Segmentation, Targeting & Positioning

In this chapter we will go through :-

1. What are the different levels of market segmentation?

2. How can a company divide a market into segments ?

3. How should a company choose the most attractive target markets ?

4. What are the requirements for effective segmentation ?

Overview: Segmentation, Targeting & Positioning

Why do this?

• Segmentation: involves finding out what kinds of consumers

with different needs exist.

Processed involved in Segmentation

1.Identify the existing and future wants in the current market

2.Examine the attributes that distinguish the segments

3.Evaluate the proposed segment ,attractiveness on the basis of measurability, accesibility,and size

Step 1. Market SegmentationRequirements for Effective Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments must be effectively reached and served.

• Segments must be large or profitable enough to serve.

Measurable

Accessible

Substantial

Differential

Actionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

Step 1. Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Step 2. Market TargetingMarket Coverage Strategies

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 3

Market

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

DemographicAge, gender,

family size and life cycle, or income

PsychographicSocial class, lifestyle,

or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

Market Segmentation - Principles

• Segmentation Variables– Geographic– Demographic– Psychographic– Behavioral – Other (anything!)

• No single best way to segment a market.• Often best to combine variables and identify smaller, better-

defined target groups.

Geographic Segmentation

• Divide markets into different geographic units.

• Examples:– World Region or Country: North America, Western

Europe, European Union, Pacific Rim, Mexico, etc.– Country Region: Pacific, Mountain, East Coast, etc. – City or Metro Size: New York, San Francisco– Population Density: rural, suburban, urban– Climate: northern, southern, tropical, semi-tropical

Demographic Segmentation

• Use Differences in:– age, gender, family size, family life cycle, income,

occupation, education, race, and religion

– Most frequently used segmentation variable• Ease of measurement and high availability.

– Usually the worst variable to use.

Psychographic Segmentation

Psychographic segmentation divides a

market into different groups based on social

class, lifestyle, or personality

characteristics.People in the same demographic classification often have very different lifestyles and personalities.

Value And LifestyleSRI Consulting Business Intelligence

Consumer Motivations

Consumer recourses

• http://www.strategicbusinessinsights.com

• Those primarily motivated by ideals are guided by knowledge and principles.

• Those motivated by achievement look for product and services that demonstrate success to their peers.

• Those who motivate in self-expression desire social or physical activity ,variety , and risk.

Four groups with higher resources :-1.Innovators :-successful ,sophisticated,

active ,take-charge people with high self esteem .purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services .

Eg:- CEO of an MNC

• Thinkers :-Mature , satisfied ,and reflective people who are motivated by ideals and who value order, knowledge, and responsibility . They seek durability , functionality and value products(Social and emotional values)

• Eg: senior professionals , politicians

• Achievers :-successful goal oriented people who focus on career and family . They favour premium products that demonstrate success to their peers.

• Eg : Doctors , Lawyers ,etc

• Experiencers :- Young enthusiastic , impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion , entertainment , and socializing

• Eg:- young IT prof

The four group with lower recourse are:-• 1.Believer :-conservative ,

conventional ,traditional people with concrete beliefs .They prefer familiar products and are loyal to established brand .

• Eg:-Middle income group

2.Strivers :- Trendy and fun loving people who are resource constrained . They favor stylish products that emulate the purchases of those with greater material wealth .

Eg :- Low income

3.Makers :- Practical , down to earth , self sufficient people who like to work with their hands . They seek products with a practical or functional purpose .

Eg:-trade union leaders , human activists

4.Survivors :- Elderly , passive people who are concerned about change. They are loyal to their favorite brands.

Eg:- retired employees, senior citizens,

Behavioral Segmentation

• Occasion– Special promotions &

labels for holidays.– Special products for

special occasions.

• Benefits Sought– Different segments

desire different benefits from the same products.

• Loyalty Status – Nonusers, ex-users,

potential users, first-time users, regular users.

• Usage Rate – Light, medium, heavy.

Loyalty Status Segmentation

Switchers

Shifting loyals

Split loyals

Hard-core

User & Loyalty Status Segmentation

Evaluating Market Segments

• Segment Size and Growth Potential– Sales, profitability and growth rates

• Segment Structural Attractiveness– Competition, substitute products, – buyers & supplier power, new

entrants (Porter’s Five Forces)• Company Objectives and Resources– Core competencies– “What business do we want to be

in?”

Targeting Segments - Overview

Differentiated (Segmented) Marketing

– Targets several segments and designs separate offers for each.

– Coca-Cola (Coke, Sprite, Diet Coke, etc.)

– Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)

– Toyota (Camry, Corolla, Prius, Scion, etc.)

Micromarketing

• Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.

Activity -2 c

Identify the bases by which companies have segmented their markets for these products (taking help from the television ads and other advertisements) : Nakshatra diamonds , Cinthol soaps , Domex toilet cleaner and parker pen .

TARGETING

• Targeting is defined as a group of people or organisations for which an organisation designs , impements and maintains the marketing mix .

Selecting target market

• Homogenious preference :- soft drinks market(Co-co cola )

• Diffused preferences :- automobile market,HUL having different brands for soaps .

• Clustered preferences :- occupation having impact on the types cloths worn.

Market Preference Patterns

Patterns of Target Market Selection: Product x Market Matrices

Positioning

Placing a product occupies in consumers’ minds relative to competing products.

eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

Positioning Example

Remember this important point.

Positioning is all about

'perception'.

This allows them to be compared and contrasted in relation to each other. This is the

main strength of this tool.

Working of position map

• The marketer would draw out the map and decide upon a label for each axis.

• They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two).

• The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.

Positioning Maps: Luxury SUVsPrice vs. Orientation Dimensions

Bases of positioning the product

• Attribute positioning :- size or number of years in existence

• Eg : Sunfeast positions its snacky brand as bigger lighter and crisper.

• Benefit positioning : Product is positioned as the leader in a certain benefit.

• Eg : Hyundai santro• Headline – India’s best –loved family car is

now also India’s ‘simplest car to drive’

• Use or Application positioning • Positioning the product as best for use and

application .• Eg: Kenstar positioned its product as

UNEXPECTEDLY COLD

• User positioning:- for some user group • Eg :- Parle-G for kids

• Competitor positiong :- the product claims to be better in some way than a particular competitor .

• Quality and price positioning :-The product is positioned as offering the best

value .Eg : Big Bazar

Positioning Strategy

• Competitive advantages• Points of Parity• Points of Difference => Differentiation

Positioning results from differentiation and competitive advantages.

Positioning may change over time.

Choosing the Right Competitive Advantages

• The best competitive advantages are…

– Important– Distinctive– Superior– Communicable– Pre-emptive– Affordable (to company and consumer)– Profitable

Moral: Avoid meaningless differentiation.

Positioning Errors

• Under-positioning:– Not positioning strongly enough.

• Over-positioning:– Giving buyers too narrow a picture of the product.

• Confused Positioning:– Leaving buyers with a confused image of the product.

Generic Product Positions & Value Propositions

In-class Activity

• Describe how each of the following brands, companies, or products is positioned:

In-class Activity, Part 2

• Choose one of the companies/brands and…– Identify relevant direct competitors– Choose the two dimensions that are most

important to consumers– Develop a perceptual positioning map– Are there any opportunities in this category?

In-class Activity, Part 3• Choose a company and invent a segmentation scheme for

that company’s customers using the variables we discussed in class.