WORKBOOK / PRESENTATIONON

SEGMENTATION,TARGETING & POSITIONING

PREPARED BY: Mr. PANDURANG SHINDEPREPARED BY: Mr. PANDURANG SHINDE ROLL NO:1011000501 ROLL NO:1011000501 IMT-CDL,GHAZIABAD IMT-CDL,GHAZIABAD

Learning ObjectivesLearning Objectives Learn the three steps of target marketing, Learn the three steps of target marketing,

market segmentation, and market positioning.market segmentation, and market positioning.

Understand the major bases for segmenting Understand the major bases for segmenting consumer and business marketing strategyconsumer and business marketing strategy

Know how companies identify attractive Know how companies identify attractive market segments and choose target marketing market segments and choose target marketing strategystrategy

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

Steps in Market Segmentation, Steps in Market Segmentation, Targeting,and PositioningTargeting,and Positioning

1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingsegments

MarketMarketSegmentationSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegments

MarketMarketTargetingTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicatethe choosenpositioning

concept

MarketMarketPositioningPositioning

Market SegmentationMarket Segmentation

Dividing a market into groups of Dividing a market into groups of consumers or segments with distinct consumers or segments with distinct needs and wants, characteristics, or needs and wants, characteristics, or consumer behavior who might require consumer behavior who might require separate products or marketing mixes.separate products or marketing mixes.

A company then needs to identify A company then needs to identify which segments it can serve which segments it can serve effectively.effectively.

Mass MarketingMass Marketing

Mass production, Mass production, mass distribution, mass distribution, and mass promotion and mass promotion of one product for all of one product for all buyers.buyers.

Ex. Ford’s Model-T; Ex. Ford’s Model-T; Coka-Cola’s 6.5-Coka-Cola’s 6.5-ounce bottleounce bottle

Mass MarketingMass Marketing

ProsPros Create the largest potential marketCreate the largest potential market Lowest cost → lower price and higher marginLowest cost → lower price and higher margin

ConsCons The increasing splintering of the market The increasing splintering of the market

(malls, specialty shops, mail-order catalogs, (malls, specialty shops, mail-order catalogs, home shopping TV networks, internet stores)home shopping TV networks, internet stores)

The proliferation of advertising and The proliferation of advertising and distribution channeldistribution channel

Segment MarketingSegment Marketing

Market segment: a group of customers who Market segment: a group of customers who share a similar set of needs or wants.share a similar set of needs or wants.

The marketer’s task: identify the segments The marketer’s task: identify the segments and decide which one(s) to target.and decide which one(s) to target.

Flexible Market offerings : 1.Naked solution Flexible Market offerings : 1.Naked solution (basic value offerings), 2. Discretionary (basic value offerings), 2. Discretionary options (added value offerings dependent options (added value offerings dependent upon the specific customer) upon the specific customer) 

Segment MarketingSegment Marketing

ProsPros More fine-tuned product or service More fine-tuned product or service

and appropriate price.and appropriate price.

More easily select the best More easily select the best distribution and communications distribution and communications channel.channel.

Clear picture of the competitors.Clear picture of the competitors.

Niche MarketingNiche Marketing

Niche: a more narrowly defined customer Niche: a more narrowly defined customer group seeking a distinctive mix of group seeking a distinctive mix of benefits.benefits.

Determine the attractiveness of a nicheDetermine the attractiveness of a niche Distinct set of needsDistinct set of needs PremiumPremium Size, profit and growth potentialSize, profit and growth potential CompetitorsCompetitors SpecializationSpecialization

Local MarketingLocal Marketing

The marketing programs are tailored to the The marketing programs are tailored to the needs and wants of local customer groups.needs and wants of local customer groups.

Local marketing is particularly important in Local marketing is particularly important in countries with strong regional differences, countries with strong regional differences, ex. India, China. E.g.Movies, matrimony.ex. India, China. E.g.Movies, matrimony.

ConsCons Reduce economics of scaleReduce economics of scale Logistical problemsLogistical problems Dilute a brand’s overall imageDilute a brand’s overall image

Individual MarketingIndividual Marketing

It leads to “segments of one”, “customized It leads to “segments of one”, “customized marketing” or “one to one marketing”.marketing” or “one to one marketing”.

