Segmentation Targeting and Positioning By Vijay Prakash Anand

Segmentation, Targeting and Positioning By Vijay Prakash Anand

STP • Market Segmentation, • Target Market Selection and • Product Positioning Mass production, mass distribution and mass marketing Management, An Indian Perspective By © Vijay Prakash Anand 2

Marketing Management, An Indian Perspective By © Vijay Prakash Anand 3

Colgate More than 50% market share • Colgate Dental Cream • Colgate Herbal • Colgate Total 12 • Colgate Cibaca Family • Colgate Sensitive • Colgate Max Fresh • Colgate Kids Tooth Paste • Colgate Fresh Energy Gel Protection • Colgate Advanced Whitening and • Colgate Active Salt Marketing Management, An Indian Perspective By © Vijay Prakash Anand 4

Market Segmentation Market segmentation involves dividing the market of potential customers into homogeneous subgroups. These subgroups may be distinguished in terms of their behaviour pattern, attitudes, demographic characteristics, psychographic profile and the like. ’ – Brian Sternthal and Alice M. Tybout Marketing Management, An Indian Perspective By © Vijay Prakash Anand 5

Market Segmentation The market segments are not created by the company, but it exists in the market. The marketer needs to identify the segment and then decides as to which one he will target. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 6

Market Segmentation Marketing Management, An Indian Perspective By © Vijay Prakash Anand 7

Marketing Management, An Indian Perspective By © Vijay Prakash Anand 8

Mass Customisation means ‘production of individually customized goods and services at mass production prices’ Mass Marketing to Segment of One Marketing Management, An Indian Perspective By © Vijay Prakash Anand 9

Customerisation Wind and Rangaswamy As an operationally driven mass customisation with customised marketing in a way that helps customers to get the product of his choice. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 10

How do you segment a market? Marketing Management, An Indian Perspective By © Vijay Prakash Anand 11

Market Segmentation The process of market segmentation is the process of dividing the heterogeneous market into homogeneous subgroups of similar needs and shared characteristics. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 12

Market Segmentation 1. Demographic Segmentation 2. Geographic Segmentation 3. Geodemographic Segmentation 4. Psychographic Segmentation and 5. Behavioural Segmentation Marketing Management, An Indian Perspective By © Vijay Prakash Anand 13

Demographic Segmentation • Most commonly used base for segmentation. – – – Age Sex Education Income Occupation Marital status Family size Family life cycle Religion Nationality and Social class All these variables are either used as a single factor or in combination to segment the market. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 14

Age • Most commonly used basis, as the same age group people behave in the identical manner and will have identical needs. • Marketers design, produce, package and promote products differently to meet the needs of different age groups. • Colgate, Fisher Price, Johnsons & Johnsons, JAM, Magic Pot, Aastha Channel, UTV Bindaas, MTV etc. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 15

Age • Infant – Newly born to 1 Year • Child – 1 to 12 years • Adolescent – 12 to 15 years • Teens – 16 to 19 years • Youth – 20 to 35 years • Middle Aged – 36 to 50 years • Elders – 51 to 60 years • Seniors – 60 and above years Marketing Management, An Indian Perspective By © Vijay Prakash Anand 16

Income • Key driver in segmenting the market. • Based on the belief that the behaviour of the consumer changes with the changes in income. • Market can be segmented as – Low Income, Low Middle income, middle income, upper middle income and high income. • C. K. Prahalad - ‘The Fortune at the Bottom of the Pyramid’ Marketing Management, An Indian Perspective By © Vijay Prakash Anand 17

Gender • Fundamental segment in the marketing, as the needs of male and female are very different Axe, Raymond, Pulsar, Scooty, Femina, Revlon, Titan Raga Reebok, Garnier Marketing Management, An Indian Perspective By © Vijay Prakash Anand 18

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Marketing Management, An Indian Perspective By © Vijay Prakash Anand 20

