Segmentation
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Transcript of Segmentation
Segmenting, Targeting & PositioningSegmenting, Targeting & Positioning
Steps in the Steps in the Target Marketing ProcessTarget Marketing Process
The 12 billion dollar question:The 12 billion dollar question:
Global $12 billion dollar sneaker market for all kinds of athletic shoes.
Reebok’s marketing research shows that in 1971 only 1 of every 27 women was involved in sports; today it is 1 in 3!! Thus Reebok has put special emphasis on the female market.
Sells multiple brands within the same product category for a variety of products
Brands feature a different mix of benefits and appeal to different segments
Has also identified different niches within certain segments
Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs
Procter & GambleProcter & Gamble
A Market is...A Market is...
(1) people or organizations with
(2) needs or wants, and with
(3) the ability and
(4) the willingness to buy.
A group of people that lacks any one of these characteristics is not a market.
Market SegmentationMarket Segmentation
MarketMarket
MarketSegmentMarket
Segment
MarketSegmentation
MarketSegmentation
People or organizations with needs or wants and the ability and
willingness to buy
People or organizations with needs or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
DefinitionDefinition
Market Segmentation:
–Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.
MARKET SEGMENTATION =MARKET SEGMENTATION =
Dividing market into segments, each of which behaves differently vis-à-vis your product
Selecting certain segment(s) Developing one marketing plan for
each segment Thinking small(er)
Market segmentation
aggregating buyers into groups that:
1. Have common needs and
2. Will respond similarly to marketing action.
The groups that result from the
market segmentation process are
called market segments.
PRODUCT
MARKETSOFT
PILLOWMEDIUMPILLOW
FIRMPILLOW
Stomach sleepers
Back sleepers
Side sleepers
Key: L, Large market; M, medium market; S, small market
L
L
L
M
M
M
M
S
S
Product/Usage Habits Product/Usage Habits SegmentationSegmentation
Pillow ManufacturerPillow Manufacturer
Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!
Buyer Preference Patterns
Homogeneous preference
Diffused preference
Clustered preference
STYLE
DURABLE
Homogeneous Preference -No natural segments -All buyers have same preference
TITAN WATCHESTITAN WATCHES
STYLE
DURABLE
Diffused Preference -No pattern (…or poor research) -Take center position
TITAN WATCHESTITAN WATCHES
STYLE
DURABLE
Clustered Preference -Natural segments -Increases as number of competitors increases
TITAN WATCHESTITAN WATCHES
Values of the Two Segments- Values of the Two Segments- Youngsters & Adults - WATCHESYoungsters & Adults - WATCHES
Attribute 1PRICE
Attribute 2BEAUTY
Attribute 3DURABILITY
Adults
Youngsters
Segmentation DilemmaSegmentation Dilemma
Mass Marketing --(Economies of Scale)
(However, everyone is different)
CUSTOMIZATION
Choosing a Targeting StrategyChoosing a Targeting Strategy
Undifferentiated Marketing Differentiated Marketing Concentrated Marketing Customized Marketing
Undifferentiated MarketingUndifferentiated Marketing
Appeals to a broad spectrum of people
Efficient due to economies of scale Effective when most consumers
have similar needs Example: Big Bazaar
Differentiated MarketingDifferentiated Marketing Develops one or more products for each
of several customer groups with different product needs
Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products
Example:Lakme, Ponds, Fair & Lovely
Concentrated MarketingConcentrated Marketing
Entails focusing efforts on offering one or more products to a single segment
Useful for smaller firms that do not have the resources to serve all markets
Example:HMT Watches
Customized MarketingCustomized Marketing
Segments are so precisely defined that products are offered to exactly meet the needs of each individual
– Example:
Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual
– Example: Dell Computers
SegmentationSegmentation
Why segment?
– Identifies opportunities and needs.
– Allows firm to focus on specific needs.
– Improves marketing mix for each segment.
– Allows small firm to exist.
The Importance of The Importance of Market SegmentationMarket Segmentation
Markets have a variety of product needs and preferences
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
Criteria for Successful Criteria for Successful SegmentationSegmentation
Criteria Criteria for for
Market Market SegmentsSegments
Criteria Criteria for for
Market Market SegmentsSegments
SubstantialitySubstantiality
IdentifiabilityIdentifiability
AccessibilityAccessibility
ResponsivenessResponsiveness
Criteria for SegmentationCriteria for Segmentation
SubstantialitySubstantialitySubstantialitySubstantiality
IdentifiabilityIdentifiabilityMeasurabilityMeasurabilityIdentifiabilityIdentifiabilityMeasurabilityMeasurability
AccessibilityAccessibilityAccessibilityAccessibility
ResponsivenessResponsivenessResponsivenessResponsiveness
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.
