Segmentation, Targeting, & Positioning

Market Segmentation

Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviours, who might require separate products or marketing mixes The key is their response to a different marketing mix If all consumers respond the same way, then there should be no need to segment a market

Market Segmentation
Best to use multiple approaches in order to identify smaller, better-defined target groups.

Start with a single base and then expand to other bases.

Bases for Segmenting Consumer Markets

Behavioral Segmentation

Segments based on actual behavior or product usage Segments based on demographic factors (e.g., gender, age, income, education, etc.) Segments based on state-of-mind issues (e.g., motives, attitudes, opinions, values, lifestyles, interests, personality, etc.) Segments based on geographic location

Demographic Segmentation

Psychographic Segmentation

Geographic Segmentation

Market Segmentation Variables

Geographic: dividing a market into different geographical units, such as national, regional, local, city size, density of population, and climate Demographic: dividing the market into groups based on demographic variables such as age,gender, family size/ life cycle, income, occupation, education, religion, and ethnic origin

Psychographic: dividing a market into different groups based on social class, lifestyle, or personality characteristics Behavioural: dividing a market into groups based on purchase occasion, benefits sought, user status, usage rate, loyalty status, readiness state, and attitude towards the product

Market Segmentation

Demographic:

Age, gender, family size, income, occupation, etc. The most popular bases for segmenting customer groups. Easier to measure than most other types of variables.

Market Segmentation
Age and Life-Cycle Stage

Example: P&G has different toothpastes for different age groups. Avoid stereotypes in promotions Promote positive messages

Market Segmentation
Gender

Women make 90% of home improvement decisions. Women influence 80% of all household consumer purchases.

Market Segmentation

Income
Identifies and targets the affluent for luxury goods. People with low annual incomes can be a lucrative market. Some manufacturers have different grades of products for different markets.

Market Segmentation
Psychographic

Social class Lifestyle Personality

Market Segmentation
Behavioral

Occasions:
Special promotions and labels for holidays.

(e.g.,Tour and travel packages for summer vacations)

(e.g., Kodak disposable cameras)

Special products for special occasions.

Market Segmentation
Behavioral

Benefits Sought:
Different segments desire different benefits from products.

(e.g., P&Gs multiple brands of laundry detergents to satisfy different needs in the product category)

Market Segmentation

Behavioral

User Status: Nonusers, ex-users, potential users, first-time users, regular users Usage Rate: Light, medium, heavy Loyalty Status: Brands, stores, companies

Market Segmentation
Geographic:

World region or country Region of country City or metro size Density or climate New term - Geodemography

Effective Segmentation
To be useful, market segments must be: Measurable: size, purchasing power, and profile Accessible: can be reached and served Substantial: large enough to profitably serve Differentiable: respond differently to a marketing mix Actionable: effective programs can be designed Segments should be evaluated for: Size Growth characteristics Structural attractiveness Compatibility with company objectives and resources

Market Segmentation Strategies

Traditional Approaches to Market Segmentation

Mass Marketing Differentiated Marketing

Multi

segment Approach Market Concentration Approach

Niche Marketing Micro segment marketing

Selecting Market Segments

Undifferentiated marketing
Company Marketing Mix Market

Differentiated marketing
Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3

Concentrated marketing
Segment 1 Segment 2 Segment 3 2004 Pearson Education Canada Figure 7-3 Inc.

Company Marketing Mix

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Mass Marketing Strategy

Multisegment Strategy

Market Concentration Strategy

Niche Marketing Strategy

Micromarketing

Tailoring products and marketing programs to suit the tastes of specific individuals and locations.
Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groupscities, neighborhoods, specific stores. Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

Micro-Market Segmentation
Local marketing: tailoring brands and promotions to the needs and wants of local customer groupscities, neighbourhoods, and even specific stores

Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers

Mass customization: the process of creating customerunique value by designing products and services tailormade to individual needs, on a large scale

Levels of Market Segmentation

Mass marketing
Treats all customers the same

Segment marketing

isolating broad segments & adapting mktg to match 1+ segment

Niche marketing

focusing on sub-segments that may seek a special combination of benefits

Micromarketing

tailoring products & mkt programs to specific individuals & local groups

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2004 Pearson Education Canada Inc.

Evaluating Market Segments

Segment Size and Growth

Analyze current segment sales, growth rates, and expected profitability.

Segment Structural Attractiveness

Consider effects of: competitors, existence of substitute products, and the power of buyers & suppliers.

Company Objectives and Resources

Examine company skills & resources needed to succeed in that segment. Offer superior value & gain advantages over competitors.

Segmenting Business Markets

Consumer and business marketers use many of the same variables to segment their markets. Business buyers can be segmented geographically or by benefits sought, user status, usage rate, or loyalty status. Additional variables unique to this market would be:

business customer demographics (industry, company size) operating characteristics purchasing approaches situational factors, and personal characteristics.

