Market Segmentation Targeting & Positioning

Prof. Ahimpreet Jurry Marketing Management PGP/SS/2010-12//SEM1

STP Strategies
Market positioning Market segmentation Market targeting 3.Develop measures of segment attractiveness. 4.Select the target segment(s). 5. Develop positioning for each target segment. 6.Develop marketing mix for each target segment.

1. Identify bases for segmenting the market .

2. Develop profiles of resulting segments .

MARKET SEGMENTATION
Who is being Targeted?

First, What Is A Market?

Actual or Potential Customers with
Authority To Buy Buying Power (Ability)

Willingness - Want To Buy

Unmet need or want

Market Segmentation
Divides the market into two or more (homogeneous) sub groups based on similar expected responses to marketing mix offerings. Assumption: subgroups differ in wants/needs that require separate marketing mixes. (response elasticity-inelasticity) Process: identify bases of audience division, develop measures of sales potential (demand estimation), evaluate, select audience and position product via the marketing mix.

Major Segmentation Variables for Consumer Markets

Geographic Region Country size City size Density Climate Demographic Age Gender Life cycle Family size Income Occupation Education . Psychographic Social class Lifestyle Personality Behavioral Purchase occasion Benefits sought User status Usage rate Loyalty status

Major Segmentation Variables for Business Markets)

Demographic Industry Company size Location Operating variables Technology User/nonuser status Customer capabilities

Purchasing approaches Purchasing function organization. Situational factors Power structure. Urgency Nature of existing Specific application relationships. Size of order. General purchase policies. Personal characteristics Purchasing criteria. Buyer-seller similarity Attitudes toward risk Loyalty.
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Market Segmentation
Environmental Opportunity Analysis Connects Company Resources with Market Demand

Target Market Segmentation

Demand Estimation

Major Segmentation Strategies

A. Undifferentiated Strategy
$

One Marketing Mix

(one product)

Mass Market
(everyone) (one demand) curve

Undifferentiated Strategy
Advantages Cost Economies Disadvantages Hyper competition Majority - Fallacy Imprecise - Inefficient

a mass marketing effort, Offer one product to the total market (everybody) E.g., Coca-Cola

B. Concentrated Strategy
One Marketing Mix (one or more) products
$
Segment 1 Segment 2 and subdivision 2A, 2B Segment 3

Concentrated Strategy
Choose & focus on one segment E.g., Mercedes, VW

Advantages

Disadvantages

Precise - Efficient High Risk (Knowledge of Consumer) One Market Segment Cost Economies (80-20 principle)

C. Differentiated Strategy
Stimuli Target Audience Black Box $ Segment 1
Responses

Marketing Mix 1 (Product 1) Marketing Mix 2 (Product 2) Marketing Mix 3 (Product 3)

demand curve 1
$

Segment 2

Q demand curve 2
$

Segment 3

Q demand curve 3

Differentiated Strategy
Target two or more segments with one or more brands.

Potential Advantages: - Precision - Efficiency Potential Disadvantages: - Cost Diseconomies Potential Social Issue: - Product Proliferation

Sales Increase

Cross segments: Offer same product across different segments. E.g., Duponts Teflon

Custom Marketing
FOR REPEAT HOTEL GUESTS

Your name

One-to-one marketing Uses data based-marketing and information technology For example... GATEWAY, DELL

Room preferences Special requests Smoking or non smoking

Credit card number

Frequent hotel user discount

Counter segmentation: Consolidate several segments and launch or reposition a product to cover all segments. E.g., Nissan and Toyota

Two Types of Markets

Consumer Market Rascos Motor Oil

Organizational or Business-to-Business Market (B2B)

Segmentation Variables for Organizational (B2B) Markets

Type of industry Organizational characteristics Type of product & volume Financial Size Geographic location Purchase behavior/usage

Segmentation Variables for Consumer Markets

Objective: Customer Satisfaction
Marketing Concept

Product Benefits Product Usage heavy - light

Problem Solution

Psychographic Motives, Life style Audience Characteristics Geography - Demographics - Customer Type
There is no single best way. It is a bundle.

 The characteristics of market segments: Measurable; Accessible; Substantial; Differentiable; Actionable.

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Market Segmentation
Benefits: Non-price focus Brand demand becomes more inelastic Operational efficiency. . for resources Disadvantages: Identifying demand elasticities Separating sub group(s) (Cannibalism) Increased costs Over fragmentation

Target Marketing
Evaluating Market Segments
Segment Size and Growth Segment Structural Attractiveness Company Objectives and Resources

Target Markets

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Target market Target market is a set of buyer sharing common needs or characteristics that the company decides to serve.

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Market Segmentation
Levels of market segmentation

Mass marketing

Segment marketing

Niche marketing

Micromarketing

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Market Positioning
Product position
The way the product is defined by consumers on important attributes the place the product occupies in consumers minds relative to competing products

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Choosing a positioning strategy (P.270)

Identifying possible Competitive Advantage

Choosing the right competitive Advantage

Selecting an Overall Position Strategy

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Competitive advantages
Product Differentiation Services Differentiation Channel Differentiation

Personnel Differentiation

Image Differentiation

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Choosing the right competitive advantages

How many differences to promote ?

Which differences to promote?

Important, Distinctive, Superior Communicable Preemptive Affordable Profitable

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Selecting a overall positioning strategy

Value proposition: The full positioning of a brand the full mix of benefits upon which it is positioned.

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Possible value propositionsP.263

Price
More
More for more

The same
More for the same

Less
More for less The same for less Less for much less
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More

Benefits

The same

Less

Positioning statement
A statement that summarizes company or brand positioning it takes this form: To (target segment and need) Our (brand) Is (concept) That (point-of-difference)

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Communicating & delivering the chosen position

Communicating
Chosen position
Product, Price, Place, Promotion

Company

Target customer

Delivering

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 Single Newly Married without children Married with children Middle age Middle age without children Older married (Empty nest) Solitary survivor Divorces Unwed w/children Singles

Demographic Segmentation on marital By Family Life CycleBased status and

children