Market Segmentation, Targeting And Positioning
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MARKET SEGMENTATION, TARGETING AND POSITIONING
SEGMENTING THE MARKET
Instead of trying to market what is easiest for us to market, we must find out much more what the consumer is willing to buy-----We must apply our creativeness more intelligently to people, and their wants and needs, rather than to products. (CHARLES G. MORTIMER)
MARKETS EXHIBIT VAST DIFFERENCES
A marketer should have deeper understanding of markets, which are the starting point for all marketing planning and control. To understand a particular market, one should first have a working knowledge of the important institutional characteristics of five types of markets:
Consumer Market International Market
Producer Market
COMPANY (PRODUCT)
Reseller Market Govt. Market
(Buying motives are different in each market, therefore different selling techniques will be used for gaining success in each market)
MARKET SEGMENTATION
A company can not serve all customers in a broad market. The customers are too numerous and diverse in their buying requirements. The company needs to identify the market segments that it can serve more effectively. Many companies are embracing target marketing. Here sellers distinguish the major market segments, target one or more of those segments, and develop products and marketing programs tailored to each.
STRATEGIC MARKETING PROCESS
It is a managerial process of identifying, analyzing, choosing and exploiting marketing opportunities to fulfill the company’s mission and objectives. More specifically it consists of :
(1.) Market Opportunity Analysis (2.) Market Segmentation and Target Market Selection (3.) Competitive Positioning (4.) Marketing Strategy and Marketing Mix.
TARGET MARKETING
Target marketing requires marketers to take three major steps : (1) Identify and profile distinct groups of buyers who might require separate products or marketing mixes (market segmentation). (2) Select one or more market segments to enter (market targeting). (3) Establish and communicate the products’ key distinctive benefits in the market (market positioning).
MARKET SEGMENTATION
Markets differ in their degree of heterogeneity . At one extreme they are homogeneous (Similar) and at the other extreme they are heterogeneous (Substantially different). Market Segmentation is the process of identifying group of buyers with different buying desires or requirements. There may be three basic market preferences: 1.Homogeneous, 2. Diffused, and 3. Clustered
BASIC MARKET PREFERENCE PATTERNS Attribute Y
:::::::::::::: :::::::::::::: :::::::::::::: Attribute :::::::::::::: Attri. :::::::::::::: :::::::::::::: Y ::::::::::::::::: ::::::::::: Y :::::::::::::: ::::::::::::::
Attribute X
Attribute X
A.Homogeneous Preferences
B.Diffused Preferences
Attribute X C.Clustered Preferences
MARKET-SEGMENTATION PROCEDURE (THREE STEP PROCESS FOR IDENTIFYING MARKET SEGMENTS)
(1) Survey Stage : The researcher conducts exploratory interviews and focus groups to gain insight into consumer motivations, attitudes, and behavior. Then the researcher collects data on attributes and their importance ratings; brand awareness and brand ratings; product usage patterns; and geographics, demographics and psychographics of the respondents.
MARKET-SEGMENTATION PROCEDURE (THREE STEP PROCESS FOR IDENTIFYING MARKET SEGMENTS)
(2) Analysis Stage : The researcher applies factor analysis to the data to remove highly correlated variables, then applies cluster analysis to create a specified number of maximally different segments. (3) Profiling Stage : Each cluster is profiled in terms of its distinguishing attitudes, behavior, demographics, psychographics, and media patterns. Each segment is given a name based on its dominant characteristic.
ADVANTAGES OF MARKET SEGMENTATION
It improves a company’s understanding of why consumers do or do not buy certain products. Therefore prepares a company to meet changing market demands. Information gained from segmentation allows the organization to plan a systematic and effective marketing programme to satisfy the consumer needs. Better assessment of the strengths and weaknesses of the competition. Better allocation of marketing resources.
HOW TO RATE SEGMENTS ? (CRITERIA FOR SELECTING SEGMENTS)
MEASURABILITY
SIZE
ACCESSABILITY
RESPONSIVENESS
SEGMENTATION ANALYSIS (BASIS OF CONSUMER CHARACTERISTICS SEGMENTATION) (1) Geographic ( Where they live ? )
(2) Demographic ( Who they are ? ) (3) Psychographic (How they behave ? ) (On the basis of social class, life style, personality etc.)
