4.segment target positioning

1

Market Segmentation

Dividing a market into distinct groups of buyers on the basis of

NeedsCharacteristics or Behavior

who might require separate products or marketing mixes

2

Reasons for Market Segmentation

Cannot appeal to all buyers Large scattered buyers Varying needs & buying practices Companies have differing abilities to

serve different segments…Therefore companies must identify parts of the

market that they can serve best & most profitably

3

5 Important Segmentation Topics

1. Market segmentation levels 2. Segmenting Consumer markets 3. Segmenting Business markets4. Segmenting International markets..5. Effective Segmentation Requirements

4

Levels of Marketing

Niche marketing MicromarketingMass marketing Segment marketing

Complete Segmentation

5

Levels of Marketing

1.Mass MarketingAdvantages

One product company to start with - GM, Coke

Creates large potential Low cost… Low prices /high margins

6

Levels of Marketing

Mass MarketingDifficulties Overtime they splinter into smaller

segments… Proliferation of distribution channels / ad

media leading to segmented marketing

7

Levels of Marketing

2.Segment Marketing Isolating broad segments that make up

the market and adapting the marketing to match the needs of one or more segments

8

Levels of Marketing Segment marketing

Advantages More focused - efficient Eg. Marriott

Business travelers Families Customized packages

Effective communication programs… Less intensity of competition- fewer focused

competitors

9

Levels of Marketing

3.Niche Marketing Focusing on sub segments or niches

with distinctive traits that may seek a special combination of benefits

10

Levels of Marketing

Niche marketingAdvantages

Serve Niches unimportant to big players…

Sometimes big companies like Nike serve niches as well

11

Levels of Marketing

4.Micromarketing The practice of tailoring products and

marketing programs to suit the tastes of specific individuals and locations – includes local marketing & individual marketing

12

Levels of Marketing 4.Micromarketing

Local marketingTailoring brands and promotions to the

needs and wants of local customer groups – cities neighborhoods or even stores.

Eg Citibank : different services in different branches depending on differing demographics

13

Levels of Marketing4.MicromarketingLocal MarketingBenefits

Closer to customer Closer to retailers…

Problems Drives up manufacturing / marketing costs Brand’s overall image can get diluted

14

Levels of Marketing4.MicromarketingIndividual Marketing Tailoring products and marketing programs to

the needs & preferences of individual customers.

This is also labeled as One to one marketing Customized marketing Eg. Dell computers

15

Segmenting Consumer markets A marketer has to try different segmentation

variables , alone or in combination - to find the best way to view the market

Different market variables used for segmenting the consumer markets are:- Geographic Demographic Psychographic Behavioral Occasion Benefit

16

Segmenting Consumer markets

Six different market variables1.Geographic segmentation Dividing a market into different

geographical units such as Nations States Regions… Cities etc

17

Segmenting Consumer marketsSix Segmentation variables2.Demographic segmentation Dividing the market into groups based on demographic

variables such as Age & life cycle Gender Family size Family life cycle Income Occupation Education Religion Race Nationality

18

Segmenting Consumer marketsSix Segmentation variables2.Demographic segmentationAge & l ife cycleExample McDonald’s targets children , teens, adults, &

seniors thru different ads & media Ads to teens feature dance – beat music,

adventure… Ads for seniors feature softer & sentimental.

19

Segmenting Consumer markets2.Demographic segmentationGender segmentationExample Automobile industry :uses gender segmentation.

More than 50% of car buying decisions are taken by women in the US.

Women have less upper body strength, long finger nails and more safety concerns.

In all new Cadillac cars-they take care by providing Easy opening hoods & trunks, Seat belts that fit women easier and An increased emphasis on safety

20


Six Segmentation variables2.Demographic segmentationIncome segmentation Dividing the market into different

income groupsExamples.. Automobiles, clothing, cosmetics,

financial services & travel etc.

21

Segmenting Consumer marketsSix Segmentation variables3.Psychographic segmentation Dividing the market into different groups

based on Social class Lifestyle or Personality characteristics

22

Segmenting Consumer marketsSix Segmentation variables4.Behavioral segmentation Dividing the market into different groups

based on Consumer knowledge, Eg. Vsnl broad band

packages –time based, & usage based Attitude, Eg. Atttude towards movie /entertainment

– differential pricing for different timings Use or response to a product-mobile phones

23

Segmenting Consumer marketsSix Segmentation variables5.Occasion segmentation Dividing the market into different groups

according to occasions when buyers get the idea to buy-in trade fairs/exhibitions actually make the purchase or use the purchased item Example :seasonal products like refrigerators ,

ACs, or geysers

24

Segmenting Consumer marketsSix Segmentation variables6.Benefit segmentation Dividing the market into different groups

according to the different benefits that consumers seek from the product

(a) Benefits sought Example :Travel

With family- relax Adventure / education Gambling / Fun

25


Benefit segmentation (b) User status Non users Ex users Potential users First time users… Regular users

26


Benefit segmentation (c) Usage rate Light Medium Heavy : small % of market but high % of total

consumption

27

Segmenting Business markets

Five Major segmentation variables1.Demographics Industry: Which buyer industry to focus

on ? Co.size : What size of co. to focus on? Location: Which geographical area to

focus on?

