ajaykumarta-Unit 3 market segmentation, targeting & positioning - copy

Unit IIIIdentifying Market Segment

S TE P Positioning

Targeting & Evaluating

Marketing StrategySegmentation

Objective• Summarize the relationship between market segmentation, targeting

and positioning

• The advantage of segmenting a market

• Requirement for effective segmentation

• Identify and describe the major variables for consumer segmentation

• Outline how companies select target markets and implement

segmentation strategies

• Frequently used market segment targeting approaches

Why do this?

Overview

Market Segmentation• Process of dividing the total market into several

homogeneous groups

• A market segment is a portion of a larger market in which

the individuals, groups or organizations share one or more

characteristics that cause them to have relatively similar

product needs

Market SegmentationBases for Segmenting Consumer Markets

Geographic

Demographic

Age, gender, family size and life cycle, or income

Psychographic

Social class, lifestyle, or personality

Behavioural

Occasions, benefits sought, user status, usage rate, loyalty

Nations, states, regions or cities

Geographic Segmentation• Divide overall market by location• 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: Bangalore, NewDelhi

– Population Density: rural, suburban, urban

– Climate: northern, southern, tropical, semi-tropical

Geoclustering

combines geographic data with demographic data

Demographic Segmentation– Divide overall market by

• Age and Life-cycle Stage

• Life Stage

• Gender

• Income

• Generation

• Race and Culture

• Use Differences in:

• Most frequently used segmentation variable– Ease of measurement and high availability.

• Usually the worst variable to use.

Age and Life-Cycle StageWants and abilities change with age.

Life stage defines a person’s major concern

Gender

Women:Influence 80% of consumer purchasesMake 75% of new home decisionsPurchase 60% of cars

Men and women have different attitudes and behaviors due in part to genetics and socialization

Income

Income segmentation is used in categories such as clothing, travel, financial services, and automobiles

GenerationSilent Generation (1925-1945) Baby Boomers (1946-1964)Gen X (1964-1978)Millennial’s (Gen Y) – (1979-1994)

- 78 Million people- > 25000 Rs annual spending power

Develop products and services that uniquely meet the particular interests or needs of a generational target.

Race and CultureDifferent ethnic and cultural segments have sufficiently

different needs and wants

Psychographic Segmentation

Personality traits Lifestyle Values

Divides population into groups that have similar psychological

character, values, and lifestyles

People in the same demographic classification often have very

different lifestyles and personalities

Behavioral Segmentation

User and Usage

Needs and Benefits

Decision Roles

Initiator

Influencer

DeciderBuyer

User

Usage occasions

User status

Usage rate

Buyer-readiness

Loyalty status

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– Hard-core– Split loyals– Shifting loyals– Switchers

• Usage Rate – Light, medium,

heavy.

Loyalty Status Segmentation

Switchers

Shifting loyals

Split loyals

Hard-core

Consumer Attitudes

Enthusiastic Positive Indifferent Negative Hostile

Brand Funnel

User & Loyalty Status Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & programs.

• Effective programs can be designed to attract and serve

the segments.

Requirements for Effective Segmentation

Bases for Segmenting B2B Markets

Demographic

Operating Variables

Purchasing Approach

Situational Factors

Personal Characteristics

Industry, company size, location

Technology, user status, customer capabilities

Power structure, nature of existing relationship

Urgency, specific application, size of order

Buyer-seller similarity, loyalty, risk attitude

• https://www.cia.gov/library/publications/the-world-factbook/geos/in.html

Target MarketTargeting involves the process of evaluating each segments

attractiveness and selecting one or more segments to enter

Market TargetingEffective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

• Segment Size and Growth Potential

– Sales, profitability and growth rates

• Segment Structural Attractiveness

– Competition, substitute products,

– buyers & supplier power, new entrants (Porter’s

Five Forces)

• Company Objectives and Resources

– Core competencies

– “What business do we want to be in?”

Evaluating Market Segments

Market TargetingPorter’s Five Force

Rivals

New Entrants

Substitute ProductsBuyer Power

Supplier Power

Rivals

New Entrants

Substitute ProductsBuyer Power

Supplier Power

Evaluating and Selecting Segments

Individual marketing

Full market coverage

Multiple segment specialization

Single-segment concentration

Patterns of Target Market Selection: Product x Market Matrices

Levels of Segmentation

– Ignores segmentation opportunities– firms that produce only 1 product or 1 product

line AND market it to all customers– Offers one product or service to the entire market– Salt, sugar, steel etc.,

Undifferentiated (Mass) Marketing

Differentiated (Segmented) Marketing– Targets several segments

and designs separate offers for each.

– firms that produce numerous products w/ dif marketing mixes designed to satisfy smaller segments

– Coca-Cola (Coke, Sprite, Diet Coke, etc.)

– Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)

– Toyota (Camry, Corolla, Prius, Scion, etc.)

Niche Marketing– firm may choose to focus on satisfying a

smaller target market rather than attempting to market its product offerings to an entire market

– Targets one or a couple small segments– Niches have very specialized interests

• targeting potential customers at a very basic level (i.e.: by zip codes,

specific occupations, lifestyles or individual households)

• Tailoring products and marketing programs to suit the tastes of

specific individuals and/or locations.

Micromarketing

Positioning• Positioning is arranging for a product to occupy a clear, distinctive and desirable

place relative to competing products in the mind of the consumer

• The act of designing a company’s offering and image to occupy a distinctive place in

the minds of the target market.

• EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-

of-difference)

Means of Differentiation Employees

Channels

Image

Services Product

Design

Quality

Additional Services

Price

Positioning Strategies• Attribute Positioning – Allahabad bank

• Benefit Positioning – ICICI bank

• Use/Application Positioning - Vicks

• User Positioning – Horlicks

• Competitor Positioning – IIPM against IIM

• Category positioning – Category leader - Dove

• Quality/Price Positioning – Tata Nano, Oberoi Hilton

• Corporate identity – Itc, Reliance

• Brand Endorsement – Titan

Brand Positioning• Customer wants and needs

• Company capabilities

• Competitive actions

Quality

Price

Brand A

BC

DE

F

G

Points of Parity / DifferencePoints of Parity

POP

Points of DifferencePODattribute or benefit associations that are

not necessarily unique to the brand

attributes or benefits that consumers strongly associate with a brand

Positioning errors• Under positioning

– Me too a brand in crowd

• Over positioning

– Projecting high attributes - apple

• Confused Positioning

– Frequent reposition makes consumer confuse

• Doubtful positioning

– Brand name & manufacturer problems

In-class Activity

• Describe how each of the following brands, companies, or products is positioned:

In-class Activity, Part 2

• Choose one of the companies/brands and…– Identify relevant direct competitors– Choose the two dimensions that are most

important to consumers– Develop a perceptual positioning map– Are there any opportunities in this category?