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Segmentation, Targeting & Positioning

Segmentation, Targeting & Positioning Concept of Market Segmentation Market segmentation is the process of dividing a potential market into distinct

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Page 1: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Segmentation, Targeting & Positioning

Page 2: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Segmentation, Targeting & Positioning

Concept of Market Segmentation Market segmentation is the process of dividing a potential

market into distinct sub-markets of consumers with common need and characteristics

Benefits of Market Segmentation Helps to understand the customer need To adopt better positioning strategies Proper allocation of marketing budget Helps in preparing a better competitive strategy Provides guidelines in preparing media plan of the company Different offerings in different segments enhances the sales Customer gets more customized product Helps company to identify niche markets Provides opportunities to expand market Encourages innovations

Page 3: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Requisites of Effective Segmentation

To be effective, segmentation should have the following characteristics

1. Measurable and Obtainable The size profile and other relevant

characteristics of the segment must be measurable and obtainable in terms of data

If the information is not obtainable, no segmentation can be carried out

2. Substantial The segment should be large enough to be

profitable For consumer markets, the small segment might

disproportionably increase the cost and hence products are priced too high

Page 4: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Requisites of Effective Segmentation

Accessible The segment should be accessible through

existing network of people at affordable cost

Differentiable The segments are different from each other

and require different 4Ps and programs Actionable The segments which a company wishes to

pursue must be actionable in the sense that there should be sufficient finance, personnel and capability to take them all

Page 5: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The Process of Market Segmentation

The process of market segmentation passes through the following stages:

Identify the existing and future wants in the current

market

Examine the attributes

that distinguish among the segments

Evaluate the proposed segment

attractiveness on the basis of

measurability, accessibility and

size

Page 6: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The Process of Market Segmentation

1. Identify existing and future wants in the current market

Marketers must examine the changing needs of the customer

This process provides opportunity to examine whether customers are satisfied with existing products or not

If they are not satisfied what are the features they are looking for the product

E.g.. Titan watches

Page 7: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The Process of Market Segmentation - Identifying existing and future wants

Page 8: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The Process of Market Segmentation

2. Examine the attributes that distinguish among segments

In this process marketers should segregate different types of wants into homogeneous categories

This may be on the basis of product features, lifestyle or behavior

Page 9: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The Process of Market Segmentation – Examine the attributes

Page 10: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

The process of market segmentation

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

Segments selected in second steps should be evaluated against the requisites, ie. Measurability, accessibility, substantial, actionable and differentiability

Page 11: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Proposed segment attractiveness

Page 12: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmenting Consumer Markets

Geographic Segmentati

on

Psychographic

Segmentation

Demographic

Segmentation

Behavioral Segmentati

on

CONSUMER MARKET

SEGMENTATION

Page 13: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

Geographic

Page 14: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

1. Geographic Segmentation Dividing the market into different

geographical units such as nations, states, regions, cities or neighborhoods

The company can operate in one or a few geographic areas or operate in all buy pay attention to local variations

Page 15: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation

DemographicSegmentation

Page 16: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation

Demographic Segmentation In demographic segmentation the market is

divided into groups on the basis of variables such as age, family size, family life-cycle, gender, income, occupation, education, religion, race, generation, nationality and social class

This is the most popular bases for distinguishing customer groups

One of the major reason is that consumers’ wants, preferences and usage rates are often associated with demographic variables

Page 17: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation

Some of the demographic variables are:A. AGE & LIFE-CYCLE STAGE On the basis of age, a market can be

divided into four parts viz. children, young, adults and old

A successful marketing manager should understand the age group for which the product would be sold and determine his marketing policy, pricing policy, advertising policy etc

Page 18: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation – Age & Life Cycle

Page 19: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation

B. Gender This segmentation is very common in

clothing, hair-styling, cosmetics etc C. Income Income segmentation is very popular in

such product and services such as automobiles, clothing, cosmetics, travel etc

But income does not always predict the best customers for a given product

Page 20: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation - Gender

Page 21: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of segmentation - Income

Page 22: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

3. PSYCHOGRAPHIC SEGMENTATION When the customers are categorized on the basis of life

style, personality or values People belonging to the same demographic group may

exhibit different psychographic profiles The major psychographic factors are: A.LIFE STYLE People exhibit different life style and goods they consume

express their life styles One of the most used psychographic profiling schemes is

called VALS developed by SRI International Inc. VALS-1 (First Version) groups the entire US population

into 8 groups

Page 23: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation – Life Style

Page 24: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation VALS - 1

Page 25: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Psychographic segmentation – Ref Page No: 130,131,132,133

Page 26: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

B. PERSONALITY When marketers use personality variables to

segment the markets, they endow their products with brand personality that corresponds to consumer personalities. Eg. Raymonds

C. SOCIAL CLASS It has a strong influence on consumer

preferences and the products they buy or consume

Social class becomes the key factor in buying

Page 27: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

4. BEHAVIORAL SEGMENTATION OR CONSUMER RESPONSE SEGMENTATION:

In behavioral segmentation, buyers are divided into groups on the basis of their knowledge or attitude towards the use of , or response to a product

Some of the behavioral factors are:a. Occasions According to occasions, buyers develop a need,

purchase a product or use a product A company should consider critical life events to

see whether they are accompanied by certain need

Page 28: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation - Occasion

Page 29: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation - Occasion

Page 30: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

b. Benefits Buyers can be classified according to the

benefits they seek from the productsc. User Status Market can be segmented into non-users,

potential users, first time users and regular users of a product

Market leaders will focus on attracting potential users, whereas smaller firms will try to attract current users away from the market leader

