Market Segmentation

Topics: Marketing, Market segmentation, Product differentiation Pages: 48 (13047 words) Published: January 16, 2010
Market Segmentation and Positioning
Positioning is not what you do to a product; it is what you do to the mind of a prospect. Ries and Trout (1972)

Learning outcomes
After reading this chapter, you will be able to:

✔ Describe the principles of market segmentation and the STP process.

✔ Explain the characteristics and differences between market segmentation and product differentiation.

✔ Explain how market segmentation can be undertaken in both consumer and business-to-business markets.

✔ Describe different targeting strategies. ✔ Explain the concept of positioning. ✔ Illustrate how the use of perceptual maps can assist the positioning process.


Part 2 Principles of Marketing Management

Stagecoach operates bus services across the UK. How does it know who its customers are and where they want to access its services? We speak to Elaine Rosscraig to find out more.

Elaine Rosscraig for Stagecoach
Stagecoach UK Bus is one of the largest bus operators in the UK, operating both express and local bus services across the country. In addition the company operates a comprehensive network of intercity operations under the Megabus Brand. We connect communities in over 100 towns and cities in the UK, operating a fleet of around 7,000 buses. We carry over two million customers every day on our network which stretches from Devon to the north of Inverness. So how do we identify who our customers are and where they may wish to access our services? Well, that’s a very interesting and important question. At Stagecoach we have formulated our segmentation and positioning strategy using primary research. By using the results of the primary research we have identified our key market segments, which have been compiled into three groups, all of which are linked to bus use. These groups may be categorized as: user, lapsed user, and non-user. A major issue to consider is how public transport is currently perceived by these target segments. Public transport in general has a negative reputation in the UK. This is the result historically of limited ongoing customer communication, inadequate staff training, and poor customer relations within the industry. Customer perception of Stagecoach is linked directly to the journey experience and customer satisfaction. In order of priority the following aspects of service contribute to customer satisfaction with the Stagecoach service: reliability/punctuality, staff attitude, comfort during the journey, cleanliness of the vehicle (interior and exterior), space for bags/pushchairs, and value for money.

An important market to target is the non-user segment . . . [especially those with] a propensity to switch. An important target market for Stagecoach is the non-user segment. The customers contained within this segment demonstrate a propensity to switch the mode of transport to bus. We estimate that about 30% of existing non-bus users in the UK have a propensity to switch the mode of transport they are regularly using, given the appropriate incentives. In addition it is essential that Stagecoach address the perceived barriers associated with bus travel amongst this group. Through geodemographic profiling we have further identified microdemographic segments within each of the local areas which we serve, to whom specific barriers to bus use are an issue. This information has formed the basis of our segmentation strategy and how we subsequently tailor our communication with each of these prospect customer groups.

Given the primary research findings to date and the market segments identified, what would you recommend Stagecoach do to target and position their brand to the differing market segments to encourage switching in mode of transport and use of Stagecoach’s services?

Customer perceptions seem to be entirely driven by the journey experience Stagecoach

Ever wondered why marketers only target certain markets or how these markets are identified? Think about...
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