chapter 4. segmentation, targeting, positioning
TRANSCRIPT
Market Segmentation
Market segmentation is the subdividing of market into homogenous sub sections of customers, where any sub section may conceivably be selected as a market target to be reached with a distinct marketing mix.
Requirements for Effective Segmentation
Requirements for Effective Segmentation
• Size, purchasing power, profiles of segments can be measured.
• Segments can be effectively reached and served.
• Segments are large or profitable enough to serve.
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond differently to different marketing mix elements & programs.
• Effective programs can be designed to attract and serve
the segments.
Bases for Segmentation
Geographic Segmentation
Region North, South, East, West
City size Major metropolitan areas, small cities, towns
Density of area Urban, suburban, (semi urban) rural
Climate Hot, Cold, warm
Demographic Segmentation
Age Under 11, 12-17, 18-34 and so on
Sex Male, Female
Marital Status Single, married, divorced, living together, widowed
Family size Up to 2 children, 3 to 4 children, 5 & above
Income Under RS.10,000, Rs. 20,000, Rs. 30,000 and so on
Education Illiterate, able to read and write, high school, graduate, post graduate or illiterate, semiliterate, literate
Occupation Professional, blue collar, white collar, agricultural
Race Brahmin, Bania, Kayastha, Rajput, Bhumihar
Language Hindi, Tamil, Telugu, Punjabi
Psychographic Segmentation
Needs- motivation Shelter, safety, security, affection
Personality Extrovert, introvert, aggressive, complaints
Attitudes Positive attitude, negative attitude
Psychographic lifestyle Straight, conservatives, status seekers
Socio-cultural Segmentation
Culture Indian, Chinese, Japanese, English
Religion Hindu, Muslim, Christian
Social Class Lower, middle, upper
Family lifestyle Bachelors, young married
Use related Segmentation buyer behavior
Usage rate Heavy users, medium users, light users, nonusers
Awareness status Unaware, aware, interested to try (enthusiastic), regular buyer
Brand loyalty None, some, strong
Use situational segmentation
Time Leisure, work, rush, morning, night
Objective Personal use, gift, fun, achievement
Location Home, work, friend’s home, in-store
Person Self, friends, boss
Benefit segmentation Convenience, prestige, economy, value for the money
Hybrid Segmentation
Demographic/Psychographic profiles Combination of demographic and psychographic characteristics
VALS Actualizer, fulfilled, believe, achieve, striver, experiencer,
maker, struggler
Principle Oriented Status Oriented
FULFILLED
BELIEVERS
ACTUALIZERS
ACHIEVERS
STRIVERS
STRUGGLERS
Abundant Resources
Minimal Resources
Action Oriented
EXPERIENCERS
MAKERS
VALS 2 - Network
RefrigeratorsThe refrigerator market can be segmented on the following basis of:i) Geographicala) North India b) South India c) East India d) West India
ii) Size of refrigeratorsa) 65 litres b) 90 litres c) 165 litres d) 286 litres e) 300 litres
iii) Nature of consumersa) Households b) Industrial
Washing machines
a) Density : Urban and Suburbanb) Economy : Middle and upper income groupc) Benefits : Automatic, Semi automatic
Segmentation, Targeting, and Positioning
Develop profiles ofresulting segments
MarketSegmentation
Develop measures ofsegment attractiveness
Select thetarget segment(s)
Develop positioningfor each segment
Develop marketing mixfor each segment
Identify bases forsegmenting market
MarketTargeting
MarketPositioning
TargetingIt involves making
decision about which
part of the market an
organization wishes
to focus on.
Evaluating a segment for targeting
• Has sufficient current and potential sales and profits
• Has the potential for sufficient future growth• Is not over-competitive• Does not have excessive barriers or costs to
entry or exit• Has some relatively unsatisfied needs that the
company can serve particularly well.
Evaluating Market Segments
1) Segment Size and Growth– Collect and analyze data on segment size– Growth rates– Expected profitability (ROI)
2) Segment Structural Attractiveness
– Consider effects of competitors– Existence of substitute products– Bargaining power of buyers– Bargaining power of suppliers
3) Company Objectives and Resources
– Company’s attention and energies are not diverted from the main goal – while serving that segment eg gaming business
– Examine company resources needed to succeed in that segment e.g.: McDonald’s in biscuits
– Offer superior value and gain advantage over competitors (Differentiation)
Market TargetingMarket Coverage Strategies
Market TargetingMarket Coverage Strategies
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
Market TargetingMarket Coverage Strategies
Market TargetingMarket Coverage Strategies
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
C. Concentrated Marketing
• Undifferentiated marketing: when a firm produces only one product or product line and promotes it to all customers with a single marketing mix– Sometimes called mass marketing– Much more common in the past
• Differentiated marketing: when a firm produces numerous products and promotes them with a different marketing mix designed to satisfy smaller segments– Tends to raise costs– Firms may be forced to practice
differentiated marketing to remain competitive
• Concentrated marketing (niche marketing): when a firm commits all of its marketing resources to serve a single market segment– Attractive to small firms with limited resources
and to firms offering highly specialized goods and services
Positioning
Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.
The process of creating an image for a product in the mind of target customers.
The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings.
Identify positioning bases
AttributeAttribute
Price and QualityPrice and Quality
Use or ApplicationUse or Application
Product UserProduct User
Product ClassProduct Class
CompetitorCompetitor
Positioning Bases
Positioning Bases
Benefits or needsBenefits or needs
Choosing and Implementing a positioning Strategy
1) Identifying possible competitive advantages
• Company can position itself as providing superior value either by low price or by providing more benefits to justify higher prices
• Deliver the promised quality and service
2. Selecting the right competitive advantages
• How many differences to promote ? • Best quality, best services, lowest price
advance technology• Which differences to promote?
3. Communicating and delivering the chosen position
1) Differentiation It is the act of designing a set of meaningful
differences to distinguish the company’s offering from competitors’ offering
a) Product differentiation i) Features ii) Performance – level at which characteristics of
products operateiii) Conformance-degree to which product meet
promised target specifications iv) Durability –expected operating life v) Reparability- ease of fixing a product vi) Style- looks and feels to the buyer vii) Design- totality of features that effect how a product
looks and functions
b) Service differentiation – differentiating in services.
i) Ordering ease- how easy it is for the cr customer to place an order
ii) delivery- how well product is delivered.iii) Installation- work done to make a product
operational.iv) Customer trainingv) Customer consulting- data, information that the
sellers offers free vi) Maintenance and repair- Company’s service
programme for helping customers.
c) Personnel Differentiation – Competitive advantage through hiring and training people.
i) Competence- employees possess the required knowledge and skill
ii) Courtesy- employees are helpful, friendlyiii) Responsiveness - respond to customer
requests and problemsiv) Communication- employees make an effort to
understand customer and communicate clearly v) Credibility- employees are trust worthy vi) Reliability- employees perform the service
consistently and accurately
d) Channel differentiation – Companies can make differentiation through distribution channel. Channel’s coverage, expertise and performance .
e) Image differentiation- how companies differentiate their personnel or brand image
2) Market Segmentation – It can help the management in achieving following benefits
a) Concentrating on most profitable market b) Designing product that really match the market
demand c) Determining promotional mix which will be most
effective.d) Choosing advertising media effectively and
determining how to allocate better budget among the various media.