Segmentation, Targeting, and PositioningSegmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.

Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that You cant be all things to all people, and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. 1. In the undifferentiated strategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really cant offer much that another one cant. Usually, this is the case only for commodities. 2. In the concentrated strategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices. In contrast, most airlines follow the differentiated strategy: They offer high priced tickets to those who are inflexible in that they cannot tell in advance when they need to fly and find it impractical to stay over a Saturday. These travelersusually business travellerspay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy two weeks in advance and stay over.

Note that segmentation calls for some tough choices. There may be a large number of variables that can be used to differentiate consumers of a given product category; yet, in practice, it becomes impossibly cumbersome to work with more than a few at a time. Thus, we need to determine which variables will be most useful in distinguishing different groups of consumers. We might thus decide, for example, that the variables that are most relevant in separating different kinds of soft drink consumers are (1) preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price sensitivity willingness to pay for brand names; and (4) heavy vs. light consumers. We now put these variables together to arrive at various combinations. Several different kinds of variables can be used for segmentation.y

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Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Campbells soup, for instance, has found that Western U.S. consumers on the average prefer spicier soupsthus, you get a different product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male dominated market, a manufacturer came out with the Lady Remmington, a more compact, handier gun more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and values. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd. Another basis for segmentation is behavior. Some consumers are brand loyali.e., they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are heavy users while others are light users. For example, research conducted by the wine industry shows that some 80% of the product is consumed by 20% of the consumers presumably a rather intoxicated group. One can also segment on benefits sought, essentially bypassing demographic explanatory variables. Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish Spring), while others prefer the clean feeling of unscented soap (the Ivory segment). Some consumers use toothpaste primarily to promote oral health, while another segment is more interested in breath freshening.

In the next step, we decide to target one or more segments. Our choice should generally depend on several factors. First, how well are existing segments served by other manufacturers? It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well. Secondly, how large is the segment, and how can we expect it to grow? (Note that a downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers? Firms may already have an established reputation. While McDonalds has a great reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers that McDonalds now offers gourmet food. Thus, McDs would probably be better off targeting families in search of consistent quality food in nice, clean restaurants.

Positioning involves implementing our targeting. For example, Apple Computer has chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for non-geeks. The Visual C software programming language, in contrast, is aimed a techies.

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of three categories:y

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Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organized and well run competitors. The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for the specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed. Customer intimate firms, which excel in serving the specific needs of the individual customer well. There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer. Reliability is also stressed. Nordstroms and IBM are examples of this discipline. Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation. These firms, because they work with costly technology that needs constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer. Intel is an example of this discipline.

Treacy and Wiersema suggest that in addition to excelling on one of the three value dimensions, firms must meet acceptable levels on the other two. Wal-Mart, for example, does maintain some level of customer service. Nordstroms and Intel

both must meet some standards of cost effectiveness. The emphasis, beyond meeting the minimum required level in the two other dimensions, is on the dimension of strength.

Repositioning involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less attractive. Sears, for example, attempted to reposition itself from a place that offered great sales but unattractive prices the rest of the time to a store that consistently offered everyday low prices. Repositioning in practice is very difficult to accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in many cases, the repositioning fails. To effectively attempt repositioning, it is important to understand how ones brand and those of competitors are perceived. One approach to identifying consumer product perceptions is multidimensional scaling. Here, we identify how products are perceived on two or more dimensions, allowing us to plot brands against each other. It may then be possible to attempt to move ones brand in a more desirable direction by selectively promoting certain points. There are two main approaches to multi-dimensional scaling. In the prior approach, market researchers identify dimensions of interest and then ask consumers about their perceptions on each dimension for each brand. This is useful when (1) the market researcher knows which dimensions are of interest and (2) the customers perception on each dimension is relatively clear (as opposed to being made up on the spot to be able to give the researcher a desired answer). In the similarity rating approach, respondents are not asked about their perceptions of brands on any specific dimensions. Instead, subjects are asked to rate the extent of similarity of different pairs of products (e.g., How similar, on a scale of 1-7, is Snickers to Kitkat, and how similar is Toblerone to Three Musketeers?) Using a computer algorithms, the computer then identifies positions of each brand on a map of a given number of dimensions. The computer does not reveal what each dimension meansthat must be left to human interpretation based on what the variations in each dimension appears to reveal. This second method is more useful when no specific product dimensions have been identified as being of particular interest or when it is not clear what the variables of difference are for the product category.

