Market Segmentation, Targeting and Positioning

• Related concepts: market segmentation, target marketing, and positioning

• Process of market segmentation, its benefits and conditions for use

• Target-market strategies• Steps in developing a positioning strategy• Methods of forecasting demand of market

segments

Lesson Overview

Indian Automobile Industry - STP

Zen, Alto

Economy

Mid SizeFamily

Luxury

Maruti 800

Getz, Swift Santro

Esteem, i10Ford Ikon, Opel Corsa

Honda CivicToyota Corolla

Baleno, Accent

Chevrolet Optra,Sonata

Mercedez Benz,BMW,Toyota Lexus

Who are the main passenger car manufacturers in India?

Markets

MARKET SEGMENTSMARKET SEGMENTS

TARGET MARKETTARGET MARKET

MARKET SEGMENTATIONMARKET SEGMENTATION

What are markets?

Markets

1(Exercisers)

1(Exercisers)

3(Transportation riders)

3(Transportation riders)

2(School-goers)

2(School-goers)

4(Adventurers)

4(Adventurers)

Market segments for Bicycles

Markets

MARKET SEGMENTSGroups of customers with different wants,

buying preferences or product-use behavior

MARKET SEGMENTSGroups of customers with different wants,

buying preferences or product-use behavior

TARGET MARKETA market segment on which

the seller decides to focus efforts

TARGET MARKETA market segment on which

the seller decides to focus efforts

Market Segmentation

Process of dividing the total marketfor a good or service into several smaller,

internally homogeneous groups

Process of dividing the total marketfor a good or service into several smaller,

internally homogeneous groups

Members of each group are similar with respect to the factors

that influence demand

Members of each group are similar with respect to the factors

that influence demand

Process of Market Segmentation

Determine potential of the segments andhow well they are being satisfied.

Determine potential of the segments andhow well they are being satisfied.

Identify wants within a marketIdentify wants within a market

Identify characteristics that distinguish the segments

Identify characteristics that distinguish the segments

Market Segmentation Conditions

MICROMARKETINGTreat each single customer

as a separate segment

MICROMARKETINGTreat each single customer

as a separate segment

Large enoughto be

Profitable

Large enoughto be

Profitable

Segment isAccessible

Segment isAccessible

Measurableand

data obtainable

Measurableand

data obtainable

Market Segmentation - First Cut

Customer’s reason for buyingCustomer’s reason for buying

CONSUMER Purchase for personal use

CONSUMER Purchase for personal use

BUSINESS Purchase to use in organizations, to resell, or to make other products

BUSINESS Purchase to use in organizations, to resell, or to make other products

Segmentation Bases for Consumer Markets

1.GeographicLocation

1.GeographicLocation

District, MufussilDistrict, Mufussil

Urban- RuralUrban- Rural

Metro, Non-MetroMetro, Non-Metro

Any OtherAny Other

Possible Market SegmentsPossible Market Segments

• Rural, Urban• Metro, Large towns, Small towns, Villages population > 1000, < 1000 etc• Coastal, Non-coastal• etc

• Rural, Urban• Metro, Large towns, Small towns, Villages population > 1000, < 1000 etc• Coastal, Non-coastal• etc

Segmentation Bases for Consumer Markets (Contd)

2.Demographic 2.Demographic

Age Age

IncomeIncome

….More….More

…More…More

OccupationOccupation

Possible Market SegmentsPossible Market Segments

• Infant (newly born–1 yr) child (1–12 yr), teens (13–19), adolescent (16 –19), youth (20–35), middle-aged (36 – 50), elders or seniors (50+ etc)• Male, Female• Blue/white Collar, traders, teachers, university professors, student, housewife etc. ---- (Contd)

• Infant (newly born–1 yr) child (1–12 yr), teens (13–19), adolescent (16 –19), youth (20–35), middle-aged (36 – 50), elders or seniors (50+ etc)• Male, Female• Blue/white Collar, traders, teachers, university professors, student, housewife etc. ---- (Contd)

GenderGender

Kids Reign Supreme in FMCG Purchase

71

59

52

20

40

60

80

% of KidsWho

InfluenceWhat FMCGBrandTheir

FamilyBuys

Biscuits Burgers andPizzas

Fruit Juices

Segmentation Bases for Consumer Markets (Contd)

2.Demographic 2.Demographic

Age Age

GenderGender

Family size & StructureFamily size & Structure

Marital statusMarital status

EducationEducation

Possible Market SegmentsPossible Market Segments

• Illiterates, literates, high school, secondary, graduate, post graduate, post doctorates.• Unmarried, married• Families with 3 or <, with 4, 5 or >members.

