Segmentation module 4 mba 1st sem by babasab patil (karrisatte)

Market Segmentation

and Positioning

Market Segmentation

and Positioning

Presented By:-

Babasab Patil

2/13/2014 Babasabpatilfreepptmba.com

Babasabpatilfreepptmba.com

What is market segmentation? What is market segmentation?

Market Segmentation

Process of dividing a large market into

smaller target markets, or customer

groups with similar needs and/or

desires


According to Philip kotler :

“ Market segmentation is sub-dividing a

market into distinct and homogeneous

subgroups of customers, where any group

can conceivably be selected as a target

market to be met with distinct marketing

mix.”


Market Segmentation Market Segmentation

MS is a method of “dividing a market

(Large) into smaller groupings of

consumers or organizations in which each

segment has a common characteristic such

as needs or behaviour.”


CONCEPT AND DEFINITION CONCEPT AND DEFINITION

The concept of market segment is based on

the fact that the market of commodities are

not homogeneous but they are

heterogeneous. Market represent a group

of customer having common

characteristics but two customer are never

common in their nature, habits, hobbies

income and purchasing techniques.



Target Marketing Target Marketing

Advantages

Easier analysis of potential and actual

consumers

Tailoring of products to market

Assessment of demand potential

Identify competing products

Increased sales effectiveness and cost

efficiencies

Product positioning and easy identification

of opportunities 2/13/2014



Target Marketing Target Marketing

Disadvantages

Increased marketing costs

Personalization can become

burdensome to manage

Faux segmentation may be viewed

cynically

Narrow segmentation can impact

brand loyalty

Ethics and stereotyping issues 2/13/2014



Target Market Selection Target Market Selection

Identify Total Market

Determine Need for

Segmentation

Determine Bases for

Segmentation

Profile Each Selected

Segment

Assess Potential

Profitability of Segment

and Select Target Segment

Select Positioning

Strategy

Develop and Implement

Appropriate Marketing Mix

Monitor, Evaluate and

Control 2/13/2014



External Factors External Factors

Stage in product life cycle

Competition

Product specific issues

Market for the product



Levels of Market Segmentation Levels of Market Segmentation

Mass

Market

Niche Micro-

marketing The

Individual

Personal-

ization Micro-

marketing Niche Standardized

Marketing

Mix 2/13/2014 Babasabpatilfreepptmba.com

1. Mass Market 1. Mass Market

Consists of a group of customers

who share a similar set of needs

and wants.

Identifiable Group with in a

Market with Similar

• Wants

• Purchasing Power

• Geographical Location

• Buying Attitudes


2. NICHE MARKETING 2. NICHE MARKETING

Group of customers seeking a distinctive mix of benefits who are ready to

pay extra premium.

Niche = segment sub – segments

Eg. Washing detergents hard & gentle washes . Surf excel for tough stains (

hard on clothes) & Ezee from Godrej for delicate clothes.

--- Astha , Sanskar , Q TV – focus on religion & spiritualism.

DISTINCT NEEDS

PAY PREMIUM

SPECIALIZATION

LESS COMPETITION

POTENTIAL


ROLLS ROYCE ROLLS ROYCE


3. Micro Market 3. Micro Market

Marketing programs tailored to the needs & wants of

local customer groups in trading areas, neighborhoods ,

etc.

this trend is called grass roots marketing.

Ex. – Spiderman 3 was released in 5 different language in

India including bhojpuri.


4. INDIVIDUAL MARKETING 4. INDIVIDUAL MARKETING

Ultimate segmentation – segments of 1 or customized

marketing or one to one marketing.

Customerization – empower the consumers to design the

product or service offering of their choice.

