Learning Objectives
Market Segmentation Target Marketing Market Positioning Major bases for segmenting
consumer & business markets.
Learning Objectives
How companies identify attractive market segment & choose a target marketing strategies.
How companies position their products for maximum competitive advantage in the market place.
Market Segmentation
PREPARED BY
UMAIR
Market Segmentation
Dividing a market into smaller groups of buyers with distinct
needs , characteristics ,or behavior who might require
separate products or marketing mixes.
Target Marketing
The process of evaluating each market segment’s
attractiveness and selecting one or more segments to
enter.
Market Positioning
Arranging for a product to occupy a clear, distinctive
and desirable place relative to competing products in the minds of target consumers.
Segmenting Consumer Markets
The major variables that might be used in segmenting consumer market are
•Geographic•Demographic •Psychographic•Behavioral
Geographic Segmentation
Dividing a market into different geographical units
such as nations , states, regions, cities or neighborhoods.
Geographic Segmentation
World region or Country:- Pakistan, India, America etc.
Country Regions:- Cities:- Density:- Urban, suburban,
rural. Climate:- Northern, southern.
Demographic Segmentation
Dividing a market into group based on demographic
variables such as age, sex, family size, family life cycle,
income, occupation, education, religion, race &
nationality.
Demographic Segmentation
•The consumer needs, wants & usage rates often vary closely with demographic variables.
•Easier to measure•Even when market segments are defined on some other bases their demographic characteristics must be known.
Age & life-cycle segmentation
Dividing a market into different age & life-cycle groups.
Different age groups areunder 6 6-11 12-19 20-34 35-49 50-64 65+
Family Life-cycle Groups
–Bachelors–Married with no children–Married with children–Older couples
Gender Segmentation
Dividing a market into different groups based on gender.
Income segmentation
Dividing a market into different income groups
Lower income group Middle income group Upper class
Segmenting Variables
Psychographic Segmentation
Behavioral Segmentation
Using Multiple Segmentation Basis
Psychographic Segmentation
Dividing the market into groups according to social
class, life style or personality characteristics.
Lifestyle
A person’s pattern of living as expressed in his or her activities, opinions, and interest.
It involves measurement of AIO dimensions.
Social Class
Lower lowers Working class Upper middles Upper uppers
Upper lowersMiddle classLower uppers
Personality
AdventurousAuthoritarianRisk TakingAmbitious
Behavioral Segmentation
Dividing the market into groups on the basis of consumer knowledge, attitude,
use or response to a product.
Behavioral SegmentationOccasion
SegmentationUser Status Loyalty Status Benefit
SegmentationUsage Rates
Occasion Segmentation
Dividing the market into groups according to
occasions when buyers get the idea to buy, actually make their purchases, or use the purchased item.
Benefit Segmentation
Dividing the market into groups according to the different benefits that
consumers seek from the product.
Procter &Gamble has identified different detergent segments.
User Status
Dividing the market into the groups according to user status
.
Non-users Ex-users Potential users First time users Regular users
Usage Rates
Market can be segmented according to usage rate.
Light Medium Heavy
Fast food industry has only 20% heavy users but eat up about 60% of all food served.
Loyalty Status
Market can be segmented according to consumer loyalty.
Consumers can be loyal to Brands Stores Companies
Loyalty Status
Consumer can be grouped on the basis of loyalty as
Somewhat loyal Completely loyal Non loyal
Multiple Segmentation Basis
Using multiple variables for segmentation analysis to identify smaller, better defined target groups.
Using Multiple Segmentation Bases
One good example of multi-variable segmentation is “Geodemographic” segmentation.
One of the leading life style segmentation systems is the “PRIZM”.
“PRIZM” System
The PRIZM system combines demographic factors with buying transaction data and lifestyle information taken from consumer surveys, to paint a precise picture of the consumer.
PRIZM System (cont’d)
PRIZM classifies people into 62 unique types or clusters. Like
Blue Blood Estates (suburban areas populated by elite families)
Shotguns and pickups (populated by rural blue collar workers and families)
Hispanic Mix (highly brand conscious, quality conscious, and brand loyal)
PRIZM System (cont’d)
With the availability of data and computer power, geodemographic marketers are continually refining their techniques by tracking and adding new segments and adjusting the older ones.
Market Segmentation (cont’d)
Target Marketing (partially)
Market SegmentationSegmenting Business Markets
Segmenting Business Markets
Major variables used for segmenting business markets are:
Demographic1. Industry: Which industries should we
serve?2. Company size: What size companies
should we serve?3. Location: What geographical location
should we serve?
Segmenting Business markets (cont’d)
Operating Variables4. Technology: What customer technologies
should we focus on?5. User or nonuser status: Should we serve
heavy users, medium users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many or few services?
