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Segmentation, Targeting Segmentation, Targeting and Positioningand Positioning
Learning ObjectivesLearning Objectives
1.1. Learn the three steps of target marketing, Learn the three steps of target marketing, market segmentation, target marketing, and market segmentation, target marketing, and market positioningmarket positioning
2.2. Understand the major bases for segmenting Understand the major bases for segmenting consumer and business marketing strategyconsumer and business marketing strategy
3.3. Know how companies identify attractive market Know how companies identify attractive market segments and choose target marketing segments and choose target marketing strategystrategy
4.4. Realize how companies position their products Realize how companies position their products for maximum competitive advantage in the for maximum competitive advantage in the marketplacemarketplace
Steps in market segmentation, Steps in market segmentation, targeting and positioningtargeting and positioning
Market SegmentationMarket Segmentation Identify bases for segmenting the marketIdentify bases for segmenting the market Develop segment profilesDevelop segment profiles
Target MarketingTarget Marketing Develop measure of segment attractivenessDevelop measure of segment attractiveness Select target segmentsSelect target segments
Market PositioningMarket Positioning Develop positioning for target segmentsDevelop positioning for target segments Develop a marketing mix for each segmentDevelop a marketing mix for each segment
Market SegmentationMarket Segmentation Dividing a market into distinct groups with Dividing a market into distinct groups with
distinct needs, characteristics, or behavior distinct needs, characteristics, or behavior who might require separate products or who might require separate products or marketing mixes.marketing mixes.
Markets differ in their degree of heterogeneity . At one extreme they are homogeneous (Similar) and at the other extreme they are heterogeneous (Substantially different).Market Segmentation is the process of identifying group of buyers with different buying desires or requirements.There may be three basic market preferences: 1.Homogeneous, 2. Diffused, and 3. Clustered
BASIC MARKET PREFERENCE BASIC MARKET PREFERENCE PATTERNSPATTERNS
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
::::::::::::::::::::::::::::
Attribute X Attribute X Attribute X
Attribute Y
Attri. Y
A.Homogeneous Preferences
B.Diffused Preferences
C.Clustered Preferences
Attribute Y
Niche, Local, CustomerisationNiche, Local, Customerisation
A niche is more narrowly defined customer A niche is more narrowly defined customer group seeking a distinctive mix of benefits.group seeking a distinctive mix of benefits.
Local marketing is tailored to the needs Local marketing is tailored to the needs and wants of local customer groups.and wants of local customer groups.
Customised marketing is one-to-one Customised marketing is one-to-one marketing.smarketing.s
ADVANTAGES OF MARKET ADVANTAGES OF MARKET SEGMENTATIONSEGMENTATION
It improves a company’s understanding of It improves a company’s understanding of why consumers do or do not buy certain why consumers do or do not buy certain products. Therefore prepares a company to products. Therefore prepares a company to meet changing market demands.meet changing market demands.
Information gained from segmentation allows Information gained from segmentation allows the organization to plan a systematic and the organization to plan a systematic and effective marketing programme to satisfy the effective marketing programme to satisfy the consumer needs.consumer needs.
Better assessment of the strengths and Better assessment of the strengths and weaknesses of the competition.weaknesses of the competition.
Better allocation of marketing resources.Better allocation of marketing resources.
