SEGMENTATION TARGETING

and POSITIONING
Tanu Bhargava

Have we ever wondered what problems big brands face after establishing themselves successfully? What strategies they should implement for further growth especially when competitors are growing?
What all various creative ideas should be developed for effective advertising?

Such questions can be addressed with the help of STP Marketing.

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STP

STP Marketing refers to the process of segmentation, targeting and positioning. Marketers pursue STP in order to formulate marketing strategies for their brands. STP helps in building strong foundation for advertising campaigns. It is for the markets characterized by diversity in consumers needs and preferences.

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SEGMENTATION

Initially, the seller used to do Mass Marketing. E.g.- Coca-cola when sold Coke in 6.5-ounce bottle.

With the increasing splintering of market, proliferation of advertising media and distribution channels; there arises a need of Marketing at micro level MICROMARKETING
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Definition

Market segmentation is the process of dividing the total heterogeneous market into relatively distinct homogeneous sub-groups of consumers with common needs or characteristics and selecting one or more segments to target with distinct marketing programme.

5 things should exist for effective market segmentation: a) Market should be heterogeneous b) Logically identification and division of population into relatively distinctive groups. c) Total market should be divided, so that comparison of estimated sale potential, costs and profits of each segment are estimated. d) One or more segment should be profitable, to support development and maintaining marketing programme. e) Accessibility to target segment should be effective.

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Steps in Segmenting Markets

1
Select a market for study

2
Choose bases for segmentation

3
Select descriptors

4
Profile and analyze segments

5
Select target markets

6
Design, implement, maintain marketing mix

Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).

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LEVELS OF MARKET SEGMENTATION

1.

SEGMENTS
Market segment are consumer groups who share a similar set of needs and wants. Marketers identify them and decide accordingly. It helps in delivering product offering to such groups with better design & price and understanding apt marketing program and activities for them to engage. However, such groups are partly fictional as different consumers have different requirements. TANU BHARGAVA

Thus, this lead to rise of Preference Segments. Under this segment, there are further 3 levels:
Homogeneous preference Where all
consumers have roughly same preferences and market shows no natural segments.

Diffused preference Where different

brands position themselves differently to match difference in consumer preferences.

Clustered preference When natural

market segment emerge from groups of consumers with shared preferences.

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Homogeneous Airlines- Economy class

Diffused Airlines- 1st class Different needs

Clustered Airlines- Economy class with TV screen TANU BHARGAVA

2. NICHE/ CONCENTRATED
It is a narrowly defined customer group seeking a distinctive mix of benefits. Marketers identify Niche by diving the segments into sub- segments. Why? i. Different customers have different needs. ii. Customers are willing to pay a premium to firm that best satisfy them. iii. More growth potential (profitable) and unlikely to attract competition. iv. Gain more economy benefits through specialization. TANU BHARGAVA

Internet has helped in the boom of NICHE MARKETS Read- Chris Anderson blog - The Long Tail TANU BHARGAVA

3. LOCAL

Target marketing is leading to marketing programs tailored to the needs and wants of local customer groups. Local marketing reflects a growing trend called Grassroots marketing. Idea is to get close and personal with the consumers. Some marketers criticize this marketing as it drives up manufacturing and marketing costs by reducing economies of scale and magnifying logistical problems.
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HSBC- Ad

READ- HSBC- No more local bank- http://marketinginteractive.com/news/30818

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4. INDIVIDUAL

The ultimate level of segmentation leads to segments of one or customized marketing or one-to-one marketing. Increase in individual initiatives to know more and understand what and how to buy has given rise of CUSTOMERIZATION It combines operationally driven mass customization with customized marketing to empower consumers to design the product/service offering of their choices. It is complex and difficult. Cannot be suitable of every product/service. The product so customized cannot be replaced, repaired and have little sales value.
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J.C. PENNY- SANTA TAGS

VISIT- http://www.zazzle.com http://www.gifts.com/categories/personalized-gifts/1vV TANU BHARGAVA

BASES OF CONSUMER MARKET SEGMENTATION

DEMOGRAPHIC

GEOGRAPHIC

PSYCHOGRAPHIC

BEHAVIORAL
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Demographic

It is based upon demographic variableRace, Age, Sex, Family size, Income, Social Class, Education, Occupation, Marital Status. It is important aspect as the choice of appropriate segment lead to efficient media reach. E.g.- Funskool, Fisher- Price segments the market on the basis of age of children.

