Segmentation, Targeting and Positioning Lecture no 6

Steps in Market Segmentation, Targeting, and Positioning Market segmentation: dividing market into distinct groups which will require separate marketing mixes Target marketing: choosing which group(s) to appeal to Market positioning: creating a clear, distinctive position in the consumer’s mind relative to competition

Definition Market Segmentation: Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Types Of Marketing Mass marketing Segment marketing Niche marketing. Local marketing Customized marketing.

Mass marketing The seller engages in the mass production, mass distribution and mass promotion of one product for all the buyers.

Segmented Marketing Marketers identify group of customers who share similar set of needs, wants and preferences. Segment marketing offers following benefits Better design Effective pricing Effective delivery and promotion.

Niche Marketing A niche is a narrowly defined customer group seeking a distinctive mix of benefits. Characteristics: –Distinct set of needs –Willingness to pay premium. –Less likely to attract customer

Local marketing Marketing groups are tailored according to the needs, wants and preferences of local customer groups. It is also called grassroots marketing.

Customized Marketing Customization operates operationally driven mass customization in a way that empowers consumers to design the product and service offering of their choice.

Requirements for Effective Segmentation Measurable –Size, purchasing power, and profile of segment Accessible –Can be reached and served Substantial –Large and profitable enough to serve Differentiable –Respond differently Actionable –Effective programs can be developed

Bases of Segmentation Demographic segmentation. Geographic segmentation. Psychographic segmentation. Benefit-sought segmentation. Behavior/usage segmentation. Situation segmentation. Product related segmentation.

Demographic Segmentation Dividing a market into groups based on variables such age, gender, family size, family life-cycle, income, occupation,education, religion,race, generation and nationality.

Demographic Segmentation Variables Age Gender Family size Family life cycle Income Occupation Education Religion Race Generation Nationality

Geographic Segmentation When an organization localizes its marketing effort to accommodate the unique needs of specific geographic regions.: Rural vs urban Metro vs nonmetro

Psychographic Segmentation Grouping customer together based on social class, lifestyle and personality characteristics:

Benefit-sought segmentation Markets can be segmented based on the benefits that consumer desire from using a specific product

Situation Segmentation Purchase situation or occasion: How much time to make a purchase. Pre-purchase attitude.

Behavior/usage Segmentation Markets can be segmented by how often or how heavily consumers use a specific product: 80/20 principle -80% of revenues are generated by 20% of customers.

Segmentation BasisIncludes Geographic segmentationRegion, city size, density of area, climate Demographic segmentationAge, gender, marital status, income, education, occupation Psychological segmentationNeeds motivation, personality, perception, learning involvement, attitudes PsychographicsLife style segmentation (, outdoors, enthusiasts, status seekers) socio-cultural segmentationCultures, religion, subcultures (race, ethnic) social class (lower, middle, upper) family life cycle Use related segmentationUsage rate, awareness status, rand loyalty Benefit sought segmentationConvenience, social acceptance, long lasting, economic Hybrid segmentationDemographic/psychographic

Target Marketing Target Market Consists of a set of buyers who share common needs or characteristics that the company decides to serve

Target Marketing Evaluating Market Segments –Segment size and growth –Segment structural attractiveness –Company objectives and resources. Level of competition 1. Less competition or more competition. Substitute products: The existence of many actual or potential substitute products may limit prices and profits that can be earned in a segment. Power of buyers The relatives power of buyers also affects segments attractiveness. Powerful suppliers A segment may be less attractive if it contains powerful suppliers who can control the prices or reduce the quality or quantity of ordered goods and services.

Target Marketing Selecting Target Market Segments –Undifferentiated (mass) marketing –Differentiated (segmented) marketing –Concentrated (niche) marketing –Micromarketing (local or individual)

Target Marketing Undifferentiated marketing (mass): A market coverage strategy in which a firm decision to ignore market segment differences and go after the whole market with one offer. Differentiated market (segmented): It target several market segment and design separate offer for each.

Target Marketing Concentrated (niche) marketing: A market –coverage strategy in which a firm goes after a large share of one or a few Micro-marketing : The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups-includes local marketing and individual marketing.

Choosing a Target Marketing Strategy Considerations include: –Company resources –The degree of product variability –Product’s life-cycle stage –Market variability –Competitors’ marketing strategies

Positioning Positioning: –The place the product occupies in consumers’ minds relative to competing products. –Typically defined by consumers on the basis of important attributes. –Involves implanting the brand’s unique benefits and differentiation in the customer’s mind. –Positioning maps that plot perceptions of brands are commonly used.

Positioning

Choosing a Positioning Strategy Identifying possible competitive advantages Differentiation can be based on –Products –Services –Channels –People –Image

Choosing a Positioning Strategy Choosing the right competitive advantage: How many differences to promote? –Unique selling proposition –Several benefits Which differences to promote? Criteria include: –Important –Distinctive –Superior –Preemptive –Communicable –Affordable –Profitable

Choosing a positioning strategy Value propositions represent the full positioning of the brand Possible value propositions: –More for More –More for the Same –More for Less –The Same for Less –Less for Much Less

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 Positioning Companies must be certain to DELIVER their value propositions. Positions must be monitored and adapted over time.

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