CONSUMER RESPONSES (4) Behavioral Segments (Why they buy ? ) (Buyer readiness stage, Benefits sought, Usage rate, Attitude, Loyalty, Occasions, User status)
TARGET MARKET STRATEGY
Sellers may have different thinking for their Marketing Strategy: (1) Mass Marketing (2) Product Variety Marketing (3) Target Marketing
TARGET MARKET STRATEGIES (1.) UNDIFFERENTIATED
MARKETING MIX
MARKET
TARGET MARKET STRATEGIES (2.) DIFFERENTIATED
Mktg. Mix 1 MM2 MM3
Seg. 1 Seg. 2 Seg. 3
TARGET MARKET STRATEGIES (3.) CONCENTRATED
Segment 1 Marketing Mix
Seg. 2 Seg. 3
FIVE PATTERNS OF TARGET MARKET SELECTION
(1) Single Market Concentration (2) Market Specialization (3) Product Specialization (4) Selective Specialization (5) Full Coverage
FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGY
1. Company’s Resources 2. Product Homogeneity 3. Product Stage in the Life Cycle 4. Market Homogeneity 5. Competitive Marketing Strategy
POSITIONING FOR COMPETITIVE ADVANTAGE What is Market Positioning ?
A product’s position is the way the product is defined by consumers on important attributes.
The place, a product occupies in consumers’ minds relative to competing products.
POSITIONING STRATEGIES Product Attributes Needs they fill or the benefits they offer Usage Occasions Users Against a Competitor Away from Competitors Product Classes (Marketers often use a combination of these positioning strategies)
IDENTIFYING POSSIBLE COMPETITIVE ADVANTAGE
Product Differentiation
Services Differentiation
Personnel Differentiation
Image Differentiation
SELECTING THE RIGHT COMPETITIVE ADVANTAGE How
many differences to promote ? Which differences to promote ?
DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY
All products can be differentiated to some extent. But not all differences are meaningful or worthwhile. A difference is worth establishing to the extent that it satisfies the following criteria : Important : The difference delivers a highly valued benefit to a sufficient numbers of buyers. Distinctive : The difference is delivered in a distinctive way.
DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY
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.
SEGMENTING THE MARKET
Instead of trying to market what is easiest for us to market, we must find out much more what the consumer is willing to buy-----We must apply our creativeness more intelligently to people, and their wants and needs, rather than to products. (CHARLES G. MORTIMER)
MARKETS EXHIBIT VAST DIFFERENCES
A marketer should have deeper understanding of markets, which are the starting point for all marketing planning and control. To understand a particular market, one should first have a working knowledge of the important institutional characteristics of five types of markets:
Consumer Market International Market
Producer Market
COMPANY (PRODUCT)
Reseller Market Govt. Market
(Buying motives are different in each market, therefore different selling techniques will be used for gaining success in each market)
MARKET SEGMENTATION
A company can not serve all customers in a broad market. The customers are too numerous and diverse in their buying requirements. The company needs to identify the market segments that it can serve more effectively. Many companies are embracing target marketing. Here sellers distinguish the major market segments, target one or more of those segments, and develop products and marketing programs tailored to each.
STRATEGIC MARKETING PROCESS
It is a managerial process of identifying, analyzing, choosing and exploiting marketing opportunities to fulfill the company’s mission and objectives. More specifically it consists of :
(1.) Market Opportunity Analysis (2.) Market Segmentation and Target Market Selection (3.) Competitive Positioning (4.) Marketing Strategy and Marketing Mix.
TARGET MARKETING
Target marketing requires marketers to take three major steps : (1) Identify and profile distinct groups of buyers who might require separate products or marketing mixes (market segmentation). (2) Select one or more market segments to enter (market targeting). (3) Establish and communicate the products’ key distinctive benefits in the market (market positioning).
