Targeting, Segmenting and Positioning

Potential of rural market

• Large population• 70% of India’s population lives in rural areas

• Purchasing power• Increasing

• Effective communication

• IT penetration

• Impact of globalization

• Saturated urban market

Segmentation

• Dividing heterogeneous market into sub – markets

• Heterogenity• Population size, socio – cultural difference

between regions, difference in income level, family structure

Requisites for effective segmentation

Measurable AccessibleDifferentiableSubstantial

Example:- Bajaj Auto Ltd

Degrees of segmentation1.Mass marketing:

• Most marketers used this in rural markets

• All consumers being treated the same

• company could target maximum no. of consumers

• First step in marketing-less market knowledge

• Eg 1:

• HLL offered Surf to all consumers.Then Nirma entered,seized the market share of low income households.Then HLL introduced Wheel

Eg 2;

Colgate palmolive successfully marketed same toothpaste to all consumers in urban and rural market. Recently they introduced Cibaca when the rural market became more demanding

2.Segment marketing

• Identifies customers as different groups

• Eg1 :Colgates 10gm sache in 2000 aimed rural consumer

• Eg2:LG’s low cost television Sampoorna (1999)

• Britannia introduced smaller pack sizes of Tiger biscuits in 1998,Rs4,Rs 2 Rs 1 pack

3.Niche marketing• Serves selctively one or a few customer

groups

• Niche marketing is used when there is a small group with specific need .Our rural amrket is not matured to this level

Eg: Hero Honda bikes, Nokia mobiles

4.Micro marketing• Focus on individuals or very small groups

• To satisfy a particular taste or need

Eg: Dabur launched Anmol,a mustard and amla based hair oil to target rural consumers in northern markets who used loose mustard oil.50 ml

pack worth Rs 10.

Micromarketing is divided

into 2

i)Local marketing

• This involves designing brands and promotions to suit the needs of local customers on the basis of geography and demography.

Eg:Philips promotion programme in Tamil Nadu Engavetta superstar.In TN Rajnikanth is the superstar

• In Andra pradesh they launched the campaign maa inti megastar. In AP Chiranjeevi is the megarstar

• This strategy helped them to increase their television sales by 25-30%

Eg 2. MRF introduced nylon bullock cart tyres.They used the muscleman symbol as well as their leadership in tyres.Finally the communication revolved around the brand name and its meaning viz., Pahalwan – Muscleman.MRF became the leader.

ii)Individual marketing

• Individual can get the product made exactly to his need

Eg: carpentary,tailoring

Segmentation

Process of diving a heterogeneous market into several sub markets or segments, each of which tends to be homogeneous in all aspects.

• Geographic

• Demographic

• Psychographic

• Behavioral

Geographic Segmentation.

NorthAggressive Dominant

Big is beautiful

East Sensual

Assertive WomenMen

Socialistic,idealistic

SouthSensual, rational

Diligent

West Leisure

Simple lifeMoney is godDemocratic

Commercial

Open to new products

Emotionally expressive

Generous

Family centric

Health Conscious

Culturally Conscious

Simplicity

Cleanliness/Hygiene

Geographic Segmentation..

• Village Population and Density

size of population- a major factor that determines the overall potential demand for a product/service.

Class I- population over 5000.

Class II- population between 1000- 5000

Class III- population less than 1000.

• Climate– Climatic conditions play an important role.

Eg: talcum powder in hot and humid regions, and health tonics in winter.

• Culture– Society and culture provide insights into the

attitudes of people and their needs.

Demographic Segmentation • Age and Life Cycle

– Pre Independence– Pain of Nation Building(Post Independence) – Pain of Liberalization(1985 onwards) – Liberalization Children( 1990 onwards) – Millennium Children( 1997 Onwards)

Marketers target the age group of 8 – 15, exposed to urban markets; education;

Old age and above the age of 35- influenced by traditional customs.

Demographic Segmentation• Family Structure

– Joint family and large families still predominate.

– Increase in family size- increase in consumption.

– Also leads to multi brand consumption.

– Increasing nuclear families- greater demand of products, esp. consumer durables like TV, cooker, LPG connection.

Demographic Segmentation

• Income– Income is seasonal( post harvest for farmers)

or Weekly/daily( Wage Earners) . – Multiple sources of income( agriculture, dairy

etc) – Agricultural income is not taxable.

Demographic Segmentation

• Landownership– 55% of income in rural areas coming from

agriculture. • Marginal Farmers- holding upto 1 Hect• Small Farmers- 1-2 hect• Semi-medium Farmer- 2-4 hect• Medium Farmer- 4- 10 hect• Large Farmer- 10 hect and more

Demographic Segmentation

• Occupation– Farm based occupations. – Cultivators: farm owners, marginal farmers. – Agri and non agri labour. – Poultry, dairy– Salary earners: doctors, teachers. – Traders, micro entrepreneurs.

Demographic Segmentation

• Education and House types– Education: Illiterate, Below SSC, SSC/HSC,

College– Houses: Pucca, Semi -Pucca, Kuccha.

• Religion and castes– Differences in religion and caste visible in

terms of settlement patterns in villages. – Village shops are demarcated along similar

lines.

Psychographic SegmentationIn Rural India.

Psychographics include personality traits, lifestyle & value

system.

Rural India.

