STP

Identify customers needs and market segments.

Develop profiles of resulting market segments
Segmentation
Evaluate attractiveness
Select target markets
Targeting
Identify the differential advantages in each segment.
Development and selection of positioning concepts
Positioning
Develop marketing mix for each segment according
to a chosen position.

Marketing plan
7 - 3
Market Segmentation

Markets consist of buyers, and buyers differ in one or
more ways. They may differ in their wants, resources,
locations, buying attitudes, and buying practices.
Through market segmentation, companies divide large,
heterogeneous markets into smaller segments that can
be reached more efficiently and effectively with
products and services that match their unique needs.
Dividing a market into distinct groups with distinct
needs, characteristics, or behavior who might
require separate products or marketing mixes.
Level of Market Segmentation

MASS MARKETING. EG, FORD MODEL-T.
SEGMENT MARKETING
NICHE MARKETING
LOCAL MARKETING
INDIVIDUAL MARKETING, EG- CUSTOMIZATION
Mass Marketing
Mass production, distribution and promotion of the
product in about the same way to all the consumers is
called Mass marketing. Such as Henry Ford offered the
model T car to all buyers in black color, similarly coca
cola produced only one drink for whole market hoping
it will appeal to everyone. It creates lowest potential
market which lead to the lowest cost or higher margin.
However distribution channel and advertising make it
difficult to practice.
Segment Marketing
A company that practice segment marketing isolate broad
segment that make up a market and adopt its offer to more
closely to match the one or more segment. Such as Marriott
hotel offers its service to variety of segment-business
travelers, families and others-with the packages to their
varying need. Similarly GM designed specific model to
different income and age group.
Segment marketing offers several benefits over mass
marketing. The company can market more efficiently and
effectively in targeting its product, channel and
communication programs to the needs of carefully defined
segment.
Niche Marketing
Niche Marketing focus on sub group. A niche is more
narrowly defined group usually identified by dividing a
segment into sub segment or by defining a group with a
distinctive set of traits who may seek a special combination
of benefits. For example; sports utility or light duty pick-up
vehicle in a vehicle segment. Niches are smaller market
segment and normally attract only one or few competitors.
Customers are willing to pay premium price eg ; HD get
high price for its two wheeler because no other offer the
same product and service membership. It offer small
companies and opportunities to compete with limited
resources with large competitors. In many market it
became norms.
Micro Marketing
Segment and Niche marketers tailor their offers and
marketing programs to meet the needs of various
market segment. However they dont customize their
offer to each individual customers. Micro marketing is
the practice of tailoring product and marketing
program to suit the taste of specific individual and
location. It includes local marketing individual
marketing.
LOCAL MARKETING
It involve tailoring brand and promotion to the needs
and want of the local customer group-cities,
neighborhood. City bank provide different mixes of
banking service in its branches depending on
neighborhood demographics.
It has some drawbacks;
It can drive up the manufacturing and marketing cost
it can also create logistic (distribution) problem.
Further a brands overall image might be diluted.
Individual Marketing
It tailor the product and marketing program to the
needs and preferences of individual customers. It is
also called One to One marketing and customize
marketing. Internet helps for mass customization to
design the product and service to meet to individual
needs. Such as in computer software are loaded
according to individual customers needs and
preference
Why Segmentation
Proper choice of target market.
Higher profits
Stimulate Innovation.
Ease in differentiation and positioning.
Mkt. efforts more efficient and economic.
Easy to spot less satisfied customers .
Higher market share.
Attributes of efective segmentation
Identifiable
Accessible
Sizeable
Profitable
Durable
Measurable
Compatible

BASIS OF SEGMENTATION
Although marketer consider and combine many variables
in identifying consumer market segment, the most
frequently used are:
Geographic segmentation
Demographic
Psychographics
Behavioral




Geographic Segmentation

The following variables can be used for geographical
segmentation
Area: country, district and cities
Topography and climate : Tarai, mid mountain,
Himalayan.
DEMOGRAPHIC SEGMENTATION


variables under demographic segmentation includes:
age, sex, marital status, family size.
occupation, income
education
religion
social class
generation (born between particular period)
If the market is segmented on the basis of age group, then the total
population is classified into various age group, such as
Under 5 yrs, 5-10 yrs, 10-15 yrs and above 60 yrs etc.