WHEN DO YOU HAVE "GOOD" WHEN DO YOU HAVE "GOOD" SEGMENTS?SEGMENTS?
You can reach them Group is large enough to be
profitable You have the capability to build a
marketing program target for them
Segmentation BasesSegmentation Bases
Characteristics of
individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
Bases for SegmentationBases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Geographic SegmentationGeographic Segmentation
Region of the country or world
Market size
Market density : TV Companies
Climate: woollen clothes
City
Bases for SegmentationBases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases for Bases for Demographic SegmentationDemographic Segmentation
Age: Cartoon Network; MTV; News Channels Gender: Cosmetics & After Shave Income: Economical & Luxury goods Ethnic background: Food Family Life Cycle: Life Insurance Companies Generation: Apparels Education Occupation: PC Selling
Bases for SegmentationBases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
PsychographicsPsychographics
Psychographic segments market in terms of shared attitudes, interests, and opinions
Segments include demographic information such as age and income, but also includes richer descriptions
Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)
Bases for Bases for Psychographic SegmentationPsychographic Segmentation
PsychographicPsychographicSegmentationSegmentation
PsychographicPsychographicSegmentationSegmentation
PersonalityPersonality
MotivationMotivation
LifestylesLifestyles
AttitudeAttitude
MOTIVATIONMOTIVATION
•Health Supplements
•Cosmetics
•Safola
•Life Insurance
•LG Products
•Health Supplements
•Cosmetics
•Safola
•Life Insurance
•LG Products
Life Style: VALSLife Style: VALS
VALS FrameworkVALS Framework•PRINCIPLE ORIENTED:
•Fulfilled: Mature, Well Educated, Informed, Respectful but Open minded
•Believers: Conservative, Conventional, follow established rules
•STATUS ORIENTED:
•Achievers:Committed to family and Work, Image is very Important
•Strivers: Unsure of themselves, Money is a measure of success
•ACTION ORIENTED:
•Experiencers: Young, Vital, Enthusiastic, rebellions
•Makers: Practical, Suspicious of new ideas, value working with their hands
•PRINCIPLE ORIENTED:
•Fulfilled: Mature, Well Educated, Informed, Respectful but Open minded
•Believers: Conservative, Conventional, follow established rules
•STATUS ORIENTED:
•Achievers:Committed to family and Work, Image is very Important
•Strivers: Unsure of themselves, Money is a measure of success
•ACTION ORIENTED:
•Experiencers: Young, Vital, Enthusiastic, rebellions
•Makers: Practical, Suspicious of new ideas, value working with their hands
Bases for SegmentationBases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Benefit SegmentationBenefit Segmentation
The process of grouping
customers into market
segments according to
the benefits they seek
from the product .
Maruti Esteem, Honda City
Bases for SegmentationBases for Segmentation
Behavioral Behavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
Segmenting by BehaviorSegmenting by Behavior
Behavioral segmentation slices consumers on the basis of how they act toward, feel about, or use a product
Behavioral Segmentation Behavioral Segmentation VariablesVariables
Market SegmentationMarket Segmentation
Occasions User Status
User Rates: Airlines Loyalty Status: Credit
Cards Readiness Stage
Attitude Toward the Product
Business Marketing SegmentationBusiness Marketing SegmentationGeographic
Customer Type
Customer Size
Product UseBusinessBusinessMarketsMarkets
BusinessBusinessMarketsMarkets
Purchasing Criteria
Purchasing Strategy
Importance
Personal Characteristics
Micro- segmentation
Micro- segmentation
Macro- segmentation
Macro- segmentation
Steps in Segmenting a MarketSteps in Segmenting a Market
Select a
market for
study
Choosebases
for segmen-
tation
Selectdescrip-
tors
Profileand
analyzesegments
Selecttarget
markets
Design,imple-ment,
maintainmkting
mix
Target MarketTarget Market
A group of people or
organizations for which an
organization designs,
implements, and maintains a
marketing mix intended to
meet the needs of that
group, resulting in mutually
satisfying exchanges.