MARKET SEGMENTATION
Markets differ in their degree of heterogeneity . At one extreme they are homogeneous (Similar) and at the other extreme they are heterogeneous (Substantially different). Market Segmentation is the process of identifying group of buyers with different buying desires or requirements. There may be three basic market preferences: 1.Homogeneous, 2. Diffused, and 3. Clustered
BASIC MARKET PREFERENCE PATTERNS Attribute Y
:::::::::::::: :::::::::::::: :::::::::::::: Attribute :::::::::::::: Attri. :::::::::::::: :::::::::::::: Y ::::::::::::::::: ::::::::::: Y :::::::::::::: ::::::::::::::
Attribute X
Attribute X
A.Homogeneous Preferences
B.Diffused Preferences
Attribute X C.Clustered Preferences
MARKET-SEGMENTATION PROCEDURE (THREE STEP PROCESS FOR IDENTIFYING MARKET SEGMENTS)
(1) Survey Stage : The researcher conducts exploratory interviews and focus groups to gain insight into consumer motivations, attitudes, and behavior. Then the researcher collects data on attributes and their importance ratings; brand awareness and brand ratings; product usage patterns; and geographics, demographics and psychographics of the respondents.
MARKET-SEGMENTATION PROCEDURE (THREE STEP PROCESS FOR IDENTIFYING MARKET SEGMENTS)
(2) Analysis Stage : The researcher applies factor analysis to the data to remove highly correlated variables, then applies cluster analysis to create a specified number of maximally different segments. (3) Profiling Stage : Each cluster is profiled in terms of its distinguishing attitudes, behavior, demographics, psychographics, and media patterns. Each segment is given a name based on its dominant characteristic.
ADVANTAGES OF MARKET SEGMENTATION
It improves a company’s understanding of why consumers do or do not buy certain products. Therefore prepares a company to meet changing market demands. Information gained from segmentation allows the organization to plan a systematic and effective marketing programme to satisfy the consumer needs. Better assessment of the strengths and weaknesses of the competition. Better allocation of marketing resources.
HOW TO RATE SEGMENTS ? (CRITERIA FOR SELECTING SEGMENTS)
MEASURABILITY
SIZE
ACCESSABILITY
RESPONSIVENESS
SEGMENTATION ANALYSIS (BASIS OF CONSUMER CHARACTERISTICS SEGMENTATION) (1) Geographic ( Where they live ? )
(2) Demographic ( Who they are ? ) (3) Psychographic (How they behave ? ) (On the basis of social class, life style, personality etc.)
CONSUMER RESPONSES (4) Behavioral Segments (Why they buy ? ) (Buyer readiness stage, Benefits sought, Usage rate, Attitude, Loyalty, Occasions, User status)
TARGET MARKET STRATEGY
Sellers may have different thinking for their Marketing Strategy: (1) Mass Marketing (2) Product Variety Marketing (3) Target Marketing
TARGET MARKET STRATEGIES (1.) UNDIFFERENTIATED
MARKETING MIX
MARKET
TARGET MARKET STRATEGIES (2.) DIFFERENTIATED
Mktg. Mix 1 MM2 MM3
Seg. 1 Seg. 2 Seg. 3
TARGET MARKET STRATEGIES (3.) CONCENTRATED
Segment 1 Marketing Mix
Seg. 2 Seg. 3
FIVE PATTERNS OF TARGET MARKET SELECTION
(1) Single Market Concentration (2) Market Specialization (3) Product Specialization (4) Selective Specialization (5) Full Coverage
FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGY
1. Company’s Resources 2. Product Homogeneity 3. Product Stage in the Life Cycle 4. Market Homogeneity 5. Competitive Marketing Strategy
POSITIONING FOR COMPETITIVE ADVANTAGE What is Market Positioning ?
A product’s position is the way the product is defined by consumers on important attributes.
The place, a product occupies in consumers’ minds relative to competing products.
POSITIONING STRATEGIES Product Attributes Needs they fill or the benefits they offer Usage Occasions Users Against a Competitor Away from Competitors Product Classes (Marketers often use a combination of these positioning strategies)
IDENTIFYING POSSIBLE COMPETITIVE ADVANTAGE
Product Differentiation
Services Differentiation
Personnel Differentiation
Image Differentiation
SELECTING THE RIGHT COMPETITIVE ADVANTAGE How
many differences to promote ? Which differences to promote ?
DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY
All products can be differentiated to some extent. But not all differences are meaningful or worthwhile. A difference is worth establishing to the extent that it satisfies the following criteria : Important : The difference delivers a highly valued benefit to a sufficient numbers of buyers. Distinctive : The difference is delivered in a distinctive way.
DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY
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.
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