Segmentation Targeting and Positioning BBA III SEM Segmentation

Segmentation, Targeting and Positioning BBA III SEM

Segmentation A market segment is a subgroup of people or organisations sharing one or more characteristics that cause them to have similar product needs. A true market segment meets all of the following criteria: It is a distinct from other segments. It is homogeneous within the segment It responds similarly to a market stimulus; It can be reached by a market intervention.

Definition Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub markets or segments, each of which tends to be homogeneous in full significant aspects

Nature Durable Unique needs Substantial Accessible Identifiable

Types of market segmentation Territorial or geographic segmentation Demographic Segmentation Socio-psychological segmentation Need-oriented segmentation Volume segmentation Qualitative segmentation Product Segmentation Life style segmentation

Variables used for segmentation Geographic Variables Behavioral Variables used for segmentation Psychographic Variable Demographic variables

Geographic segmentation Segmenting market by region of a country or the world, market size, market density, or climate. Market density means number of people within a unit of land, such as a census tract.

Demographic segmentation In demographic segmentation, the market is divided into groups on the basis of variable such as age, family size, family life cycle, gender, income occupation social class, family size, educational level, religion etc.

Psychographic segmentation Life style Personality Values Beliefs

Behavioural segmentation Buyers are divided into groups on the basis of their knowledge, attitude, use or response to a product. Occasions Benefits (Quality, Service, economy, specially) User Status: Marketers can be segmented into following classes depending on the user status. Non User, potential user, first time user, regular user, ex user. Quantity Consumed/ usage rate (Light, medium heavy) Loyalty status (Hard Core, Soft Core Split loyal, switchers)

Requisites of sound marketing segmentation Measurable Substantial Accessible Differentiable Actionable

Targeting Process of identifying group of consumers who are highly likely to purchase a specific good or service.

Basis for identifying target market Market attractiveness: it is important to determine whether it would be profitable to enter a market segment because a company has to expand huge amount of resources in developing a particular marketing mix. • Market Factors (Segment Size, Segment growth rate, price sensitivity, bargaining power of customer, bargaining power of suppliers, barriers to market segment entry, bargaining to market segment exit). • Competitive Factors (Nature of competition, new entrants, competitive differentiation) • Political. Social and Environmental Factors(Political issues, Social trends, environmental issues)

Firms capability to serve segments Exploitable marketing assets Cost advantage Technological edge Managerial capabilities and commitment

Types or strategies of targeting Limited coverage market targeting Full market coverage targeting

Limited coverage market targeting Full coverage Market specilaization Product specialisation Selective specialisation Single segment

Single Segment concentration In this case, the marketer prefers to go for single segment. In our hypothetical example, the company X uses this strategy when it produces a typical product for a single type of market like plasma TV. In real life, companies like Allahabad Law Agency (only law books) and BPB publications (only Computer books) are good examples. The company may adopt this strategy if it has strong market position, greater knowledge about segment-specific-needs, specified reputation and probable leadership position.

Selective specialisation This is known as multistage coverage because different segments are sought to be captured by the company. The company selects a number of segments each of which is attractive, potential and appropriate. There may be little or no synergy among the segments, but this strategy has the advantage of diversifying the firm’s risk. if the company X produces plasma TV as well as Walkman, the two different types of products obviously for two different types of markets, then it can be cited as an example of Selective Segment Specialisation strategy. Bata shoes were mostly in the popular segment until beginning of 1990 s. Then, it turned itself into premium segment while still retaining the appeal of popular segment. The taking of select segments of shoe market could not help Bata to gain full control of market. After 1995, it has come back again to the popular segment.

Product specialisation occurs when a company sells certain products to several different types of potential customers. In our example, if the company X produces only a particular type of gizmo like toaster that is consumed by all type of people, they we can say that the company uses Product Specialisation strategy. Product specialisation promises strong recognition of customer within the product areas. Super Precision Components supply small nuts and screws for use in military, industry and daily use.

Market specialisation Here the company takes up a particular market segment for supplying all relevant products to the target group. In our example, the company X can implement Market Specialisation strategy by producing all sorts of home appliances like TV, washing machine, refrigerator and micro oven for middle class people. Here the chosen segment is the middle class and the firm specializes in that market only. Sudha Publications Pvt. Ltd. publishes and sells books for the students and job-hunters that include competition books (CAT, IIT-JEE, IAS), general knowledge books and personality development books.

Full coverage The company attempts to serve all customer groups with all the products they might need. Only very large firms can undertake a full market coverage strategy that can be done in 2 ways: i. Undifferentiated marketing or convergence: ii. Differentiated marketing or divergence:

Undifferentiated marketing or convergence The company ignores market segment differences and goes after the whole market with one market offer. It focuses on a basic buyer need rather than on differences among buyers.

Differentiated marketing or divergence: The company operates in several market segments and designs different programmes for each segment. It creates more total sales than the former. But the following costs would be higher: Product modification cost Manufacturing cost Administrative cost Inventory cost Promotion cost

Positioning is the act of designing the company’s offereing and image to occupy a distinctive place in the target market’s mind.

Importance of positioning Putting product in pre-determined orbit. Connects product offereings with target market. Product cannot be “everything to everyone”. Brand seeks a locus in space through positioning.

Brand positioning is a part of brand identity and value proposition that is to be actively communicated to be target audience, and that demonstrate an advantage over competing brands.

Factors affecting brand positioning Brand attributes Consumer perceptions Price Consumer expectations Competitors attributes

Brand positioning vs product positioning

Process of positioning Competitors identification Determining how competitor are perceived and evaulated. Determining the competitor’s position Analysing customer’s preference Making the positiong decision Moniotoring the positioning

Positioning strategies Who am I ? Positioning by corporate identity. Positinoing by brand endorsement What am I? Category positioning Benefit positioning Usuage and use time positioning Price quality positioing For whom am i? Demographic, behavioural and psuchographic Why me? Unique attributes Why me positioning

Requisites for successful positioning Relevance Distinctiveness Clarity Coherence Commitment courage Patience

Errors in positioning Obvious aspects of the product features Living in future Under positioning Over positioning Short term gains Confused positioning Doubt positioning