Download - Segmentation, Targeting and Positioning

Segmentation, Targeting Segmentation, Targeting and Positioningand Positioning

Learning ObjectivesLearning Objectives

1.1. Learn the three steps of target marketing, Learn the three steps of target marketing, market segmentation, target marketing, and market segmentation, target marketing, and market positioningmarket positioning

2.2. Understand the major bases for segmenting Understand the major bases for segmenting consumer and business marketing strategyconsumer and business marketing strategy

3.3. Know how companies identify attractive market Know how companies identify attractive market segments and choose target marketing segments and choose target marketing strategystrategy

4.4. Realize how companies position their products Realize how companies position their products for maximum competitive advantage in the for maximum competitive advantage in the marketplacemarketplace

Steps in market segmentation, Steps in market segmentation, targeting and positioningtargeting and positioning

Market SegmentationMarket Segmentation Identify bases for segmenting the marketIdentify bases for segmenting the market Develop segment profilesDevelop segment profiles

Target MarketingTarget Marketing Develop measure of segment attractivenessDevelop measure of segment attractiveness Select target segmentsSelect target segments

Market PositioningMarket Positioning Develop positioning for target segmentsDevelop positioning for target segments Develop a marketing mix for each segmentDevelop a marketing mix for each segment

Market SegmentationMarket Segmentation Dividing a market into distinct groups with Dividing a market into distinct groups with

distinct needs, characteristics, or behavior distinct needs, characteristics, or behavior who might require separate products or who might require separate products or marketing mixes.marketing mixes.

Markets differ in their degree of heterogeneity . At one extreme they are homogeneous (Similar) and at the other extreme they are heterogeneous (Substantially different).Market Segmentation is the process of identifying group of buyers with different buying desires or requirements.There may be three basic market preferences: 1.Homogeneous, 2. Diffused, and 3. Clustered

BASIC MARKET PREFERENCE BASIC MARKET PREFERENCE PATTERNSPATTERNS

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

::::::::::::::::::::::::::::

Attribute X Attribute X Attribute X

Attribute Y

Attri. Y

A.Homogeneous Preferences

B.Diffused Preferences

C.Clustered Preferences

Attribute Y

Niche, Local, CustomerisationNiche, Local, Customerisation

A niche is more narrowly defined customer A niche is more narrowly defined customer group seeking a distinctive mix of benefits.group seeking a distinctive mix of benefits.

Local marketing is tailored to the needs Local marketing is tailored to the needs and wants of local customer groups.and wants of local customer groups.

Customised marketing is one-to-one Customised marketing is one-to-one marketing.smarketing.s

ADVANTAGES OF MARKET ADVANTAGES OF MARKET SEGMENTATIONSEGMENTATION

It improves a company’s understanding of It improves a company’s understanding of why consumers do or do not buy certain why consumers do or do not buy certain products. Therefore prepares a company to products. Therefore prepares a company to meet changing market demands.meet changing market demands.

Information gained from segmentation allows Information gained from segmentation allows the organization to plan a systematic and the organization to plan a systematic and effective marketing programme to satisfy the effective marketing programme to satisfy the consumer needs.consumer needs.

Better assessment of the strengths and Better assessment of the strengths and weaknesses of the competition.weaknesses of the competition.

Better allocation of marketing resources.Better allocation of marketing resources.

Requirements for Effective Requirements for Effective SegmentationSegmentation

MeasurableMeasurable Size, purchasing power, and profile of segmentSize, purchasing power, and profile of segment

AccessibleAccessible Can be reached and served Can be reached and served

SubstantialSubstantial Large and profitable enough to serveLarge and profitable enough to serve

DifferentiableDifferentiable Respond differentlyRespond differently

ActionableActionable Effective programs can be developedEffective programs can be developed

SEGMENTATION ANALYSIS SEGMENTATION ANALYSIS (BASIS OF SEGMENTATION)(BASIS OF SEGMENTATION)