• The slowdown experienced by India on account of the IT (information technology), real estate, financial services and automobile sectors was an urban phenomenon .

• 15.6 million middle class house holds in rural India.(http://madisonindia.com/rural_middle_class.pdf )

• Rural households form 72% of the total households.

Over 400 school children from the city anddifferent rural areas across the countrygathered in New Delhi in April 2008 for aunique three-day fun-filled interaction.‘Pratibimb’ (source : IBEF)

Some Examples• Affordability -- Godrej introduced three brands of Cinthol, Fair Glow

and Godrej (soap) in 50-gram packs, priced at 10 cents; Adidas and Reebok increased their sales by 50% in rural markets by reducing prices.

•  Size and design changes -- Videocon introduced a washing machine without a drier for US$60; Philips launched a low-cost smokeless chulha(stove); DCM Shriram developed a low-cost water purifier especially for rural areas.

• Improving product acceptance -- LG Electronics developed a customized TV (cheap and capable of picking up low-intensity signals) for the rural markets and christened it Sampoorna. It sold 100,000 sets in the first year; Coca-Cola provided low-cost iceboxes as regular power outages meant families could not depend on refrigerators.

MRUC and IRS classification of social class.

• Education of the chief wage earner.

• Ownership of durables.

• Type of house.

Lifestyles

• Trendsetters

• Adopters

• Traditionalists

Behavioral segmentation

• Occasions

• Benefits sought

• User status

• Usage rate

• Loyalty status

• Place of purchase

Targeting

• Targeting involves evaluating and selecting various segments.

Steps

1. Evaluation and Selection of segments

2. Coverage

Evaluation and Selection

• While evaluating market segments, two broad factors are considered:

1.Overall attractiveness of each segment Size, Growth rate, Accessibility, Profitability, Low risk

2. Companies objectives and resource competencies.Long term and short term objectives of companiesIts resources and capabilities should also considered

Coverage strategies

1. Undifferentiated MarketingIt take into consideration what is common

requirements among consumers, and try to include it in the offer

Ex : Medimix---claims it as a beauty care ayurvedic family soap.

Coverage strategies

2. Differentiated / Targeted Marketing

Differentiated marketing strategy investigates and identifies the difference between segments and tries to match the market offer to the desire and expectations of each segment.

Ex : Tractors 25 - 30HP for small/marginal and 50HP for large farmers

Coverage strategies

3. Concentrated Strategy

- Concentrate on single segment, also known as niche marketing

- Risk of changing preference of customersHUL dominate the mass market in the rural with a series of niche brands, each aimed at small section of customers.

Ex-Lifebuoy, Lifebuoy Active, Lifebuoy Gold

CHOOSING A COVERAGE STRATEGY

Variables Strategy

Undifferentiated Differentiated Concentrated

Company resources Moderate Large Limited

Product variability Less More Less

Product lifecycle stage Introduction Growth Introduction/Maturity

Market variability Less High High

POSITIONING

• It is the act of designing the company’s offering and image so that it occupies a distinctive place in mind of the target segment.

• It serves as a platform for the brands to reach target customers.

POSITIONING INVOLVES

Identifying the USP of the product as well as that of the competitors.

Selecting the differences that have greater competitive advantage.

Communicating those advantages to the target customers.

PERCEPTUAL MAPSUPERIOR QUALITY

EXPENSIVE

ECONOMICAL

INFERIOR QUALITY

LG

SAMSUNG

JOLLY

SALORA

VIDEOCOM

BPL

Identifying the Positioning Concept

The marketer has to understand the consumer’s motive when he purchases a product. This will help in identifying the positioning them. The marketer can adopt several approaches in positioning the product in order to develop or enhance its value to customer.

PRODUCT DIFFERENTIATION

Products can be differentiated on the basis of attributes like form, features, durability and quality.

Example- Chota Pepsi, Hero Honda(Dawn)

SERVICE DIFFERENTIATION

Service may be differentiated in respect of delivery, installation and maintenance.

Long warranty periods, free service coupons,24 hours service, emergency care, etc are some example.

PEOPLE

Celebrities who are widely respected and admired by consumers bring a differentiation to the image of products and services.

Example-Idea

IMAGE

Image is built by advertisements, symbols, signs, colors, logos and the general reputation of the company.

A glance at Rural India:

* 46 percent of soft drinks* 49 percent of motorcycles* 59 percent of cigarettes* 18 million TV Sets* 50 percent of 2 million BSNL mobile connections* 53 percent of FMCG products * 59 percent of consumer durables are sold in rural India.

Selecting the Positioning Concept.

• Marketers has to select a positioning concept that serves as a bridge between the product and the target customers.

• Critical factors that should be kept in mind are:

< Attractiveness-: Does it provide value to the customers?

< Distinctiveness-: Is it different from that of the competitors?

< Pre-emptive-: Is it very difficult for the competitors to copy it?

< Affordability-: Can buyers pay for it?

< Communicability-: is the product difference easily visible and expressed?

DEVELOPING THE CONCEPT

• The marketers should try to bring positioning concept as close as possible to the target customers, to ensure it appeals them.

• With the help of various media and advertising strategies.

Communicating the Concept.

• Deciding how many ideas/ differences to promote.

• Deciding on which position to promote.

Conclusion

• “ Rural people may be old fashioned but it takes modern and innovative marketing strategies to win them.”

R.V.RAJAN