PSYCHOGRAPHIC
Social Class: lower class, middle class, upper class

lifestyle: culture oriented, sports oriented,
drunkard, fashionable
personality: eg- introvert, analytical, authoritarian,
aggressive, social, self-confident, money minded.
BEHAVIOURAL
occasions: Diwali, Christmas, Birthday.
Benefits desired : cost, quality, durability, health
eg- tooth paste(low cost, medicinal, cosmetic, )
user status (Rate): non user, ex-user, potential user, first
time users and regular users, light user, heavy user.
loyalty status: Popular Brand Name, Common Brand Name
and Attractive Name.
Segmentation Procedure
Identify market segments
Develop profiles of each segments
Evaluate Market segment
Select Target Market
Develop Positioning Strategy
Establish a Marketing Plan.
TARGETING
Once the segmentation is done, each segment should be
evaluated in term of size and growth to determine its
attractiveness with respect to firms capabilities , objectives
and resources.
It then chooses on of three market-coverage strategies.
Just the segment meets all criteria for viability does not
mean that a firm should pursue it.
Basis of targeting
Analysis of each segment.
The firms current and anticipated situation.
A comprehensive SWOT analysis.
A firm might consider 5 basic strategies for target market
selection.
Attractive segments might be dropped for several
reasons which include
lack of resources
No synergy with the firms mission
Overwhelming competition in the segment.
Impending technology shift.
Ethical or legal concerns over targeting a particular
segment

Single market segmentation:
M1 M2 M3

P1
P2
P3
The single-coverage market also known as single-
segment concentration which cover only one segment.
Here the company enjoy many operating economies
through specialization of its production , distribution
and promotion. However the company cannot survive
if the customer stooped buying goods or diverted
towards the next product.
Selective Targeting

M1 M2 M3

P1
P2
P3
In this market coverage , the company select few
market segment, each of which is objectively attractive
and matches the companys objective and resources. It
is also known as multi segment coverage. It has
advantages of diversifying the companys risks. If one
segment become unattractive, the company can
continue to sell product and earn profit in other
segment. But each segment require separate
marketing program.
Product specializtion
M1 M2 M3

P1
P2
P3
Here the company concentrates on making and
distributing a particular product to different market
segment.
A microscope might be sell to university laboratories,
government laboratories and commercial laboratories.
The company is prepared to make differences for these
customer group but avoids getting into the production
of any other instrument that laboratories require
Market Specialization
M1 M2 M3

P1
P2
P3
Here the company concentrates on serving many
needs of a particular customer group. i.e. many
products for single market.
For example the company deals in array of product for
universities laboratories including microscope it deals
in chemicals , tubes, burner.
Mass market Targeting:
M1 M2 M3

P1
P2
P3
In this market coverage the company attempts to select
and serve all customer groups with all the product
they might need. Only very large firm, such as
Microsoft, General motor, and Coca cola can
undertake full market coverage. Large firm can cover
whole market in two broad ways : undifferentiated and
differentiated marketing.
Undifferentiated Marketing
In it the firm ignores segment difference and goes after
the whole market with one offer. The narrow product
line keeps down the costs of research and
development, production, inventory, transportation,
marketing research, advertising and product
management. Suitable for price sensitive segment of
the market.
Differentiated Marketing

The firm operate in several market segment and
designs different product for each. It create more total
sales than undifferentiated marketing. However it also
increases the cost of doing business.
Positioning
The act of designing the cos offering and image to
occupy a distinct place in the mind of the target market.
The end result of the positioning is the successful
creation of a customer focused value proposition and
give strong reason why the target market should buy the
product. E.g.



