Market Analysis Segmentation, Targeting and Positioning

Market Analysis: Segmentation, Targeting

and Positioning

Market Segmentation

• Consumers differ widely in terms of space, time, perception and values.

• Markets are not homogeneous rather they are heterogeneous

• Two consumers of the same commodity are never in conformity with each other as far as their nature, habits, taste or interests, income, age, mode of purchasing or other attitudes are concerned.

• In order to facilitate the marketing of product company subdivides a market into homogeneous sub-sets of customers having common customers in one set so that the customers may be served better with a distinct marketing mix.

Market Segmentation

“ Market Segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can be selected as a target market to be met with distinct marketing mix.”

“ The process of taking the total heterogeneous market for a product and dividing it into market for a product and dividing it into several submarket or segments, each of which tends to be homogenous in all significant aspects

Basic Market-Preference Patterns

(a) Homogeneous(a) Homogeneouspreferencespreferences

(c) Clustered(c) Clusteredpreferencespreferences

(b) Diffused(b) Diffusedpreferencespreferences

Market Segmentation Procedure

Description

1. Needs-Based Segmentation

Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.

2. Segment Identification

For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).

3. Segment Attractiveness

Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.

4. Segment Profitability Determine segment profitability.

5. Segment Positioning For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics.

Market Segmentation Procedure

Description

6. Segment “Acid Test” Creating segment Storyboards to test the attractiveness of each segments positioning strategy.

7. Market Mix Strategy Expanding segment positioning strategy to include all aspects of marketing mix

Bases For Segmenting

Consumer Markets

Variables Variables for Segmenting for Segmenting

Consumer Consumer MarketsMarkets

Variables Variables for Segmenting for Segmenting

Consumer Consumer MarketsMarkets

DemographicDemographic

Detailed View of Demographic Variables

Age Gender Race Ethnicity Income Education

Occupation Family Size Family Life Cycle Religion Social Class

Variables Variables for Segmenting for Segmenting

Consumer Consumer MarketsMarkets

DemographicDemographic GeographicGeographic

Detailed View of Geographic Variables

RegionRegion Urban, Sub-Urban, Sub-

urban, Ruralurban, Rural City SizeCity Size County SizeCounty Size

State SizeState Size Market DensityMarket Density ClimateClimate TerrainTerrain

Variables Variables for Segmenting for Segmenting

Consumer Consumer MarketsMarkets

DemographicDemographic GeographicGeographic

PsychographicPsychographic

Detailed View of Psychographic Variables

Personality AttributesPersonality Attributes MotivesMotives LifestylesLifestyles

Variables Variables for Segmenting for Segmenting

Consumer Consumer MarketsMarkets

DemographicDemographic GeographicGeographic

PsychographicPsychographic BehavioristicBehavioristic

Detailed View of Behavioristic Variables

Volume UsageVolume Usage End UseEnd Use Benefit ExpectationsBenefit Expectations Brand LoyaltyBrand Loyalty Price SensitivityPrice Sensitivity

Target Marketing

• Target Market is a distinctive category of the market which includes market for company's product”

• There are three alternatives for defining and satisfying a target market

Mass MarketingMarket Segmentation Multiple Segmentation

Steps in Target Marketing

2. Determining Market Segmentation2. Determining Market Segmentation

1. Identifying Markets 1. Identifying Markets

3. Selecting a Market to Targeting3. Selecting a Market to Targeting

4. Positioning through market Strategies4. Positioning through market Strategies

Market Targeting

• Market targeting is the process of formulating market coverage policies.

• In this stage, the firm has to evaluate the various segments and their structural attractiveness and then decide which ones to target and haw many market to target.