• Illiterates, literates, high school, secondary, graduate, post graduate, post doctorates.• Unmarried, married• Families with 3 or <, with 4, 5 or >members.

OccupationOccupation

Socio-economic Pyramid of Indian Population

A1 & A2(9.5%)

B1 & B2 (17%)

C (19.5%) Skilled workers, clerks, salespersons, etc

D (22.4%) Same as above, occupation profile with SSC

E1 & E2 (31.6%) Unskilled labour

Typically SSC qualified, about 40% Graduates;occupation clerk/shopkeeper

Graduates, white-collar workers,and professionals

Psychographics

In the field of marketing, psychographic variables are any attributes relating to personality,

values, attitudes, interests, or lifestyles. They are also called IAO

variables (for Interests, Activities, and Opinions).

Segmentation Bases for Consumer Markets (Contd)

3.Psychographic 3.Psychographic

PersonalityPersonality

Values Values

Life-styleLife-style

Possible Market SegmentsPossible Market Segments

- Ambitious, self-confident, Aggressive, Introverted, Extroverted, Sociable, Achievers, etc - Activities (Spiritual, Yoga, travel); Interests(Music, Politics, Art etc); Opinions (Conservation, capitalism)- Values and lifestyles (VALS), List of Values (LOV)

- Ambitious, self-confident, Aggressive, Introverted, Extroverted, Sociable, Achievers, etc - Activities (Spiritual, Yoga, travel); Interests(Music, Politics, Art etc); Opinions (Conservation, capitalism)- Values and lifestyles (VALS), List of Values (LOV)

Segmentation Bases for Consumer Markets (Contd)

4.Behavioral 4.Behavioral

Benefits DesiredBenefits Desired

Possible Market SegmentsPossible Market Segments

• Virtually for all Products (Titan, GardenHMT, Pepsodent) • Heavy, Medium, Low user, Non-user• Rasana• Hard Core, Soft Core,Switchers

• Virtually for all Products (Titan, GardenHMT, Pepsodent) • Heavy, Medium, Low user, Non-user• Rasana• Hard Core, Soft Core,Switchers

Product UsageProduct Usage

Use SituationsUse Situations

Customer LoyaltyCustomer Loyalty

Segmentation Bases for Business Markets

Bases for Segmentation

Bases for Segmentation

Customer LocationCustomer Location

Customer SizeCustomer Size

Possible Market SegmentsPossible Market Segments

• Customer located in one site will have one market plan and other in another• Large, Medium and Small buyers (Payment terms, packaging, call frequency etc different ) • For steel manufacturer it could be construction, office furniture, cable, automobile etc

• Customer located in one site will have one market plan and other in another• Large, Medium and Small buyers (Payment terms, packaging, call frequency etc different ) • For steel manufacturer it could be construction, office furniture, cable, automobile etc

Product End UseProduct End Use

Segmentation Bases for Business Markets

Bases for Segmentation

Bases for Segmentation

BUYER Behavior, Motivation, or Purchase criteria

BUYER Behavior, Motivation, or Purchase criteria

Possible Market SegmentsPossible Market Segments

• In any end use segment , we can further segment based on purchase criteria – say buyers being insensitive, sensitive and highly sensitive to price change. • We can also segment them according to their needs, say Standardized or Customised products.

• In any end use segment , we can further segment based on purchase criteria – say buyers being insensitive, sensitive and highly sensitive to price change. • We can also segment them according to their needs, say Standardized or Customised products.

