marketing

Segmentation, Targeting and Positioning

By Rimjhim Singh & Amit Kumar

Outlines
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Introduction Segmentation & its strategies Targeting & its strategies Positioning & its strategies

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Steps in Mktg Segmentation, Targeting and Positioning

Market Segmentation

1. Identify bases for segmenting the market 2. Develop segment profiles

Market Targeting

3. Develop measure of segment attractiveness 4. Select target segments

Market Positioning

5. Develop positioning for target segments 6. Develop a marketing mix for each segment 3

Segmentation

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The process of dividing the heterogeneous market in to homogenous sub-groups for the purpose of targeting it. Dividing the total mkt for services(or goods) of consumers in to several smaller groups with similar needs or characteristics that influence the demand for the purpose of marketing.

Segmentation Strategies

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Geographic segmentation; Demographic segmentation; Behavioral segmentation; Psychological segmentation; Volume segmentation; Benefit segmentation;

Basis for market segmentation

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On the basis of consumers personal characteristics (nonbehavioral correlates)

On the basis of consumer responses (behavioral correlates)

Geographic

Psychographic

Demographic

Socio-economic

Usage based

Benefits

Loyal status

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Geographic Segmentation

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International

National

Regional/City

Geographic Segmentation

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Geographic Segmentation: This segmentation divides the consumers on the basis of countries, regions, states, cities, and towns. Ex: A bank practices geographic segmentation when it decide on the location of a new branch. Since a bank cannot have locations everywhere, it must carefully allocate its resources to meet the business goals. It does that by locating the new branch offices in the more promising geographic market area.

Demographic Segmentation

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Demography is the study of people in the aggregate , including population, size, age, sex, income, occupation & family life cycle. Demographic segmentation is extensively used in the banking , & tourism Ex: Generally old people take interest in museums and young people are interested in theme parks.

Demographic Segmentation

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Dividing the market into groups based on variables such as: o o o o o o o o o o Age Gender Family size or life cycle Income Occupation Education Religion Race Generation Nationality

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Psychographic Segmentation

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 Psychographic Segmentation: It is a process of dividing markets into segments on the basis of consumer life styles, social class or personality profile. Ex: A bank might identify the young professional on fast track as the prime market for credit card sales.

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Psychographic Segmentation
Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics.
People in the same demographic classification often have very different lifestyles and personalities.

Psychographic Segmentation

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Divides Buyers Into Different Groups Based on:

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Psychographic Segmentation

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Life style: This depends upon the peoples activities, interests & opinion (AIO). Ex: Fashion marketing professional rely heavily on life style marketing.

Behavioral Segmentation

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Occasion
Special promotions labels for holidays. Special products for special occasions.

Loyalty Status
Nonusers, exusers, potential users, first-time users, regular users. Usage Rate Light, medium, heavy.

Benefits Sought
Different segments desire different benefits from the same products.

Behavioral Segmentation

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Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product

Volume segmentation
Marketers make an attempt to segment final consumers and organizational consumers based on usage rate, usage expenses and brand loyalty. Segmentation based on volume takes into consideration: Brand loyalty Heavy usage (heavy half) Medium usage Light usage Non users

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Loyalty Status Segmentation

Hard-core Split loyals Shifting loyals Switchers

Volume segmentation

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The volume segmentation follows Pareto Principle which says 80% of profits come from 20% of the customers. Ex: In a bank 80% of the saving volume is on account of 20% of its customer.

Benefit segmentation

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Benefit segmentation is the process of grouping consumers into market segment on the basis of different benefits sought from the product. Ex: A bank may offer the benefit of after working hour appointment for the upper income segment.

Benefit segmentation
Segmented on the basis of benefits sought by consumers

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Toothpaste General benefits that consumers seek are cleanliness and hygiene in all segments. Other key benefits are:-

Cosmetic

Fluoride

Herbal

Protection against foul smell, modernity and cosmic value. EgColgate, Prudent

Family health, extra protection for children. EgColgate Fluoride, Cibaca Fluoride.

Family health and welfare. Traditionally good for health. Eg-Neem, Dabur.

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Targeting
Targeting involves selecting which segments in a market are appropriate to focus on and designing the means of reaching them. A market for which a company designs, implements and maintains a market mix intended to meet the needs of that segment also considering segment competitive positioning

Market Targeting Strategies

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There are three basic types of strategies:  Undifferentiated  Multi-segment (Differentiated)  Concentration (Niche)

Market Targeting
Market Coverage Strategies

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A. Undifferentiated Marketing

Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Company Marketing Mix
B. Differentiated Marketing

Market

Segment 1 Segment 2 Segment 3

C. Concentrated Marketing

Segment 1 Segment 2 Segment 3

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1. Undifferentiated Strategy

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A strategy that ignores differences between groups within a market and offers a single marketing mix to the entire market It works when a product is new to the market and there is minimal or no competition E.g. Cadburys chocolate
Agricultural commodities

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Undifferentiated (Mass) Marketing

Ignores segmentation opportunities

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Advantages and disadvantages

Minimizes risks, as losses in one segment can be made up for in others Unique product features allow for higher prices Increased costs for differentiated products and marketing

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2. Multi-segment/Differentiated Strategy
Targeting two or more segments with different marketing mixes for each. Minimizes risks, as losses in one segment can be made up for in others Unique product features allow for higher prices. Increased costs for differentiated products and marketing E.g. General Motors & Nike

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Differentiated (Segmented) Marketing

Targets several segments and designs separate offers for each. Coca-Cola (Coke, Sprite, Diet Coke, etc.) Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.) Toyota (Camry, Corolla, Prius, Scion, etc.)

3. Concentration/Niche Marketing Strategy

Focus on one submarket Greater knowledge of customers needs Economies of scale Entry of a strong competitor Change in size or tastes of the segment E.g. Harley-Davidson

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Niche Marketing

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Targets one or a couple small segments Niches have very specialized interests

Micromarketing

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Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations. Highest Customization.

Positioning

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The place a product occupies in consumers minds relative to competing products. eBays positioning: No matter what it is, you can find it on eBay!

Positioning Strategy

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Competitive advantages Points of Parity(Similar

features + identity)

Points of Difference
Ex: Bank decides to open till late & on holidays also.

Positioning results from differentiation and competitive advantages. Positioning may change over time.

Sources of Differentiation

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Product Design Quality Additional Services Image People (Staff) Price Other

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Choosing the Right Competitive Advantages

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The best competitive advantages        Important Distinctive Superior Communicable Pre-emptive (A prior appropriation of something ) Affordable (to company and consumer) Profitable

Moral: Avoid meaningless differentiation.

Positioning Errors

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Under-positioning:
Not positioning strongly enough.

Over-positioning:
Giving buyers too narrow a picture of the product.

Muddled Positioning:
Leaving buyers with a confused image of the product.

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