Unit 7 Segmentation Targeting and Positioning

8/6/2019 Unit 7 Segmentation Targeting and Positioning

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Unit : 7

Subject Code : MB0046

Segmentation, targeting and positioning

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Contents

Introduction

Concept of market segmentation

Benefits of market segmentation

Requisites of effective segmentation

The process of market segmentation

Bases for segmenting consumer markets

Targeting

Market positioning

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Introduction

Market segmentation is the first step in applying themarketing strategy.

Segmentation means dividing the market into similar sub-markets by understanding the needs and expectations of

customers. Companies follow different marketing programs for different

segments to maintain better relationship with customers.

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Learning Objectives

After studying this unit you will be to able to

Explain the concepts and benefits of marketsegmentation

Mention the requisites' of effective segmentation Explain the bases of market segmentation.

Describe the process of evaluating market segments

Identify appropriate target market for given segment

Analyze the positioning strategies of companies onthe basis of product differentiation.

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Concept of Market SegmentationDefinition

Market segmentation is the process of dividing a potential market into

distinct sub markets of consumers with common needs and characteristics.

For example, Cadbury India functions in three different markets namely,

malted foods, cocoa powder and drinking chocolates and chocolates and

sugar confectionary.

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Benefits of Market Segmentation

The benefits of market segmentation are

1. Understanding the needs of Consumers

2. To adopt better positioning strategies.

3. Proper allocation of marketing budget.

4. Helps in preparing a better competitive strategy.5. Provides guidelines in preparing media plan of the company.

6. Different offerings in different segments enhance the sales.

7. Customer gets more customized product.

8. Helps Company to identify niches.

9. Provides opportunities to expand market

10. Encourages innovations

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Requisites of Effective Segmentation

Segmentation is successful if it has the followingcharacteristics:

1. Measurable and obtainable The size, profile and

other characteristics of the segment must bemeasurable and should be obtained in the form ofdata.

2. Substantial The size of the segment should be suchthat it is profitable. For small segments the cost is highand hence the products are priced very high.

3. Accessible We should be able to reach the segmentthrough existing network at affordable cost.

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4. Differentiable The segments are different fromeach other and hence require different 4Ps and

programs.

5. Actionable The segments which a company wants

to target must be actionable, i.e., there should besufficient finance, personnel, and capability to target

the segment.

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Segmentation

The process of market segmentation.

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1. Identify existing and future wants in the current

market

Marketers must understand the changing needs of

customers.

This process helps to know whether the customer issatisfied with the existing products or not.

It also helps to test the companys new and

innovative concepts.

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2. Examine the attributes that distinguish amongsegments.

In this process, marketers separate different types of

wants into similar categories.

The separation may be done on the basis of product

features, lifestyle or behavior.

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3. Evaluate the proposed segment attractiveness on the basisof measurability, accessibility and size

Segments selected in second step should be analyzed for measurability,

accessibility, substantial, actionable and differentiability.

The further plans of the company depend on the result of this process.

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Bases f r Seg e ti g s er arkets

1. Ge graphic seg e tati :Dividing the market into different

geographical units such as nations,

states, regions, cities or neighborhoods

2. De graphic Seg e tati :In this segmentation the market is

divided into groups on the basis of

variable such as age, family size, family

life-cycle, gender, income, occupation,

education, religion, race, generation,

nationality and social class.

Some factors used for

demographic segmentation

are:

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3. Psychographic Segmentation: In this segmentation, buyers

are classified into different groups on the basis of life-style or

personality and values.

People belonging to the same demographic group may show

very different psychographic characteristics.

Some factors used for psychographic segmentation are

a) Life-style: Different people have different life-styles and the

products they use shows their life-style.

One of the most common psychographic profiling scheme is the VALS,

developed by SRI International, INC.

VALS defined adult consumers into eight segments. They are

1. Innovators: They are successful, sophisticated, active, take charge. They are

people with high self-esteem and rich resources. They are business leaders

and interested in growth, innovation and change. They are image conscious.

2. Thinkers: They are mature, satisfied, comfortable, thoughtful people who

value order, knowledge and responsibility.

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3. Achievers: They are successful career and work oriented people who

want a controlled life. They prefer predictability and stability over risk.

They are committed to work and family.

4. Experiencers: They are young, enthusiastic, impulsive, disloyal,disobedient. They want variety and excitement. They like variety and

enjoy new things. They like exercise, sports, outdoor recreation and

social activities.

5. Believers: They are traditional people with high commitment to family,

community and nation. They have a moral code. They prefer Americanproducts and established brands.

6. Strivers: They look for motivation and approval from others. They are

unsure of themselves and have less economic, social and psychological

resources.

7. Makers: They are practical people who have constructive skills and valueself-sufficiency. They are happy with their families and have little interest

outside their family.

8. Survivors: They are poorly educated, low skilled and concerned about

their health. They satisfy urgent needs of the present. They are

concerned for security and safety. They are cautious consumers. They are

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4. In behavioral segmentation, buyers are divided into groups

on the basis of their knowledge or attitude towards the useof, or response to a product.