Occupation • The consumption behaviour of a working executive differs from a self employed person or a blue collar worker or a businessman • Professionals like Doctors, Lawyers, Teachers, Professors, Chartered Accountants or Traders or Students or Shopkeepers or Housewives • Financial companies and banks like ICICI Bank, Central Bank of India, State Bank of India Defense personnel customers Marketing Management, An Indian Perspective By © Vijay Prakash Anand 21

Education • Indian market can be classified as Illiterates, Literates, High School Pass outs, University educated and professionally qualified people • The business of information like Newspapers, magazines, books etc. Marketing Management, An Indian Perspective By © Vijay Prakash Anand 22

Marital Status • Being single or being married influences the behaviour patterns of the customers • Unmarried people generally use more of fast food and packaged food • Similarly married people tend to spend a lot on consumer durables, cars, travel plans and financial products • Businesses like Matrimonial websites, wedding management companies, wedding video and photographers etc dependent on marriages Marketing Management, An Indian Perspective By © Vijay Prakash Anand 23

Family Size • Family size and structure • More and more nuclear families than the joint families • Single working males and females • Right from the apparels to shoes to accessories to multiplexes, all have benefited largely in the post liberalization era with the changing family size and structure Marketing Management, An Indian Perspective By © Vijay Prakash Anand 24

Family Size • Family size and structure • More and more nuclear families than the joint families • Single working males and females • Right from the apparels to shoes to accessories to multiplexes, all have benefited largely in the post liberalization era with the changing family size and structure Marketing Management, An Indian Perspective By © Vijay Prakash Anand 25

Socio Economic Classification (SEC) • By Media Research Users’ Council (MRUC) and the Market Research Society of India (MRSI) • Based on two variables: – Education of chief wage earner and – Number of “consumer durables” (from a predefined list)owned by the family, 11 items • 12 SEC groups for both urban and rural India A 1, A 2, A 3, B 1, B 2, C 1, C 2, D 1, D 2, E 1, E 2 and E 3 Marketing Management, An Indian Perspective By © Vijay Prakash Anand 26

Marketing Management, An Indian Perspective By © Vijay Prakash Anand 27

Socio Economic Classification (SEC) • Largely been done using the Indian Readership Survey (IRS) database, also used IMRB’s ‘Household Panel’ data • SEC A 1 - 0. 5% of all Indian households (SEC A 1 - Nearly 2% of urban households and less than 0. 1% of rural households) • More than half of all SEC A 1 households reside in - Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad • SEC E 3 - 10% of all Indian households (Only 2% of urban households and 13% of rural households belong to new SEC E 3; Nearly 93% of all SEC E 3 households are in rural India) Marketing Management, An Indian Perspective By © Vijay Prakash Anand 28

Marketing Management, An Indian Perspective By © Vijay Prakash Anand 29

Geographic Segmentation • Geographic segmentation is the starting point and the simplest form of segmenting the market • LG, Ghadi, Wheel, DTDC, Nirma, Samsung Marketing Management, An Indian Perspective By © Vijay Prakash Anand 30

Geodemographic Segmentation • Combines the geographic and demographic segmentation • Based on the philosophy that consumers staying in the same area have got similar characteristics and needs • Pureit, Aquaguard Marketing Management, An Indian Perspective By © Vijay Prakash Anand 31

Psychographic Segmentation • Same demographic profile may act in a totally different manner, due to the difference in their personality, lifestyle and values • Psychographics is the science of using psychology and demographics to understand the consumers better Marketing Management, An Indian Perspective By © Vijay Prakash Anand 32

Psychographic Segmentation • AIO Framework (Activities, Interests and Opinions) • Personality - the marketers try to project the brand personality, which imitates the target consumer personality • Sri Consulting – Business Intelligence (SRIC-BI) VALS (Values and Lifestyle) Model Framework – Divides the American adults into eight typologies – VALS is based on 4 demographic factors (Sex, Age, Education and Income) and 35 Attitudinal Questions (I am often interested in theories / I like a lot of variety in my life / I like to learn about art, culture, and history…. ) to profile the consumers Marketing Management, An Indian Perspective By © Vijay Prakash Anand 33