CONSUMER CHARACTERISTICSCONSUMER CHARACTERISTICS (1) Geographic ( Region, city, rural and semi-urban (1) Geographic ( Region, city, rural and semi-urban

areas )areas ) (2) Demographic ( age, life cycle stage, generation, (2) Demographic ( age, life cycle stage, generation,

family size, gender, income, occupation, education, family size, gender, income, occupation, education, socio-economic classification )socio-economic classification )

(3) Psychographic ((3) Psychographic ( life style, psychological/personality life style, psychological/personality traits, values)traits, values)

CONSUMER RESPONSESCONSUMER RESPONSES (4) Behavioral Segments ((4) Behavioral Segments (Buyer readiness stage, Benefits Buyer readiness stage, Benefits

sought, Usage rate, Attitude, Loyalty, Occasions, User status)sought, Usage rate, Attitude, Loyalty, Occasions, User status)

Segmenting Business MarketsSegmenting Business Markets

Demographic segmentationDemographic segmentation Industry, company size, locationIndustry, company size, location

Operating variablesOperating variables Technology, usage status, customer capabilitiesTechnology, usage status, customer capabilities

Purchasing approachesPurchasing approaches Situational factorsSituational factors

Urgency, specific application, size of orderUrgency, specific application, size of order

Personal characteristicsPersonal characteristics Buyer-seller similarity, attitudes toward risk, loyaltyBuyer-seller similarity, attitudes toward risk, loyalty

Segmenting International MarketsSegmenting International Markets

Geographic segmentationGeographic segmentation Location or regionLocation or region

Economic factorsEconomic factors Population income or level of economic developmentPopulation income or level of economic development

Political and legal factorsPolitical and legal factors Type / stability of government, monetary regulations, Type / stability of government, monetary regulations,

amount of bureaucracy, etc.amount of bureaucracy, etc. Cultural factorsCultural factors

Language, religion, values, attitudes, customs, Language, religion, values, attitudes, customs, behavioral patternsbehavioral patterns

Target MarketingTarget Marketing

Target MarketTarget Market Consists of a set of buyers who share Consists of a set of buyers who share

common needs or characteristics that the common needs or characteristics that the company decides to servecompany decides to serve


Evaluating Market SegmentsEvaluating Market Segments Segment size and growthSegment size and growth Segment structural attractivenessSegment structural attractiveness

• Level of competitionLevel of competition• Substitute productsSubstitute products• Power of buyersPower of buyers• Powerful suppliersPowerful suppliers

Company objectives and resourcesCompany objectives and resources


Selecting Target Market SegmentsSelecting Target Market Segments Undifferentiated (mass) marketingUndifferentiated (mass) marketing Differentiated (segmented) marketingDifferentiated (segmented) marketing Concentrated (niche) marketingConcentrated (niche) marketing Micromarketing (local or individual)Micromarketing (local or individual)

FIVE PATTERNS OF TARGET FIVE PATTERNS OF TARGET MARKET SELECTIONMARKET SELECTION

Single Market ConcentrationSingle Market ConcentrationMarket SpecializationMarket SpecializationProduct SpecializationProduct SpecializationSelective SpecializationSelective SpecializationFull CoverageFull Coverage

FACTORS CONSIDERED IMPORTANT IN FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET THE SELECTION OF TARGET MARKET

STRATEGYSTRATEGY 1. Company’s Resources1. Company’s Resources 2. Product Homogeneity 2. Product Homogeneity 3. Product Stage in the Life Cycle3. Product Stage in the Life Cycle 4. Market Homogeneity4. Market Homogeneity 5. Competitive Marketing Strategy5. Competitive Marketing Strategy

PositioningPositioning

Positioning:Positioning: The place the product occupies in consumers’ The place the product occupies in consumers’

minds relative to competing products.minds relative to competing products. Typically defined by consumers on the basis Typically defined by consumers on the basis

of important attributes.of important attributes. Involves implanting the brand’s unique Involves implanting the brand’s unique

benefits and differentiation in the customer’s benefits and differentiation in the customer’s mind.mind.

Positioning maps that plot perceptions of Positioning maps that plot perceptions of brands are commonly used.brands are commonly used.