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Geographic

It is a division or segmentation of market on the basis of geographic location. It may be conducted within a country by region, by state, by city, or even by neighborhood. Geographic consumer market segmentation which identifies neighborhoods around the country that share common demographic conditions- also known as Geo-Demographic Segmentation.

E.g.- TATA SAFARI segments the terrain area as its market.

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Psychographics & Lifestyle

Psychographics consumer segmentation is based upon understanding consumer's activities, interests and opinions. This is popularly called AIO analysis.

ACTIVITIES
SPORTS

INTERESTS
FAMILY

OPINIONS
THEMSELVES

DEMOGRAPHI CS
AGE

WORK

HOME

SOCIAL ISSUES

EDUCATION

HOBBIES

JOB

POLITICS

INCOME

SOCIAL EVENTS

COMMUNITY

BUSINESS

OCCUPATION

This gives an insight to consumers lifestyle pattern which helps to create message that directly ring true to the consumers. Lets analyze it from Lifestyle categories and examples table---

VACATION

RECERATION

ECONOMICS

FAMILY SIZE

ENTERTAINMENT

FASHION

EDUCATION

GEOGRAPHY

SHOPPING

FOOD

PRODUCTS

CITY SIZE

CLUB MEMEBERSHIP COMMUNITY

MEDIA

FUTURE

DWELLING

ACHIEVEMENTS

CULTURE

Also, Read- VALS Segmentation

STAGE IN LIFE CYCLE

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MTR-RAVA IDLI- INSTANT

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Behavioral Marketers believe that the following behavioral variables helps in constructing segments:
1. Occasions Utilizing the various occasions for promoting a product or service. E.g. Monaco biscuits promotes itself as snacks for parties by dressing it with toppings. OR Haldirams ad on Rakshabandhan
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2. Benefits
Buyers are classified according to benefits they seek. Various product categories seek to satisfy needs of different people with different benefits. E.g.- Heads & Shoulders ads for Anti-dandruff or Liril ads on freshness

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3. User Status Every product has its non-users, ex-users, potential users, first time users, and regular users. The key here is to attract potential user or non user and analyze the reason why they are not using brands product/services. E.g.- Mothers-tobe are captured by infant products manufactures so that they become heavy user. Johnsons baby oil
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4. Buyer- Readiness Stage

Some people are unaware of the product, some are aware, some are informed, some are interested, some desire the product. To help characterize how many people are at different stages and how well they have converted people from one stage to another, some marketers employ marketing funnel. It encourages to initially build interest/awareness and gradually describe products usage benefits.
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The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage

Aware Ever tried Recent trial Occasional user Regular user Most often used

5. Usage Pattern and Loyalty

If the usage pattern of a product by a particular segment leads it to heavy user, then it is considered under preferred Or primary target segment. It includes 4 types: a) Brand Loyal Consumers- They are an asset to the brand

b) Switchers- They are the variety seekers and buy products where discounts are available. They are highmaintenance and expensive segment to win as new deals by competitors deviate them c) Non- Users- They provide lowest level of opportunity
d) Emergent Consumers- They provide business opportunity. Their brand preference is under developed and they are in process of becoming brand loyal users. E.g. Gen-X group
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Behavioral Segmentation Breakdown

Principle Benefit Brightness of Teeth

Psychographic

Behavioural

Demographic

Brands

Outgoing, Active, Highly sociability Health conscious

Smokers

Teenagers Youngsters

Close-up Promise Aquafresh

Decay prevention

Heavy users

Large families Pepsodent Colgate Total Children Aquafresh Colgate

Taste

Self Indulgent

Mint lovers

Low Price

Price conscious Independent

Heavy users Deal prone

Men, Traditional

Neem Babool

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Segmenting for Business Markets