Dell- Customerization (Computers)

Ex. Paint companies have started doing this- Asian Paint ,

Nerolac , Berger Paints

Arvind mills launched Ruff’n Tuff Jeans, branded ready – to –

stitch 2/13/2014 Babasabpatilfreepptmba.com


Basis For Segmenting Consumer Market Basis For Segmenting Consumer Market

Psychographic

Segmentation

Geographic

Segmentation

Behavior/Usage

Segmentation

Demographic

Segmentation



Family Size Gender Family Size Gender

Income Level Income Level

Occupation Occupation Education Education

Age Age

Demographic Segmentation Demographic Segmentation



Segmentation Variables Segmentation Variables

Psychographic

Segmentation

Geographic

Segmentation Behavior/Usage

Segmentation

Demographic

Segmentation



Geographic Segmentation Geographic Segmentation

When an organization localizes its

marketing efforts to accommodate the

unique needs of specific geographic

regions

World Region or country

Country Region

City or Metro

2/13/2014



Segmenting Consumer Markets Segmenting Consumer Markets

Psychographic

Segmentation

Geographic


Segmentation

Demographic

Segmentation



Psychographic Segmentation Psychographic Segmentation

Grouping customers together based on

social class, lifestyles (Achievers,

Strivers, Survivors) and psychological

characteristics (attitudes, interests and

opinions)



Segmenting Consumer Markets Segmenting Consumer Markets

Psychographic

Segmentation

Geographic


Segmentation

Demographic

Segmentation



Light Users

80%

Light Users

80% Heavy Users

20%

Heavy Users

20%

Behavior/Usage Segmentation Behavior/Usage Segmentation

Markets can be segmented by how often or how

heavily consumers use a specific product

80/20 Principle - 80% of revenue generated by 20%

of customers


Conti… Conti…

Occasions: Special Occasions, Holiday, Seasonal

Benefits: Quality, Service, Economy, Convenience,

Speed

User Status: Nonuser, ex-user, potential user, first-

time user, regular user

Babasabpatilfreepptmba.com 2/13/2014


Segmenting Business Markets Segmenting Business Markets

Demographic:

1. Industry: Which industries should we

serve?

2. Company size: What size companies

should we serve?

3. Location: What geographical area

should we serve.


Conti… Conti…

Operating Variable:

1.Technology:What customer technologies

should we focus on?

2. User or nonuser status: Should we serve

heavy users, medium users, light users, or

non-users

3. Customer Capabilities: Should we serve

customers needing many or few services


Conti… Conti…

Purchasing Approaches

1. Purchasing-function organization: Should we serve

companies with highly centralized or decentralized

purchasing organization?

2. Power Structure: Should we serve companies that

are engineering dominated, financially dominated and

so on?

3. Nature of Existing Relationship: Should we serve

companies with which we have strong relationships or

simply go after the most desirable companies


4. General Purchase Policies: Should we serve companies that

prefer leasing? Service contract? Systems purchase? Sealed

Bidding?

5. Purchasing Criteria: Should we serve companies that are

seeking quality? Service Price?


Situational Factors:

1. Urgency: Should we serve companies that need

quick and sudden delivery or service?

2. Specific Applications: Should we focus on certain

applications of our products rather than all

applications?

3. Size of Order: Should we focus on large or small

orders? 2/13/2014 Babasabpatilfreepptmba.com

Personal Characteristics

1. Buyer-seller Similarity: Should we serve

companies whose people and values are similar to

ours?

2. Attitude Towards Risk: Should we serve risk-

taking or risk-avoiding customers?

3. Loyalty: Should we serve companies that show high

loyalty to their suppliers?



Segmenting Global Markets Segmenting Global Markets

Economic

Stage of development in a host country

Political/Legal

Regulations and laws

Cultural

Language barriers, differences in

consumer customs


Requirements for Effective Segmentation Requirements for Effective Segmentation

Measurable Measurable

Substantial Substantial

Accessible Accessible

Differentiable Differentiable

Actionable Actionable


1. Measurable

Size, purchasing power, and profile of segment

2. Accessible

Can be reached and served

3. Substantial

Large and profitable enough to serve

4. Differentiable

Respond differently

5. Actionable

Effective programs can be developed


Evaluating and Selecting the Market Segments Evaluating and Selecting the Market Segments

Through concentrated

marketing, the firm gains a

strong knowledge of the

segment’s needs and achieves a

strong market presence.

Firms enjoys operating

economies through a strong

Specializing its production,

distribution and promotion


Conti… Conti…

A firm selects a number of

segments, each objectively

attractive and appropriate.