Co Target
Customer
Benefits Price Value
proposition
Volvo Safety
conscious
Durability
and safety
20%
premium
Safest, most
durable car
for your
family
Process of positioning
Identify the organization's or brands possible
competitive advantage.
Choosing the right competitive advantage.
Selecting the overall positioning strategy.
Communicating and delivering the chosen position
Identifying Possible Competitive Advantages
The key to winning and keeping customers is to understand
their needs and buying process better than
competitors do and to deliver more value. To the extent
that a company can position itself as providing superior
value to selected target markets it gains competitive
advantages. But solid positions cannot be built on empty
promises. If a company positions its product as offering the
best quality and services it must then deliver the promised
quality and services. Thus, positioning begins with actually
differentiating the companys marketing offer so that it will
give consumers more value than competitors offers do.
Differentiation Strategies
A company or market offer can be differentiated along
the line of
Product
Service
Personnel
Channel
Image
Choosing the Right Competitive
advantages
A company is fortune enough to discover several
potential competitive advantages. It must choose one
on which it will built its positioning strategy. It must
decide how many difference to promote and which one
How many and Which ideas to promote
Find unique selling proposition and stick to it. E.g Crest(anticavity),
close up(freshness).then several benefits.
The Idea which are:-
Important
Distinctive
Superior
Easy communication to the target market.
Preemptive
Affordable
Profitable
3 major positioning errors
Under positioning: Failing to ever really position the
company at all. Some cos discover that the customers
have the vague idea of the product.
Over positioning: Giving buyers too narrow an image
of the brand e.g Levis(Costly jeans but available in the
lower range also)
Confused positioning: Buyers may have confused
image of a product.
Selecting the overall positioning
strategy
Consumers typically choose product and service that
give them the greatest value. Thus, marketers want to
position their brand on the key benefit. The full
positioning of the brand is called the Brand value
proposition which give answer to the question why
should I buy your brand?.
more
for
more
more
for the
same
more
For
Less
The same
for less
Less for
much less
More for More

It involve providing the most up scale product or service
and charging a higher price to cover the higher cost eg;
Mercedes Benz claim superior quality, durability ,
performance or style and charge a price to match. It
also offer prestige to the buyer which symbolize status
and lofty life style.
More for the same

Companies can attack a competitors more for more
positioning by introducing a brand offering
comparable quality but at lower price.
The same for less
Offering the same for less can be a powerful value
proposition because everyone like a good deal. They
dont claim to offer different or better product.
Discount store offer many of the same brand as
departmental store and specialty store but at deep
discount.
Other companies develop imitative but lower price
brand to lure customers away from the market leader.
less for much less
A marketer almost always exist for the product that offer
less and therefore cost less. Few people need, want or
can afford the very best in every thing they buy.
In many cases consumer will gladly settle for less than
optimal performance in exchange for a lower price. For
example many travelers seeking lodge prefer not to pay
for unnecessary facilities such as pool, cable television
and restaurant. South west airlines is the best example.
more for less
Of course, the winning value proposition would be to
offer more for less. Dell computer claim to have better
product and lower price.
Yet in long run company will find it very difficult to
sustain. Offering more usually cost more, making it
difficult to deliver on for less. Company that tries to
deliver both, may loose out, to more focus competitor.
Communicating the positioning
Once the co. has developed a clear positioning
statement, it must communicate the positioning
effectively through all the elements of the marketing
mix. Suppose the co. chooses the best quality
positioning. Quality must be communicated through
all physical signs and cues that people normally use to
judge quality. It can be price packaging advertising and
promotion.
Product Differentiation
Form Differentiation
Features
Customization
Performance Quality
Conformation Quality
Durability
Reliability
Repairability
Style
Design