Segmenting Business Markets

Consumer and business markets use many of the same variables for segmentation. Business marketers can also use:
Operating Characteristics Purchasing Approaches Situational Factors Personal Characteristics

Bases for Segmenting Business Markets

Type of Organization Organizational Characteristics Benefits Sought or Buying Processes Personal and Psychological Relationship Intensity

Segmenting International Markets

Factors Used:
Geographic location Economic factors Political and legal factors Cultural factors

Intermarket Segmentation

Requirements for Effective Segmentation

Measurable Accessible Substantial Differentiable Actionable

Choosing a Market Coverage Strategy

Depends on: Company resources Degree of product variability Product life cycle stage Market viability Competitors marketing strategies

Market Targeting

Market targeting:

Target market: a set of

buyers sharing common needs or characteristics that the company decides to serve May not be the largest segment The segment (s) that the company can most profitably serve

The process of evaluating each market segments attractiveness, and selecting one or more segments to enter

Target Marketing Strategies

Five basic strategies for target market selection:

(1) Single Segment Targeting-McD, Volkswagen (2) Selective Targeting-Radio for youth (3) Mass Market Targeting-IBM, Coca Cola (4) Product Specialization-Maruti (5) Market Specialization-Bengal peerless

Basic Target Marketing Strategies

Socially Responsible Marketing

Smart targeting helps both companies and consumers. Target marketing sometimes generates controversy and concern.
Vulnerable and disadvantaged can be targeted. Cereal, cigarette and fast-food marketers have received criticism. Internet has raised fresh concerns about potential targeting abuses.

Market Positioning

Market positioning:

Product position: the way

the product is defined by consumers on important attributes, relative to competing products The quicker-pickerupper? The uncola? Great taste, less filling?

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products, In the minds of target consumers, Formulating competitive positioning for a product, and creating a detailed marketing mix

Choosing a Positioning Strategy

Differences need to be:

Important Distinctive Superior Communicable Pre-emptive Affordable Profitable choosing one attribute and aggressively promoting itself as being the best on that benefit The full mix of benefits on which a product/brand is positioned

Unique Selling Proposition:

Value Proposition:

Differentiation and Positioning

Relative perception Process of creating favorable relative position:

(1) Identification of target market (2) Determination of needs, wants, preferences and benefits desired (3) Examination of competitors characteristics and positioning (4) Comparison of product offerings with competitors (5) Identification of unique position (6) Development of a marketing program (7) Continual reassessment

Differentiation and Positioning

Differentiation Strategies

Product Descriptors

Product features Advantages Benefits

Customer Support Services Image

Positioning Strategies

Strengthen the Current Position Repositioning Reposition the Competition

Using Product Descriptors for Product Differentiation

Choosing a Positioning Strategy

Identify a set of possible competitive advantages on which to build a position. Choose the right competitive advantages. Select an overall positioning strategy.

Positioning Strategies

Types

Product Positioning Brand positioning Market positioning

Product positioning strategies

1. By attribute or benefit- This is the most frequently used positioning strategy. For a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it might be the mint taste or tartar control.

2. By use or application- The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Apple positions its computers based on how the computer will be used.

3. By user- Facebook is a social networking site used exclusively by college students. Facebook is too cool for MySpace and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs.

4. By product or service class- Margarine competes as an alternative to butter. Margarine is positioned as a lower cost and healthier alternative to butter, while butter provides better taste and wholesome ingredients.

5. By competitor- BMW and Mercedes often compare themselves to each other segmenting the market to just the crme de la crme of the automobile market. Ford and Chevy need not apply.

6. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to believe that their diamonds are of the highest quality, while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices.

Brand positioning

A product can be positioned based on 2 main platforms: The Consumer and The Competitor. When the positioning is on the basis of CONSUMER, the campaigns and messages are always targeted to the consumer himself (the user of the product),Peter England, Louis Philip

On Competitor, Dettol tv commercials concentrate on total p0rotection only given by Dettol and no other product

By product attributes
Ariel cleaning micro systems Colgate preventing cavity and promoting fresh breath Promise broke this claim by having clove differentiating the product Maruti suzuki fuel efficiency and safety Nirma lower price than HUL

Positioning by Use/application

Surf excel hai na! Clinic all clear dare to wear black

By product class

Airlines as against trains or buses Music CDs with cassettes industry

By product user

Motorola mobile http://drypen.in/branding/brand-positioningstrategies.html In google positioning strategies : keywords

Fundamental Positioning Themes

Benefit Positioning User Positioning Competitive Positioning

Positioning for Competitive Advantage

Products position is the way the product is defined by consumers on important attributes. The place the product occupies in consumers minds relative to competing products.

Positioning for Competitive Advantage

Competitive advantage: an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Three Important Steps:

Identifying a set of possibly competitive advantages upon which to build a position Choosing the right competitive advantages Selecting an overall positioning strategy

Identifying Possible Competitive Advantages

Key to winning target customers is to understand their needs better than competitors do and to deliver more value. Competitive advantage extent to which a company can position itself as providing superior value.

Identifying Possible Competitive Advantages

Product differentiation Services differentiation Image differentiation People differentiation

Choosing Right Competitive Advantages

Important Distinctive Superior Communicable Preemptive Affordable Profitable

Communicating and Delivering the Chosen Position

Company must take strong steps to deliver and communicate the desired position to target consumers. The marketing mix efforts must support the positioning strategy. Must monitor and adapt the position over time to match changes in consumer needs and competitors strategies.

Positioning Errors

Under positioning:
Failing to really position the company at all.

Over positioning:
Giving buyers too narrow a picture of the company.

Confused Positioning:
Leaving buyers with a confused image of a company.

Doubtful Positioning:
Finding it hard to believe the brand claims w.r.t products features, or price

Repositioning

Used to revive an ailing brand or fix a lackluster new market entry Advertising themes and positioning can be trendy and become outdated The challenge: Changing perceptions of a brand forged over years of advertising.

Market Segmentation, Targeting, and Positioning

Identify bases for segmenting market Develop profiles of resulting segments Develop measures of segment attractiveness Select the target segment(s) Develop positioning for each segment Develop marketing mix for each segment

Market Segmentation

Market targeting

Market positioning

Figure 7-1