Strategies for SelectingStrategies for SelectingTarget MarketsTarget Markets
ConcentratedStrategy
ConcentratedStrategy
UndifferentiatedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
MultisegmentStrategy
Undifferentiated Undifferentiated Targeting StrategyTargeting Strategy
AdvantagesAdvantages: Potential savings on
production and marketing costs
DisadvantagesDisadvantages: Company more
susceptible to competition
Concentrated Concentrated Targeting StrategyTargeting Strategy
AdvantagesAdvantages: Concentration of resources Meets narrowly defined
segment Small firms can compete Strong positioning
DisadvantagesDisadvantages: Segments too small, or
changing Large competitors may market
to niche segment
AdvantagesAdvantages: Greater financial success Economies of scale
DisadvantagesDisadvantages: High costs Cannibalization
Multi-segment Multi-segment Targeting StrategyTargeting Strategy
PositioningPositioning
Developing a specific
marketing mix to influence
potential customers’ overall
perception of a brand,
product line, or organization
in general.
PositionPosition
The place a product, brand,
or group of products
occupies in consumers’
minds relative to competing
offerings.
Procter & Gamble--11 Brands of DetergentProcter & Gamble--11 Brands of Detergent
Tide: all purpose family detergent, tough on stains, keeps clothing looking like new
Cheer with Triple Color Guard: the color expert, guards against fading
Bold: built in fabric softener Gain: gives you clean, fresh-smelling clothes Era: built in stain removers Dash: does it all for a low price Dreft: removes tough baby stains but gently Ariel: targeted to Upper Class market
Toothpaste ExampleToothpaste Example
Pepsodent Tooth Decay Close-Up Freshness Appeal Aqua fresh Triple Benefit Teeth Colgate CDC Strong Teeth Colgate Jr. Kids brand with fluoride
POSITIONING THE PRODUCTPOSITIONING THE PRODUCT
Choosing a Positioning Strategy:Choosing a Positioning Strategy:– Identifying possible competitive advantages
• Products, services, channels, people or image can be sources of differentiation.
– Choosing the right competitive advantage• How many differences to promote?
– Unique selling proposition (pick one benefit; Volvo = safety)
– Choose more than one if others share a claim to be best:
• Which differences to promote? - Some: Important, Distinctive, Superior, Affordable, visible to buyers.
POSITIONING THE PRODUCTPOSITIONING THE PRODUCT
Choosing a Positioning Strategy:Choosing a Positioning Strategy:– Developing a positioning statement
• Positioning statements summarize the company or brand positioning
• EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference).
– Communicating the chosen position
Steps to Choosing and Implementing Steps to Choosing and Implementing
a Positioning Strategya Positioning Strategy
Step 1. Identifying a set of possible competitive advantages:
– Competitive Differentiation.
Step 2. Selecting the right competitive advantage.
Step 3. Effectively communicating and delivering the chosen position to the market.
Step 4: Evaluate market response and reposition if necessary
What Kind of Advantages to Focus On?What Kind of Advantages to Focus On?
Against aCompetitor
Against aCompetitor
UsageOccasions
UsageOccasions
Away fromCompetitors
Away fromCompetitors
Product/ServiceAttributes
Product/ServiceAttributes
ProductClass
ProductClass
BenefitsOffered
BenefitsOffered
UsersUsers
BB
AA
EEDD
CCHHGG
FF
ImageImagePersonnelPersonnel
1.Attribute Positioning 1.Attribute Positioning GM: SafetyGM: Safety
2.Benefit Positioning2.Benefit Positioning Maruti:EconomyMaruti:Economy
3. Use Positioning 3. Use Positioning PVR:Leisure Based Entertainment
PVR:Leisure Based Entertainment
4. User Positioning4. User Positioning Bungee Jumping: Adventurous
Bungee Jumping: Adventurous
5.Competitor Positioning 5.Competitor Positioning
6. Product Category 6. Product Category IIMs: Best B SchoolIIMs: Best B School
IIPM:Better Than IIMsIIPM:Better Than IIMs
Which Competitive Advantages?Which Competitive Advantages?
Criteriafor
DeterminingWhich
Differencesto
PromoteAffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
CommunicableCommunicable
How Many Differences to Promote?How Many Differences to Promote?
Trend to broaden and position to more segments– Lux soap: cleanses, deodorizes, moisturizes– Risks of disbelief and loss of clear position
Avoid– Under positioning– Over positioning– Confusion
Effective PositioningEffective Positioning
Assess the positions of competing products
Determine the dimensions of these positions
Choose an effective market position
RepositioningRepositioning
Changing consumers’
perceptions of a brand
in relation to
competing brands.