Segmenting, Targeting, and Positioning
Nov 18, 2014
Segmenting, Targeting, and Positioning
Marketing Process Involves
• Market segmentation• Targeting market• Positioning• Marketing mix
Job seekers(Market Size 20 %)
Students (Market Size 30 %)
Foreign Travelers(Market Size 5 %)
Conversion Possibility 40%
Conversion Possibility 70%
Conversion Possibility 50%
Middle Class Population
Target
Steps in Market Segmentation, Targeting, and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
MarketSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketPositioning
Basic Market-Preference Patterns
(a) Homogeneous(a) Homogeneous (c) Clustered(c) Clustered(b) Diffused(b) Diffused
Mar
ket
Costumer / Consumer
Mar
ket
Costumer / Consumer
Mar
ket
Costumer / Consumer
HomogeneousHomogeneousHeterogeneous Market
“A market in which distinctive and different customer needs can be identified and which can then be used as a basis for segmentation; opposite” of homogeneous.”
HomogeneousHomogeneousHeterogeneous Market
DiffusedDiffused
ClusteredClustered
Step 1. Market SegmentationLevels of Market Segmentation
Mass MarketingSame product to all consumers (no segmentation)
Mass MarketingSame product to all consumers (no segmentation)
Segment MarketingPdt./ service to one or more segments (some segmentation)
Segment MarketingPdt./ service to one or more segments (some segmentation)
MicromarketingProducts / service to suit the tastes of individuals and locations
(complete segmentation)
MicromarketingProducts / service to suit the tastes of individuals and locations
(complete segmentation)
Niche MarketingPdt./service to subgroups within segments (more segmentation)
Niche MarketingPdt./service to subgroups within segments (more segmentation)
Local Marketing
Tailoring brands / promotions to local customer groups
Individual Marketing
Tailoring products / programs to individual
customers
Target the Mass Market versus the Individual Consumer
12
Mass Market
Niche Micro-marketing The
Individual
Personal-ization
Micro-marketingNiche
Standardized Marketing Mix
Continuum of Market Segmentation Size
Continuum of Market Segmentation Size
Segment Marketing
Segment Marketing
Mass MarketingSame product /service to all consumers (no segmentation)
Segment Marketing Products / service to one or more segments (some segmentation)
Niche Marketing Products / service to subgroups within segments (more segmentation)
Micromarketing Products / service to suit the tastes of individuals and locations
(complete segmentation)
Local MarketingTailoring brands / promotions to local customer groups
• Salary Account• Suvidha Account• Privileged Account• Training Center
Individual MarketingTailoring products/ programs to individual customers
• Computer Institution• Designer Outfits
Steps in the Market Segmentation Process
• Determine Market Boundaries• Decide Which Segmentation Variables to
Use• Collect and Analyze Segmentation Data• Develop a Profile of Each Segment• Target Segments to be Served• Design a Marketing Plan
Effective Segmentation
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
ActionableActionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to
different marketing mix elements & actions.
• Must be able to attract and serve
the segments.
Bases of Market Segmentation
Geographic
Demographic
Psychographic
Behavioral Occasion
Benefits-Sought
• Region / Country• Density•Climate
•Age•Gender•Family Size•Income•Occupation•Education•Religion•Race•Nationality
•Social Class•Lifestyle•Personality
•Benefits•User Status•Usage rate•Loyalty Status•Readiness•Attitude
•Segmenting market based on occasion when buyers get the idea to buy or actually make their purchase, or use the purchased item.
•Markets can be segmented based on the benefits that consumers desire from using a specific product
Geographic Segmentation
Demographic Segmentation
Psychograph Segmentation
Behavioral Segmentation
Occasion Segmentation
Benefits-Sought Segmentation
Step 2 Market TargetingEvaluating Market Segment
• Segment Structural Attractiveness Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.
• Segment Size and Growth– Analyze sales, growth rates and expected profitability
for various segments.
• Company Objectives and Resources– Company skills & resources relative to the segment(s).– Look for Competitive Advantages.
Target Market
• “ A set of buyer sharing common needs or characteristics that the company decide to serve”
Five Patterns of Target Market Selection
Single-segmentconcentration
Productspecialization
M1 M2 M3 P1
P2
P3
Selectivespecialization
M1 M2 M3 P1
P2
P3
M1 M2 M3
Full marketcoverage
P1
P2
P3
Marketspecialization
M1 M2 M3 P1
P2
P3
P1
P2
P3
M1 M2 M3
P = ProductM = Market
Single-segmentconcentration
Selectivespecialization
M1 M2 M3 P1
P2
P3
Selectivespecialization
M1 M2 M3 P1
P2
P3
Productspecialization
M1 M2 M3 P1
P2
P3
Marketspecialization
M1 M2 M3 P1
P2
P3
M1 M2 M3
Full marketcoverage
P1
P2
P3
Step 2. Market TargetingMarket Coverage Strategies
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
CompanyMarketing
Mix
CompanyMarketing
MixMarketMarket
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
B. Differentiated Marketing
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
C. Concentrated Marketing
Step 2. Market TargetingChoosing a Market-Coverage
StrategyCompany Resources
ProductVariability
Product’s Life-Cycle Stage
Market Variability
Competitors’Marketing Strategies
Positioning the Offering
Positioning is the act of designing the company’s
offering and image to occupy a distinctive place in the
target market’s mind.
