Segmentation, Targeting, Positioning & Differentiation Cornerstones of Marketing Management

Submitted by : Ankush Puri Amit Kumar

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation
1. Identify segmentation variables and segment the market
2. Develop profiles of resulting segments

Market Targeting
3. Evaluate attractiveness of each segment 4. Select the target segment(s)

Market Positioning
5. Identify possible positioning concepts for each target segment
6. Select, develop, and communicate the chosen positioning concept

Step 1. Market Segmentation

Levels of Market Segmentation
Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation)
Local Marketing
Tailoring brands/ promotions to local customer groups

Individual Marketing
Tailoring products/ programs to individual customers

Steps in the Market Segmentation Process

Determine Market Boundaries Decide Which Segmentation Variables to Use Collect and Analyze Segmentation Data Develop a Profile of Each Segment Target Segments to be Served Design a Marketing Plan

Bases for Segmenting Consumer Markets

Geographic
Region, City or Metro Size, Density, Climate

Demographic
Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Psychographic
Lifestyle or Personality

Behavioral
Occasions, Benefits, Uses, or Attitudes

Step 1. Market Segmentation

Bases for Segmenting Business Markets
Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets

Operating Characteristics

Purchasing Approaches

Effective Segmentation
Measurable Substantial Accessible Differential Actionable
Size, purchasing power, profiles of segments can be measured. Segments must be large or profitable enough to serve. Segments can be effectively reached and served. Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Descriptive Bases
Age Gender Income Occupation Education Family Size or Family Life Cycle Religion or Nationality

Geographic Bases
Region
Density

Climate
Population

Behavioral Bases
User Status & Brand Loyalty Personality/Lifestyle Social Class
Occasion Readiness to Buy Benefits Sought Usage Rate

Single Versus Multiple Variable Segmentation

Step 2. Market Targeting

Evaluating Market Segments
Segment Size and Growth
Analyze sales, growth rates and expected profitability for various segments.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Five Patterns of Target Market Selection

Single-segment concentration

M1 M2 M3 P1 P2 P1 P2

M1 M2 M3
P1 P2

Selective specialization

Product specialization

M1 M2 M3

P3

P3
Market specialization

P3
Full market coverage

M1 M2 M3 P = Product M = Market P1 P1

M1 M2 M3

P2
P3

P2
P3

Step 2. Market Targeting

Market Coverage Strategies
Company Marketing Mix
A. Undifferentiated Marketing

Market

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

B. Differentiated Marketing

Segment 1 Segment 2 Segment 3

Company Marketing Mix

Segment 1 Segment 2
Segment 3

C. Concentrated Marketing

Step 2. Market Targeting

Choosing a Market-Coverage Strategy
Company Resources Product Variability

Products Life-Cycle Stage Market Variability

Competitors Marketing Strategies

designing the companys offering and image to occupy a distinctive place in the the target markets mind. P 298

Positioning is the act of

Product Differentiation
Features Performance Conformance Quality

Form

Quality

Durability

Reliability

Repairability

Style

Design

Services Differentiation
Ordering Ease Customer Consulting

Installation

Miscellaneous Services

Delivery

Customer Training

Maintenance & Repair

Image Differentiation
Media Atmosphere

Symbols

Events

Important Profitable Distinctive

Differences Worth Establishing

Affordable Preemptive Superior

 Important:-the difference delivers a highly valued benefit to a sufficient number of buyer. Distinctive:-the difference is delivered in a distinctive way. Superior:-the difference is superior to other ways of obtaining the benefit

 Preemptive:-the difference cannot be easily copied by competitors. Affordable:-the buyer can afford to pay for the difference. Profitable:- the company will find it profitable to introduce the difference.

Positioning Strategies
Product Attributes Benefits, Problem Solutions & Basic Needs Price & Quality Specific Use Against Other Products Product User Against a Competitor

PRODUCT DIFFERENTIATION
(1)FORM:-the Size,Shape ,Physical structure

for eg.(Aspirin-dosage,size,shape,colour, coating or action time.) (2) FEATURES :-Supplements its basic function calculate customer value VS. CO. cost for each potential features. for eg. ;-Auto Cos.-several trim levels which lowers manufacturing cost and Inventory costs.

 (3) PERFORMANCE QUALITY :-Level at which primary characteristics operate.eg;Shlitz driven in it dust when it lowered Q. Q becoming increasingly parameter for differentiation. Catalogues J crow raising prices of merchandise as its raise Q highly.

 (4) Conformance quality:- Every Porsche 944 designed to accelerate to 60 mph within 10 second. (C.Q.) (5) Durability :-long lasting-people think more for vehicles & kitchen appliances. (p/cs video cameras must not be exposed to rapid obsolescence )

 Reliability:- means that a product will not malfunction. e.g.. -Maytag. (major home appliances.) Style:-100 k & feel e.g.:- car buyers pay high appl. Comp/Mont blanc/H.D.

 To be branded, products must be differentiated .Perdue chicken , Bayer aspirin , tata steel , P&G tide , cheer ,gain candy detergents, Otis making elevators smart.

Personnel diff.
Company can gain a strong competitive advantage through having better trained people.eg;-Singapore airlines.

Channel diff.
Company can achieve competitive advantage through the way they design their distribution channel coverage , expertise ,and performance.eg. (caterpillar)

Image diff.
Buyers respond differently to company and brand image.eg.Marlboro-(machocowboy)

DIFFERENTIATION
Process of adding a set of meaningful and valued differences to distinguish companies offerings from competitors offering. For eg.South west airlines .

Differentiations Variables
Product Form Features Performance Conformance Durability Reliability Reparability Services Ordering ease Delivery Installation Customer Training C. Consulting Maintenance Repair Personnel Competence courtesy Credibility Reliability Responsiveness Communication Channel Coverage Expertise Performance

Style
Design

Miscellaneous

Differentiation Strategies
Parameter Product Features Performance Quality Exclusivity Style Product Design Product range & variety Service Quality Packaging Example Cielo car, IFB washing machine, Sony Trinitron TV Dove beauty soap,100 pipers whisky. Tanisque watches,Madura coats, Van Heusen,Louies Philippe. VIP Elanza suitcases, Bentley ties. Revlon cosmetics, Ray ban sunglasses. Citibank, Otis elevators, eureka Forbes vacuum cleaners Sand piper beer

Positioning Strategy
Bases Used
Brand Name

Example
Antiquity Whisky, Monte Carlo Sweaters. orchids Cosmetics Esteem,Cielo Cars, Raymond's Suitings Escorts Yamaha Bikes,Raymondes Suitings Mercedes

Consumer aspiration

Brand Personality

Selective Consumer