I. Market Segmentation, TARGETING &

Marketing Management-1
SEGMENTATION,
SEGMENTATION
TARGETING &
POSITIONING
Market Segmentation
Market Segmentation is the process of sub-

dividing of customers into homogenous sub-
sets having similar needs, wants, or demand
characteristics and can be reached with
distinct Marketing Mix.
MM 2016/STP, Demand Forecasting 2

Narrowing down to Focus on a Target Market
Broad generic market
Broad product market
Specific market
segment(s)
Target
Segment(s)
Examples of Generic Markets, Relevant Customer
Needs, and Specific Product-Markets
Relevant
Relevant product-
product- Some
Some specific
specific
Generic
Generic markets
markets types
types for
for some
some brands
brands within
within
and
and potential
potential needs
needs broad
broad product-
product- narrower
narrower
markets
markets submarkets
submarkets
1. Need for 1. Train, Car model

transportatio 2. Automobile
n
3. -Photography, Kodak, Nikon
2. Capture
images
MM 2016/STP, Demand Forecasting
4
Evaluating Market Segments
Homogeneous Heterogeneous
Within Between
Criteria
Criteria for
for
Good
Good
Segments
Segments
Substantial Operational

Requirements for Effective Segmentation
A good market segment must be:
1. Measurable
The size, purchasing power, and profiles
of the segments

2. Accessible
The market can be effectively reached
and served

3. Substantial
The markets are large and profitable
enough to serve

4. Differentiable
The markets are distinguishable and
respond differently to marketing mix
elements and programs

5. Actionable
Effective programs can be designed for
attracting and serving the segments

Segmentation Dimensions for Consumer Markets

Demographic Segmentation
The most popular segmentation method because

consumer needs, wants, and usage often vary closely
with demographic variables and are easier to measure
than other types of variables

Age and life-cycle stage Segmentation
The process of offering different products or using

different marketing approaches for different age
and life-cycle groups

Psychographic Segmentation
Divides buyers into different groups based on:
Social class
Lifestyle, or
Personality traits

Behavioral Segmentation
Divides buyers into groups based on their knowledge,
attitudes, uses, or responses to a product
Occasion
Benefits sought
User status
Usage rate
Loyalty status

Other Segmentation Methods
Occasion segmentation
Divides buyers into groups according to occasions when
they get the idea to buy, actually make purchases, or
respond to a product
Benefit segmentation
Finding the major benefits people look for in the product
class, the kinds of people who look for each benefit, and
the major brands that deliver each benefit

User status divides buyers into ex-users,

potential users, first-time users, and regular
users of a product
Usage rate divides buyers into light, medium,

and heavy product users
Loyalty status divides buyers into groups

according to their degree of loyalty

Multiple segmentation
is used to identify smaller, better-defined target
groups
Geo-demographic segmentation
is an example of multivariable segmentation
that divides groups into consumer lifestyle
patterns

Segmenting International Markets
Geographic location
Economic factors
Political and legal factors
Cultural factors

Segmenting International Markets
Inter-market segmentation divides consumers
into groups with similar needs and buying
behaviors even though they are located in
different countries

Segmentation Dimensions for
Business/Organizational Markets
Kind of
Relationship
Purchasing
Type of
Method
Customer
Possible
Segmentation
Dimensions
Buying Situation Demographics
Product Use

Segmenting Product Markets
Name Broad Product-

Market
List Customer Needs
Narrow Product-Markets
Identify
Determining Dimensions
Name Possible
Process Market segments
for
Segmenting Evaluate Segments
Product-Markets
Estimate
EstimateSize
Size
SEGMENTING, TARGETING & POSITIONING
TARGETING

1. Segment size and growth

Smaller versus larger segments
Growth potential

2. Segment structural attractiveness

Competition
Substitute products
Power of buyers
Power of suppliers

3. Company objectives and resources

Competitive advantage
Availability of resources
Consistent with company objectives

FOUR GENERAL
GUIDELINES IN TARGETING:
Target markets should be compatible with the
organizations goals and images.
The market opportunity must match the companys
resources.
The company should seek markets that will
generate profits.
Markets should be sought where the number and
size of competitors are minimal.

STEPS IN THE SEGMENTATION-TARGETING PROCESS

The Competitive Environment
Competitor Competitive
analysis rivals
Key Areas
to Consider
Competitive
barriers
29
MM 2016/STP, Demand Forecasting
Targeting
Undifferentiated targeting
Multi-segment targeting
Concentrated targeting
Niche Marketing
Micro-Marketing :
Treating each customer as a different segment

Socially Responsible Target Marketing
Benefits customers with specific needs
Concern for vulnerable segments

Children
Alcohol
Cigarettes
Drugs

Choosing a Targeting Strategy
Depends on:
Company resources
Product variability
Product life-cycle stage
Market variability
Competitors marketing strategies

Developing Market-Oriented
Strategies in Broad Product-Markets
Single Target
Market Approach
The
Strategy
This approach segments The segmenter here

the market and picks one aims at one
of the homogeneous
segments as the firm's submarket with
target market. one marketing mix.