Form Differentiation

Many products can be differentiated in form- the
size, shape , or physical structure of a product.
Consider the many possible forms taken by products
as aspirin. Although aspirin is essentially a commodity,
it can be differentiated by dosage size, shape, color,
coating or action time.
Features
Most product can be offered with varying features that
supplement their basic functions. A company can
identify and select appropriate new features by
surveying recent buyers and then calculating
customers value versus company cost for each feature ,
how long it would take to introduce it , and it whether
competitors could easily copy it. To avoid feature
fatigue, the company also must be careful to prioritize
those feature that included and find unobtrusive ways
to provide information about how consumers can use
and benefit from the feature. Companies must also
think in term of feature bundles or packages.
Customization
Marketers can differentiate products by making them
customized to an individual customers and business
partners(suppliers, distributors, retailers), and as their
factories are begin designed more flexibly, they have
increased their ability their individualize market
offerings, massages, and media. Mass customization is
the ability of a company to meet each customers
requirement to prepare on mass basis individually
designed products services, programs, and
communications. While Levis and Lands End were
among the first clothing manufactures to introduce
custom jeans, other players have introduce mass
customization into other market.
Performance Quality
Most product are established at one of four performance
levels: low, average, high, or superior. Performance is
the level at which the products primary characteristics
operate. Quality is becoming an increasingly
important dimension or differentiation as companies
adopt a value model and provide higher quality for less
money. Firms, however, should not performance level
appropriate to the target market and competitors
performance levels. A company must also manage
performance quality through time. Continuously
improving the product can produce high returns and
market share, failing to do so can have negative
consequences.
Conformance Quality
Buyers expect products to have conformance quality,
which is the degree to which all produced units are
identical and meet the promised specifications.
Suppose a porsche911 is designed to accelerate to 60
miles per hour. If every porsche 911 coming of the
assembly line does this , the model is said to have high
conformance quality. The problem with low
conformance quality is that the product will
disappoint some buyers.
Durability
Durability , a measure of the products expected
operating life under natural or stressful conditions, is a
valued attribute for certain products. Duracell
advertises itself as a long lasting battery and the brand
commands a premium price. Nokia phones are also
known for their durability. Buyers will generally pay
more for vehicles and kitchen appliance that have a
reputation for being long lasting. however, this rule is
subject to same qualifications. The extra price must
not be excessive. Furthermore, the product must not
be subject to rapid technological obsolescence, as are
personal computers and video camera.
Reliability
Buyers normally will pay a premium for more reliable
products. Reliability is a measure of the probability
that a product will not malfunction or fail within a
specified time period. Toyota describes how that
company has excelled at marketing and selling high-
quality, dependable automobiles.
Repairability
Repairability is a measure of ease of fixing a product
when it malfunction or fails. Ideal repairability would
exist if users could fix the product themselves with
little cost in money or time. Some products include a
diagnostic feature that allows service people to correct
a problem over the telephone or advice the user how to
correct it. Many computer hardware and software
companies offer technical support over the phone, by
fax or e-mail, or by real-time chat online.
Style
Style describe the products look and feel to the buyer.
Car buyers pay a premium for Jaguars because of their
extraordinary looks. Aesthetics play a key role in
brands such as Absolut vodka, Apple computer,
Montblanc pens, Godiva chocolate, and Harley-
Davidson motorcycles. Style has the advantage of
creating distinctiveness that is difficult to copy. On the
negative side, strong style not always mean high
performance. A car may look sensational but spend a
lot of time in the repair shop.
Design
Design is the factor that will often give a company its
competitive edge . Design is the totality of features
that affect how a product looks, feels, and function in
term of customer requirements. Design is particularly
important in marketing and marketing retail service ,
apparel, packaged goods, and durable equipment. The
designer must figure out how much to invest in form,
feature development, performance, conformance,
durability, reliability and style. To the consumer, a well
designed product is that is pleasant to look, and easy
to open, install, use, repair and dispose of.