1. Segmentation, Targeting & Positioning

2. Segmentation, Targeting & Positioning
Concept of Market Segmentation
Market segmentation is the process of dividing a potential market into distinct sub-markets of consumers with common need and characteristics
Benefits of Market Segmentation
Helps to understand the customer need
To adopt better positioning strategies
Proper allocation of marketing budget
Helps in preparing a better competitive strategy
Provides guidelines in preparing media plan of the company
Different offerings in different segments enhances the sales
Customer gets more customized product
Helps company to identify niche markets
Provides opportunities to expand market
Encourages innovations

3. Requisites of Effective Segmentation
To be effective, segmentation should have the following characteristics
Measurable and Obtainable
The size profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data
If the information is not obtainable, no segmentation can be carried out
Substantial
The segment should be large enough to be profitable
For consumer markets, the small segment might disproportionably increase the cost and hence products are priced too high

4. Requisites of Effective Segmentation
Accessible
The segment should be accessible through existing network of people at affordable cost
Differentiable
The segments are different from each other and require different 4Ps and programs
Actionable
The segments which a company wishes to pursue must be actionable in the sense that there should be sufficient finance, personnel and capability to take them all

5. The Process of Market Segmentation
The process of market segmentation passes through the following stages:
Identify the existing and future wants in the current market
Examine the attributes that distinguish among the segments
Evaluate the proposed segment attractiveness on the basis of measurability, accessibility and size

6. The Process of Market Segmentation
Identify existing and future wants in the current market
Marketers must examine the changing needs of the customer
This process provides opportunity to examine whether customers are satisfied with existing products or not
If they are not satisfied what are the features they are looking for the product
E.g.. Titan watches

7. The Process of Market Segmentation - Identifying existing and future wants

8. The Process of Market Segmentation
2. Examine the attributes that distinguish among segments
In this process marketers should segregate different types of wants into homogeneous categories
This may be on the basis of product features, lifestyle or behavior

9. The Process of Market Segmentation – Examine the attributes

10. The process of market segmentation
3. Evaluate the proposed segment attractiveness on the basis of measurability, accessibility and size
Segments selected in second steps should be evaluated against the requisites, ie. Measurability, accessibility, substantial, actionable and differentiability

11. Proposed segment attractiveness

12. Bases of Segmenting Consumer Markets
Geographic Segmentation
Demographic Segmentation
Psychographic Segmentation
CONSUMER MARKET SEGMENTATION
Behavioral Segmentation

13. Bases of Segmentation
Geographic

14. Bases of Segmentation Geographic Segmentation
Dividing the market into different geographical units such as nations, states, regions, cities or neighborhoods
The company can operate in one or a few geographic areas or operate in all buy pay attention to local variations

15. Demographic Segmentation
Bases of segmentation
Demographic
Segmentation

16. Bases of segmentation Demographic Segmentation
In demographic segmentation the market is divided into groups on the basis of variables such as age, family size, family life-cycle, gender, income, occupation, education, religion, race, generation, nationality and social class
This is the most popular bases for distinguishing customer groups
One of the major reason is that consumers’ wants, preferences and usage rates are often associated with demographic variables

17. Bases of segmentation Some of the demographic variables are:
A. AGE & LIFE-CYCLE STAGE
On the basis of age, a market can be divided into four parts viz. children, young, adults and old
A successful marketing manager should understand the age group for which the product would be sold and determine his marketing policy, pricing policy, advertising policy etc

18. Bases of segmentation – Age & Life Cycle

19. Bases of segmentation B. Gender
This segmentation is very common in clothing, hair- styling, cosmetics etc
C. Income
Income segmentation is very popular in such product and services such as automobiles, clothing, cosmetics, travel etc
But income does not always predict the best customers for a given product

20. Bases of segmentation - Gender

21. Bases of segmentation - Income

22. Bases of Segmentation 3. PSYCHOGRAPHIC SEGMENTATION
When the customers are categorized on the basis of life style, personality or values
People belonging to the same demographic group may exhibit different psychographic profiles
The major psychographic factors are:
A.LIFE STYLE
People exhibit different life style and goods they consume express their life styles
One of the most used psychographic profiling schemes is called VALS developed by SRI International Inc.
VALS-1 (First Version) groups the entire US population into 8 groups

23. Bases of Segmentation – Life Style

24. Bases of Segmentation VALS - 1

25. Psychographic segmentation – Ref Page No: 130,131,132,133

26. Bases of Segmentation B. PERSONALITY
When marketers use personality variables to segment the markets, they endow their products with brand personality that corresponds to consumer personalities. Eg. Raymonds
C. SOCIAL CLASS
It has a strong influence on consumer preferences and the products they buy or consume
Social class becomes the key factor in buying

27. Bases of Segmentation
4. BEHAVIORAL SEGMENTATION OR CONSUMER RESPONSE SEGMENTATION:
In behavioral segmentation, buyers are divided into groups on the basis of their knowledge or attitude towards the use of , or response to a product
Some of the behavioral factors are:
Occasions
According to occasions, buyers develop a need, purchase a product or use a product
A company should consider critical life events to see whether they are accompanied by certain need

28. Bases of Segmentation - Occasion

29. Bases of Segmentation - Occasion

30. Bases of Segmentation b. Benefits
Buyers can be classified according to the benefits they seek from the products
c. User Status
Market can be segmented into non-users, potential users, first time users and regular users of a product
Market leaders will focus on attracting potential users, whereas smaller firms will try to attract current users away from the market leader