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Behavioural Segmentation • Buyer’s purchase decision role – Initiator, Influencer, Decider, Buyer and User • Product or brand usage • Occasions – Archies, Kurkure, Cadbury, ICICI Bank • User status - first time users, regular users, ex users, potential users and non users and • Usage rate - light, medium or heavy users Marketing Management, An Indian Perspective By © Vijay Prakash Anand 35

Loyalty Richard L. Oliver Loyalty is ‘a deeply held commitment to re-buy or re-patronise a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behaviour. ’ Marketing Management, An Indian Perspective By © Vijay Prakash Anand 36

Loyalty • George H. Brown divided the brand loyalty status into 4 groups: – Hard Core Loyals, who buy the same brand all the time – Split loyals, who are loyal to two or three brands – Shifting loyals, who shift from one brand to another and – Switchers, who show no loyalty to any brand Marketing Management, An Indian Perspective By © Vijay Prakash Anand 37

Effective Market Segmentation Measurable Accessible Substantial Differentiable Actionable Marketing Management, An Indian Perspective By © Vijay Prakash Anand 38

Effective Market Segmentation • Market segmentation can only be effective, – if the size of the market and purchasing power of the customers can be measured – Needs to be substantial enough to justify the product or service development – The market segment also needs to be reachable and actionable – Lastly, it should be differentiable; then only the customers will be satisfied Marketing Management, An Indian Perspective By © Vijay Prakash Anand 39

Marketing Management, An Indian Perspective By © Vijay Prakash Anand 40

Segmenting the Market : Tata Ginger Way • An unfulfilled need in the market for budget hotels in the tier II cities, with the right kind of service • In June, 2005, Tata Group launched the first-of-its-kind category of Smart Basics hotel in Bangalore under its whollyowned subsidiary Roots Corporation Limited • The concept was developed in association with renowned corporate strategy thinker – Dr. C. K. Prahalad • a unique combination of intelligently designed facilities and consistent services at extremely affordable rate ranging from Rs 1299/- to Rs 2999/Marketing Management, An Indian Perspective By © Vijay Prakash Anand 41

Market Targeting Marketing Management, An Indian Perspective By © Vijay Prakash Anand 42

Market Targeting • With an objective of maximizing profits, a company targets one or more market segments based on – the market opportunity with the understanding of the customer and the competition – its ability to reach the customers in the segment and the costs involved in reaching them – the barriers to entry – potential profitability and – growth forecast Marketing Management, An Indian Perspective By © Vijay Prakash Anand 43

Market Targeting Marketing Management, An Indian Perspective By © Vijay Prakash Anand 44

Market Targeting Undifferentiated marketing targets the whole market with one offer – Mass marketing – Focuses on common needs rather than what’s different Marketing Management, An Indian Perspective By © Vijay Prakash Anand 45

Market Targeting Differentiated marketing targets several different market segments and designs separate offers for each • Goal is to achieve higher sales and stronger position • More expensive than undifferentiated marketing Management, An Indian Perspective By © Vijay Prakash Anand 46

Market Targeting Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations • Local marketing • Individual marketing Management, An Indian Perspective By © Vijay Prakash Anand 47

Market Targeting Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups • Cities • Neighborhoods • Stores Marketing Management, An Indian Perspective By © Vijay Prakash Anand 48

Market Targeting Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers • Also known as: – One-to-one marketing – Mass customization – Markets-of-one marketing Management, An Indian Perspective By © Vijay Prakash Anand 49

Market Targeting • Single Segment Concentration - Nirma • Multi Segment Specialisation - UTV • Product Specialisation - Carl Zeiss • Market Specialisation - laboratory market • Full Market Coverage - LG, Samsung, HUL, ITC, Pepsi, Colgate, Maruti Suzuki, General Motors, Hero Honda, Bajaj Auto Marketing Management, An Indian Perspective By © Vijay Prakash Anand 50

