Segmentation, Targeting and Positioning

Learning ObjectivesLearn the three steps of target marketing, market segmentation, target marketing, and market positioningUnderstand the major bases for segmenting consumer and business marketing strategyKnow how companies identify attractive market segments and choose target marketing strategyRealize how companies position their products for maximum competitive advantage in the marketplace

Steps in market segmentation, targeting and positioningMarket SegmentationIdentify bases for segmenting the marketDevelop segment profilesTarget MarketingDevelop measure of segment attractivenessSelect target segmentsMarket PositioningDevelop positioning for target segmentsDevelop a marketing mix for each segment

Market SegmentationDividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or 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 PATTERNS ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::Attribute XAttribute XAttribute XAttribute YAttri. YA.Homogeneous PreferencesB.Diffused PreferencesC.Clustered PreferencesAttribute Y

Niche, Local, CustomerisationA niche is more narrowly defined customer group seeking a distinctive mix of benefits.Local marketing is tailored to the needs and wants of local customer groups.Customised marketing is one-to-one marketing.s

ADVANTAGES OF MARKET SEGMENTATIONIt improves a companys understanding of why consumers do or do not buy certain products. Therefore prepares a company to meet changing market demands.Information gained from segmentation allows the organization to plan a systematic and effective marketing programme to satisfy the consumer needs.Better assessment of the strengths and weaknesses of the competition.Better allocation of marketing resources.

Requirements for Effective Segmentation

MeasurableSize, purchasing power, and profile of segmentAccessibleCan be reached and served SubstantialLarge and profitable enough to serveDifferentiableRespond differentlyActionableEffective programs can be developed

SEGMENTATION ANALYSIS (BASIS OF SEGMENTATION)CONSUMER CHARACTERISTICS (1) Geographic ( Region, city, rural and semi-urban areas ) (2) Demographic ( age, life cycle stage, generation, family size, gender, income, occupation, education, socio-economic classification ) (3) Psychographic ( life style, psychological/personality traits, values)CONSUMER RESPONSES (4) Behavioral Segments (Buyer readiness stage, Benefits sought, Usage rate, Attitude, Loyalty, Occasions, User status)

Segmenting Business MarketsDemographic segmentationIndustry, company size, locationOperating variablesTechnology, usage status, customer capabilitiesPurchasing approachesSituational factorsUrgency, specific application, size of orderPersonal characteristicsBuyer-seller similarity, attitudes toward risk, loyalty

Segmenting International Markets

Geographic segmentationLocation or regionEconomic factorsPopulation income or level of economic developmentPolitical and legal factorsType / stability of government, monetary regulations, amount of bureaucracy, etc.Cultural factorsLanguage, religion, values, attitudes, customs, behavioral patterns

Target MarketingTarget MarketConsists of a set of buyers who share common needs or characteristics that the company decides to serve

Target MarketingEvaluating Market SegmentsSegment size and growthSegment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliersCompany objectives and resources

Target MarketingSelecting Target Market SegmentsUndifferentiated (mass) marketingDifferentiated (segmented) marketingConcentrated (niche) marketingMicromarketing (local or individual)

FIVE PATTERNS OF TARGET MARKET SELECTIONSingle Market ConcentrationMarket SpecializationProduct SpecializationSelective SpecializationFull Coverage

FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGY1. Companys Resources2. Product Homogeneity 3. Product Stage in the Life Cycle4. Market Homogeneity5. Competitive Marketing Strategy

PositioningPositioning: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 brands unique benefits and differentiation in the customers mind.Positioning maps that plot perceptions of brands are commonly used.

POSITIONING STRATEGIESIdentifying possible competitive advantagesDifferentiation can be based on ProductsServicesChannelsPeople Image

Product DifferentiationForm- size, shape or physical structureFeatures- supplement to basic function.Performance Quality-the level at which the products primary characteristics operates.Conformance Quality- the degree to which all the produced units are identical and meet the promised specifications.Durability- a measure of the products expected operating life under natural or stressful conditions.Reliability- a measure of the probability that a product will not malfunction within a specified time period.Reparability- a measure of the ease of fixing a product when it failsStyleQuality can be communicated by choosing physical signs and cues

Services DifferentiationOrdering easeDeliveryInstallationCustomer trainingCustomer consultingMaintenance and repair

Personnel DifferentiationCompetenceCourtesyCredibilityReliabilityResponsivenessCommunication

Channel DifferentiationCoverageExpertisePerformance

Image DifferentiationImage is the way the public perceives the company or its products.Identity is the way a company aims to identify or position itself or its products.Symbols, colours, slogans, atmosphere,Events and employee behaviour

Choosing the right competitive advantage

How many differences to promote?Unique selling propositionSeveral benefitsWhich differences to promote? Criteria include:ImportantDistinctiveSuperiorCommunicablePreemptiveAffordableProfitable

Developing and communicating a positioning strategyAll products can be differentiated to some extent. But not all differences are meaningful or worthwhile. A difference is worth establishing to the extent that it satisfies the following criteria :Important : The difference delivers a highly valued benefit to a sufficient numbers of buyers.Distinctive : The difference is delivered in a distinctive way.

Developing and communicating a positioning strategySuperior : The difference is superior to other ways of obtaining the benefit.Preemptive : The difference cannot be easily copied by competitors.Affordable : The buyer can afford to pay for the difference.Profitable : The company will find it profitable to introduce the difference.

Choosing a positioning strategy

Value propositions ( the whole cluster of benefits the company promises to deliver )represent the full positioning of the brandPossible value propositions:More for More More for the Same More for LessThe Same for Less Less for Much Less

Some examples

Lays

Dove

Amul : The taste of India

Hindustan Unilever Limited

HDFC Standard Life Insurance

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