Market Segmentation: An Introduction What is Segmentation ?Segmentation refers to a process of bifurcating or dividing a large unit into various small units which have more or less similar or related characteristics.

Market Segmentation Market segmentation is a marketing concept which divides the complete market set up into smallersubsets comprising of consumers with a similar taste, demand and preference.

A market segment is a small unit within a large market comprising of like minded individuals. One market segment is totally distinct from the other segment. A market segment comprises of individuals who think on the same lines and have similar interests. The individuals from the same segment respond in a similar way to the fluctuations in the market.

Basis of Market Segmentation Gender

The marketers divide the market into smaller segments based on gender. Both men and women have different interests and preferences, and thus the need for segmentation. Organizations need to have different marketing strategies for men which would obviously not work in case of females. A woman would not purchase a product meant for males and vice a versa. The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries. Age Group

Division on the basis of age group of the target audience is also one of the ways of market segmentation. The products and marketing strategies for teenagers would obviously be different than kids. Age group (0- 10 years) - Toys, Nappies, Baby Food, Prams Age Group (10-20 years) - Toys, Apparels, Books, School Bags Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on Income

Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings. The three categories are: High income Group Mid Income Group Low Income Group Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group.

Pantaloon, Carrefour, Shoppers stop target the high income group as compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment. Marital Status

Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples. Occupation

Office goers would have different needs as compared to school / college students. A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals. Types of Market Segmentation Psychographic segmentation

The basis of such segmentation is the lifestyle of the individuals. The individuals attitude, interest, value help the marketers to classify them into small groups. Behaviouralistic Segmentation

The loyalties of the customers towards a particular brand help the marketers to classify them into smaller groups, each group comprising of individuals loyal towards a particular brand. Geographic Segmentation

Geographic segmentation refers to the classification of market into various geographical areas. A marketer cant have similar strategies for individuals living at different places. Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season. McDonalds in India does not sell beef products as it is strictly against the religious beliefs of the countrymen, whereas McDonalds in US freely sells and promotes beef products. NEED FOR MARKET SEGMENTATION: A set-up where two or more parties (also called buyers and sellers) are engaged in transaction of goods and services in exchange of money is called a market. At the market place the sellers sell their goods to the consumers (buyers) in exchange of money. Let us go through the following examples: Nokia offers wide range of handsets for both males as well as females. The handset for females would be sleeker and more colourful as compared to sturdy handsets for males. Males generally do not prefer stylish handsets. The organizations cant have similar products for all individuals. Perfumes and deodorants for females have a sweet fragrance whereas perfumes for males

have a strong fragrance. A marketer cant have similar strategies for all consumers. The process of creating small segments comprising of like minded individuals within a broad market refers to market segmentation. Market segmentation helps in the division of market into small segments including individuals who show inclination towards identical brands and have similar interests, attitudes and perception. Need for Market Segmentation (Why Market Segmentation?) Not all individuals have similar needs. A male and a female would have varied interests and liking towards different products. A kid would not require something which an adult needs. A school kid would have a different requirement than an office goer. Market Segmentation helps the marketers to bring together individuals with similar choices and interests on a common platform.