Single Target Multiple Target

Market Approach Market Approach
Strategy
1
This approach segments the market

and chooses two or more Strategy
segments as the firm's target market. 3
The segmenter here aims at two or
more submarkets with a different
marketing mix for each. Strategy
2

Single Target Multiple Target Combined Target

Market Approach Market Approach Market Approach
The Strategy
The marketer here aims This approach combines
two or more submarkets into
at two submarkets with a larger target market as a
one marketing mix. basis for one strategy.

Market Aggregation
The marketing of standardized goods and

services to a large population of people that have
similar needs.
Another name for market aggregation is "mass

marketing," a strategy that treats all customers as
a single group that is handled homogeneously.

Market Aggregation
Market aggregation reduces production and
marketing costs, thereby reducing costs to
consumers.
Product differentiation by branding
Mass Marketing
Compare with
Undifferentiated marketing
Mass Customization

Aggregation of Demand
Analyzing historical purchasing data to provide the
management information necessary to assess purchasing
practices and trends
Drawing together information on common or similar

current or future requirements within an organization, and
with other organizations
Assessing the potential for collaborating with other business

units within an organization, or with other organizations, and
agreeing to present these requirements in a coordinated way
to the market.
Product Positioning
The decisions and activities that create and

maintain a certain concept of the firms
products in customers minds.

Positioning
Positioning is the perception or the image that
customers have of the company and its products
Responsibility of the company to manage its
customers perceptions
Every fact and act of the company shapes
customer perceptions directly or indirectly
Company should evaluate every activity in terms
of its role in creating positive customer
perceptions

Positioning
Communicating the differential advantage to
customers
Product differentiation
Promotional differentiation
Distribution differentiation
Price differentiation

CRITERIA FOR SUCCESSFUL POSITIONING
Clarity
Consistency
Credibility
Competitiveness

COMMON POSITIONING STRATEGIES IN THE
CONSUMER DURABLE SECTOR
Benefit or use positioning:

The positioning strategies adopted by consumer
durable companies depend a lot on usage,
economy and corporate identity of which a well
established brand surely projects the identity of
the product in terms of which corporate house the
product is from

Competitor related positioning:
This is the strategy of placing a firms brand next
to the leader in the market and trying to uproot it
on a specific tangible variable
Lifestyle positioning:
A firm could even position the brand as a lifestyle
contemporary or futuristic.

Positioning by Corporate Identity:
This type of positing is seen very much with

consumer durables when a tried and trusted
corporate identity

Surrogate positioning:
Here the product cant be positioned differently
on the basis of attributes but differentiated by
positioning them on the surrogates for the
attributes.
The two most popular surrogates are nonpareil (our product is simply
the best available, no features or benefits cited) and parentage (our
product is good because it was designed by the designers or producers
of product X)

Sine qua non of Positioning
o
Precision,
o
Defined Target audience,
o
Differentiate,
o
Reflect organizational values,
o
Address customer needs,
o
Specific,
o
Ability to deliver the promise/s

REPOSITIONING
Same product and target market, change

in the image of the product
Product repositioning
Intangible repositioning
Tangible repositioning
Chandrika Soap from skin cure to skin care

Four Major Positioning Errors
1. Under positioning
consumers have only a vague idea of the brand.
2. Over positioning
consumers have too narrow a view of the brand.
3. Confused Positioning
consumers confused about the brand due to frequent
changes or too many claims.
4. Doubtful Positioning
consumers dont believe the brands claims

Product Space Positioning for Bar Soaps
High moisturizing
Dove
Lux
Nondeodorant Deodorant
Lifebuoy
Low moisturizing
Product Space Positioning for Tooth Paste
High/Low:
Whitening
Foaming
Mouth Freshening
MM 2016/STP, Demand Forecasting Medicinal 51
Demand Forecasting

DEMAND FORECASTING AND
ESTIMATING SALES OF A PRODUCT
A sales forecast is an estimate of probable sales for

one companys brand of the product during a stated
time period in a specific market segment and
assuming the use of a predetermined marketing plan.
Planning and scheduling production

Acquiring inputs
Making provision for finances
Formulating pricing strategy
Planning advertisement

DEMAND FORECASTING AND
ESTIMATING SALES OF A PRODUCT
A sales forecast
- Is based on a specific marketing plan.
Can be expressed in Rupees or product units.

Normally prepared after market potential and sales
potential have been estimated.
Normally made on annual basis.
Marketing goals and broad strategies must be established
before a sales forecast is made.
A key controlling factor in all operational planning
throughout the company.