Choice board Choice board :Online system to design products:Online system to design productsMass-customization: Mass-customization: (Collaborative (Collaborative

customization, Adaptive customization, Transparent customization, Adaptive customization, Transparent customization & cosmetic customization)customization & cosmetic customization)

Ex. Asian paints, Kansai Nerolac, Berger paints etc.Ex. Asian paints, Kansai Nerolac, Berger paints etc.

Market SegmentationMarket Segmentation

Market Segmentation is the process of identifying group of buyers with different buying desires or preferences.

There may be three basic market preferences:

1. Homogeneous- same preferences, No natural segments

2. Diffused - 3. Clustered

Basic Market-Preference PatternsBasic Market-Preference PatternsBasic Market-Preference PatternsBasic Market-Preference Patterns

(a) Homogeneous(a) Homogeneouspreferencespreferences

SweetnessSweetness

Cre

am

iness

Cre

am

iness

(c) Clustered(c) Clusteredpreferencespreferences

Cre

am

iness

Cre

am

iness

SweetnessSweetness

(b) Diffused(b) Diffusedpreferencespreferences

Cre

am

iness

Cre

am

iness

SweetnessSweetness

Top-down and Bottom -upTop-down and Bottom -up

George Day (1980) describes model of George Day (1980) describes model of segmentation as segmentation as

Top-down approachTop-down approach: : start with the total start with the total population and divide it into population and divide it into segmentssegments. .

Bottom-up approachBottom-up approach. . In this approach, In this approach, start with a single customer and build start with a single customer and build on that profile. on that profile.

Similar to Database marketing Similar to Database marketing

ADVANTAGES OF MARKET ADVANTAGES OF MARKET SEGMENTATIONSEGMENTATION

It improves a company’s understanding It improves a company’s understanding of why consumers do or do not buy of why consumers do or do not buy certain products. certain products.

Information gained from segmentation Information gained from segmentation allows the organization to plan a allows the organization to plan a systematic and systematic and effective marketing effective marketing programme programme to satisfy the consumer to satisfy the consumer needs.needs.

Better Better assessment of the strengths and assessment of the strengths and weaknesses weaknesses of the competition.of the competition.

Better Better allocation of marketing resources.allocation of marketing resources.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

ActionableActionable

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

• Segments must respond differently to

different marketing mix elements & actions.

Product must be able to attract and

serve the segments .

Effective SegmentationEffective SegmentationEffective SegmentationEffective Segmentation

Bases for Segmenting Bases for Segmenting Consumer MarketsConsumer Markets

Bases for Segmenting Bases for Segmenting Consumer MarketsConsumer Markets

Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or Metro

Size, Density, Rural & semi-urban areas

DemographicAge, Gender, Family size and life cycle, Race, Occupation, or Income ...

Lifestyle or Personality traits , values

Psychographic

BASIS OF SEGMENTATIONBASIS OF SEGMENTATION

CONSUMER CHARACTERISTICSCONSUMER CHARACTERISTICS

1. Geographic: 1. Geographic: ( Region, city, rural and semi-urban ( Region, city, rural and semi-urban areas )areas )

2. Demographic: 2. Demographic: (Age, life cycle stage, generation, (Age, life cycle stage, generation, family size, gender, income, occupation, family size, gender, income, occupation, education, socio-economic classification )education, socio-economic classification )

3. Psychographic: 3. Psychographic: ( life style, ( life style, psychological/personality traits, values)psychological/personality traits, values)

CONSUMER RESPONSESCONSUMER RESPONSES

4. Behavioral Segments: 4. Behavioral Segments: (Buyer readiness stage, (Buyer readiness stage, Benefits sought, Usage rate, Attitude, Loyalty, Benefits sought, Usage rate, Attitude, Loyalty, Occasions, User status)Occasions, User status)

Geographic SegmentationGeographic Segmentation

The market is The market is divided by location. divided by location. The strategy is that The strategy is that people who live in people who live in the same area have the same area have similar needs, similar needs, wants, and that wants, and that these needs and these needs and wants differ from wants differ from those of people those of people living in other area.living in other area.

Demographic SegmentationDemographic Segmentation

Demographic Demographic characteristics, characteristics, such as age, sex, such as age, sex, marital status, marital status, income, income, occupation, and occupation, and education are education are most often used most often used as the basis for as the basis for market market segmentation.segmentation.

Psychological SegmentationPsychological Segmentation

The buyers are The buyers are divided into divided into different groups different groups on the basis of on the basis of psychological ,perpsychological ,personality traits, sonality traits, lifestyle or values.lifestyle or values.

