A brand helps you to target your audience. A learning brand gets to know its customers, and goes out looking for them. Segmentation is the process of identifying those target audiences and understanding them in such depth that the offer, through the brand, can be tailored with both precision and sufficient uniqueness to win compet- itive advantage.
Other books deal with the mechanics of segmen- tation (see page 171). Here we will focus on the importance of segmentation to the development of a winning brand strategy and, in particular, the need to practice segmentation with a level of sophisti- cation greater than the norm.
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Segmentation – a source of
Definitions and purpose – avoiding the
‘me too’ scenario
A segment is a group of people with similar needs, perceptions, attitudes and behaviours, concerning your offer and offers like yours. In theory the process of segmentation could break these groups down into micro-segments, or even down to unique individuals. How far you need to go depends on the nature of your market, and your intentions and ability to vary your offer.
For most consumer goods, the segments come in tens if not hundreds of thousands of consumers. For a B2B supplier the entire customer base may only number 100 and segments comprising single figures may be appropriate.
Whatever the scale, the intention remains the same: to develop an offer that meets the needs of the segment as uniquely as possible. One of the problems for the brand manager is that if your basis of segmentation is the same as your competitors, in other words you are all targeting the same people with the same needs, then the opportunities for uniqueness are somewhat limited. The brand name may be the only point of difference. While this is of course a key purpose of the brand – to find differen- tiation in crowded markets – it might be better to find a more novel way of segmenting the market in the first place. Very often it will require only a small shift in your view to find potential competitive advantage staring you in the face.
If everyone were to segment the market the same way, where would be the competitive advantage in that?
Choices
The thing about segmentation is that there are always choices, and it is important to try to find a choice not already taken by a competitor.
Kellogg’s and Weetabix
In the breakfast cereal market Kellogg’s has chosen to place individual brands in all of the available segments, from health to fun, diet control to energy, traditional to novelty. Its promotional spend is consequently huge (£55 million in the United Kingdom) but it occupies 8 out of the top 10 positions for breakfast cereal brands sold in the United Kingdom.
Weetabix makes another choice: to focus on fewer segments through far fewer brands. Weetabix is number two in the United Kingdom’s top 10 selling breakfast cereal brands with a promo- tional spend of £15 million focused on a product once described as ‘a dour, sugarless flaked wheat block that looks like it was designed by the Soviet Cereal secretariat in 1951’. In fact, Weetabix is the SAS of the breakfast cereal market compared to the Kellogg’s Red Army.
The brand as focus for the marketing mix
Having identified the segment, and understood its dynamics, the marketer will need to construct an offer based on the four Ps – product, price, promotion and place. The brand is the focus that puts this ‘marketing mix’ to work. Not only do the four Ps interact with each other, they must balance with each other for a successful mix. New brand launches are particularly prone to misfits in the mix.
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Segmentation as a weapon in the UK breakfast wars…
Babycham
When Babycham was first launched, the product, promotion and place were well thought out, but the price was too low. This was a drink (‘fake’ champagne) that men bought for their girl- friends to impress them (remember this was the 1960s!). But at such a low price who was going to be impressed? The product was re-launched at a suitably ego-enhancing price and remains one of the brand icons of a now very different world.
Different mix, different brand?
Since a segment is a group with unique needs it is quite possible that different segments will require sufficiently different market mixes to warrant different brands.
ICI Dulux
In the market for decorative paint used by professional tradesmen, ICI Dulux found itself targeting two key, but quite What price Babycham?
Table 10.1 Segmentation and branding in the professional paint market
Base Major Small Decorator
Contractor Firm
size of firm 200+ 1–5
size of purchase industrial scale, domestic scale, larger pack size smaller pack size specification professional from client, usually
a homeowner distribution channel direct from supplier builders or
decorators’ merchant purchasing function professional buyer owner/manager
direct to supplier through merchant lead influence on price and cost client specification purchase decision analysis and brand loyalty
Brand Glidden Dulux Trade
different segments – the small firms of decorators and the major contractor firms. Table 10.1 shows some of the bases on which the segments were compared, and found to be so different as to require two separate brands, Dulux Trade and Glidden.
When it looked at buying behaviour in particular it found that the brand loyalty of self-employed professional decorators and the influence of their clients (brand aware houseowners) made the use of the Dulux brand a must. The buyer for the major contractor demanded cost reductions that would have compromised the main brand had it attempted to work in both segments A new brand was the perfect solution, and one already existed in the ICI world group – Glidden is the main ICI paint brand in the United States.