1 Market Segmentation, Targeting and Positioning By : Prof Sameer Kulkarni

1

Market Segmentation, Targeting and

Positioning

By : Prof Sameer Kulkarni

The Starting Point

• Mass Marketing:The Seller engages in –

1.Mass marketing>mass production>mass distribution>and mass promotion

ONE PRODUCT FO ALL BUYERS.It creates the largest potential market>leads to

lower costs>lower prices>higher margins

2

Segment Marketing

• Role of Marketer

• The marketer does not create the segments

• The marketer identifies the segments and decide which one to target

• The company can better design>price>disclose& deliver the product to satisfy the target market.

3

4

• Effective use of resources

• Gain a focus

• Create Value for a target market

• Positioning

Benefits of Segmentation

5

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profilesMarket Targeting

3. Develop measure of segment attractiveness4. Select target segments

Market Positioning

5. Develop positioning for target segments6. Develop a marketing mix for each segment

6

Step 1. Market SegmentationLevels of Market Segmentation

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached

More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

Mass MarketingSame product to all consumers

(no segmentation, i. e. a commodity)

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Thumsup)

Steps in Market Segmentation, Targeting, and Positioning

1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingsegments

MarketSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegment(s)

MarketTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicate

the chosenpositioning

concept

MarketPositioning

Basic Market-Preference Patterns

(a) Homogeneous(a) Homogeneouspreferencespreferences

SweetnessSweetness

Cre

amin

ess

Cre

amin

ess

(c) Clustered(c) Clusteredpreferencespreferences

Cre

amin

ess

Cre

amin

ess

SweetnessSweetness

(b) Diffused(b) Diffusedpreferencespreferences

Cre

amin

ess

Cre

amin

ess

SweetnessSweetness

Step 2. Market SegmentationLevels of Market Segmentation


(no segmentation)


(no segmentation)


(some segmentation)


(some segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products/ programs to individual customers

Bases for Segmenting Consumer Markets

Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or MetroSize, Density, Climate Demographic

Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Lifestyle or PersonalityPsychographic

11

Regional/City

National

International

Step 3. Market SegmentationGeographic Segmentation

Geographic Bases

• Region

• Density

• Climate

• Population

Step 4. Market SegmentationBases for Segmenting Business Markets

Basesfor Segmenting

BusinessMarkets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches

14

Step 5. Market SegmentationDemographic Segmentation

• Dividing the market into groups based on variables such as:– Age– Gender– Family size or life cycle– Income– Occupation– Education– Religion– Race– Generation– Nationality

15

Step 6. Market SegmentationPsychographic Segmentation

Divides Buyers Into Different Groups Based on:

16

Step 7. Market SegmentationBehavioral Segmentation

• Dividing the market into groups based on variables such as:

– Occasions

– Benefits

– User status

– Usage rate

– Loyalty status

– Readiness stage

– Attitude toward product

Behavioral Bases

• User Status & Brand Loyalty

• Personality/Lifestyle• Social Class

• Occasion• Readiness to Buy• Benefits Sought• Usage Rate

18

Step 8. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

Requirements for effective segmentation

Step 8. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

Requirements for effective segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve the segments.

19

Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness

• Company objectives and resources

20

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1






MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 9. Market TargetingMarket Coverage Strategies

Step 10. Market TargetingEvaluating Market Segments

Segment Size and GrowthAnalyze sales, growth rates and expected profitability for various segments.

Segment Structural Attractiveness Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and ResourcesCompany skills & resources relative to the segment(s).Look for Competitive Advantages.

22

Choosing a market-coverage strategy

• Company resources • Degree of product homogeneity• Market homogeneity• Competitors’ strategies

Five Patterns of Target Market Selection

Single-segmentconcentration

Productspecialization

M1 M2 M3 P1

P2

P3

Selectivespecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketcoverage

P1

P2

P3

Marketspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductM = Market

Step 11. Market TargetingChoosing a Market-Coverage

StrategyCompany Resources

ProductVariability

Product’s Life-Cycle Stage

Market Variability

Competitors’Marketing Strategies

Positioning is the act of designing the company’s

offering and image to occupy a distinctive

place in the the target market’s mind.

26

• Product’s PositionProduct’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.

Marketers must:–Plan positions to give their products the

greatest advantage in selected target markets

Step 12: Positioning for Competitive Advantage

27

Positioning Strategies

• Positioning by specific product attributes• Positioning by benefits• Positioning for user category• Positioning for usage occasion• Positioning against another competitors• Positioning against another product class

28

• Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation.

• Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP).

• Step 3. Communicating and Delivering the Chosen Position.

Steps to Choosing and Implementing a Positioning Strategy

The BCG CompetitiveAdvantage Matrix

Volume

FragmentedStalemated

Specialized

Siz

e o

f th

e A

dva

nta

ge

SmallSmall

LargeLarge

Number of Approachesto Achieve Advantage

FewFew ManyMany

30

Product Differentiation

• Physical attributes

• Service differentiation

• Personnel differentiation

• Location

• Image differentiation

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

Miscellan

eou

sS

ervices

33

Which differences to promote?

• Important to customers• Distinctive• Superior • Communicable to customers• Preemptive• Affordable• Profitable

Media Atmosphere

Symbols

Events

Image Differentiation

Differences WorthDifferences WorthEstablishingEstablishing

AffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

36

Positioning map of service level versus price. Source: MARG, 2007

Perceptual Map

Positioning Strategies

• Product Attributes

• Benefits, Problem Solutions & Basic Needs•Cholesterol Free Oil:Dhara•

•Price & Quality

• Specific Use : Gift for all Events Titan

• Against Other Products: Tata salt Vs. Captain Cook

• Product User :Fashion loving , Well to do Consumers :Vimal fabrics • Against a Competitor

Documents

1 Market Segmentation, Targeting and Positioning By : Prof Sameer Kulkarni