28

Segmenting Business marketsFive Major segmentation variables2.Operating variables Technology: What customer technologies to

focus on ? User-nonuser status : Should we focus on

high , medium, heavy or non users ? Customer capabilities

29

Segmenting Business marketsFive Major segmentation variables3.Purchasing approaches Purchasing function organization : Focus on

companies with centralized or decentralized purchasing function ?

Power Structure :Focus on engineering, financing or marketing dominated cos. ?...

Purchase criteria :Focus on cos seeking quality, price or service ?

30

Segmenting Business marketsFive Major segmentation variables4.Situational factors Urgency :Should we focus on cos which need

quick delivery or service? Specific application: Should we focus on a

few applications of our product rather than all ?...

Size of order :Should we focus on large or small orders ?

31

Segmenting Business marketsFive Major segmentation variables5.Personal characteristics Buyer seller similarity :Should we focus on

cos whose people and values are similar to ours ?

Attitude towards risk :Should we focus on risk taking or risk avoiding customers ?...

Loyalty :Should we focus on cos. that show high loyalty to their suppliers ?

32

Segmenting international markets

Five Segmentation variables 1.Geographic location: Grouping cos by

regions- US, Western Europe, Asia Pacific, Middle East, or Africa. Nations close to each other may have common traits

& behaviors.

33


Five Segmentation variables 2.Economic factors : Grouping developed

countries and developing countries separately

3.Political legal factors : Type & stability of governments, Receptivity to foreign firms, Monetary regulations, Amount of bureaucracy etc.

34


Five Segmentation variables 4.Cultural factors :

Common language, Religion , Values & attitudes , Customs and behavioral patterns.

35


Five Segmentation variables5.Intermarket segmentation Forming segments of consumers who

have similar needs and buying behavior even though they are located in different countries

36

Requirements of Segmentation

To be useful market segmentation must be: Measurable Accessible Substantial Differentiable… Actionable

___________

37

Market targetingEvaluating market segmentsLong term segment attractiveness can get impacted due

to the following factors :- Aggressive competitors Substitute products :

l imits prices, impacts profits…

Power of buyers ; can force prices down, demand more services, set competitors one against the other

38

Market targetingSelecting Market SegmentsThree alternative market coverage strategies

1.Undifferentiated marketing Firm goes after the whole market with one offer

Company marketing mix Market

39

Market targeting2.Differentiated marketing

Firm decides to target several market segments and designs separate offers for each

Company Mktg Mix 1 Segment 1Company Mktg Mix 2 Segment 2Company Mktg Mix 3 Segment 3

40

Market targeting

3.Concentrated marketing: Firm goes after a large share of one or

a few submarkets

Company marketing mix

Segment 1

Segment 2

Segment 3

41

Market targeting

Choosing a Market coverage strategy Company resources

Eg. Limited resources- concentrated marketing becomes more relevant…

Product variability Eg. Undifferentiated marketing more suited

for uniform products like grapefruit, or steel

42

Market targetingChoosing a Market coverage strategy Product’s life cycle stage

New product introduction stage-practical to launch only one version and use undifferentiated or concentrated marketing

Market variability If most buyers have same taste, react the same way to

marketing efforts- undifferentiated marketing becomes appropriate …

Competitor’s marketing strategy When competitors use differentiated or concentrated

marketing – undifferentiated marketing can be suicidal

43

Positioning for competitive advantage Product positionThe way the product is defined by consumers on

important attributes – the place the product occupies in consumers’ minds relative to competing products…

Competitive advantageAn advantage over competition gained by offering

consumers greater value , either thru lower prices or by providing more benefits that justify higher prices

44

Positioning

Identifying possible competitive advantages

1.Product differentiation: Consistency, Durability, Reliability… Reparability

45

Positioning

Identifying possible competitive advantages

2.Services differentiation: Speedy delivery, Convenient… Careful

46

Positioning Identifying possible competitive advantages3.Channel differentiation:

coverage, expertise, performance

4.People differentiation : hiring & training better people

5.Brand image differentiation : McDonald’s golden arch, Prudential , Pillsbury doughboy provide strong co. or brand recognition

& image differentiation

47

PositioningWhich differences to Promote ?A difference is worth establishing to the extent that it

satisfies the following criteria Important Distinctive Superior Communicable Preemptive Affordable… Profitable

48

Selecting an overall Positioning Strategy

Value proposition Consumers choose products & services that give

them the greatest value Marketers therefore position their key benefits that

they offer relative to competing brands The full positioning of a brand is called “Brand’s

Value Proposition”… Volvo’s value proposition hinges on safety but also

includes reliability, roominess, and styling – all for a price that is higher than average but seems fair for this mix of benefits

49

Positioning

Possible value propositionsBenefit for Price More for More More for the Same The Same for Less Less for Much Less… More for Less

50

Possible value propositions

More The same Less

More More for more More for the same

More for less

The same The same for less

Less Less for much less

Ben

efit

s

Pr ice