TWO BASIC PROCEDURES USED TO
FORECAST SALES ..1
A top-down approach in which management:

Develops a forecast of economic conditions and industry
trends.
Determines the market potential for a product.
Determines the sales potential for the product.
Measures the share of this market the firm is currently
getting or plans to capture.
Forecasts the firms sales of the product.

TWO BASIC PROCEDURES USED TO
FORECAST SALES ..2
A bottom-up approach in which management:

Generates estimates of future demand from
customers or the companys salespeople.
Combines the estimates to get a total forecast.
Adjusts the forecast based on managerial insights
into the industry, competition, and general
economic trends.

Demand Forecasting Techniques
Market-factor analysis
Demand for a product is assumed to be related to the

behavior of certain sales activity.

Survey of buyer intentions
A sample of current or potential customers are asked

how much of a particular product they would buy
at a given price during a specified future time
period.

Test marketing
A firm markets its product in a limited geographic area,

measures sales, and then projects the companys sales
over a larger area.

Past sales and trend analysis
A flat percentage increase is applied to the volume

achieved last year or to the average volume of the
past few years.

Sales-force composite
A bottom-up method consisting of collecting

estimates of sales for the future period from all
salespeople.

Executive judgment
Obtaining opinions regarding future sales volume

from one or more executives.

Delphi Method
Expert opinions collected independently and analyzed

Survey Methods
Consumer Survey:
Opinion Poll Methods
Direct Interview
Complete Sample End-Use

Enumeration Survey method Expert Market Studies &
opinion Experiments
Sample Survey Delphi Market

Laboratory Tests
Method Method Test

Statistical Methods
Trend Barometric Econometric

Projection Methods Method
Lead-Lag Diffusion
indicators indices
Regression Simultaneous
Methods Equations
Simple: Bivariate Multivariate
Graphical Trend fitting or least Box- Jenkins

Method Square method Method
Demand Forecasting

The External Environment Affects Marketing Opportunities
Cultural
Culturaland
andsocial
social Economic
Economic
Dimensions
of the
External
Environment
Political Technology
Technology
& Legal
Environmental
Environmental

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Marketing Management-1

Market Segmentation is the process of sub-

MM 2016/STP, Demand Forecasting 2

Broad generic market

Broad product market

1. Need for 1. Train, Car model

MM 2016/STP, Demand Forecasting

MM 2016/STP, Demand Forecasting 5

MM 2016/STP, Demand Forecasting 6

MM 2016/STP, Demand Forecasting 7

MM 2016/STP, Demand Forecasting 8

MM 2016/STP, Demand Forecasting 9

MM 2016/STP, Demand Forecasting 10

MM 2016/STP, Demand Forecasting 11

The most popular segmentation method because

MM 2016/STP, Demand Forecasting 12

The process of offering different products or using

MM 2016/STP, Demand Forecasting 13

Divides buyers into different groups based on:

MM 2016/STP, Demand Forecasting 14

MM 2016/STP, Demand Forecasting 15

MM 2016/STP, Demand Forecasting 16

User status divides buyers into ex-users,

Usage rate divides buyers into light, medium,

Loyalty status divides buyers into groups

MM 2016/STP, Demand Forecasting 17

MM 2016/STP, Demand Forecasting 18

MM 2016/STP, Demand Forecasting 19

MM 2016/STP, Demand Forecasting 20

MM 2016/STP, Demand Forecasting 21

Name Broad Product-

List Customer Needs

MM 2016/STP, Demand Forecasting 23

1. Segment size and growth

MM 2016/STP, Demand Forecasting 24

2. Segment structural attractiveness

MM 2016/STP, Demand Forecasting 25

3. Company objectives and resources

MM 2016/STP, Demand Forecasting 26

MM 2016/STP, Demand Forecasting 27

MM 2016/STP, Demand Forecasting 28

MM 2016/STP, Demand Forecasting 30

Benefits customers with specific needs

Concern for vulnerable segments

MM 2016/STP, Demand Forecasting 31

MM 2016/STP, Demand Forecasting 32

This approach segments The segmenter here

MM 2016/STP, Demand Forecasting 33

Single Target Multiple Target

This approach segments the market

MM 2016/STP, Demand Forecasting 34

Single Target Multiple Target Combined Target

MM 2016/STP, Demand Forecasting 35

The marketing of standardized goods and

Another name for market aggregation is "mass

MM 2016/STP, Demand Forecasting 36

Product differentiation by branding

MM 2016/STP, Demand Forecasting 37

Drawing together information on common or similar

Assessing the potential for collaborating with other business

The decisions and activities that create and

MM 2016/STP, Demand Forecasting 39

MM 2016/STP, Demand Forecasting 40

MM 2016/STP, Demand Forecasting 41

I. Market Segmentation, TARGETING &

I. Market Segmentation, TARGETING &