Segmenting, Targeting &

Positioning

Ajilal

Figure 8.1: Steps in the Target Marketing Process

Sells multiple brands

within the same

product category for

a variety of products

Brands feature a

different mix of

benefits and appeal

to different segments

Has also identified

different niches within

certain segments

Product modifications

are useful: Tide offers

seven different product

formulations to serve

different niches’ needs

Procter & Gamble

Market Segmentation

Market

MarketSegment

MarketSegmentation

People or organizations with needs or wants and the ability and

willingness to buy

A subgroup of people or organizations sharing one or more characteristics that cause them to

have similar product needs.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

MARKET SEGMENTATION =

Dividing market into segments,

each of which behaves differently

vis-à-vis your product

Selecting certain segment(s)

Developing one marketing plan for

each segment

Thinking small(er)

PRODUCT

MARKETSOFT

PILLOW

MEDIUM

PILLOW

FIRM

PILLOW

Stomach sleepers

Back sleepers

Side sleepers

Key: L, Large market; M, medium market; S, small market

L

L

L

M

M

M

M

S

S

Product/Usage Habits

Segmentation

Pillow Manufacturer

Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!

Buyer Preference Patterns

Homogeneous preference

Diffused preference

Clustered preference

STYLE

DURABLE

Homogeneous Preference

-No natural segments

-All buyers have same preference

TITAN WATCHES

STYLE

DURABLE

Diffused Preference

-No pattern (…or poor research)

-Take center position

TITAN WATCHES

STYLE

DURABLE

Clustered Preference

-Natural segments

-Increases as number of competitors increases

TITAN WATCHES

Values of the Two Segments-

Youngsters & Adults - WATCHES

Attribute 1

PRICE

Attribute 2

BEAUTY

Attribute 3

DURABILITY

Adults

Youngsters

Segmentation Dilemma

Mass Marketing --

(Economies of Scale)

(However, everyone is

different)

CUSTOMIZATION

Choosing a Targeting Strategy

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

Customized Marketing

Undifferentiated Marketing

Appeals to a broad spectrum of

people

Efficient due to economies of scale

Effective when most consumers

have similar needs

Example: Big Bazaar

Differentiated Marketing

Develops one or more products for each of several customer groups with different product needs

Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products

Example:Lakme, Ponds, Fair & Lovely

Concentrated Marketing

Entails focusing efforts on offering

one or more products to a single

segment

Useful for smaller firms that do not

have the resources to serve all

markets

Example:HMT Watches

Customized Marketing

Segments are so precisely defined that

products are offered to exactly meet the

needs of each individual– Example:

Mass customization is a related

approach in which a company modifies a

basic good to meet the needs of an

individual– Example: Dell Computers

Segmentation

Why segment?

– Identifies opportunities and needs.

– Allows firm to focus on specific needs.

– Improves marketing mix for each segment.

– Allows small firm to exist.

The Importance of

Market Segmentation

Markets have a variety of product

needs and preferences

Marketers can better define

customer needs

Decision makers can define objectives

and allocate resources more accurately

Criteria for Successful

Segmentation

Criteria for

Market Segments

Substantiality

Identifiability

Accessibility

Responsiveness

Criteria for Segmentation

Substantiality

IdentifiabilityMeasurability

Accessibility

Responsiveness

Segment must be large enough to warrant a special

marketing mix.

Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with

marketing mix.

Unless segment responds to a marketing mix differently, no separate treatment is needed.

Segmentation Bases

Characteristics of

individuals, groups,

or organizations used

to divide a total market

into segments.