Requirements for Effective Requirements for Effective SegmentationSegmentation
MeasurableMeasurable Size, purchasing power, and profile of segmentSize, purchasing power, and profile of segment
AccessibleAccessible Can be reached and served Can be reached and served
SubstantialSubstantial Large and profitable enough to serveLarge and profitable enough to serve
DifferentiableDifferentiable Respond differentlyRespond differently
ActionableActionable Effective programs can be developedEffective programs can be developed
SEGMENTATION ANALYSIS SEGMENTATION ANALYSIS (BASIS OF SEGMENTATION)(BASIS OF SEGMENTATION)
CONSUMER CHARACTERISTICSCONSUMER CHARACTERISTICS (1) Geographic ( Region, city, rural and semi-urban (1) Geographic ( Region, city, rural and semi-urban
areas )areas ) (2) Demographic ( age, life cycle stage, generation, (2) Demographic ( age, life cycle stage, generation,
family size, gender, income, occupation, education, family size, gender, income, occupation, education, socio-economic classification )socio-economic classification )
(3) Psychographic ((3) Psychographic ( life style, psychological/personality life style, psychological/personality traits, values)traits, values)
CONSUMER RESPONSESCONSUMER RESPONSES (4) Behavioral Segments ((4) Behavioral Segments (Buyer readiness stage, Benefits Buyer readiness stage, Benefits
sought, Usage rate, Attitude, Loyalty, Occasions, User status)sought, Usage rate, Attitude, Loyalty, Occasions, User status)
Segmenting Business MarketsSegmenting Business Markets
Demographic segmentationDemographic segmentation Industry, company size, locationIndustry, company size, location
Operating variablesOperating variables Technology, usage status, customer capabilitiesTechnology, usage status, customer capabilities
Purchasing approachesPurchasing approaches Situational factorsSituational factors
Urgency, specific application, size of orderUrgency, specific application, size of order
Personal characteristicsPersonal characteristics Buyer-seller similarity, attitudes toward risk, loyaltyBuyer-seller similarity, attitudes toward risk, loyalty
Segmenting International MarketsSegmenting International Markets
Geographic segmentationGeographic segmentation Location or regionLocation or region
Economic factorsEconomic factors Population income or level of economic developmentPopulation income or level of economic development
Political and legal factorsPolitical and legal factors Type / stability of government, monetary regulations, Type / stability of government, monetary regulations,
amount of bureaucracy, etc.amount of bureaucracy, etc. Cultural factorsCultural factors
Language, religion, values, attitudes, customs, Language, religion, values, attitudes, customs, behavioral patternsbehavioral patterns
Target MarketingTarget Marketing
Target MarketTarget Market Consists of a set of buyers who share Consists of a set of buyers who share
common needs or characteristics that the common needs or characteristics that the company decides to servecompany decides to serve
Target MarketingTarget Marketing
Evaluating Market SegmentsEvaluating Market Segments Segment size and growthSegment size and growth Segment structural attractivenessSegment structural attractiveness
• Level of competitionLevel of competition• Substitute productsSubstitute products• Power of buyersPower of buyers• Powerful suppliersPowerful suppliers
Company objectives and resourcesCompany objectives and resources
Target MarketingTarget Marketing
Selecting Target Market SegmentsSelecting Target Market Segments Undifferentiated (mass) marketingUndifferentiated (mass) marketing Differentiated (segmented) marketingDifferentiated (segmented) marketing Concentrated (niche) marketingConcentrated (niche) marketing Micromarketing (local or individual)Micromarketing (local or individual)
FIVE PATTERNS OF TARGET FIVE PATTERNS OF TARGET MARKET SELECTIONMARKET SELECTION
Single Market ConcentrationSingle Market ConcentrationMarket SpecializationMarket SpecializationProduct SpecializationProduct SpecializationSelective SpecializationSelective SpecializationFull CoverageFull Coverage
FACTORS CONSIDERED IMPORTANT IN FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET THE SELECTION OF TARGET MARKET
STRATEGYSTRATEGY 1. Company’s Resources1. Company’s Resources 2. Product Homogeneity 2. Product Homogeneity 3. Product Stage in the Life Cycle3. Product Stage in the Life Cycle 4. Market Homogeneity4. Market Homogeneity 5. Competitive Marketing Strategy5. Competitive Marketing Strategy
PositioningPositioning
Positioning:Positioning: The place the product occupies in consumers’ The place the product occupies in consumers’
minds relative to competing products.minds relative to competing products. Typically defined by consumers on the basis Typically defined by consumers on the basis
of important attributes.of important attributes. Involves implanting the brand’s unique Involves implanting the brand’s unique
benefits and differentiation in the customer’s benefits and differentiation in the customer’s mind.mind.
Positioning maps that plot perceptions of Positioning maps that plot perceptions of brands are commonly used.brands are commonly used.
