Market SegmentationTarget MarketingMarket PositioningMajor bases for segmenting consumer & business markets.
Learning ObjectivesHow companies identify attractive market segment & choose a target marketing strategies.
How companies position their products for maximum competitive advantage in the market place.
Market SegmentationPREPARED BY
Market SegmentationDividing a market into smaller groups of buyers with distinct needs , characteristics ,or behavior who might require separate products or marketing mixes.
Target MarketingThe process of evaluating each market segments attractiveness and selecting one or more segments to enter.
Market PositioningArranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers.
Segmenting Consumer MarketsThe major variables that might be used in segmenting consumer market are
Geographic SegmentationDividing a market into different geographical units such as nations , states, regions, cities or neighborhoods.
Geographic SegmentationWorld region or Country:-
Pakistan, India, America etc.Country Regions:-Cities:-Density:-
Urban, suburban, rural.Climate:-
Demographic SegmentationDividing a market into group based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race & nationality.
Demographic SegmentationThe consumer needs, wants & usage rates often vary closely with demographic variables.Easier to measureEven when market segments are defined on some other bases their demographic characteristics must be known.
Age & life-cycle segmentationDividing 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 GroupsBachelorsMarried with no childrenMarried with childrenOlder couples
Gender SegmentationDividing a market into different groups based on gender.
Income segmentationDividing a market into different income groups
Lower income groupMiddle income groupUpper class
Segmenting VariablesPsychographic Segmentation
Behavioral Segmentation Using Multiple Segmentation Basis
Psychographic SegmentationDividing the market into groups according to social class, life style or personality characteristics.
Lifestyle A persons pattern of living as expressed in his or her activities, opinions, and interest. It involves measurement of AIO dimensions.
Social ClassLower lowersWorking classUpper middlesUpper uppers
Upper lowersMiddle classLower uppers
Behavioral SegmentationDividing 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 SegmentationDividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchases, or use the purchased item.
Benefit SegmentationDividing the market into groups according to the different benefits that consumers seek from the product.
Procter &Gamble has identified different detergent segments.
User StatusDividing the market into the groups according to user status .
Non-usersEx-usersPotential usersFirst time usersRegular users
Usage RatesMarket can be segmented according to usage rate.
Fast food industry has only 20% heavy users but eat up about 60% of all food served.
Loyalty StatusMarket can be segmented according to consumer loyalty.
Consumers can be loyal toBrandsStoresCompanies
Consumer can be grouped on the basis of loyalty as
Somewhat loyalCompletely loyalNon loyal
Multiple Segmentation Basis Using multiple variables for segmentation analysis to identify smaller, better defined target groups.
Using Multiple Segmentation BasesOne 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 (contd)PRIZM classifies people into 62 unique types or clusters. LikeBlue 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 (contd) 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 (contd)Target Marketing (partially)
Market SegmentationSegmenting Business Markets
Segmenting Business Markets Major variables used for segmenting business markets are: Demographic
Industry: Which industries should we serve?Company size: What size companies should we serve?Location: What geographical location should we serve?
Segmenting Business markets (contd)Operating Variables
4. 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 (contd)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 (contd)Situational Factors
12. 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 (contd)Personal Characteristics
15. 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 MarketsAdditional Variables Used by Business MarketsServing More Then One MarketsAmerican Express
Separate system for dealing with larger or multiple location customers.
Market SegmentationSegmenting International Markets
Segmenting InternationalMarketsUsage of common variables (as described before)The concept of Inter market SegmentationExamples
Market SegmentationRequirement for effective segmentation
Requirement for effective segmentationMeasurableAccessibleSubstantialDifferentiableActionable
Target MarketingThe process of evaluating each market segments 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 SegmentsDefining Target MarketLevels of Target MarketingUndifferentiated Marketing (very broadly)Differentiated Marketing (somewhere in between)Concentrated Marketing (somewhere in between)Micromarketing (very narrowly)
Undifferentiated MarketingA 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 (contd)
Concentrated MarketingA market coverage strategy in which a firm goes after a large share of one or a few segments or niches.
Normally used when company resources are limited
Company gains a better understanding of the niches it caters & special reputation may be gained.
Products can be Fine-Tuned to assure effective marketing focused upon specific customers.
Can be highly profitable but also involves higher risk levels.
Examples: Tetra Sea Food, Oshkosh Trucks
Micro Marketing The practice of tailoring products and marketing programs to the needs of specific individuals and local customer groups. Rather then seeing a customer in every individual, micro-marketers see INDVIDUALS in every customer
Types of MicromarketingLocal Marketing
Tailoring brands and promotion to the needs and wants of local customer groups cities, neighborhoods, and specific stores.
Can drive up manufacturing and marketing cost by reducing economies of scale.
Create logistics problems as companies try to meet the varied requirements of different regional and local market.
Brands overall image my be diluted if the product and message vary at different localities.
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 MarketingTailoring products and marketing programs to needs and preference of individual customer also labeled as markets of-one, customized marketing and one-to-one marketing. At the LEGO factory website, fans can design there own ultimate LEGO model, show it off, and bring it to life.
Mass CustomizationMass customization is the process through which firms interact one-to-one with masses of customers to create customer-unique value by designing products and services tailor-made to individual needs.
Socially Responsible Target MarketingSome segments are at special risk :
ChildrenInner-city minorities consumersInternet shoppers
Controversy occurs when the methods used are questionable.
Most targeting market benefits both the marketer and the consumer. Nacara Cosmetiques markets cosmetics for ethnic women who have a thirst for the exotic
Choosing a Target- Marketing Strategyrequires consideration of :
Company resourcesThe degree of product variabilityProducts life-cycle stageMarket variabilityCompetitors marketing strategies
Positioning for Competitive Advantage
PositioningThe 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 MapsPositioning maps are a useful tool for giving you a graphical idea of where your product stands vis--vis other products in the market at a given time.
OrientationPositioning Map: Large Luxury SUVs Range roverHigh Lincoln NavigatorEscaladeHummer H1Hummer H2Price Lexus LX470 Land Cruiser
Choosing a Positioning StrategyThe positioning task consist of three steps.
Identify Possible Competitive Advantages Choosing the Right Competitive Advantages Selecting an overall Positioning Strategy
Identify Possible Competitive AdvantagesAn 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 Differentiationi.e.Features, Performance,Style,Design or Attributes.
Service Differentiationi.e.Delivery,Installation,Repair Service,Customer Training Services.
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
ContdOthers 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
Selecting An Overall Positioning Strategy
Value PropositionThe full Positioning of a brand.
In simpler words, the full mix of benefits upon which a brand is positioned.
Major Value PropositionsMore for moreMore for the sameThe same for lessLess for much lessMore for less
More for More PropositionProviding 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 PropositionProviding 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. Toyotas Lexus line vs. Mercedes-Benz
The Same for Less PropositionProviding equivalent quality products at a Lower Price. It can be a powerful value proposition.
Less for Much Less PropositionProviding lower performance or quality products as required by the consumers at a Much Lower Price.
More for Less PropositionProviding 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 StatementA 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 PositionKeeping 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.