Demographic-Industry, Company size, Location

Operating Variable- Technology, Usage status, Customer capabilities

Purchasing Approaches- Power structure, Purchase- function organization, General purchasing policies, Purchasing criteria

Situational Factors-Urgency, Specific application, Size of order

Personal Characteristics-Buyer-seller similarity, Attitudes toward risk, Loyalty

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Requirements for Effective Segmentation

Measurable

Size, purchasing power, profiles of segments can be measured.

Segments can be effectively reached and served.

Accessible

Substantial

Segments are large or profitable enough to serve.

Differential

Segments must respond differently to different marketing mix elements & programs.

Actionable

Effective programs can be designed to attract and serve the segments.

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TARGETING
The marketers decide Targeting on the basis of :

What T.A. of segment want v.s. organizations ability to provide.

e.g.- Dominos Pizza provides food services to doorstep in hour of an order placement.

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Segment size and growth potential Segment size is a function of the number of people, households or institutions in the segment plus their willingness to spend in the product category.
Marketers must keep in mind the heavy users as they may be small but can be profitable in sustaining potential growth of the segment. e.g.- Tupperware has small no. of users but are brand loyal.
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Competitors Power of buyers and suppliers, availability of substitutes, niche market conditions should be identified when deciding on the target consumers.

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LEVELS OF TARGETING
After the understanding and evaluating different segments, the company can consider the following patterns of target market selection.

Singlesegment

Selective Specialization

Product Specialization

Market Specialization

Full Market Coverage

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Single-segment concentration

It is concentrated marketing, in which firm gains a strong knowledge about a particular segment needs and aspire to achieve strong market presence. Firm enjoys specialization in production, distribution and promotion leading to high ROI. Disadvantage- Due to dynamic environment, a segmented market can turn sour or competitor may invade the single-segment. Economies of scope is required rather isolated segments. Supersegmenting is required.

Concentrated Strategy

Single Marketing Mix

Organization Target Market

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Selective Segmentation

A firm selects a number of segments, each objectively attractive and appropriate with little or no synergy amongst the other segments. Premium pricing is possible This Multi-segment strategy helps in diversifying firms risk/less risk The basis idea is to generate more profits. Disadvantage- High costs & Cannibalization TANU BHARGAVA

Product Specialization

The firm makes a certain product that it sells to several different market segments. Drawback- A change in trend or technology can overpower and affect its growth in target market.

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Market Specialization

The firm concentrates on serving many needs of a particular customer group. Helps to build strong reputation in this customer group and becomes a channel for additional products the customer group can use. Drawback- Budget loss and shrinkage in group size.

AKC Group Ltd. Developed attendance software for Amity University

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Full Market Coverage

The big firm can undertake the full market coverage strategy as they attempt to serve all customer groups with all products as they might need. It can be done in two ways: Differentiated marketing Undifferentiated marketing

Undifferentiated

Ignores segment difference and market in the Whole spectrum. Mass distribution. Designs product and marketing program to provide superior image and appeal. Being narrow product line- reduce costs of research and development, inventory, transportation, advertising, marketing research and product management. Lower cost= lower prices to win pricesensitive segment consumer group.
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Undifferentiated Strategy

Single Marketing Mix

Organization

Target Market

Differentiated

Firms operated in several market segments and designs different products for each. Creates more sales= higher costs Increase the cost of production, advertising, product management etc. Cautious about overM.A.C. cosmetics is more youthful hipsters segmentation of the markets.
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Differentiated Strategy
Marketing Mix 1

Marketing Mix 2 Organization Target Market

Selecting Marketing Mix with Full Market Coverage Targeting

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

POSITIONING
It revolves around the following question:

Who am I? (Brands identity)

What am I? (Functional capability)

For whom am I? (Target Audience) Why me? (Reason to choose me over competitors)
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Product Levels

