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MARKET SEGMENTATION , TARGETING AND POSITIONING Segmentation To divide into packets or groups. Aggregation No division. Market Segmentation The process of dividing the total market for a good or service into smaller and homogenous groups. Benefits of Market Segmentation Customers wants identification. Better and easy marketing Focus A technique to reach each nature of market. The Process of Market Segmentation Identify the Needs Identify the Characteristics that distinguish among the segments Determine the size of the market Three Stages of Market Segmentation Identifying Segments Selecting Target Segments Creating Marketing Mix for Each Segment Requirements for Segmentation Substantiality Means a relative size of the segment. Particular market may be attractive for one firm may not be for other. Market should be enough to make profit. Differential Response One segment requirements must be different from the others. Accessibility Accessibility of media, people, channels, transportation, sales force.

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Types of Segmentation or Segmentation Basis for Consumer Market Segmentation Basis Possible Market Segmements

Geographic Region City Climate

New England, north region etc Area and size hot, cold, rainy.

Demographic Income Age Gender Family Life Cycle Social Class Education Occupation Ethnic Background

under 2500, 50000, 100000$ under 0-15, 15-30, 30-45, 45-60 and beyond Male, Female young, single, couple, married, with children upper, Lower, Middle school, college, University household, businessman, clerk, professional. African, religion, European, Middle Eastern

Psychographic Personality Life Style Values

Aggressive, passive, rational way of leading a life different people different values, money

Behavioral Benefits Desired

Toothpaste-no cavities, bright teeth, good test, Low price.

Usage Rate

non user, light user, heavy user

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Segmenting Business Markets

Basis for Segmenting the Business Market Customer Location Should be closed to the source. E.g. Textile industry Faisalabad. To minimize the shopping cost. Location is important factor. Customer Type Industry Which one to target. Size Sales volume, no of employees etc. Organization Structure Centralized or decentralized. Who is making the decision. Weather they have the purchase department or not . Lengthy meeting while purchasing e.g. Govt. Deptts. Purchase Criteria Quality, price, durability etc. Terms of purchase. Transaction Conditions Buying Situations Straight rebuy, modified rebuy, new buy. Usage Rate Nonuser, light user, heavy user. Purchase Procedure competitive bidding, leasing. Order size. Purchase terms and conditions.

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Target Market Strategies

Aggregation Strategy Also called mass market strategy. Seller treat the market as the single market. All the needs of the customers are considered as same. Easy marketing strategy, because we develop single marketing mix. Suitable strategy for staple product, vegetables Cost minimization is the main benefit of this strategy. Product differentiation may occur. E.g. Telecom Sector. Single Segment Strategy also called concentration strategy. companies segment the market. Deferent marketing mix for different markets. Difficult strategy to execute. More finance is required. More chances of success. Helpful to one market in depth, e.g. Johnson and Johnson, Nike, Bata, nestle etc. E.g. Mobilink. Multiple Segment Strategy After segmenting the market then target all of them or few. results in greater sales volumes, extending market share and the image. It can be expensive strategy. Inventory cost develop because to maintain more quantity e.g. Bata, Nestle, Unilever. Guidelines in Selecting a Segment

competitive look of the product, service, or organization.

Three Steps in Positioning Strategy

Select the Positioning Concept What is important to the target market. Design the Features that are most Effective brand name, slogan, benefits etc. Coordinate the Marketing Mix Forecasting Market Demand

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Basic Forecasting Terms

Market Share Its a proportion of sales of the product during a stated period in a specific market captured by a single firm. Market Factor Different market factors which can be helpful to make forecasting e.g. sale of the car. Three things determine market factor, it should exist in a market, should be measurable, related to the demand of the product. Market Potential, Sales Potential and Sales Forecast Potential It is maximum level of sale assume from a market. Market Potential It is the total sales expected by the sale of product by all organization in specific market. Sales Potential It is the portion of market potential expected to achieve a specific company. Sales Forecast It is an estimate of probable sale for one company brand of a product in a specific market. Methods of Forecasting Sales Market Analysis There are so many market factor to be analyzed by the companies. Companies check the behavior of these market factor then they plan for sales forecast. E.g. company want to check the share of their product in the market share. Now this is market factor analyze by the company. Survey of Buyers Intention Asking a current or potential customers how much a particular they would buy at a given price at a specified period. Asking questions about the product. Its actually a concept test.

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Test Marketing To offer a product in limited geographical area then measure the sale and then project the sale over larger area. Past Sales and Trend Analysis To use the past years sales data to project the future and to break the previous sales records. Sales Force composite it consists of the sales data form all sales people form their territories and then project the future sale for their territories. Executive Judgment Product Planning and Development What is Product Product Attributes

Classification of Products
Consumer Product Business Product Classification of Consumer Goods Convenience goods: often purchasing products Shopping goods: which consumer wants to compare Specialty goods: a product needs time and money to purchase Unsought goods: new product consumer is not yet aware Classification of Business Goods 1. Raw Material: business goods from which we make finished product. 2. Fabricating Materials and Parts: business goods that become part of the finished product. 3. Installations: expensive and long lived business equipments 4. Accessory Equipment: not related to the production and not having the great value in business, facilitating products. 5. Operating Supplies: business goods not becomes the part of finished product but necessary for the business operation. Importance of Product Innovation Requirement for Growth High Failure Rates

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Development of New Product

What is a New Product? Really innovative: truly unique. Replacement Product: slightly different from existing product on the basis of faction, benefit, style etc. Imitative product: that are new for a company not to the market. New Product Strategy Stages in the Development Process Idea Generation Screening of ideas Business Analysis Prototype Development Market Tests Commercialization New Product Adoption and Diffusion

Stages in the Adoption Process

Awareness: Interest: Evaluation: Individual is exposed to the change or innovation Prospect in interested to seek further information Judgment of advantages and disadvantages and cost and benefit. Trial: Prospect adopt the product on limited basis. Adoption: decision weather to use the product on full flag basis Confirmation: Adopt the product permanently

Adopter Categories
Innovators Early Adopters Early Majority Late Majority Laggards

Characteristics Affecting Adoption Rate

Advantages: Compatibility: Complexity: Trainability: Operability: cost, usage, style innovation should match with values and lifestyles the degree of understanding and using innovation it may be sampled on a limited basis it should be prominent, demons ratable.