Segmentation Targeting Positioning Segmentation Targeting Positioning Concept of

Segmentation, Targeting & Positioning

Segmentation, Targeting & Positioning Concept of Market Segmentation Market segmentation is the process of dividing a potential market into distinct sub-markets of consumers with common need and characteristics Benefits of Market Segmentation Helps to understand the customer need To adopt better positioning strategies Proper allocation of marketing budget Helps in preparing a better competitive strategy Provides guidelines in preparing media plan of the company Different offerings in different segments enhances the sales Customer gets more customized product Helps company to identify niche markets Provides opportunities to expand market Encourages innovations

Requisites of Effective Segmentation 1. q q 2. q q To be effective, segmentation should have the following characteristics Measurable and Obtainable The size profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data If the information is not obtainable, no segmentation can be carried out Substantial The segment should be large enough to be profitable For consumer markets, the small segment might disproportionably increase the cost and hence products are priced too high

Requisites of Effective Segmentation Accessible The segment should be accessible through existing network of people at affordable cost Differentiable The segments are different from each other and require different 4 Ps and programs Actionable The segments which a company wishes to pursue must be actionable in the sense that there should be sufficient finance, personnel and capability to take them all

The Process of Market Segmentation The process of market segmentation passes through the following stages: Identify the existing and future wants in the current market Examine the attributes that distinguish among the segments Evaluate the proposed segment attractiveness on the basis of measurability, accessibility and size

The Process of Market Segmentation 1. Identify existing and future wants in the current market Marketers must examine the changing needs of the customer This process provides opportunity to examine whether customers are satisfied with existing products or not If they are not satisfied what are the features they are looking for the product E. g. . Titan watches

The Process of Market Segmentation - Identifying existing and future wants

The Process of Market Segmentation 2. Examine the attributes that distinguish among segments In this process marketers should segregate different types of wants into homogeneous categories This may be on the basis of product features, lifestyle or behavior

The Process of Market Segmentation – Examine the attributes

The process of market segmentation 3. Evaluate the proposed segment attractiveness on the basis of measurability, accessibility and size Segments selected in second steps should be evaluated against the requisites, ie. Measurability, accessibility, substantial, actionable and differentiability

Proposed segment attractiveness

Bases of Segmenting Consumer Markets Geographic Segmentation Psychographi c Segmentation CONSUMER MARKET SEGMENTATIO N Behavioral Segmentation Demographic Segmentation

Bases of Segmentation Geographic

Bases of Segmentation 1. q q Geographic Segmentation Dividing the market into different geographical units such as nations, states, regions, cities or neighborhoods The company can operate in one or a few geographic areas or operate in all buy pay attention to local variations

Bases of segmentation Demographic Segmentation

Bases of segmentation Demographic Segmentation In demographic segmentation the market is divided into groups on the basis of variables such as age, family size, family life-cycle, gender, income, occupation, education, religion, race, generation, nationality and social class This is the most popular bases for distinguishing customer groups One of the major reason is that consumers’ wants, preferences and usage rates are often associated with demographic

Bases of segmentation Some of the demographic variables are: A. AGE & LIFE-CYCLE STAGE On the basis of age, a market can be divided into four parts viz. children, young, adults and old A successful marketing manager should understand the age group for which the product would be sold and determine his marketing policy, pricing policy, advertising policy etc

Bases of segmentation – Age & Life Cycle

Bases of segmentation B. Gender This segmentation is very common in clothing, hair-styling, cosmetics etc C. Income segmentation is very popular in such product and services such as automobiles, clothing, cosmetics, travel etc But income does not always predict the best customers for a given product

Bases of segmentation Gender

Bases of segmentation Income

Bases of Segmentation 3. PSYCHOGRAPHIC SEGMENTATION When the customers are categorized on the basis of life style, personality or values People belonging to the same demographic group may exhibit different psychographic profiles The major psychographic factors are: A. LIFE STYLE People exhibit different life style and goods they consume express their life styles One of the most used psychographic profiling schemes is called VALS developed by SRI International Inc. VALS-1 (First Version) groups the entire US population into 8 groups

Bases of Segmentation – Life Style

Bases of Segmentation VALS - 1

Psychographic segmentation – Ref Page No: 130, 131, 132, 133

Bases of Segmentation B. PERSONALITY When marketers use personality variables to segment the markets, they endow their products with brand personality that corresponds to consumer personalities. Eg. Raymonds C. SOCIAL CLASS It has a strong influence on consumer preferences and the products they buy or consume Social class becomes the key factor in buying

Bases of Segmentation 4. BEHAVIORAL SEGMENTATION OR CONSUMER RESPONSE SEGMENTATION: In behavioral segmentation, buyers are divided into groups on the basis of their knowledge or attitude towards the use of , or response to a product Some of the behavioral factors are: a. Occasions According to occasions, buyers develop a need, purchase a product or use a product A company should consider critical life events to see whether they are accompanied by certain need

Bases of Segmentation Occasion

Bases of Segmentation Occasion

Bases of Segmentation b. Benefits Buyers can be classified according to the benefits they seek from the products c. User Status Market can be segmented into non-users, potential users, first time users and regular users of a product Market leaders will focus on attracting potential users, whereas smaller firms will try to attract current users away from the market leader