Sociocultural SegmentationSociocultural Segmentation

Sociocultural Sociocultural variables such as variables such as family life cycle, family life cycle, social class, core social class, core cultural values, cultural values, sub-cultural sub-cultural memberships and memberships and cross-cultural cross-cultural affiliation can be affiliation can be used for used for segmentation.segmentation.

Use-Related SegmentationUse-Related Segmentation

The market can The market can be segmented be segmented on the basis of on the basis of product, service, product, service, or brand or brand usageusage characteristics, characteristics, such as usage such as usage rate, awareness rate, awareness status, and status, and degree of brand degree of brand loyalty.loyalty.

Use-Situation SegmentationUse-Situation Segmentation

Marketers recognize Marketers recognize that the occasion or that the occasion or situation often situation often determines what determines what consumers will consumers will purchase or purchase or consume. For this consume. For this reason, they reason, they sometimes focus on sometimes focus on the usage situation the usage situation for segmentationfor segmentation

Benefit SegmentationBenefit Segmentation

Consumers Consumers search for search for

benefits such benefits such as as

convenience, convenience, prestige, prestige, economy, economy, value-for-value-for-

money etc. money etc.

Based on the Based on the benefits ,the benefits ,the

market can be market can be segmentedsegmented

Hybrid SegmentationHybrid Segmentation

Marketers are Marketers are increasingly increasingly segmenting segmenting markets by markets by combining several combining several segmentation segmentation variables rather variables rather than relying on a than relying on a single single segmentation base.segmentation base.

Segmenting Business MarketsSegmenting Business Markets

DemographicDemographic

• Industry: Which industries should we serve?Industry: Which industries should we serve?• Company size: What size companies should Company size: What size companies should

we serve?we serve?• Location: What geographical areas should Location: What geographical areas should

we serve?we serve?

Operating VariablesOperating Variables

• Technology: What customer technologies Technology: What customer technologies should we focus on?should we focus on?

• User or nonuser status: Should we serve User or nonuser status: Should we serve heavy users, medium users, light users, or heavy users, medium users, light users, or nonusers?nonusers?

• Customer capabilities: Should we serve Customer capabilities: Should we serve customers needing many or few services?customers needing many or few services?

Purchasing ApproachesPurchasing Approaches

• Purchasing-function organization: Purchasing-function organization: Should we serve companies with Should we serve companies with highly centralized or decentralized highly centralized or decentralized purchasing organizations?purchasing organizations?

• Power structure: Should we serve Power structure: Should we serve companies that are engineeringcompanies that are engineering

dominated, financially dominated, and dominated, financially dominated, and so on?so on?

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 Business MarketsSegmenting Business Markets

Segmenting International MarketsSegmenting International Markets

Geographic segmentationGeographic segmentation Location or regionLocation or region

Economic factorsEconomic factors Population income or level of economic Population income or level of economic

developmentdevelopment Political and legal factorsPolitical and legal factors

Type / stability of government, monetary Type / stability of government, monetary regulations, amount of bureaucracy, etcregulations, amount of bureaucracy, etc..

Cultural factorsCultural factors Language, religion, values, attitudes, Language, religion, values, attitudes,

customs, behavioral patternscustoms, behavioral patterns

TARGET MARKETINGTARGET MARKETING

It consists of a set of buyers who It consists of a set of buyers who share common needs or share common needs or characteristics that the company characteristics that the company decides to servedecides to serve

TARGET MARKETINGTARGET MARKETING

Evaluating Market SegmentsEvaluating Market SegmentsFirms must look at two factors:Firms must look at two factors: Company objectives and resourcesCompany objectives and resources Structural AttractivenessStructural Attractiveness

. Level of competition. Level of competition

. Power of Buyers. Power of Buyers

. Power of suppliers. Power of suppliers

. Substitutes. Substitutes

. Potential entrants . Potential entrants

Structural attractivenessStructural attractiveness

Industry Competitors(Segment Rivalry)

Buyers ( Buyers power)

Suppliers (Supplier Power)

Potential Entrants (Threat of mobility)

Substitutes (Threat of substitutes)

TARGET MARKETINGTARGET MARKETING

Selecting Target Market SegmentsSelecting Target Market Segments Undifferentiated (mass) marketingUndifferentiated (mass) marketing Differentiated (segmented) Differentiated (segmented)

marketingmarketing Concentrated (niche) marketingConcentrated (niche) marketing Micromarketing (local or individual)Micromarketing (local or individual)