(variables)

Bases for Segmentation

Behavioral

Benefits Sought

Psychographics

Demographics

Geography

Bases Used toSegment

ConsumerMarkets

Geographic Segmentation

Region of the country or world

Market size

Market density : TV Companies

Climate: woollen clothes

City

Bases for Segmentation

Behavioral

Benefits Sought

Psychographics

Demographics

Geography

Bases Used toSegment

ConsumerMarkets

Bases for

Demographic Segmentation

Age: Cartoon Network; MTV; News Channels

Gender: Cosmetics & After Shave

Income: Economical & Luxury goods

Ethnic background: Food

Family Life Cycle: Life Insurance Companies

Generation: Apparels

Education

Occupation: PC Selling

Bases for Segmentation

Behavioral

Benefits Sought

Psychographics

Demographics

Geography

Bases Used toSegment

ConsumerMarkets

Psychographics

Psychographic segments market in terms of shared attitudes, interests, and opinions

Segments include demographic information such as age and income, but also includes richer descriptions

Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)

Bases for

Psychographic Segmentation

PsychographicSegmentation

Personality

Motivation

Lifestyles

Attitude

MOTIVATION

•Health Supplements

•Cosmetics

•Safola

•Life Insurance

•LG Products

Life Style: VALS

VALS Framework•PRINCIPLE ORIENTED:

•Fulfilled: Mature, Well Educated, Informed, Respectful but Open minded

•Believers: Conservative, Conventional, follow established rules

•STATUS ORIENTED:

•Achievers:Committed to family and Work, Image is very Important

•Strivers: Unsure of themselves, Money is a measure of success

•ACTION ORIENTED:

•Experiencers: Young, Vital, Enthusiastic, rebellions

•Makers: Practical, Suspicious of new ideas, value working with their hands

Bases for Segmentation

Behavioral

Benefits Sought

Psychographics

Demographics

Geography

Bases Used toSegment

ConsumerMarkets

Benefit Segmentation

The process of grouping

customers into market

segments according to

the benefits they seek

from the product .

Maruti Esteem, Honda City

Bases for Segmentation

Behavioral

Benefits Sought

Psychographics

Demographics

Geography

Bases Used toSegment

ConsumerMarkets

Segmenting by Behavior

Behavioral segmentation slices

consumers on the basis of how they

act toward, feel about, or use a

product

Behavioral Segmentation

Variables

Market Segmentation

Occasions

User Status User Rates: Airlines

Loyalty Status: Credit

Cards

Readiness Stage

Attitude Toward the Product

Business Marketing SegmentationGeographic

Customer Type

Customer Size

Product UseBusinessMarkets

Purchasing Criteria

Purchasing Strategy

Importance

Personal Characteristics

Micro-segmentation

Macro-segmentation

Steps in Segmenting a Market

Select a

market for

study

Choosebases

for segmen-

tation

Selectdescrip-

tors

Profileand

analyzesegments

Selecttarget

markets

Design,imple-ment,

maintainmkting

mix

Target Market

A group of people or

organizations for which an

organization designs,

implements, and maintains

a marketing mix intended to

meet the needs of that

group, resulting in mutually

satisfying exchanges.

Strategies for Selecting

Target Markets

ConcentratedStrategy

UndifferentiatedStrategy

MultisegmentStrategy

Undifferentiated

Targeting Strategy

Advantages: Potential savings on

production and marketing costs

Disadvantages: Unimaginative product

offerings Company more

susceptible to competition

Concentrated

Targeting Strategy

Advantages: Concentration of resources Meets narrowly defined

segment Small firms can compete Strong positioning

Disadvantages: Segments too small, or

changing Large competitors may market

to niche segment

Advantages: Greater financial success Economies of scale

Disadvantages: High costs Cannibalization

Multisegment

Targeting Strategy

Positioning

Developing a specific

marketing mix to influence

potential customers’ overall

perception of a brand,

product line, or

organization in general.

Position

The place a product, brand,

or group of products

occupies in consumers’

minds relative to competing

offerings.

Effective Positioning

Assess the positions of

competing products

Determine the dimensions of

these positions

Choose an effective market

position

Positioning Bases

Attribute

Price and Quality

Use or Application

Product User

Product Class

Competitor

Positioning Bases