POSITIONING STRATEGIESPOSITIONING STRATEGIES
Identifying possible competitive Identifying possible competitive advantagesadvantages
Differentiation can be based on ProductsServicesChannelsPeople Image
Product DifferentiationProduct Differentiation Form- Form- size, shape or physical structuresize, shape or physical structure Features- Features- supplement to basic function.supplement to basic function. Performance Quality-Performance Quality-thethe level at which the product’s level at which the product’s
primary characteristics operates.primary characteristics operates. Conformance Quality- Conformance Quality- the degree to which all the produced the degree to which all the produced
units are identical and meet the promised specifications.units are identical and meet the promised specifications. Durability-Durability- a measure of the product’s expected operating life a measure of the product’s expected operating life
under natural or stressful conditions.under natural or stressful conditions. Reliability- Reliability- a measure of the probability that a product will not a measure of the probability that a product will not
malfunction within a specified time period.malfunction within a specified time period. Reparability- Reparability- a measure of the ease of fixing a product when it a measure of the ease of fixing a product when it
failsfails StyleStyleQuality can be communicated by choosing Quality can be communicated by choosing
physical signs and cuesphysical signs and cues
Services DifferentiationServices Differentiation
Ordering easeOrdering ease DeliveryDelivery InstallationInstallation Customer trainingCustomer training Customer consultingCustomer consulting Maintenance and repairMaintenance and repair
Personnel DifferentiationPersonnel Differentiation
CompetenceCompetence CourtesyCourtesy CredibilityCredibility ReliabilityReliability ResponsivenessResponsiveness CommunicationCommunication
Channel DifferentiationChannel Differentiation
CoverageCoverage ExpertiseExpertise PerformancePerformance
Image DifferentiationImage Differentiation
Image is the way the public perceives the Image is the way the public perceives the company or its products.company or its products.
Identity is the way a company aims to Identity is the way a company aims to identify or position itself or its products.identify or position itself or its products.
Symbols, colours, slogans, atmosphere,Symbols, colours, slogans, atmosphere, Events and employee behaviourEvents and employee behaviour
Choosing the right competitive Choosing the right competitive advantageadvantage
How many differences to promote?•Unique selling proposition•Several benefits
Which differences to promote? Criteria include:•Important•Distinctive•Superior•Communicable•Preemptive•Affordable•Profitable
Developing and communicating a Developing and communicating a positioning strategypositioning strategy
All products can be differentiated to some All products can be differentiated to some extent. But not all differences are meaningful extent. But not all differences are meaningful or worthwhile. A difference is worth or worthwhile. A difference is worth establishing to the extent that it satisfies the establishing to the extent that it satisfies the following criteria :following criteria :
Important : The difference delivers a highly Important : The difference delivers a highly valued benefit to a sufficient numbers of valued benefit to a sufficient numbers of buyers.buyers.
Distinctive : The difference is delivered in a Distinctive : The difference is delivered in a distinctive way. distinctive way.
Developing and communicating a Developing and communicating a positioning strategypositioning strategy
Superior : The difference is superior to Superior : The difference is superior to other ways of obtaining the benefit.other ways of obtaining the benefit.
Preemptive : The difference cannot be Preemptive : The difference cannot be easily copied by competitors.easily copied by competitors.
Affordable : The buyer can afford to Affordable : The buyer can afford to pay for the difference.pay for the difference.
Profitable : The company will find it Profitable : The company will find it profitable to introduce the difference. profitable to introduce the difference.
Choosing a positioning strategyChoosing a positioning strategy
Value propositions ( the whole cluster of benefits Value propositions ( the whole cluster of benefits the company promises to deliver )represent the the company promises to deliver )represent the full full positioning of the brandpositioning of the brand
Possible value propositions:Possible value propositions: More for More More for More More for the Same More for the Same More for LessMore for Less The Same for Less The Same for Less Less for Much Less Less for Much Less
Some examplesSome examples
Lays Lays
DoveDove
Amul : The taste of India
Hindustan Unilever LimitedHindustan Unilever Limited
HDFC Standard Life InsuranceHDFC Standard Life Insurance