There may be little or no

synergy among the segments,

but each promises to be a

moneymaker. This multi

segment strategy has the

advantage of diversifying the

firm’s risk


The firm makes a certain

product that it sells to several

different segments. Ex: A

microscope manufacturer who

sells to university,

government, and commercial

laboratories. The firms makes

different microscopes for the

different customers groups &

build a strong reputation in the

specific product area


The firm concentrates on

serving many needs of a

particular group. Ex: A

firm that sells an

assortment of products

only to university

laboratories.


The firm attempts to serve all

customers groups with all the

products they might need. Only very

large firms such as IBM (Computer

Market), GM (Vehicle Market),

Coco-Cola can undertake a full

market coverage strategy.

Can cover whole market in to two broad

ways:

1. Un-differentiated Marketing (coco

cola )

2. Differentiated Marketing (HUL

soaps) 2/13/2014 Babasabpatilfreepptmba.com

Choosing and implementing Positioning

Strategy

Choosing and implementing Positioning

Strategy

Differentiation through:

Product attributes - characteristics as a

positioning base

Product usage - positioning based on a

products typical use

Product Position: The way the products is

defined by consumers on important attributes-the

place the product occupies in consumer’s minds

relative to competing products 2/13/2014 Babasabpatilfreepptmba.com

Identifying Possible Value Differences and

Competitive Advantage

Competitive Advantage: An advantage over

competitors gained by offering greater customer

value, either through lower prices or by

providing more benefits that justify higher

prices


Choosing the Right Competitive Advantages Choosing the Right Competitive Advantages

1. How Many Differences to Promote (USP)

2. Which Difference to Promote

Important: The difference delivers a highly valued

benefit to target buyers

Distinctive: Competitors do not offer the differences

Superior: Superior to other ways that customers

might obtain the same benefit.

Communicable: The Difference is communicable

and visible to buyers

Preemptive: Competitors cannot easily copy the

differences 2/13/2014 Babasabpatilfreepptmba.com

Conti…. Conti….

Affordable: Buyers can afford to pay for the

differences

Profitable: The company can introduce the

difference profitability



Selecting an overall Positioning Strategy Selecting an overall Positioning Strategy

Value Proposition:

A Value Proposition statement must contain

Describe "What" we provide

Answer "So what?"

Quantify "How much"

Provide Proof


Possible Value Propositions


More for More More for More

“More for More” positioning involves providing

the most upscale product or service and

charging a higher price to cover the higher

costs.

Ex: Mercedes Automobile

IIMB


More for the Same More for the Same

Companies can attack competitor’s more-

for-more positioning by introducing a

brand offering comparable quality but at a

lower price.

Ex: Toyota introduced its Lexus line with

a “more-for-more” value proposition

versus Mercedes and BMW


The Same for Less The Same for Less

Offering the Same for less can be a powerful

value proposition.

Ex: Wal Mart, Big Bazar, Croma, E-Zone


Less For Much Less For Much

A Market almost always exists for products that

offer less and therefore cost less. Few people

need, want, or can offered “the very best” in

everything they buy.

Ex: TATA NANO offers very few features and

less requirements at a much lower price


More For Less More For Less

Of course, the winning value proposition would be

to offer “More for less”.

(only for short term)

Ex: TATA Indica Offers “More Car per car”

(more space and better fuel economy at a lower

price)




Positioning Strategy Positioning Strategy

Differentiation

through:

Product attributes -

characteristics as a

positioning base

Product usage -

positioning based

on a products

typical use

Differentiation

through:

Symbol - use of a

symbol or icon to

position a product

in the consumer

consciousness




Differentiation

through:

Product user - the

typical user of a

product




Differentiation

through:

Product class -

positioning against

another type of

product or product

class




Differentiation

through:

Competition -

comparisons to a

product’s

competition

(directly or

indirectly)



Market Segmentation Market Segmentation

Differentiated

Concentrated

Undifferentiated



Differentiated Marketing Differentiated Marketing

Differentiated

Marketing

An organization targets multiple market segments and develops segment specific mixes



Concentrated Marketing Concentrated Marketing

Concentrated

Marketing

When an organization concentrates its marketing efforts on a smaller segment of a larger market



Undifferentiated Marketing Undifferentiated Marketing

Undifferentiated

Marketing

An organization develops one strategy appropriate for all members of the total market


Thank You
