MARKET SEGMENTATION, TARGETTING AND POSITIONING

What is Market Segmentation?

• Market segmentation involves aggregating prospective buyers into groups that have two key characteristics.

▫ have common needs and ▫ respond similarly to a marketing action.

Why Segment Markets?

Slide: 3

One Product and Multiple Market Segments

Multiple Product and Multiple Market Segments Segments of One: Mass Customization

• Build-to-Order (BTO)

• Synergy

Satisfy diverse needs by developing different products to suit various consumer needs.

PATTERNSOF MARKET SEGMENTATION

1.HOMOGENEOUS PREFERENCES • All the consumer have roughly the same

preferences.2. DIFFERED PREFERENCES• Consumers Preferences may be scattered

through out the space, indicating that consumers vary greatly in their preferences

3. CLUSTERED PREFERENCES • The marketing might reveal distinct

preference clusters, called natural marketing segment

Types of Segmentation

Geographic Segmentation

• Region• City• Rural • Semi-Urban

Demographic Segmentation

• Age• Family Size• Gender • Income• Occupation• Education

Psychographic Segmentation

• Socio-economic Classification• Life Style(Culture-Oriented, Sports oriented,

Indoor Oriented)• Personality(Compulsive, Gregarious,

Authoritarian, Ambitious)

Behavioral Segmentation• Occasions (Regular, Special)• Benefits(Quality, Service, Economy, Speed)• User Status(Non-user, Ex-user, Potential

User, First time User, Regular User)• Usage Rate(Light, Medium, Heavy User)• Loyalty Status(Hard Core, Split ,Shifting and

Switchers)• Readiness Stage (Unaware, aware, interested,

desirous, Intending to buy)• Attitude towards the product(Enthusiastic,

Positive, Indifferent, Hostile, Negative)

5 Step Segmentation Process• Needs-based Segmentation• Segment Identification• Segment Attractiveness(mkt growth, comp intensity, mkt

access)• Segment Profitability• Segment Positioning• Segment “Acid Test”• Marketing Mix Strategy

Effective Segmentation Criteria

SubstantiableSubstantiableSubstantiableSubstantiable

Identifiable andIdentifiable andMeasurableMeasurable

Identifiable andIdentifiable andMeasurableMeasurable

AccessibilityAccessibilityAccessibilityAccessibility

Differentiable Differentiable Differentiable Differentiable

Segment must be large enough to warrant a special

marketing mix.

Segment must be large enough to warrant a special

marketing mix.

Segments must be identifiable and their size measurable.

Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with

marketing mix.

Members of targeted segments must be reachable with

marketing mix.

Unless segment responds to a marketing mix differently, no separate treatment is needed.

Unless segment responds to a marketing mix differently, no separate treatment is needed.

Actionable Programs formulated for serving segments

IMPORTANCE OF MARKET SEGMENTATION

1.Allocation of Market budget.2.Adjustment of the product to the market need.3. To estimate level of sales in a given market4. To overcome competition effectively.5. To develop effective marketing programme.6. To promote marketing activities.7. To modify the existing product or to develop

new product to satisfy needs of potential buyers.8. To have more precise definition of market9. To contribute towards achieving company goals

TARGETTING

CRITERIA USED TO SELECT THE TARGET MARKET

• Market Size

• Expected Growth

• Compatibility with the Organizations objectives

and resources.

• Cost of reaching the segment

• Competitive Position

• After evaluating different segments, the company can consider 5 patterns of target market selection.

• SINGLE SEGMENT CONCENTRATIONo A firm that has only one product and caters to a

particular market segment.o Benefits of specialization but risks of higher

competition.o Eg-RCC,ZODIAC

• SELECTIVE SPECIALIZATIONo A firm selects a no. of segments, each objectively

attractive and appropriate.o This multi segment strategy has an advantage of

diversifying the firms risk.o Eg-P&G

• PRODUCT SPECIALIZATIONoA firm makes a certain product that it sells to

different market segmentsoEg-Microscope

• MARKET SPECIALIZATIONoThe firm concentrates on serving many needs of a

particular customer groupoEg-University Laboratories, Adult foods

• FULL MARKET COVERAGEoThe firm attempts to serve all customer groups

with all the products they might need.oEG-Microsoft, General Motors, Coca-Colao It can be done in 2 ways-1.Undifferentiated MarketingThe firm ignores segment difference and goes

after the whole market with one offer.Mass distribution and advertising2.Differentiated MarketingThe firm operates in several market segments

and designs different products for each.IT creates more sales than the former and it is

costly to do the business

POSITIONING

• Positioning is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market.

• Positioning requires the similarities and differences between brand to be defined and communicated.

• For this, the firm has to identify the Frame of Reference, Point of Parity and Point .of Difference.

• FRAME OF REFERENCEFRAME OF REFERENCE----The target market that could be selected due to its

potential and give the firm a better competitive advantage

• POINTS OF DIFFERENCEPOINTS OF DIFFERENCE----Attributes or benefits that consumers strongly

associate with a brand and believe they cannot find it with another brand.

Eg-Apple(innovation and Performance)• POINTS OF PARITYPOINTS OF PARITY----The attributes that are not necessarily unique to

the brand and could be shared by other brands.Eg-Raymond, Reid & Taylor

• CATEGORY MEMBERSHIPThe products or set of products with which a brand

competes and which function as close substitutes.Target consumers may know that their brand is a leading

firm, but Category membership should be informed.There are situations where a consumer knows the brands

category membership but not convinced.Eg-Samsung

The positioning of Moov, Cadbury Dairy Milk

Product Positioning- Using Perceptual Maps

A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.

A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.

PRODUCT POSITIONING USING PERCEPTUAL MAPS

PRODUCT DIFFERENTIATION

Product differentiation is a strategy that involves a firm’s using different marketing mix activities to help consumers perceive the product as being different and better than competing products.

DIFFERENTIATION STRATEGIES FOR POSITIONING

• Personnel DifferentiationBetter trained employeeEg-King Fisher Airlines

• Channel DifferentiationDesign effectively-distribution channels

coverage, expertise and performance.Eg-Eureka Forbes:-direct-to-home delivery

• Image DifferentiationCraft powerful, compelling ImagesEg-Park Avenue, Marlboro etc.