Market Targeting • HUL offers – 8 types of personal soaps – Breeze, Lux, Lifebuoy, Liril, Hamam, Dove, Pears, Rexona and Dove – 4 types of detergent powders – Surf Excel, Rin, Wheel and Sunlight – 4 types of skin care – Fair & Lovely, Pond’s, Vaseline and Aviance; and – 2 types of toothpastes – Pepsodent and Close Up Marketing Management, An Indian Perspective By © Vijay Prakash Anand 51

Market Targeting Hero Motocorp sells 15 different bikes – CD Dawn, CD Deluxe, Splendor+, Splendor NXG, Passion Pro, Passion Plus, Super Splendor, Glamour, Glamour PG Fi, Achiever, CBZ XTreme, Hunk, Karizma, Karizma ZMR and Pleasure 52

Market Targeting Depends on: • Company resources • Product variability • Product life-cycle stage • Market variability • Competitor’s marketing strategies Marketing Management, An Indian Perspective By © Vijay Prakash Anand 53

Market Targeting • Benefits customers with specific needs • Concern for vulnerable segments • Children – Alcohol – Cigarettes – Internet abuses Marketing Management, An Indian Perspective By © Vijay Prakash Anand 54

Market Positioning Once the market segment is identified by the company to be targeted, it needs to be positioned in the mind of the prospective customer Positioning is creating an identity in the minds of the target market Marketing Management, An Indian Perspective By © Vijay Prakash Anand 55

Market Positioning • Positioning as a concept popularised by advertising professionals Al Ries and Jack Trout through their bestseller book ‘Positioning - a battle for your mind’ • The concept was first published in 1969 by Jack Trout in the paper ‘Positioning is a game people play in today’s me-too market place’ in Industrial Marketing Management, An Indian Perspective By © Vijay Prakash Anand 56

Market Positioning Al Ries and Jack Trout ‘Positioning starts with a product. A piece of merchandise, a service, a company, an institution or even a person…………. . But positioning is not what you do to a product. Positioning is what you do the mind of the prospect. That is, you position the product in the mind of the prospect. ’ Marketing Management, An Indian Perspective By © Vijay Prakash Anand 57

Market Positioning • Product position is the way the product is defined by consumers on important attributes— the place the product occupies in consumers’ minds relative to competing products – Perceptions – Impressions – Feelings Marketing Management, An Indian Perspective By © Vijay Prakash Anand 58

Market Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions Marketing Management, An Indian Perspective By © Vijay Prakash Anand 59

Differentiation and Positioning • Identifying a set of possible competitive advantages to build a position • Choosing the right competitive advantages • Selecting an overall positioning strategy • Developing a positioning statement Marketing Management, An Indian Perspective By © Vijay Prakash Anand 60

Identifying Possible Value Differences and Competitive Advantages Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices Marketing Management, An Indian Perspective By © Vijay Prakash Anand 61

Identifying Possible Value Differences and Competitive Advantages Identifying a set of possible competitive advantages to build a position by providing superior value from: Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation Marketing Management, An Indian Perspective By © Vijay Prakash Anand 62

Choosing the Right Competitive Advantages Difference to promote should be: Important Distinctive Superior Communicable Preemptive Affordable Profitable Marketing Management, An Indian Perspective By © Vijay Prakash Anand 63

Selecting an Overall Positioning Strategy Value proposition is the full mix of benefits upon which a brand is positioned Marketing Management, An Indian Perspective By © Vijay Prakash Anand 64

Market Positioning Fevicol Vodafone Amul Nokia Nike LG Aaj Tak ICICI Prudential Marketing Management, An Indian Perspective By © Vijay Prakash Anand 65

Market Positioning Fevicol Ka Jod Vodafone Zoozoo Amul’s Utterly, Butterly Delicious Nokia’s Connecting People Nike’s Just do it LG’s Life is good Aaj Tak’s Sabse Tej ICICI Prudential’s Jeetey Raho Marketing Management, An Indian Perspective By © Vijay Prakash Anand 66

Thank You… Marketing Management, An Indian Perspective By © Vijay Prakash Anand 67