Market Segmentation, Targeting and Positioning By : Prof Sameer Kulkarni

The Starting Point Mass Marketing: The Seller engages in – Mass marketing>mass production>mass distribution>and mass promotion ONE PRODUCT FO ALL BUYERS. It creates the largest potential market>leads to lower costs>lower prices>higher margins

Segment Marketing Role of Marketer The marketer does not create the segments The marketer identifies the segments and decide which one to target The company can better design>price>disclose& deliver the product to satisfy the target market.

Benefits of Segmentation Effective use of resources Gain a focus Create Value for a target market Positioning

Steps in Market Segmentation, Targeting, and Positioning 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market Positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment Marketing Segmentation HOA380 Chapter 9

Step 1. Market Segmentation Levels of Market Segmentation Mass Marketing Same product to all consumers (no segmentation, i. e. a commodity) Segment Marketing Different products to one or more segments (some segmentation, i.e. Thumsup) Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs. Marketing Segmentation HOA380 Chapter 9

Steps in Market Segmentation, Targeting, and Positioning 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Segmentation 3. Evaluate attractiveness of each segment 4. Select the target segment(s) Market Targeting 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen concept Market Positioning

Basic Market-Preference Patterns (a) Homogeneous preferences Sweetness Creaminess (b) Diffused preferences Creaminess Sweetness (c) Clustered preferences Creaminess Sweetness

Step 2. Market Segmentation Levels of Market Segmentation Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Step 2. Market Segmentation Levels of Market Segmentation Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers

Bases for Segmenting Consumer Markets Geographic Region, City or Metro Size, Density, Climate Demographic Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ... Lifestyle or Personality Psychographic Occasions, Benefits, Uses, or Attitudes Behavioral

Step 3. Market Segmentation Geographic Segmentation International National Regional/City Marketing Segmentation HOA380 Chapter 9

Geographic Bases Region Density Climate Population

Step 4. Market Segmentation Bases for Segmenting Business Markets Personal Characteristics Demographics Bases for Segmenting Business Markets Operating Characteristics Situational Factors Purchasing Approaches

Step 5. Market Segmentation Demographic Segmentation Dividing the market into groups based on variables such as: Age Gender Family size or life cycle Income Occupation Education Religion Race Generation Nationality Most Popular Bases & Easiest to Measure Marketing Segmentation HOA380 Chapter 9

Step 6. Market Segmentation Psychographic Segmentation Divides Buyers Into Different Groups Based on: Social Class Lifestyle Personality Marketing Segmentation HOA380 Chapter 9

Step 7. Market Segmentation Behavioral Segmentation Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product Marketing Segmentation HOA380 Chapter 9

Behavioral Bases User Status & Brand Loyalty Personality/Lifestyle Social Class Occasion Readiness to Buy Benefits Sought Usage Rate

Step 8. Market Segmentation Segments must respond differently to different marketing mix elements & programs Requirements for effective segmentation Measurable Accessible Substantial Size, purchasing power, profiles of segments can be measured. Actionable Segments can be effectively reached and served. Segments are large or profitable enough to serve. Effective programs can be designed to attract and serve the segments. Marketing Segmentation HOA380 Chapter 9

Evaluating Market Segments Segment size and growth Segment structural attractiveness Company objectives and resources

Step 9. Market Targeting Market Coverage Strategies Company Marketing Mix Market A. Undifferentiated Marketing Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 B. Differentiated Marketing Company Marketing Mix 3 Segment 3 Segment 1 Company Marketing Mix Segment 2 Segment 3 C. Concentrated Marketing Marketing Segmentation HOA380 Chapter 9

Step 10. Market Targeting Evaluating Market Segments Segment Size and Growth Analyze sales, growth rates and expected profitability for various segments. Segment Structural Attractiveness Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers. Company Objectives and Resources Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Choosing a market-coverage strategy Company resources Degree of product homogeneity Market homogeneity Competitors’ strategies

Five Patterns of Target Market Selection Single-segment concentration Selective specialization M1 M2 M3 P1 P2 P3 Product specialization M1 M2 M3 P1 P2 P3 P1 P2 P3 M1 M2 M3 P = Product M = Market Market specialization M1 M2 M3 P1 P2 P3 M1 M2 M3 Full market coverage P1 P2 P3

Step 11. Market Targeting Choosing a Market-Coverage Strategy Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies

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

Step 12: Positioning for Competitive Advantage Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products. Marketers must: Plan positions to give their products the greatest advantage in selected target markets Marketing Segmentation HOA380 Chapter 9

Positioning Strategies Positioning by specific product attributes Positioning by benefits Positioning for user category Positioning for usage occasion Positioning against another competitors Positioning against another product class

Steps to Choosing and Implementing a Positioning Strategy Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation. Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP). Step 3. Communicating and Delivering the Chosen Position. Marketing Segmentation HOA380 Chapter 9

The BCG Competitive Advantage Matrix Number of Approaches to Achieve Advantage Few Many Volume Specialized Size of the Advantage Small Large Stalemated Fragmented

Product Differentiation Physical attributes Service differentiation Personnel differentiation Location Image differentiation

Product Differentiation Form Fea- tures Perfor- mance Quality Conform- ance Quality Dura- bility Relia- bility Repair- ability Style Design

Services Differentiation Ordering Ease Installation Customer Consulting Miscellaneous Services Delivery Customer Training Maintenance & Repair

Which differences to promote? Important to customers Distinctive Superior Communicable to customers Preemptive Affordable Profitable

Image Differentiation Media Symbols Atmosphere Events

Differences Worth Establishing Important Profitable Distinctive Differences Worth Establishing Affordable Superior Preemptive

Perceptual Map Positioning map of service level versus price. Source: MARG, 2007

Positioning Strategies Product Attributes Benefits, Problem Solutions & Basic Needs Cholesterol Free Oil:Dhara Price & Quality Specific Use : Gift for all Events Titan Against Other Products: Tata salt Vs. Captain Cook Product User :Fashion loving , Well to do Consumers :Vimal fabrics Against a Competitor