POSITIONING STRATEGIESPOSITIONING STRATEGIES

Identifying possible competitive Identifying possible competitive advantagesadvantages

Differentiation can be based on ProductsServicesChannelsPeople Image

Product DifferentiationProduct Differentiation Form- Form- size, shape or physical structuresize, shape or physical structure Features- Features- supplement to basic function.supplement to basic function. Performance Quality-Performance Quality-thethe level at which the product’s level at which the product’s

primary characteristics operates.primary characteristics operates. Conformance Quality- Conformance Quality- the degree to which all the produced the degree to which all the produced

units are identical and meet the promised specifications.units are identical and meet the promised specifications. Durability-Durability- a measure of the product’s expected operating life a measure of the product’s expected operating life

under natural or stressful conditions.under natural or stressful conditions. Reliability- Reliability- a measure of the probability that a product will not a measure of the probability that a product will not

malfunction within a specified time period.malfunction within a specified time period. Reparability- Reparability- a measure of the ease of fixing a product when it a measure of the ease of fixing a product when it

failsfails StyleStyleQuality can be communicated by choosing Quality can be communicated by choosing

physical signs and cuesphysical signs and cues

Services DifferentiationServices Differentiation

Ordering easeOrdering ease DeliveryDelivery InstallationInstallation Customer trainingCustomer training Customer consultingCustomer consulting Maintenance and repairMaintenance and repair

Personnel DifferentiationPersonnel Differentiation

CompetenceCompetence CourtesyCourtesy CredibilityCredibility ReliabilityReliability ResponsivenessResponsiveness CommunicationCommunication

Channel DifferentiationChannel Differentiation

CoverageCoverage ExpertiseExpertise PerformancePerformance

Image DifferentiationImage Differentiation

Image is the way the public perceives the Image is the way the public perceives the company or its products.company or its products.

Identity is the way a company aims to Identity is the way a company aims to identify or position itself or its products.identify or position itself or its products.

Symbols, colours, slogans, atmosphere,Symbols, colours, slogans, atmosphere, Events and employee behaviourEvents and employee behaviour

Choosing the right competitive Choosing the right competitive advantageadvantage

How many differences to promote?•Unique selling proposition•Several benefits

Which differences to promote? Criteria include:•Important•Distinctive•Superior•Communicable•Preemptive•Affordable•Profitable

Developing and communicating a Developing and communicating a positioning strategypositioning strategy

All products can be differentiated to some All products can be differentiated to some extent. But not all differences are meaningful extent. But not all differences are meaningful or worthwhile. A difference is worth or worthwhile. A difference is worth establishing to the extent that it satisfies the establishing to the extent that it satisfies the following criteria :following criteria :

Important : The difference delivers a highly Important : The difference delivers a highly valued benefit to a sufficient numbers of valued benefit to a sufficient numbers of buyers.buyers.

Distinctive : The difference is delivered in a Distinctive : The difference is delivered in a distinctive way. distinctive way.

Developing and communicating a Developing and communicating a positioning strategypositioning strategy

Superior : The difference is superior to Superior : The difference is superior to other ways of obtaining the benefit.other ways of obtaining the benefit.

Preemptive : The difference cannot be Preemptive : The difference cannot be easily copied by competitors.easily copied by competitors.

Affordable : The buyer can afford to Affordable : The buyer can afford to pay for the difference.pay for the difference.

Profitable : The company will find it Profitable : The company will find it profitable to introduce the difference. profitable to introduce the difference.

Choosing a positioning strategyChoosing a positioning strategy

Value propositions ( the whole cluster of benefits Value propositions ( the whole cluster of benefits the company promises to deliver )represent the the company promises to deliver )represent the full full positioning of the brandpositioning of the brand

Possible value propositions:Possible value propositions: More for More More for More More for the Same More for the Same More for LessMore for Less The Same for Less The Same for Less Less for Much Less Less for Much Less

Some examplesSome examples

Lays Lays

DoveDove

Amul : The taste of India

Hindustan Unilever LimitedHindustan Unilever Limited

HDFC Standard Life InsuranceHDFC Standard Life Insurance