Segmentation Bases for Business Markets

Bases for Segmentation

Bases for Segmentation

- Purchase Criteria, Size, & Geography- Buying Situation

- Purchase Criteria, Size, & Geography- Buying Situation

Possible Market SegmentsPossible Market Segments

Matrix Approach

• New Task Buying, • Straight rebuy, • Modified rebuy

Matrix Approach

• New Task Buying, • Straight rebuy, • Modified rebuy

Target-Market Strategy

Single MarketingStrategy“shotgun”

Single MarketingStrategy“shotgun”

Market-aggregationStrategy

“mass-market”“undifferentiated-market”

Market-aggregationStrategy

“mass-market”“undifferentiated-market”

andand

Product differentiationStrategy

Product differentiationStrategy

Target-Market Strategy

Single-SegmentStrategy

“concentration ”

Single-SegmentStrategy

“concentration ”

NICHEMARKETERS

NICHEMARKETERS

One Marketing

Mix

One Marketing

Mix

Target-Market Strategy

Multiple Marketing

Mixes

Multiple-SegmentStrategy

Selecting a Target Market -- Guidelines

Compatible with company’s goals

Compatible with company’s goals

Match target market opportunity

with company resources.

Match target market opportunity

with company resources.

Profit that justifies investment

Profit that justifies investment

Competitors are few and/or weak

Competitors are few and/or weak

Positioning

A position is the way afirm’s product, brand, ororganization is viewed

relative to the competitionby current and prospective

customers.

A position is the way afirm’s product, brand, ororganization is viewed

relative to the competitionby current and prospective

customers.

What is a Position? What is a Position?

So what is Positioning?

Firm creating and maintaining in theminds of a target market ‘a particularImage’ relative to competing products

Firm creating and maintaining in theminds of a target market ‘a particularImage’ relative to competing products

Coordinate the marketing mix to convey position

Design the feature that conveys position

Select position concept

THREE STEPS

How do you Position a Product?

Perceptual Map

Determine what is important to thetarget market and how its members

view the competing products

How do you select the positioning concept?

STEP 1

Perceptual Mapping

• An analytical technique that enables marketers to plot graphically consumers’ perceptions concerning product attributes of specific brands

29Chapter Six Slide

Perceptual Map for different brands of bar soap

DeodorantNon-deodorant

Low moisturizing

High moisturizing

1

2

38

7

6

4 5

Lifebuoy

Dove

What bar soap?What position?

Perceptual Mapping – toothpastes

• Freshness• Whiteness• Prevent tooth decay – bacteria• Medicinal / Curative properties – Clove oil• Foam• Healthy tooth / gums

31Chapter Six Slide

How do you Position a Product?..Contd

Brand nameA SloganAppearance, or any other • features of the Product, • the place where it is sold, • the appearance of the employees, and in many other ways

Design the feature that mosteffectively conveys the position

STEP 2

How do you Position a Product?..Contd

What is repositioning?

Coordinate the Marketing-mixto convey a consistent position

STEP 3

When the position of any product iseroded, or needs to be changed due tocompetition, and the firm wants to re-

establish its attractiveness in its marketit is engaging in repositioning.

Repositioning of Brands - Horlicks

• Initially introduced as a substitute and additive to milk and positioned as ‘food for convalescing’ and nutrient supplement for kids.

• From a boring nutritional drink, repositioned by

launching it in vanilla, chocolate and honey versions.

• Introduced other variants like Jr.Horlicks, Mother Horlicks and Women’s Horlicks

34Chapter Six Slide

Repositioning of Brands - Cadbury

• In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe for children.

Repositioned as:• In the Mid 90's the category was re-defined by the very popular `Real Taste of Life'

campaign, shifting the focus from `just for kids' to the `kid in all of us'. It appealed to the child in every adult.

• The "girl dancing on the cricket field" has remained etched in everyone's memory, as the most spontaneous & un-inhibited expression of happiness.

• The 'Khanewalon Ko Khane Ka Bahana Chahiye' campaign. This campaign built social acceptance for chocolate consumption amongst adults, by showcasing collective and shared moments.

• Mischievous, bubbly teenagers getting out of their 'stuck and hungry' situations by having a Cadbury Perk. Cadbury Perk became the new mini snack in town and its proposition "Thodi si pet pooja" went on to define its role in the category.

35Chapter Six Slide