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Market segmentation,Target Marketing, Market Positioning

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Page 1: Market segmentation,Target Marketing, Market Positioning
Page 2: Market segmentation,Target Marketing, Market Positioning

Learning Objectives

Market Segmentation Target Marketing Market Positioning Major bases for segmenting

consumer & business markets.

Page 3: Market segmentation,Target Marketing, Market Positioning

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.

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Market Segmentation

PREPARED BY

UMAIR

Page 5: Market segmentation,Target Marketing, Market Positioning

Market Segmentation

Dividing a market into smaller groups of buyers with distinct

needs , characteristics ,or behavior who might require

separate products or marketing mixes.

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Target Marketing

The process of evaluating each market segment’s

attractiveness and selecting one or more segments to

enter.

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Market Positioning

Arranging for a product to occupy a clear, distinctive

and desirable place relative to competing products in the minds of target consumers.

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Segmenting Consumer Markets

The major variables that might be used in segmenting consumer market are

•Geographic•Demographic •Psychographic•Behavioral

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Geographic Segmentation

Dividing a market into different geographical units

such as nations , states, regions, cities or neighborhoods.

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Geographic Segmentation

World region or Country:- Pakistan, India, America etc.

Country Regions:- Cities:- Density:- Urban, suburban,

rural. Climate:- Northern, southern.

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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.

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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.

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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+

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Family Life-cycle Groups

–Bachelors–Married with no children–Married with children–Older couples

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Gender Segmentation

Dividing a market into different groups based on gender.

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Income segmentation

Dividing a market into different income groups

Lower income group Middle income group Upper class

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Segmenting Variables

Psychographic Segmentation

Behavioral Segmentation

Using Multiple Segmentation Basis

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Psychographic Segmentation

Dividing the market into groups according to social

class, life style or personality characteristics.

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Lifestyle

A person’s pattern of living as expressed in his or her activities, opinions, and interest.

It involves measurement of AIO dimensions.

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Social Class

Lower lowers Working class Upper middles Upper uppers

Upper lowersMiddle classLower uppers

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Personality

AdventurousAuthoritarianRisk TakingAmbitious

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Behavioral Segmentation

Dividing the market into groups on the basis of consumer knowledge, attitude,

use or response to a product.

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Behavioral SegmentationOccasion

SegmentationUser Status Loyalty Status Benefit

SegmentationUsage Rates

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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.

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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.

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User Status

Dividing the market into the groups according to user status

.

Non-users Ex-users Potential users First time users Regular users

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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.

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Loyalty Status

Market can be segmented according to consumer loyalty.

Consumers can be loyal to Brands Stores Companies

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Loyalty Status

Consumer can be grouped on the basis of loyalty as

Somewhat loyal Completely loyal Non loyal

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Multiple Segmentation Basis

Using multiple variables for segmentation analysis to identify smaller, better defined target groups.

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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”.

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“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.

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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)

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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.

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Market Segmentation (cont’d)

Target Marketing (partially)

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Market SegmentationSegmenting Business Markets

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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?

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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?

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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?

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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?

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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?

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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.

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Market SegmentationSegmenting International Markets

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Segmenting InternationalMarkets

Usage of common variables (as described before)

The concept of Inter market Segmentation Examples

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Market SegmentationRequirement for effective segmentation

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Requirement for effective segmentation Measurable Accessible Substantial Differentiable Actionable

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Target Marketing

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Target Marketing

The process of evaluating each market segment’s

attractiveness & selecting one or more segments to

enter

Page 50: Market segmentation,Target Marketing, Market Positioning

Evaluating Marketing SegmentsInvolvement of 3 factors

Segment size and growth

Segment structural attractiveness

Company objectives and resources

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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)

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Undifferentiated Marketing

A market-coverage strategy in which a firm decides to ignore market segment

differences & go after the whole market with one

offer.

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Differentiated Marketing

A market-coverage strategy in which a firm decides to

target several market segments and designs

separate offers for each.

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Target Marketing (cont’d)Target Marketing (cont’d)

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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

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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

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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.

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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.

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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.

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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.

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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.

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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”

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Choosing a Target- Marketing Strategy

requires consideration of :

Company resources The degree of product variability Products life-cycle stage Market variability Competitors’ marketing strategies

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Positioning for Competitive Advantage

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Positioning

The way the product is defind by consumers on important attributes ---- The place the

product occupies in consumers’ minds relative to competing products.

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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.

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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.

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Orientation

Positioning Map: Large Luxury SUVs

Range roverHigh Lincoln NavigatorEscaladeHummer H1Hummer H2Price Lexus LX470 Land Cruiser

Low

Luxury Performance

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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

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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

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Identify Possible Competitive Advantages

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Product Differentiation

i.e.Features, Performance,Style,Design or Attributes.

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Service Differentiation

i.e.Delivery,Installation,Repair Service,Customer Training Services.

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Image Differentiation

i.e.Symbols,Atmospheres,Events.

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Personnel Differentiation

i.e.

Hiring and training better people than others do.

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Choosing the Right Competitive Advantages

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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

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Cont’d

• Others think that company should position themselves on more than one differentiator.

e.g. Unilever (Three-in-one bar soap)

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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

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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…

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Cont’d

Important Distinctive Superior Communicable Preemptive Affordable Profitable

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Selecting An Overall Positioning Strategy

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Value Proposition

The full Positioning of a brand.

In simpler words, the full mix of benefits upon which a

brand is positioned.

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Major Value Propositions

More for moreMore for the sameThe same for lessLess for much lessMore for less

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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

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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

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The Same for Less Proposition

Providing equivalent quality products at a Lower Price. It can be a powerful value proposition.

e.g. Wall-Mart

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Less for Much Less Proposition

Providing lower performance or quality products as

required by the consumers at a Much Lower Price.

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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

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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.

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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.

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