Market Segmentation helps the marketers to devise appropriate marketing strategies and promotional schemes according to the tastes of the individuals of a particular market segment. A male model would look out of place in an advertisement promoting female products. The marketers must be able to relate their products to the target segments. Market segmentation helps the marketers to understand the needs of the target audience and adopt specific marketing plans accordingly. Organizations can adopt a more focussed approach as a result of market segmentation. Market segmentation also gives the customers a clear view of what to buy and what not to buy. A Rado or Omega watch would have no takers amongst the lower income group as they cater to the premium segment. College students seldom go to a Zodiac or Van Heusen store as the merchandise offered by these stores are meant mostly for the professionals. Individuals from the lower income group never use a Blackberry. In simpler words, the segmentation process goes a long way in influencing the buying decision of the consumers. An individual with low income would obviously prefer a Nano or Alto instead of Mercedes or BMW. Market segmentation helps the organizations to target the right product to the right customers at the right time. Geographical segmentation classifies consumers according to their locations. A grocery store in colder states of the country would stock coffee all through the year as compared to places which have defined winter and summer seasons. Segmentation helps the organizations to know and understand their customers better. Organizations can now reach a wider audience and promote their products more effectively. It helps the organizations to concentrate their hard work on the target audience and get suitable results.

STEPS IN SEGMENTATIONSegmentation refers to the process of creating small segments within a broad market to select the right target market for various brands. Market segmentation helps the marketers to devise and implement relevant strategies to promote their products amongst the target market. A market segment consists of individuals who have similar choices, interests and preferences. They generally think on the same lines and are inclined towards similar products. Once the organizations decide on their target market, they can easily formulate strategies and plans to make their brands popular amongst the consumers.

Steps in Market Segmentation 1. Identify the target market The first and foremost step is to identify the target market. The marketers must be very clear about who all should be included in a common segment. Make sure the individuals have something in common. A male and a female cant be included in one segment as they have different needs and expectations. Burberry stocks separate merchandise for both men and women. The management is very clear on the target market and has separate strategies for product promotion amongst both the segments. A Garnier mens deodorant would obviously not sell if the company uses a female model to create awareness. Segmentation helps the organizations decide on the marketing strategies and promotional schemes. Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Lower Income Group Maruti 800, Middle Income Group Wagon R, Swift, Swift Dzire, High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara Alto Ritz

Suzuki Grand Vitara would obviously have no takers amongst the lower income group. The target market for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata watch. 2. Identify expectations of Target Audience Once the target market is decided, it is essential to find out the needs of the target audience. The product must meet the expectations of the individuals. The marketer must interact with the target audience to know more about their interests and demands. Kelloggs K special was launched specifically for the individuals who wanted to cut down on their calorie intake. Marketing professionals or individuals exposed to sun rays for a long duration need something which would protect their skin from the harmful effects of sun rays. Keeping this in mind, many organizations came with the concept of sunscreen lotions and creams with a sun protection factor especially for men. 3. Create Subgroups The organizations should ensure their target market is well defined. Create subgroups within groups for effective results. Cosmetics for females now come in various categories. Creams and Lotions for girls between 20-25 years would focus more on

fairness. Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing. 4. Review the needs of the target audience

It is essential for the marketer to review the needs and preferences of individuals belonging to each segment and sub-segment. The consumers of a particular segment must respond to similar fluctuations in the market and similar marketing strategies. 5. Name your market Segment Give an appropriate name to each segment. It makes implementation of strategies easier. A kids section can have various segments namely new born, infants, toddlers and so on. 6. Marketing Strategies Devise relevant strategies to promote brands amongst each segment. Remember you cant afford to have same strategies for all the segments. Make sure there is a connect between the product and the target audience. Advertisements promoting female toiletries cant afford to have a male model, else the purpose gets nullified. A model promoting a sunscreen lotion has to be shown roaming or working in sun for the desired impact. 7. Review the behavior Review the behavior of the target audience frequently. It is not necessary individuals would have the same requirement (demand) all through the year. Demands vary, perceptions change and interests differ. A detailed study of the target audience is essential. 8. Size of the Target Market It is essential to know the target market size. Collect necessary data for the same. It helps in sales planning and forecasting.