Segmenting Business markets (cont’d) Purchasing Approaches 7. Purchasing-function organization: Should we serve
companies with highly centralized or decentralized purchasing organizations?
8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on?
9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies?
10. General purchase policies: should we serve companies that? Service contacts? Systems purchases? Sealed bidding?
11. Purchasing criteria: should we serve companies that are seeking quality? Service? Price?
Segmenting business Markets (cont’d)
Situational Factors12. Urgency: Should we serve companies
that need quick sudden delivery or service?
13. Specific application: Should we focus on certain applications of our product rather than all applications?
14. Size of order: Should we focus on large or small orders?
Segmenting Business Markets (cont’d)
Personal Characteristics15. Buyer-seller similarity: should we serve
companies whose people and values are similar to ours?
16. Attitudes toward risk: Should we serve risk-taking or risk-avoiding customers?
17. Loyalty: Should we serve companies that shoe high loyalty to their suppliers?
Segmenting Business Markets Additional Variables Used by
Business Markets Serving More Then One Markets
American Express
Separate system for dealing with larger or multiple location customers.
Market SegmentationSegmenting International Markets
Segmenting InternationalMarkets
Usage of common variables (as described before)
The concept of Inter market Segmentation Examples
Market SegmentationRequirement for effective segmentation
Requirement for effective segmentation Measurable Accessible Substantial Differentiable Actionable
Target Marketing
Target Marketing
The process of evaluating each market segment’s
attractiveness & selecting one or more segments to
enter
Evaluating Marketing SegmentsInvolvement of 3 factors
Segment size and growth
Segment structural attractiveness
Company objectives and resources
Selecting Target Market Segments Defining Target Market Levels of Target Marketing
Undifferentiated Marketing (very broadly) Differentiated Marketing (somewhere in
between) Concentrated Marketing (somewhere in between) Micromarketing (very narrowly)
Undifferentiated Marketing
A market-coverage strategy in which a firm decides to ignore market segment
differences & go after the whole market with one
offer.
Differentiated Marketing
A market-coverage strategy in which a firm decides to
target several market segments and designs
separate offers for each.
Target Marketing (cont’d)Target Marketing (cont’d)
Concentrated Concentrated MarketingMarketing
A market coverage strategy in which a firm goes after a large share of one or a A market coverage strategy in which a firm goes after a large share of one or a few segments or niches.few segments or niches.
Normally used when company resources are limitedNormally used when company resources are limited
Company gains a better understanding of the niches it caters & special Company gains a better understanding of the niches it caters & special reputation may be gained.reputation may be gained.
Products can be “Fine-Tuned” to assure “effective marketing” focused upon Products can be “Fine-Tuned” to assure “effective marketing” focused upon specific customers.specific customers.
Can be highly profitable but also involves higher risk levels.Can be highly profitable but also involves higher risk levels.
Examples:Examples: Tetra Sea Food, Oshkosh Trucks Tetra Sea Food, Oshkosh Trucks
Micro MarketingMicro Marketing
• The practice of tailoring products and The practice of tailoring products and marketing programs to the needs of marketing programs to the needs of specific individuals and local customer specific individuals and local customer groups.groups.
• Rather then seeing a customer in Rather then seeing a customer in every individual, micro-marketers see every individual, micro-marketers see INDVIDUALS in every customerINDVIDUALS in every customer
Types of Types of MicromarketingMicromarketing
Local MarketingLocal Marketing
Tailoring brands and promotion to the Tailoring brands and promotion to the needs and wants of local customer needs and wants of local customer groups cities, neighborhoods, and groups cities, neighborhoods, and specific stores. specific stores.
Local MarketingLocal Marketing
DrawbacksDrawbacks
Can drive up manufacturing and marketing Can drive up manufacturing and marketing cost by reducing economies of scale.cost by reducing economies of scale.
Create logistics problems as companies try to Create logistics problems as companies try to meet the varied requirements of different meet the varied requirements of different regional and local market. regional and local market.
Brand’s overall image my be diluted if the Brand’s overall image my be diluted if the product and message vary at different product and message vary at different localities.localities.
Local MarketingLocal MarketingBenefits
Helps a company to market more effectively in the face of pronounced regional and local differences in demographics and style.
Meets the needs of company's first-line customer.
Individual MarketingIndividual Marketing
Tailoring products Tailoring products and marketing and marketing programs to needs programs to needs and preference of and preference of individual customer individual customer also labeled as also labeled as markets of-one, markets of-one, customized customized marketing and one-marketing and one-to-one marketing. to-one marketing.
• At the LEGO factory website, fans can design At the LEGO factory website, fans can design there own ultimate LEGO model, show it off, and there own ultimate LEGO model, show it off, and bring it to life.bring it to life.
