Segmentation, Targeting & Positioning for Competitive Advantage

Prof. Rushen Chahal

Marketing Process Involves

Market orientation as philosophy Market segmentation Targeting market Positioning Marketing mix

Marketing Strategy
Select base for segmentation and identify appropriate market segments. Evaluate and appraise the market segments resulting from the first step. Select an overall market targeting strategy and specific target segments. Tailoring a distinct position in selected markets Developing marketing mixes that serve desired positioning strategy in the marketplace Auditing marketing environments and efforts
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Importance of Segmentation and Targeting

The focus of a successful marketing program is the customer. Effectively marketing must fully understand the needs. Customers with decent life and individualism have Heterogeneous demands, This has given rise to need segmenting. The process of understanding the customer and choosing a group of customer you can serve best is targeting. So target a segmentation is core of the marketing process.

Identify the Total Market

Identify Total Market Effective Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Identify the Total Market

The first step in the target market selection process is to specifically define the total market of all potential customers for a product category.

Segmentation and Effectiveness

Identify Total Market

Effective
Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Segmentation
Segmenting means dividing a heterogeneous demanding markets into homogenous groups based on similar characteristics or traits Heterogeneous demand- different groups of customers have differing needs from specific products. Homogeneous segment- the separation of markets into distinctive groups based on homogeneous characteristics.

Criteria for successful segmentation

Criteria for successful segmentation

Clear differences in consumer preferences for a product must exist.

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Criteria for successful segmentation

Difference preferences for a product must be identifiable and capable of being related to measurable variables.
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Criteria for successful segmentation

The proposed market segment must have enough size and purchasing power to be profitable.

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Criteria for successful segmentation

Companies must be able to respond to difference preferences with an appropriate marketing mix.

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Criteria for successful segmentation

The proposed market segment must be readily accessible and reachable with market programs.

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Determine Bases for Segmentation

Identify Total Market

Effective Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Bases for Segmentation

To divide a market into segments, firms use segmenting criterion that describe the characteristics of each part of the market.

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

Life-cycle

Income Level

Social class Education Ethnic

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base Localizes its marketing efforts to specific geographic regions

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions) Useful but more difficult to identify and measure compared to demographic variables
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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

Markets can be segmented based on the benefits that consumers desire from using a specific product

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

Purchase situation or occasion Physical surroundings Social surroundings Temporal perspective

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

BenefitsBenefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base
Markets can be segmented by how often or how heavily consumers use a specific product
Paretos Principle or 80/20 Principle - 80% of revenue generated by 20% of customers

Light Users 80% Heavy Users 20%

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Segmentation Base

Information for segmenting markets may be obtained from database such as Census, State Statistics, ACORN

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Segmenting Business Markets

While the steps in the target market selection process are essentially the same for business markets, there are three major differences: The purchasing process, which differs greatly from the household consumer market. The use of different segment variables, in simple way, a Standard Industrial classification is often employed

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Segmenting Business Markets

Segmentation variables used to segment business markets: Size Industry Purchasing approaches Product usage Situational factors (seasonal trend) Geographic
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Select Segments for Targeting

Identify Total Market Determine Need for Segmentation Determine Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Targeting
Targeting: choose the specific segment toward which a firm directs its market efforts. Niche Marketing: the process of targeting a small market segment with a specific, specialized marketing mix. Micromarketing- the process of targeting smaller, more narrowly defined market segments. On the individual consumer end of the continuum, a firm may decide to target individual consumers and personalize marketing efforts toward each.
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Target the Mass Market versus the Individual Consumer

Mass Market Niche Micromarketing The Individual

Standardized Marketing Mix

Niche

Micromarketing

Personalization

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Advantage of Targeting Efforts

Cannot effectively serve all the segments, must target marketing efforts to a segment or segments. Marketing opportunities and unfilled gaps are more accurately identified Marketing mix is more delicately meet toe potential customer s needs Offer the greatest potential to achieve profit or relationship goals

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Targeting Strategy

1.Undifferentiated marketing 2.Differentiated marketing 3.Concentrated marketing 4.Custom marketing

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Targeting Strategy
Undifferentiated targeting strategy

Concentrated strategy Differentiated strategy

Companies might develop one marketing mix strategy that is appropriate for all members of the total market.

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Targeting Strategy
Undifferentiated targeting strategy

Concentrated strategy

Differentiated strategy

Only one marketing mix is developed and directed toward a few, or perhaps one, profitable market segments.

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Targeting Strategy
Undifferentiated targeting strategy

Concentrated strategy

Differentiated strategy

Exists when a firm develops different marketing mix plans specially tailored for each of two or more market segments.

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Alternative of Targeting Strategy

1. Single segment 2. Multi segment 3. Product specialized 4. Market specialized 5. Full market coverage

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Select Positioning Strategy

Identify Total Market

Effective
Segmentation Determine Bases for Segmentation
Targeting Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Positioning
Positioning Kotler defined: designing an offer so that it occupies a distinct and valued place in the minds of the target customer.
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Positioning

Positioning Image that customers have about a product in relation to the products competitors

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Positioning Strategy

Key to developing the appropriate marketing mix is the positioning strategy of the product.

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Presumptions of Positioning

All products have object and subject attributes Recognizable Comparable

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Select Positioning Strategy

Effective positioning What consumers currently think about the product, especially in relation to competing products What the marketer wants consumers to think about the product Which positioning strategy will elevate the consumers current product image to the desired product image.
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Select Positioning Strategy

Position Mapping- creating a visual description about consumer perceptions of a product on two or more dimensions in relation to competitors.

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Select Positioning Strategy

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Select Positioning Strategy

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Select Positioning Strategy

The positioning strategy must determine where a company wants to go And how to get there by positioning the product according to any of the following ways:
Price/Quality Product Attributes Product User Product Usage Product Class Competition Symbol
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Marketing Mix
Identify Total Market Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Marketing Mix
The final steps are to develop and a marketing mix matched to the needs of the target market This must support the chosen positional strategy in the selected target markets Therefore determine the 4Ps or 7Ps of its marketing mix as a tool to achieve the desired position

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Recognize 4Ps and the 7Ps Product customer value Price cost Place convenience Promotion communication People consideration Processes co-ordination Physical evidence confirmation
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Marketing Strategy and the Mix

Marketing

Product
Marketing Mix

Place (Distribution)

Promotion

Price
Objective 4
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Marketing Strategy and the Mix

Marketing

Product

Refers to goods, services, people, places and ideas Household consumers Business-to-business customers
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Marketing Strategy and the Mix

Marketing

Place (Distribution)

Marketing channel is the network of organizations that create time, place and ownership utilities for household consumers and business customers.
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Marketing Strategy and the Mix

Marketing

Integrated Marketing Communication (IMC) System of management and integration of marketing communication elements
Advertising, publicity, sales promotion, personal selling, sponsorship marketing, and point-ofpurchase communications

Promotion
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Marketing Strategy and the Mix

Marketing

Pricing decisions are complex and are driven by a variety of considerations including: Customer demand, costs, information availability, competition, profit motives, product considerations, and legal considerations

Price

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