Page 31: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation- User Status

Page 32: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

d. Usage Rate Markets can be segmented into light, medium and heavy users

of the product Heavy users are small percentage of the market but account for

high percentage of total consumption Marketers try to attract heavy users than light userse. Loyal Status Consumers have varying degree of loyalty to specific brands,

stores and other entities. Buyer can be divided into four groups according to brand loyalty status: Hardcore Loyals – Consumers who buy one brand all the time Split Loyals: Consumers who are loyal to two or three brands Shifting Loyals: Consumers who shift from one brand to another Switchers : Consumers who show no loyalty to any brand. When

there is a low involvement and few significant perceived brand differences, consumer try to purchase different brands in the category

Page 33: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation –Loyal StatusHardcore Loyal

Page 34: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation –Loyal StatusSplit Loyals

Page 35: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation –Loyal StatusShifting Loyals

Page 36: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation –Loyal StatusSwitchers

Page 37: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Segmentation

f. Buyer-Readiness Stage A market consists of people in different

stages of readiness to buy a product Some are unaware of the product, some

are aware, some are informed, some are interested, some desire the product and some intend to buy

Page 38: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Targeting

Targeting is defined as a group of people or organizations for which an organization designs, implements and maintains the marketing mix

Once the bases of segmentation are selected, the marketer has to identify the people or organization to whom the product is meant

SELECTING TARGET MARKET SEGMENTS Depending upon the emerging patterns of

market segmentation, there exists various segments in a market. They are:

Page 39: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Targeting

Homogeneous Preference Showing no natural segments as in case of

soft drinks Diffused Preference Showing clear preference as in case of

automobile market Clustered Preference Market showing natural segments as in

case of occupation having impact on the types of clothes worn

Page 40: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Targeting

The general strategy adopted for market segmentation are:

a. Undifferentiated Marketing It is a market coverage strategy in which the

company treats the target market as one and does not consider that there are market segments that exhibit uncommon needs

The company focus on the centre of the target market to get maximum advantage

The feature of ‘one product all segments’ calls for presenting one marketing mix for the target market. Example Coca Cola

Page 41: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Targeting

b. Differentiated Marketing It is a market coverage strategy in which the

company goes for proper market segmentation as depicted by the analysis of the total market

The company goes for several products or several segment approach which calls for preparing different marketing mixes for each of the market segment

This is followed by Hindustan Lever that sell soap in different segments

Page 42: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Targeting

c. Concentrated Marketing It is a market coverage strategy in which company

follows ‘one product one segment’ principle. The manufacturer gets maximum knowledge

about the segment’s needs and therefore acquires special reputation.

This strategy helps the small companies to stand against a large corporation because small companies can create niches in its one-product one segment approach by providing maximum varieties

Page 43: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Choosing a Market Coverage Strategy

FOCUS UNDIFFERENTIATED MARKETING

DIFFERENTIATED MARKETING

CONCENTRATED MARKETING

PRODUCT ONE/FEW MANY ONE/FEW

SEGMENT ALL MANY ONE/FEW

MARKETING MIX

ONE MANY ONE/FEW

COMPARISON OF MARKET COVERAGE STRATEGIES

Page 44: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Choosing a market coverage strategy

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

Constrained Firm Resources

More suitable Least suitable Most suitable

Common usage of products

Most suitable More suitable Least suitable

Different need satisfying products

Least suitable Most suitable More suitable

Page 45: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Market Positioning

Each firm needs to develop a distinctive positioning for its market offering

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind

Many marketers advocate promoting only one central benefit and Rosser Reeves called it as ‘ a unique selling preposition’ (USP)

Some of the USP includes ‘best quality’, ‘best service’, ‘lowest price’, ‘best value’, ‘safest’, ‘more advanced technology’ etc

Page 46: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Market Positioning

Sometimes double benefit positioning may be necessary if two or more firms claim to be best on the same attribute

A company must avoid four major positioning errors:1. Under Positioning Some companies discover that buyers have only a vague idea of the

brand. The brand is seen as just another entry in a crowded market place

2. Over-positioning Buyers may have too narrow image of the brand3.Confused Positioning Buyers might have a confused image of the brand resulting from the

company’s too many claims or changing the brand’s positioning too frequently

4.Doubtful Positioning Buyers may find it hard to believe the brand claims in view of the

product’s features, price or manufacturer

Page 47: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Positioning Maps

Is a two dimensional graph of how a product, brand or company is perceived versus competition

These maps are drawn on important buying dimensions of consumer for company products as well as competitors products

Construction of Position Map Evaluate the buying dimension of customer Select two buying dimensions of consumer - Eg. Price

and quality Identify the relative market share Draw the circles according to relative market share on

two dimension graph

Page 48: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Positioning Maps for soaps

Cosmetics

Ayurvedic

Low price High Price

Godrej No:1

LifebuoySantoor

Page 49: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Positioning the Product

The bases for positioning strategies are:1. Attribute Positioning: A company positions itself on an

attribute such as size or number of years in existence

2. Benefit Positioning The product is positioned as the leader

in a certain benefit3. Use or Application Positioning Positioning the product as best for use

Page 50: Segmentation, Targeting & Positioning  Concept of Market Segmentation  Market segmentation is the process of dividing a potential market into distinct

Bases of Positioning the Product

4. User Positioning Positioning the product as best for some user

group5. Competitor Positioning The product claims to be better in some way than

a particular competitor6. Product Category Positioning The product is positioned as the leader in a certain

product category7. Quality or Price Positioning The product is positioned as offering the best value