Five Patterns of Target Market SelectionFive Patterns of Target Market SelectionFive Patterns of Target Market SelectionFive Patterns of Target Market Selection

Single-segmentSingle-segmentconcentrationconcentration

ProductProductspecializationspecializationM1 M2 M3

P1

P2

P3

SelectiveSelectivespecializationspecializationM1 M2 M3

P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecializationM1 M2 M3

P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM = MarketM = Market

Single-segment strategy or Single-segment strategy or concentration strategyconcentration strategy

- Involves selecting one segment from within the total Involves selecting one segment from within the total market as the target marketmarket as the target market

- One marketing-mix is developed to reach this single One marketing-mix is developed to reach this single segmentsegment

- A single-segment strategy enables a seller to A single-segment strategy enables a seller to penetrate one market in depth and to acquire a penetrate one market in depth and to acquire a reputation as a specialist or an expert in this limited reputation as a specialist or an expert in this limited marketmarket

- Niche marketing and niche marketsNiche marketing and niche markets- A single-segment strategy can often be initiated with A single-segment strategy can often be initiated with

limited resourceslimited resources- However, single-segment strategies can be riskyHowever, single-segment strategies can be risky

Multi-segment StrategyMulti-segment Strategy

- Two or more different groups of Two or more different groups of potential customers are identified as potential customers are identified as target marketstarget markets

- A separate marketing mix is A separate marketing mix is developed to reach each targeted developed to reach each targeted segmentsegment

SEGMENT-BY-SEGMENT INVASION PLANSEGMENT-BY-SEGMENT INVASION PLANSEGMENT-BY-SEGMENT INVASION PLANSEGMENT-BY-SEGMENT INVASION PLAN

Goods transport Goods transport LargeLarge

computerscomputers

Pro

du

ct

Vari

eti

es

Pro

du

ct

Vari

eti

es

PersonalPersonalcomputerscomputers

Mid-sizeMid-sizecomputerscomputers

Company BCompany B Company CCompany CCompany ACompany A

Airlines Airlines Passenger transport Passenger transport

Customer GroupsCustomer Groups

FACTORS CONSIDERED IMPORTANT IN THE FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGYSELECTION OF TARGET MARKET STRATEGY

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

Designing the company’s

offering and image to occupy

a distinctive place in the minds of

the target market.

POSITIONINGPOSITIONING

Positioning:Positioning: The place the product occupies in The place the product occupies in

consumers’ minds relative to consumers’ minds relative to competing products.competing products.

Typically defined by consumers on Typically defined by consumers on the basis of important attributes.the basis of important attributes.

Involves implementing the brand’s Involves implementing the brand’s unique benefits and differentiation unique benefits and differentiation in the customer’s mind.in the customer’s mind.

Positioning maps that plot Positioning maps that plot perceptions of brands are perceptions of brands are commonly used.commonly used.

Competitive Frame of ReferenceCompetitive Frame of Reference

The competitive frame of reference defines the associations that consumers use to evaluate points of parity and points of difference.

The frame of reference often includes other brands in the same category, but could also include brands in other related categories. Ie to determines category membership.

To determine proper competitive frame of reference, marketers need to understand consumer behavior & consideration sets consumers use in making brand choices

Defining AssociationsDefining Associations

Points-of-difference (PODs)- Points-of-difference (PODs)- are attributes are attributes consumers strongly associated with a consumers strongly associated with a brand, positively evaluate, and brand, positively evaluate, and believe they could not find to the believe they could not find to the same extent with a competitive same extent with a competitive brand. Ex. Apple ( design), Nikes brand. Ex. Apple ( design), Nikes (Performance),Lexus (Quality)(Performance),Lexus (Quality)

Points-of-parity (POPs)-Points-of-parity (POPs)-are associations that are associations that are not necessarily unique to the are not necessarily unique to the brand but may in fact be shared with brand but may in fact be shared with other brands.other brands.

Category points-of-parity- essential Category points-of-parity- essential attributes represents necessary but attributes represents necessary but not sufficient.not sufficient.

Competitive points-of-parity- Competitive points-of-parity- Designed to negate competitor’s Designed to negate competitor’s points of difference.points of difference.