Bases of Segmentation- User Status

Bases of Segmentation d. Usage Rate Markets can be segmented into light, medium and heavy users of the product Heavy users are small percentage of the market but account for high percentage of total consumption Marketers try to attract heavy users than light users e. Loyal Status Consumers have varying degree of loyalty to specific brands, stores and other entities. Buyer can be divided into four groups according to brand loyalty status: � � Hardcore Loyals – Consumers who buy one brand all the time Split Loyals: Consumers who are loyal to two or three brands Shifting Loyals: Consumers who shift from one brand to another Switchers : Consumers who show no loyalty to any brand. When there is a low involvement and few significant perceived brand differences, consumer try to purchase different brands in the category

Bases of Segmentation –Loyal Status Hardcore Loyal

Bases of Segmentation –Loyal Status Split Loyals

Bases of Segmentation –Loyal Status Shifting Loyals

Bases of Segmentation –Loyal Status Switchers

Bases of Segmentation f. Buyer-Readiness Stage A market consists of people in different stages of readiness 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 intend to buy

Targeting q q Targeting is defined as a group of people or organizations for which an organization designs, implements and maintains the marketing mix Once the bases of segmentation are selected, the marketer has to identify the people or organization to whom the product is meant SELECTING TARGET MARKET SEGMENTS Depending upon the emerging patterns of market segmentation, there exists various segments in a market. They are:

Targeting q q q Homogeneous Preference Showing no natural segments as in case of soft drinks Diffused Preference Showing clear preference as in case of automobile market Clustered Preference Market showing natural segments as in case of occupation having impact on the types of clothes worn

Targeting q a. The general strategy adopted for market segmentation are: Undifferentiated Marketing It is a market coverage strategy in which the company treats the target market as one and does not consider that there are market segments that exhibit uncommon needs The company focus on the centre of the target market to get maximum advantage The feature of ‘one product all segments’ calls for presenting one marketing mix for the target market. Example Coca Cola

Targeting b. Differentiated Marketing It is a market coverage strategy in which the company goes for proper market segmentation as depicted by the analysis of the total market The company goes for several products or several segment approach which calls for preparing different marketing mixes for each of the market segment This is followed by Hindustan Lever that sell soap in different segments

Targeting c. Concentrated Marketing It is a market coverage strategy in which company follows ‘one product one segment’ principle. The manufacturer gets maximum knowledge about the segment’s needs and therefore acquires special reputation. This strategy helps the small companies to stand against a large corporation because small companies can create niches in its oneproduct one segment approach by providing maximum varieties

Choosing a Market Coverage Strategy COMPARISON OF MARKET COVERAGE STRATEGIES FOCUS UNDIFFERENTIATE D MARKETING CONCENTRATE D MARKETING PRODUCT ONE/FEW MANY ONE/FEW SEGMENT ALL MANY ONE/FEW MARKETING MIX ONE MANY ONE/FEW

Choosing a market coverage strategy Undifferentiated Marketing Differentiated Marketing Concentrated Marketing More suitable Least suitable Most suitable Common usage of Most suitable products More suitable Least suitable Different need satisfying products Most suitable More suitable Constrained Firm Resources Least suitable

Market Positioning Each firm needs to develop a distinctive positioning for its market offering Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind Many marketers advocate promoting only one central benefit and Rosser Reeves called it as ‘ a unique selling preposition’ (USP) Some of the USP includes ‘best quality’, ‘best service’, ‘lowest price’, ‘best value’, ‘safest’, ‘more advanced technology’ etc

Market Positioning Sometimes double benefit positioning may be necessary if two or more firms claim to be best on the same attribute A company must avoid four major positioning errors: 1. Under Positioning Some companies discover that buyers have only a vague idea of the brand. The brand is seen as just another entry in a crowded market place 2. Over-positioning Buyers may have too narrow image of the brand 3. Confused Positioning Buyers might have a confused image of the brand resulting from the company’s too many claims or changing the brand’s positioning too frequently 4. Doubtful Positioning Buyers may find it hard to believe the brand claims in view of the product’s features, price or manufacturer

Positioning Maps Is a two dimensional graph of how a product, brand or company is perceived versus competition These maps are drawn on important buying dimensions of consumer for company products as well as competitors products Construction of Position Map � Evaluate the buying dimension of customer � Select two buying dimensions of consumer - Eg. Price and quality � Identify the relative market share � Draw the circles according to relative market share on two dimension graph

Positioning Maps for soaps Godrej No: 1 Cosmetics Lifebuoy Low price Santoor Ayurvedic High Price

Bases of Positioning the Product The bases for positioning strategies are: 1. Attribute Positioning: A company positions itself on an attribute such as size or number of years in existence 2. Benefit Positioning The product is positioned as the leader in a certain benefit 3. Use or Application Positioning the product as best for use

Bases of Positioning the Product 4. User Positioning the product as best for some user group 5. Competitor Positioning The product claims to be better in some way than a particular competitor 6. Product Category Positioning The product is positioned as the leader in a certain product category 7. Quality or Price Positioning The product is positioned as offering the best