Mass CustomizationMass Customization
Mass customization is the Mass customization is the process through which firms process through which firms interact one-to-one with masses interact one-to-one with masses of customers to create customer-of customers to create customer-unique value by designing unique value by designing products and services tailor-products and services tailor-made to individual needs.made to individual needs.
Socially Responsible Target Socially Responsible Target MarketingMarketing
Some segments Some segments are at special risk :are at special risk :• ChildrenChildren• Inner-city Inner-city
minorities minorities consumersconsumers
• Internet shoppersInternet shoppers
Controversy occurs Controversy occurs when the methods when the methods used are used are questionable.questionable.
• Most targeting market benefits both Most targeting market benefits both the marketer and the consumer. the marketer and the consumer. Nacara Cosmetiques markets Nacara Cosmetiques markets cosmetics for “ethnic women who cosmetics for “ethnic women who have a thirst for the exotic”have a thirst for the exotic”
Choosing a Target- Marketing Strategy
requires consideration of :
Company resources The degree of product variability Products life-cycle stage Market variability Competitors’ marketing strategies
Positioning for Competitive Advantage
Positioning
The way the product is defind by consumers on important attributes ---- The place the
product occupies in consumers’ minds relative to competing products.
Product Position
The way the product is defined by consumers on important attributes-the place the product occupies in consumers’ minds relative to competing products.
Positioning Maps
Positioning maps are a useful tool for giving you a graphical
idea of where your product stands vis-à-vis other products in the market at a given time.
Orientation
Positioning Map: Large Luxury SUVs
Range roverHigh Lincoln NavigatorEscaladeHummer H1Hummer H2Price Lexus LX470 Land Cruiser
Low
Luxury Performance
Choosing a Positioning Strategy
The positioning task consist of three steps.
Identify Possible Competitive Advantages
Choosing the Right Competitive Advantages
Selecting an overall Positioning Strategy
Identify Possible Competitive Advantages
An advantage over competitors gained by offering consumers
greater value either through lower prices or by providing more
benefits that justify higher prices.
A company or market offer can be differentiated along the lines of Product, Services, Channels, People or Image
Identify Possible Competitive Advantages
Product Differentiation
i.e.Features, Performance,Style,Design or Attributes.
Service Differentiation
i.e.Delivery,Installation,Repair Service,Customer Training Services.
Image Differentiation
i.e.Symbols,Atmospheres,Events.
Personnel Differentiation
i.e.
Hiring and training better people than others do.
Choosing the Right Competitive Advantages
How many differences to promote?
Unique Selling Proposition (USP)USP is to promote only one benefit to the
target market for each brand and stick to it.
e.g. Crest Toothpaste (Anticavity Protection)Wall-Mart (Always Low Prices)
Choosing the Right Competitive Advantages
Cont’d
• Others think that company should position themselves on more than one differentiator.
e.g. Unilever (Three-in-one bar soap)
Under positioning:-Buyers have only a vague idea of the brand.
Over Positioning:-Buyers may have too narrow an image of the brand.
Confused Positioning:- Leaving buyers with a confused image of a company.
Positioning Errors to Avoid
Which differences to promote?
A company should carefully select the way in which it will distinguish itself from competitors.
A difference is worth establishing to the extent that it satisfies the following criteria…
Cont’d
Important Distinctive Superior Communicable Preemptive Affordable Profitable
Selecting An Overall Positioning Strategy
Value Proposition
The full Positioning of a brand.
In simpler words, the full mix of benefits upon which a
brand is positioned.
Major Value Propositions
More for moreMore for the sameThe same for lessLess for much lessMore for less
More for More Proposition
Providing the most upscale product or service and charging
a higher price to cover the higher costs.
e.g. Mercedes-Benz auto mobiles
More for The Same Proposition
Providing a brand offering comparable or even better quality
to that of competitor/s’ upscale one but at a Lower or The Same Price.
e.g. Toyota’s Lexus line vs. Mercedes-Benz
The Same for Less Proposition
Providing equivalent quality products at a Lower Price. It can be a powerful value proposition.
e.g. Wall-Mart
Less for Much Less Proposition
Providing lower performance or quality products as
required by the consumers at a Much Lower Price.
More for Less Proposition
Providing even better or the best products or services compared to the competitor/s at Lower or the
Lowest Prices.
e.g. Dell ComputersProcter & Gamble
Developing a Positioning Statement
A Positioning Statement summarizes company or brand positioning by
targeting the segment, developing a need, delivering the brand name and its concept, and pointing out
the competitive advantage or difference.
Communicating and Delivering the Chosen Position
Keeping a permanent channel to Communicate the desired
position to target consumers and taking actions in order to
Deliver the position the company wants to build relative
to competing products.