The BCG CompetitiveAdvantage Matrix
Volume
FragmentedStalemated
Specialized
Siz
e o
f th
e A
dva
nta
ge
SmallSmall
LargeLarge
Number of Approachesto Achieve Advantage
FewFew ManyMany
Product Differentiation
Form FeaturesPerfor-mance
QualityConform-
anceQuality
DurabilityRelia-bility
Repair-ability
Style Design
Performance of a Product
Consistency (Conformance of a Product)
Reliability
Durability
Accuracy
User Friendly (Ease of Operation)
Repair
Other Value Added Services
Value of a feature and cost
Usefulness
Looks
Performance
Services Differentiation
DeliveryDelivery
OrderingEase
OrderingEase
Maintenance& Repair
Maintenance& Repair
CustomerTraining
CustomerTraining
InstallationInstallation CustomerConsulting
CustomerConsulting
Miscellan
eou
sS
ervices
Ordering Ease
Installation
Delivery
Customer Consulting
Customer Training
Maintenance & Repair
Differentiation
• Personnel• Channel
Image Differentiation
Media Atmosphere
Symbols
Events
Media
Differences WorthDifferences WorthEstablishingEstablishing
AffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
Perceptual Map
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.60.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2
1.01.0
0.80.8
0.60.60.40.4
0.20.2
-0.2-0.2
-0.4-0.4
-0.6-0.6
--0.80.8
MagicMagicMountainMountain
JapaneseDeer Park
BuschBuschGardensGardens
Knott’sKnott’sBerryBerryFarmFarm
LionLionCountryCountrySafariSafari
MarinelandMarinelandof theof thePacificPacific
DisneylandDisneyland
Economical
Fun ridesExercise
FantasyGood food
Easy to reach
Educational,animals
Little waitingLive shows
Positioning Process
1. Market Positioning2. Psychological Positioning
• Objective Positioning• Subjective Positioning
3. Positioning Approaches
Market Positioning
• “The market positioning process of identifying and selecting markets to determine the criteria for competitive success.”
Psychological Positioning
• “Psychological Positioning enables marketers to create a unique product image with the objective of creating interest”.
Psychological Positioning
• Objective Positioning :- The objective positioning relates to the objective attributes of physical products or service.
• Subjective Positioning :- inspiring customer with some intangible offering
Objective Positioning
Subjective Positioning
inspiring customer with some intangible offering
Positioning Strategies
• Service / Product Attributes • Benefits, Problem Solutions & Basic Needs• Price & Quality• Specific Use• Against Other Products• Product User• Competitor• Endorsement• Empathy• Service Evidence
Service / Product Attributes
Benefits, Problem Solutions & Basic Needs
Price & Quality
Specific Use
Against Other Products
Endorsement
Empathy
Service Evidence
Types of Mass Customization (1)
• The Four Faces of Mass Customization – – Joseph Pine and James Gilmore - Jan.-Feb. 1997 Harvard
Business Review
– 1. Collaborative Customization:• Consumer and producer engage in a dialogue to determine
customer requirements• Computers, clothing and footwear, furniture, some services
– 2. Adaptive Customization: • Product is designed so that users can alter it themselves to
fit unique requirements on different occasions• High-end office chairs, R7 golf club, certain electronic
devices
– 3. Cosmetic Customization: • Product is unique in appearance only• Customer’s chosen text or image on T-shirts, mouse mats,
baseball caps, mugs etc.• Also called ‘Personalization’
– 4. Transparent Customization: • Producer provides customized product without consumer
being necessarily being aware that it has been customized• Can be used when consumer’s needs are predictable or can
be easily deduced, and when customers do not want their requirements repeated.
• Example- repeat orders for customized clothing, chemicals
Collaborative Customization
Adaptive Customization
Cosmetic Customization
Transparent Customization
True Mass Customization
• True Mass Customization requires:– System for customer to specify
requirements easily e.g. Costumer service department, online ordering, call centre.
– Advanced manufacturing & communication systems
• Enable economies of scope (keep cost and price low)
– Build-to-order approach • product is not made until order is received (Book:
Build to Order and Mass Customization – David M. Anderson)
– Minimum order quantity of one
Advantages of MC
– Customer has control over product– Does not have to pay for features he/she
does not want (computers etc.)– Company does not have finished product
inventory better use of working capital– Easier for company to differentiate
product– Levels out economic fluctuations
• When slowdown occurs, less backlog of inventory• Prices do not have to be cut as much• Therefore, less likelihood of recession
What Mass Customization Isn’t
• Massive Product Variety – Customer has Choice but not Control;
– E.g. ‘Personalize your cellphone with any of our 2000 skins’
• Advanced ordering system linked to craft production• Personalization or mass customization of Marketing:
– Use of knowledge about customer to personalize marketing of standard products.
– Data gathered from loyalty schemes, etc.• Customized products with minimum quantities
– ‘Your design on a T-shirt, minimum order 100’
Examples of Mass Customization
• Dell– Build to order computers– Assembly, not manufacture (modular
components)– MC sometimes associated with higher prices
but Dell cheaper than most– Why? Massive efficiency of supply chain
management– ‘Living in Dell Time’ - Fast Company, Nov. 2004
• Clothing and Footwear– NikeID, MiAdidas, Otabo Shoes, Vans– Bivolino (shirts), U-Jeans, Land’s End, Target,
Tommy Hilfiger– Clothing and footwear very suited to MC due to
each person being unique in size and shape
• Sports Equipment– Nautilus (treadmills)
• Industrial equipment, construction– Kingspan – insulated roof and wall panels,
made to order for size, colour, insulation type
Mass Customization of Services
• Difficult to define when a service is mass customized rather than just ‘customized’
• Degree of automation required• Examples
– MyYahoo, MyMSN, Google Personalized– Personalized songs – Instasong.com– I.T. – providing services in similar way to object oriented
software – small pre-existing components of work combined to create overall service
– Requires increased efficiency and lower prices so as not to be just ‘packaging’ of existing services