Market Targeting Procedure

I. Evaluating Market segment• Forecasting segment potential to know the

size and growth.• Analyzing competitors position to know

segment structural attractiveness.• Analyzing potential goal and objective

achievement

II. Selecting Market Segmentation Strategies

Market Segmentation Strategies

Single-segmentSingle-segmentconcentrationconcentration

ProductProductspecializationspecialization

M1 M2 M3 P1

P2

P3

SelectiveSelectivespecializationspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM = MarketM = Market

Undifferentiated Strategy

Single Single Marketing Marketing

MixMix

Target MarketTarget Market

OrganizationOrganization

Concentrated StrategyThrough Market Segmentation

Single Single Marketing Marketing

MixMix

Target MarketTarget Market

OrganizationOrganization

Differentiated StrategyThrough Market Segmentation

OrganizationOrganization

Marketing Mix 1Marketing Mix 1

Target MarketTarget Market

Marketing Mix 2Marketing Mix 2

Positioning• Product positioning is the final step in

target marketing.• Positioning strategy is concerned with

selecting a marketing mix appropriate to each target market segment.

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

Elements of Positioning

1. The Product

2. The Company

3. The Competition

4. The Consumer

Differentiation

“ Process of adding a set of meaningful and valued differences to distinguish the company’s offering from competitors offerings”

Differentiation Tools

Product Differentiation

FormFea-

turesPerfor-mance

QualityConform-

anceQuality

Dura-bility

Relia-bility

Repair-ability

Style Design

DeliveryDelivery

Services Differentiation

OrderingEase

OrderingEase

Maintenance& Repair

Maintenance& Repair

CustomerTraining

CustomerTraining

InstallationInstallation CustomerConsulting

CustomerConsulting

MiscellaneousS

ervices

Media Atmosphere

Symbols

Events

Image Differentiation

Personnel Differentiation

Competence Courtesy

Commu

nication Credibility Reliability

Coverage Expertise

Performance

Availability

Channel Differentiation

Marketing Research• Today, it has become necessary to study

systematically the different aspects relating to marketing process with regard to fulfilling the expectations and needs of the consumer by the right thing at the right time and at the right place.

• MR is concerned with all those factors which have a direct impact upon the marketing of products and services.

• It links the organization with its marketing environment.

Marketing Research“ MR is the systematic design, collection,

analysis and reporting of data findings relevant to a specific marketing situation facing the company”

MR is the systematic gathering, recording, and analyzing the data about marketing problems towards the end of providing information useful in marketing decision making’

The Marketing Research Process

Defining theDefining theproblem andproblem and

researchresearchobjectivesobjectives

Defining theDefining theproblem andproblem and

researchresearchobjectivesobjectives

DevelopingDevelopingthe researchthe research

planplan

DevelopingDevelopingthe researchthe research

planplanCollect the Collect the informationinformationCollect the Collect the informationinformation

Analyze theAnalyze theinformationinformationAnalyze theAnalyze theinformationinformation

Present thePresent thefindingsfindings

Present thePresent thefindingsfindingsMake the Make the

DecisionDecisionMake the Make the DecisionDecision

Defining the Problem & Research Objectives

• The precise definition on the problem helps in determining the techniques to be used, the extent of information to be collected.

• It is said that “ A problem well defined is half solved.

• If the problem is clearly defined, it will help the researcher to handle the problem effectively.

• After defining the basic problem, the researcher must specify the objectives of the study.

• It is essential for the researcher to have a clear picture of the purpose of the research because this will guide the rest of the research process

1. Develop the Research Plan

• The second stage of MR calls for developing the most efficient plan for gathering the needed information.

• Designing a research plan calls for decision on

Data sources Research approaches Research Instruments Sampling plan Contact methods

Data Sources

Secondary

Data

Internal

External

Accounts Receivables/ Payables

P & L Statements

Government Publications, such as Census Figures

Nongovernment Publications

Primary Data

Survey

ObservationExperiment

Simulation

In person

Telephone

Mail

Human

Mechanical

Internet

Research Approaches

BehavioralBehavioral

Focus-groupFocus-group

SurveySurvey

ExperimentalExperimental

ObservationalObservational

Research Instruments

QuestionnairesQuestionnaires

Psychological tools

Psychologicaltools

Mechanical Devices

Mechanicaldevices

QualitativeMeasures

Qualitative Measures

Research Instruments

PopulationPopulation

Sampling UnitSampling Unit

Sampling SizeSampling Size

Sampling ProcedureSampling Procedure

Sampling Plan

Contact

Methods

Personal Interview

Telephone Interview

Mail Questionnaire

Online Method

Contact Methods

3. Collect the information

• The data collection phase of marketing research generally the most expensive and most prone to errors.