31. Bases of Segmentation- User Status

32. Bases of Segmentation d. Usage Rate
Markets can be segmented into light, medium and heavy users of the product
Heavy users are small percentage of the market but account for high percentage of total consumption
Marketers try to attract heavy users than light users
e. Loyal Status
Consumers have varying degree of loyalty to specific brands, stores and other entities. Buyer can be divided into four groups according to brand loyalty status:
Hardcore Loyals – Consumers who buy one brand all the time
Split Loyals: Consumers who are loyal to two or three brands
Shifting Loyals: Consumers who shift from one brand to another
Switchers : Consumers who show no loyalty to any brand. When there is a low involvement and few significant perceived brand differences, consumer try to purchase different brands in the category

33. Bases of Segmentation –Loyal Status Hardcore Loyal

34. Bases of Segmentation –Loyal Status Split Loyals

35. Bases of Segmentation –Loyal Status Shifting Loyals

36. Bases of Segmentation –Loyal Status Switchers

37. Bases of Segmentation f. Buyer-Readiness Stage
A market consists of people in different stages of readiness to buy a product
Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product and some intend to buy

38. Targeting
Targeting is defined as a group of people or organizations for which an organization designs, implements and maintains the marketing mix
Once the bases of segmentation are selected, the marketer has to identify the people or organization to whom the product is meant
SELECTING TARGET MARKET SEGMENTS
Depending upon the emerging patterns of market segmentation, there exists various segments in a market. They are:

39. Targeting Homogeneous Preference
Showing no natural segments as in case of soft drinks
Diffused Preference
Showing clear preference as in case of automobile market
Clustered Preference
Market showing natural segments as in case of occupation having impact on the types of clothes worn

40. Targeting The general strategy adopted for market segmentation are:
Undifferentiated Marketing
It is a market coverage strategy in which the company treats the target market as one and does not consider that there are market segments that exhibit uncommon needs
The company focus on the centre of the target market to get maximum advantage
The feature of ‘one product all segments’ calls for presenting one marketing mix for the target market. Example Coca Cola

41. Targeting b. Differentiated Marketing
It is a market coverage strategy in which the company goes for proper market segmentation as depicted by the analysis of the total market
The company goes for several products or several segment approach which calls for preparing different marketing mixes for each of the market segment
This is followed by Hindustan Lever that sell soap in different segments

42. Targeting c. Concentrated Marketing
It is a market coverage strategy in which company follows ‘one product one segment’ principle.
The manufacturer gets maximum knowledge about the segment’s needs and therefore acquires special reputation.
This strategy helps the small companies to stand against a large corporation because small companies can create niches in its one-product one segment approach by providing maximum varieties

43. Choosing a Market Coverage Strategy
COMPARISON OF MARKET COVERAGE STRATEGIES
FOCUS
UNDIFFERENTIATED MARKETING
DIFFERENTIATED MARKETING
CONCENTRATED MARKETING
PRODUCT
ONE/FEW
MANY
SEGMENT
ALL
MARKETING MIX
ONE

44. Choosing a market coverage strategy
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Constrained Firm Resources
More suitable
Least suitable
Most suitable
Common usage of products
Different need satisfying products

45. Market Positioning
Each firm needs to develop a distinctive positioning for its market offering
Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind
Many marketers advocate promoting only one central benefit and Rosser Reeves called it as ‘ a unique selling preposition’ (USP)
Some of the USP includes ‘best quality’, ‘best service’, ‘lowest price’, ‘best value’, ‘safest’, ‘more advanced technology’ etc

46. Market Positioning
Sometimes double benefit positioning may be necessary if two or more firms claim to be best on the same attribute
A company must avoid four major positioning errors:
Under Positioning
Some companies discover that buyers have only a vague idea of the brand. The brand is seen as just another entry in a crowded market place
2. Over-positioning
Buyers may have too narrow image of the brand
3.Confused Positioning
Buyers might have a confused image of the brand resulting from the company’s too many claims or changing the brand’s positioning too frequently
4.Doubtful Positioning
Buyers may find it hard to believe the brand claims in view of the product’s features, price or manufacturer

47. Positioning Maps
Is a two dimensional graph of how a product, brand or company is perceived versus competition
These maps are drawn on important buying dimensions of consumer for company products as well as competitors products
Construction of Position Map
Evaluate the buying dimension of customer
Select two buying dimensions of consumer - Eg. Price and quality
Identify the relative market share
Draw the circles according to relative market share on two dimension graph

48. Positioning Maps for soaps
Cosmetics
Godrej No:1
Lifebuoy
Santoor
Low price
High Price
Ayurvedic

49. Bases of Positioning the Product
The bases for positioning strategies are:
Attribute Positioning:
A company positions itself on an attribute such as size or number of years in existence
2. Benefit Positioning
The product is positioned as the leader in a certain benefit
3. Use or Application Positioning
Positioning the product as best for use

50. Bases of Positioning the Product
4. User Positioning
Positioning the product as best for some user group
5. Competitor Positioning
The product claims to be better in some way than a particular competitor
6. Product Category Positioning
The product is positioned as the leader in a certain product category
7. Quality or Price Positioning
The product is positioned as offering the best value