MARKET SEGMENTATION, TARGETING & POSITIONING

Contents

MARKET SEGMENTATION

MEANING REASONS/NEEDS/BENEFITS/SIGNIFICANCE BASES FOR MARKET SEGMENTATION PHILOSOPHIES OF MARKET SEGMENTATION(APPROACHES TO MARKETING) MARKET SEGMENTATION STRATEGIES(LEVELS OF SEGMENTATION) PROCESS OF MARKET SEGMENTAITION EFFECTIVE MARKET SEGMENTATION MARKET SEGMENTATION DECISION
Contd.

Contents

TARGETING

TARGET MARKET TARGET MARKETING STRATEGIES PROCESS OF SELECTING TARGET MARKET

MEANING PRODUCT POSITION vs. BRAND POSITION SUCCESSFUL POSITION POSITIONING ACCORDING TO RIES AND TROUT POSITIONING APPROACHES

POSITIONING

Market Segmentation

Market Segmentation
MEANING

Dividing a potential market into distinct sub-markets of consumers with common needs and characteristics The process of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significants - Stanton

Market Segmentation (Contd.)

REASONS/ NEEDS/ BENEFITS/
SIGNIFICANCE

Proper/appropriate choice of Target Markets Tapping of the Target Market and Adapting the offer to the Target Minimizes Aggregation Risk Gains to the Customers Efficiency & Economy in Marketing Effort Helps create Innovations Provides opportunities to Expand Market

Market Segmentation (Contd.)

BASES
1.

Geographic Segmentation
Geographic Variables
1.

Components
Asian, Pacific, American, European Pop Below 5000; 5000 20000; etc. Rural; Semi-urban; Urban

Regions City Size Density

2. 3. 4.

Climate

Hot; Humid; Cold

2.

Demographic Segmentation
Age, Sex, Marital Status, Income, Family Size, Occupation, Education, Religion, Nationality, Generation, Race, Social Class, Family Life Cycle, etc.

3.

Psychographic Segmentation
1.

Lifestyle Social Class Cultural

Conservative. Liberal, Adventuresome, Statusseeker, H & Fitness Lower, L-M, H-M, Upper Indian, South Indian, Hindu

2. 3.

4.

Personality

Extrovert, Aggressive, Introvert

Market Segmentation (Contd.)

BASES
4.

Behavioral Segmentation
Needs-motivation; Perception; Learning Involvement; Beliefs; Attitudes; Usage rate

5.

Socio-economic Segmentation
Social Class

Ability to Buy
6.

Product Segmentation
1. 2. 3. 4. 5.

Prestige Products Maturity Products

Status Products
Anxiety Products Functional Products

Market Segmentation (Contd.)

BASES
7.

Value Based Segmentation

Cs Value = Net Present Value of Customer
= (Annual Revenue from Customer X Number of years of Association) (Cost of Acquiring the Customer)

Market Segmentation (Contd.)

PHILOSOPHIES OF MS / APPROACHES TO MARKETING
2. 1.

Mass marketing Same product Same MM Undifferentiated marketing strategy Product Variety Marketing Differentiated product features Target Marketing Shot-gun Approach Rifle Approach

3.

Example Pepsi Mirinda, 7UP, Dew, Pepsi, Tropicana

Market Segmentation (Contd.)

PHILOSOPHIES OF MS / APPROACHES TO MARKETING
5.

4.

Micro Marketing Bifurcate Target Market Example Westside S. Delhi vs. Westside W. Delhi
Customized Marketing Individual customer basis Personalized Marketing Relationship Building

6.

Market Segmentation (Contd.)

Market Segmentation Strategies or Levels of Segmentation

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

Market Segmentation (Contd.)

Market Segmentation Strategies or Levels of Segmentation

Comparison

FOCUS Product Segments MM

UM One/few All One

DM Many Many Many

CM One/Few One/Few One/Few

Market Segmentation (Contd.)

Process of Market Segmentation
1.

Form the Segments (Basis for Segmentation)

2.
3.

Profile the Segments (Solicit Buyer Profile Info.)

Evaluate the Segments (By means of Financial and Strategic Criteria) Target Market Selection (Selects and Targets)

4.

Market Segmentation (Contd.)

Market Segment Selection / Selection of Target Markets

Market Segmentation (Contd.)

Market Segment Selection / Selection of Target Markets

Market Segmentation (Contd.)

EFFECTIVE Market Segmentation
1.

Measurable and Obtainable

2.
3. 4. 5. 6.

Substantial
Accessible Differentiable Actionable Others 1. Profitable 2. Relevant 3. Potential 4. Risk and Competition

Market Segmentation (Contd.)

Market Segmentation Decision
N
Y Y Y N N

Targeting

Targeting
Target Market

A set of buyers sharing common needs or characteristics that the company decided to serve

Targeting (Contd.)
Target Market Strategies

Task of Target Marketing (or Targeting) Analyzing the environment and evaluating business opportunities in order to identify the organizations MS opportunities and, Evaluating these alternatives to take a decision whether to enter into one market segment or a number of strategically significant segments for launching the marketing programme

Targeting (Contd.)
Target Market Strategies (Contd.)

Target Marketing Strategies Undifferentiated MS

Concentrated MS

Targeting (Contd.)
Target Market Strategies (Contd.)

Target Marketing Strategies Differentiated MS

Targeting (Contd.)
Process of Selecting Target Market
1.

TM Strategy

2.
3. 4. 5.

Determine segment variables

MS Profiles Evaluate relevant Market Segments Select Specific Target Markets

Positioning

Positioning (Contd.)
Positioning Approaches

By price value

With respect to use

According to users/class of users With respect to product class Vis--vis competition

Positioning
Concept

Act of developing the companys offerings and image to occupy a distinct place in the minds of the target market Consumer driven strategy in which the objective is to occupy a unique place in the consumers mind and maximize its potential benefit for the firm

Positioning (Contd.)
Product Position Vs. Brand Position

PP
Idea of functional vale Refers to a brands objective or functional attributes in relation to other brands in the category. Characteristic of the physical product and its functional attributes

BP
Something above functional value Outcome of the perception of the target segment customers. Brands subjective or perceived attributes in relation to competing brands in the market.

Positioning (Contd.)
Positioning According to Rites and Trout

Six step framework for successful positioning 1. What position do you currently own? 2. What position do you want to own? 3. Whom you have to defeat for that position? 4. Do you have the resources to do it? 5. Can you persist until you get there? 6. Are your tactics supporting the positioning objective you set?

Positioning (Contd.)
Positioning According to Rites and Trout (Contd.)

Principles of Positioning 1. Minds of customers 2. Singular, consistent 3. Differentiate from competitor 4. Focus its efforts (Companys) Positioning Errors 1. Under-positioning 2. Over-positioning 3. Confused Positioning 4. Doubtful Positioning

Positioning (Contd.)
Successful Position

Relevance

Distinctiveness
Coherence Commitment Durability Clarity Courage