• In this phase three major problems arise- Some respondents will not be at home or

replaced. Respondents may refuse to cooperate. Respondent may give biased or dishonest

answers

4. Analyze the information

• In this step researcher has to extract findings from the collected data.

• To analyze the information researcher should use statistical techniques.

5. Present the Findings • Objective Look• Report Deficiencies and

Reasons• Formal, Written Document• Short, Clear, and Simple for

Executives• Technical Report Contains More

Detail

Marketing Information System

“ A marketing information system (MIS)marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.”

Components Of MIs

• Computer

• User

• Information

• Marketing Research

• Data Base

• People

Sources of Information

• Internal Sources

• External Sources

Need of MIS

• Gin a competitive edge

• Monitor consumer attitude

• Monitor the environment

• Reduce financial and image risk

• Determine the consumer behaviour.

Competition Analysis

Five Forces Determining Segment Structural Attractiveness (Porter’s Model)

Potential Entrants(Threat ofMobility)

Potential Entrants(Threat ofMobility)

Buyers(Buyer power)

Substitutes(Threats ofsubstitutes)

Suppliers(Supplier power)

Suppliers(Supplier power)

IndustryCompetitors

(Segment rivalry)

Identifying Competitors

1. Industry Concept of Competition

2. Market Concept of Competition.

Industry Concept of Competition

“ An Industry is a group of firms that offer a product or class of products that are close substitutes for one another”

• Industry competition can be identified by-• Number of Sellers and Degree of

Differentiation• Monopoly• Oligopoly• Monopolistic competition• Pure competition

Industry Concept of Competition

• Entry, Mobility, Exit Barriers• Cost Structure• Cost Structure• Degree of Vertical Integration• Degree of Globalization

Market Concept of Competition

• Market concept of competition say’s that –“ Competition is rivalry for consumer disposable

income and competitors are companies that are satisfy the same customer needs”

• Generic Competition• Form competition• Brand Competition

Analyzing Competitors

CompetitorCompetitorActionsActions

ObjectivesObjectives

Strengths &Strengths &WeaknessesWeaknesses

ReactionReactionPatternsPatterns

StrategiesStrategies

Designing Competitive Strategies(254)

Hypothetical Market Structure & Strategies

40%

Marketleader

30%

Marketchallenger

20%

Marketfollower

Attack leaderStatus quo

Imitate

10%

Marketnicher

Special-ize

Market Leader Strategies

1. Expanding the Total Market(254)•New Users

– Market-penetration strategy– New-market segment strategy– Geographical-expansion strategy

•New Uses•More Usage

2. Defending Market Share•Continuous innovation•Maintaining same quality

3. Defense Strategies

AttackerAttacker(3)(3) PreemptivePreemptive

defensedefense

(4)(4) Counter-Counter-offensiveoffensivedefensedefense Defender

(1)(1)PositionPositiondefensedefense

(5)Mobile

defense

(2) Flank defense(2) Flank defense

(6) Contraction(6) Contractiondefensedefense

4. Expanding Market share• Increasing product quality• Increasing sales force expenditure• Increasing sales force activities

Market Challenger Strategies

Attack Strategies

AttackerDefender

(3) Encirclement attack

(4) Bypass attack

(2) Flank attack

(5) Guerilla attack

(1) Frontal attack

Specific Attack Strategies

• Price-discount• Cheaper goods• Prestige goods• Product proliferation• Product innovation• Improved services• Distribution innovation• Manufacturing cost reduction• Intensive advertising promotion

Market Follower Strategies

CounterfeiterClonerImitatorAdapter

Market Nicher Strategies

• Market-Nicher Strategies– High margin versus high

volume– Nicher Specialist Roles

• End-user specialist• Vertical-level specialist• Customer-size specialist• Specific-customer specialist• Geographic specialist• Product or product-line specialist