & financial projections
After lots of ideas, you do screening as you cant take on everything

Screening and evaluation:

You can do it internally asking your employee, externally (asking customers), formally (doing a
survey), informally (just a chit-chat)

Business analysis:
Looking at cost figures, look at profit and lost

e.g. treadmill desk

The New Product Process

5. Development
o Idea is turned into prototype
o Lab & consumer tests, service delivery design,
safety tests
Development:
The previous steps are on papers only
But in this step, you can see a physical form (a prototype) to
test the ideas and refine your toughts

e.g.
Tension test for dolls making sure the head doesn’t comes out
Car crash test
Phone drop test
The New Product Process
After you try in your lab and you are comfortable
Then you do Market Testing but not all companies do test marketing because it is costly

Marketing Testing:
Going out there and see through customers acceptance and reaction

Test Market:
Standard:
Launching it in normal distribution channel a selected place and try it out

e.g. Tinder
Tested in Australia
They are tech savvy and they are very far away

Controlled:
Carefully designed and measured (shrink it into a small venue and measured it very carefully)

e.g.
Cheers started as a pilot store in NYP in 1998 (tested waters for 2 years)

Stimulated:
Can be done in marketplace(e.g. mall) or in lab

e.g.
Make believe Stimulator
The New Product Process

6. Market testing
o Exposes actual products to prospective
consumers under realistic purchase conditions
to see if they will buy

Test markets
• standard, controlled, simulated
• not feasible for all due to product nature
(e.g., intangible, too costly)
The New Product Process

7. Commercialisation
o Positioning & launch
Planting a brand image in people’s mind and then you launch
This stage is highly expensive because you incur a lot of Advertising and
Promotions

e.g.
Launching Microsoft is US$400 million on advertisement budget for tablet

After you launch new product, process does not end with commercialization
as it can be iterative
When a problem is found you go back to your storyboard and do it again and
again and again

e.g.
Candy Crush
They had a slow start
Design changes to intentionally “prevent” players from putting it down
(having different skill different score)
Then it become a global phenomenal
Lecture 5:
Market Segmentation, Positioning, & Forecasting Markets;
Developing New Products & Services

Why Segment Markets?

• What market segmentation means; When & how to segment
markets
Steps in Segmenting & Targeting Markets
• Step 1: Group potential buyers into segments
• Step 2: Group products to be sold into categories
• Step 3: Develop a market-product grid & estimate size of markets
• Step 4: Select target markets
• Step 5: Take marketing actions to reach target markets
Lecture 5:
Market Segmentation, Positioning, & Forecasting
Markets; Developing New Products & Services
Positioning The Product
• Two approaches to product positioning
• Writing a positioning statement
• Product positioning using perceptual maps
What Are Products & Services
• Classifying products
• Product items, lines & width
New Product & Why They Succeed Or Fail
• What is a new product
• Why products & services succeed or fail
Lecture 5:
Market Segmentation, Positioning, & Forecasting
Markets; Developing New Products & Services

The New Product Process

• Stage 1: New product strategy development
• Stage 2: Idea generation
• Stage 3: Screening & evaluation
• Stage 4: Business analysis
• Stage 5: Development
• Stage 6: Market Testing
• Stage 7: Commercialisation