POD (Point of Difference)POD (Point of Difference)

POD (Point of Difference) POD (Point of Difference) Strong, favorable, unique brand Strong, favorable, unique brand

associations associations May be any kind of attribute or May be any kind of attribute or

benefit benefit Two types of Two types of PODsPODs Attribute Based Attribute Based

Functional, performance related Functional, performance related differences differences

Image Based Image Based Affective, experiential, brand Affective, experiential, brand

image related differencesimage related differences

POP (Point of Parity)POP (Point of Parity)

For an offering to achieve a POP on a For an offering to achieve a POP on a particular attribute or benefit, a particular attribute or benefit, a sufficient number of consumers must sufficient number of consumers must believe the brand is ‘good enough’ on believe the brand is ‘good enough’ on that dimension.that dimension.

There is a zone or range of tolerance There is a zone or range of tolerance or acceptance with POP. The brand or acceptance with POP. The brand does not literally need to be seen as does not literally need to be seen as equal to competitors, but consumers equal to competitors, but consumers must feel that the brand does well must feel that the brand does well enough on that particular attribute or enough on that particular attribute or benefit.benefit.

    

Consumer Desirability CriteriaConsumer Desirability Criteria

RelevanceRelevance

DistinctivenessDistinctiveness

BelievabilityBelievability

Deliverability Criteria for PODsDeliverability Criteria for PODs

FeasibilityFeasibility

CommunicabilityCommunicability

SustainabilitySustainability

Important considerations in choosing Points of Difference (PODs)

(1) PODs are desirable by the customer - Relevant and important to the customer – e.g. price of HP Laptop - Distinctiveness – Service backup is not a

common featureof all foreign made laptops in India - Believable – HP has been in the

electronic business fordecades

(2) PODs are deliverable to the customer

- Feasibility – HP has the required organization to make the service deliverable and the required technology to offer a value for money product

- Communicability- HPs products are not known as very

expensive - Sustainable- HP has the required R&D to continue

making product upgrades

POSITIONING STRATEGIESPOSITIONING STRATEGIES

Competitive advantages- it is ability of Competitive advantages- it is ability of company’s to perform in one or more company’s to perform in one or more ways that competitors can not or will ways that competitors can not or will not match.not match.Differentiation strategies can be based on

Products Services Channels People Image

Product DifferentiationProduct Differentiation Form- Form- size, shape or physical structuresize, shape or physical structure

Features- Features- supplement to basic functionsupplement to basic function..

Performance Quality-Performance Quality-the level at which the level at which the product’s primary characteristics the product’s primary characteristics operates.operates.

Conformance Quality- Conformance Quality- the degree to which the degree to which all the produced units are identical all the produced units are identical and meet the promised and meet the promised specificationsspecifications..

Durability-Durability- a measure of the product’s a measure of the product’s expected operating life under natural expected operating life under natural or stressful conditionsor stressful conditions..

Reliability- Reliability- a measure of the probability a measure of the probability that a product will not malfunction that a product will not malfunction within a specified time periodwithin a specified time period..

Reparability- Reparability- a measure of the ease of a measure of the ease of fixing a product when it failsfixing a product when it fails

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 Image is the way the public perceives the company or its products.the 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 behaviorEvents and employee behavior

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 :

ImportantImportant : The difference delivers a highly : The difference delivers a highly valued benefit to a sufficient numbers of valued benefit to a sufficient numbers of buyers.buyers.

DistinctiveDistinctive : The difference is delivered in a : The difference is delivered in a distinctive way. distinctive way.

Developing and communicating a Developing and communicating a positioning strategypositioning strategy

Superior : Superior : The difference is superior to The difference is superior to other ways of obtaining the benefitother ways of obtaining the benefit..

Preemptive : Preemptive : The difference cannot be The difference cannot be easily copied by competitorseasily copied by competitors..

Affordable : Affordable : The buyer can afford to pay The buyer can afford to pay for the difference.for the difference.

Profitable : Profitable : The company will find it The company will find it profitable to introduce the difference. profitable to introduce the difference.

References:References:

Books: Books: Marketing Management- Marketing Management- 1313thth Edition, Edition,

A south Asian Perspective….Written A south Asian Perspective….Written By..Mr.Philip Kotler,Mr.Kevin Lane By..Mr.Philip Kotler,Mr.Kevin Lane Keller,Mr.Abraham Keller,Mr.Abraham Koshy,Mr.Mithileshwar Jha.Koshy,Mr.Mithileshwar Jha.

THANK YOUTHANK YOU