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Definition

It is an act of designing the companys offerings and image to occupy a distinctive place in the mind of the target market. The goal is to locate the brand in the minds of customers to maximize the potential benefits to the firm. The result of successful positioning is creation of customer-focused value proposition, a cogent reason why the target market should buy the product. Positioning requires determining a frame of pointsof-parity and point-of-difference for brand association.
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Defining Associations Points-of-difference Points-of-parity (PODs) (POPs) Attributes or benefits Associations that are consumers strongly not necessarily associate with a brand, unique to the brand positively evaluate, and but may be shared believe they could not with other brands. find to the same extent They have two basic with a competitive brand. forms: Category E.g.- APPLE in its points-of-parity and design and touch screen Competitive-points-offeatures parity

Different types of Positioning strategies: 1. Positioning by corporate identity

Brands/companies that are household names and used to imply the competitive superiority. These are consumer-facing brands used across all the firm's activities, and this name is how they are known to all their stakeholders consumers, employees, shareholders, partners, suppliers and other parties.
Eg- TATA, SONY, HERO MOTOCORP etc.
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2. Positioning by brand endorsement

Positioning the subbrand/new brands by usage of company's powerful brand names. E.g.- SONYs VAIO

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3. Positioning by product attributes and benefits It involves setting the brand apart from competitors based on specific brand attributes or benefits offered.
e.g.- TATA Indica more car per car It emphasize economy, safety, reliability. Advertisers also use Unique Emotional Values (UEV) in case of ego-intensive or feeling category of products.
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4. Positioning by use based on occasion and time It is positioned on the basis of finding an occasion or time of use of a particular product or service. e.g.- DETTOL- use when cuts or burns happens STREPSILS- when throat infection occurs.
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5. Positioning by price quality

Powerful approach for heterogeneous market; where consumers quality expectation levels are different.
Thus, price quality positioning helps to satisfy needs of different socio-economic groups. e.g.- ROLEX- uber, high-quality needs SONATA- value for money. It answers questions like Who am I? Or Why me? for T.A. to decide.
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6. Positioning by product category

The product/service is positioned to be perceived as belonging to different product category. It is also called inter-set positioning or macropositioning. e.g.- DOVE by HUL, it positioned away from toilet soap category. It is perceived as a cleansing cream product. or 7-UP by PEPSI position as a beverage that has a fresh clean taste that is thirst quenching.

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7. Positioning by product user characteristics The positioning of any product/service dependent on the characteristics of T.A.(demographics,psychographics,psychologic al etc.) e.g.- Dabur Chayavanprash for families to build resistance from cold for grandparents and their grandchildren.

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8. Positioning by competitors Positioning products/services as better than competitors e.g.- HT is now no.2 it thus, develops natural sympathy & inclination to support from T.A. or iMac comparing this to a PC is nothing short of a slander It answers question- Why me?

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9. Repositioning
A brand repositioning usually considered when there are attractive opportunities or the brand sales decline or remains stagnant. e.g.- Milkmaid initially positioned as a tea or coffee whitener. Now it is positioned recipe for dessert.
Repositioning should be used very careful because it often confuses the T.A.

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POSITIONING ERRORS
Four major positioning errors: Under positioning - Failing to position the strong features of product/service. It occurs when consumers cannot identify benefits of purchasing/consuming that product/service. Eg.- Solar lamp, Volvo positioned as- Drive Safely Over positioning - Giving buyers an image that the product is too special. It reflects the idea that the product is for a niche group. E.g- Tanishq jewelery are highly priced. Confused positioning - Leaving buyers with a confused image of a company by showcasing two or more benefits that contradict each other Doubtful positioning Creating a product as a brand before it can be properly positioned. E.g.- Fair and Handsome
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Question to Think

IS POSTIONING AN ATTEMPT TO MISLEAD CONSUMERS?

RECOMMENDED READ- Positioning - The Battle for Your Mind by Al Ries and Jack Trout

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THANK YOU

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