Some factors used for behavioral segmentation are

1. Occasions

2. Benefits3. User status

4. Usage rate

5. Loyal status

6. Buyer readiness stage

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1. Occasions: Buyers develop a need, purchase or use a product according tooccasion. For example, Tanishq offer schemes and promotions for purchasing

on Akshaya Truthiya.2. Benefits: Buyers can be classified according to the benefits they are looking

for.

3. User status: Markets can be segmented into non-users, potential users, firsttime users and regular users of a product. Marketing strategy for eachsegment is different.

4. Usage rate: Markets can be segmented into light, medium and heavy productusers. Heavy users are less in number but responsible for a large part of totalconsumption. Marketers like to attract one heavy user rather than many lightusers. For example, textile brand Allan Paine offered 4 cotton trousers for Rs.999. It wanted to earn profits from sales volume.

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5. Loyal status: Consumers have different levels of loyalty for different

brands and stores. According to brand loyalty status, buyers can bedivided into four groups:

a) Hard core loyal: Such consumers buy only one brand all the time.

b) Split loyal: Such consumers are loyal to two or three brands.

c) Shifting loyal: Such consumers shift from one brand to another.

d) Switchers: Such consumers show no loyalty to any brand.6. Buyer readiness stage: A market consists of buyers who are at different

stages of willingness to buy a product. Some are unaware of the product, some

are aware, some are informed, some are interested, some desire the product and

some plan to buy.

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Targeting

Targeting is defined as a group of people or

organizations for which an organization designs,

implements and maintains the marketing mix.

After segmentation, it is important to identify the

people or organization for which the product is

meant.

Selecting target market segments

A company chooses its market segmentation

strategy on the basis of following factors

Homogeneous preference showing no natural

segments as in case of cold drinks.

Diffused preference showing clear preferences as in

case of automobiles.

Clustered preference, market showing natural

segments as in case of occupation having impact on

the types of clothes worn.

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Undifferentiated marketing: In this strategy, the whole target market is treatedas one and it is considered that there are no market segments that show

uncommon needs. The company believes on one product-all segments strategy

and has one marketing mix for the target market. For example, Coca Cola sells

Coke, Limca, Thums-up, etc. and does not differentiate between the target

audience.

Differentiated marketing: In this marketing strategy the company divides themarket into segments and uses different marketing mix for each segment. This

strategy is used by Hindustan Unilever which sells soaps like Lifebuoy, Lux, Rexona,

Liril, Pears, etc. and each has its own market.

Concentrated marketing: In this marketing strategy the company follows oneproduct one segment policy. For example Ashok Leyland produces large chassis of

machines for buses and trucks.

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Comparison of Market Coverage Strategies

Focus Undifferentiated

Marketing

Differentiated

Marketing

Concentrated

Marketing

Product One/Few Many One/Few

Segment All Many One/Few

Marketing Mix One Many One/Few

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Choosing a Market Coverage Strategy

Undifferentiated

Marketing

Differentiated

Marketing

Concentrated

Marketing

Constrained Firm

Resources

More suitable Least suitable Most suitable

Common Usage

Products

Most suitable More suitable Lease suitable

Different need

satisfying products

Least suitable Most suitable More suitable

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Market Positioning

Positioning is defined as the process of designing the companys products and

image to occupy a unique place in the target markets mind.

Many marketers favor promoting only one major benefit and Rosser Reeves called

it as a unique selling proposition. Some unique selling propositions (USPs)

companies use are best quality, best service, lowest price, best value, safest, moreadvanced technology, etc.

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The four major positioning errors that a company must avoid are

Under positioning: Some companies find that buyers have only an

unclear idea of the brand.

Over positioning: Buyers have very narrow image of the brand.

Confused positioning: Buyers have confused image of the brandbecause the company has made too many claims or changed the

brand positioning too frequently.

Doubtful positioning: Buyers do not easily believe the claims made

by brands about the products features, price or manufacturer.

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Bases of positioning the product

1. Attribute positioning: The company positions itself on the basis of attribute like

size or number of years in existence. Sunfeast positions its snacky brand as bigger,lighter and cheaper.

2. Benefit positioning: The company positions its product as leader in providing a

certain benefit. For example Santro positioned itself as Indias simplest car to drive.

3. Use or application positioning: The company positions its products as best for

certain use or application. For example, Kenstar positioned its products as

unexpectedly cold.

4. User positioning: The company positions its product as best for some user group.

For example, Parle-G positions the boy in the advertisement as rock star targeting

the kids and boys.

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5. Competitor positioning: The company claims its products as better than a

named competitor.

6. Product category positioning: The company positions its product as leader

in certain product category. For example, Bajaj CT 100 was positioned as

leader in the entry segment bikes.

7. Quality or price positioning: The product is positioned as offering the best

value. For example, the vegetable oil brand Dhara positions itself asanokhi shuddata, anokha asar. This means the company offers unique

purity and unique effect.

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Unit 7 Segmentation Targeting and Positioning

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