1. Segmentation, Targeting and Positioning Strategies
Unit 5
Segmentation, Targeting and Positioning Strategies

2. Market Segmentation
Market segmentation, also called market segregation is the process of dividing large, heterogeneous market into smaller, homogeneous sub-markets which have common needs and characteristics.
Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

3. Requirements for Effective Segmentation
“Lefties” are hard to identify and measure, so few firms target this segment.

4. Requirements for Effective Segmentation
Measurable
Requirements for Effective Segmentation
Accessible
Substantial
Size, purchasing power, profiles
of segments can be measured.
Differential
Segments can be effectively
reached and served.
Segments are large or profitable enough to serve.
Actionable
Segments must respond differently to different marketing mix elements & programs.
Effective programs can be designed to attract and serve the segments.

5. Steps in Segmentation, Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment
Market
Positioning
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
Market
Targeting
3. Evaluation of market segments
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Process of market segmentation

6. The STP Process
Segmentation is the process of classifying customers into groups which share some common characteristic
Targeting involves the process of evaluating each segments attractiveness and selecting one or more segments to enter
Positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of the consumer

7. Levels of market segmentation
Mass Marketing: Seller offer same product for all the buyers with different needs and seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. In this case, the size of market will be larger and the promotion and advertising expenses becomes generic in nature to attract the entire customers.

8. Segment Marketing: In this level of market segmentation, a marketer divides a total market into several segment depending upon the needs, problems, requirements, buying behavior, purchasing capacity, social class, and other demographic variables, and then select some of the segments to sell his entire range of products.

9. Niche Marketing: A niche is a more closely defined group, it is dividing the segment into sub-segment and it can be divided by identifying the distinct trait of consumer which might need special combination of benefits.
Local Marketing: It focus on brands and promotion to the needs and wants of local consumer and design marketing program according to the need of local consumer groups cities, neighborhoods and even specific stores.
Individual Marketing: It focuses on satisfying the needs and wants of individual prospective customer. It is also known as one-to-one marketing and customized marketing.

10. Market Segmentation Variables
Segmentation Variables for consumer market
Geographic
Demographic
Psychographic
Behavioral
Other (anything!)
No single best way to segment a market.
Often best to combine variables and identify smaller, better-defined target groups.

11. Geographic Segmentation
Divide markets into different geographic units.
Examples:
World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc.
Country Region: Pacific, Mountain, East Coast, etc.
City or Metro Size: New York, San Francisco
Population Density: rural, suburban, urban
Climate: northern, southern, tropical, semi-tropical

12. Demographic Segmentation
Use Differences in:
age, gender, family size, family life cycle, income, occupation, education, race, and religion
Most frequently used segmentation variable
Ease of measurement and high availability.

13. Psychographic Segmentation
Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics.
People in the same demographic classification often have very different lifestyles and personalities.

14. Behavioral Segmentation
Occasion
Special promotions & labels for holidays.
Special products for special occasions.
Benefits Sought
Different segments desire different benefits from the same products.
Loyalty Status
Nonusers, ex-users, potential users, first-time users, regular users.
Usage Rate
Light, medium, heavy.

15. Base for segmenting Organizational Markets
Use of product: It is concerned with the purpose of using products or how the customer will use the product.
Buying characteristics: It includes price sensitivity, importance of services, types of purchase (First purchase or second purchase), requirement of home delivery, buying procedures etc.
Size of Market or Size of Purchase: What will be the lot-size per purchase
Geographical Areas: On the basis of areas’ level of industrial development, nature of industries and their brand preferences etc.

16. Segment Evaluation, Analysis and Selection
Before selecting a target market, marketers have to critically evaluate and decide how many or which one segment to serve in order to acquire more opportunities from the desired market segment.
Normally three tools are available for evaluating market segments:

17. Size and growth of segments: A market segment must have right size, i
Size and growth of segments: A market segment must have right size, i.e., manageable and profitable. Large companies prefer large segments, while small companies prefer small segments. Similarly the segment must have appropriate growth potential.
Structural attractiveness of segment: It indicates long-term profitability. A market segment might have desirable size and growth potential and still not be attractive from the viewpoint of profitability because it depends on:
Number of competitors and their strength
Rate of new entrants in the target market
Availability of potential substitutes in the market
Bargaining power of buyers and suppliers

18. Company objectives and resources: Although, a market segment has positive size and growth characteristics and is structurally attractive, it may not mesh with the company’s long-run objectives. A market segment must be able to achieve company’s desired goal. Similarly, the company must have adequate resources in terms of finance; manpower and skill to manage market segments properly and successfully run the market.

19. Selection of market/Target Marketing
After various forces are being properly evaluated, then the marketer’s task is to select a best market segment/s where they want to serve. Such market segment/s is called target market/s.
Target Market
Consists of a set of buyers who share common needs or characteristics that the company decides to serve

20. 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.

21. Positioning Example
eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

22. Positioning Example
To (target segment and need) our (brand) is a (concept) that (point-of-difference).
“To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”

23. Process of Product Positioning
Identify the target market
Identify the product features
Identify the competitors
Select the best position
Promote brands
Monitoring

24. Types of Product Positioning/ Decision
Positioning on specific product features
Positioning on benefits, problem solution or needs
Positioning on specific usage occasions
Positioning for user category
Positioning against another product
Positioning on product class dissociation