Segmentation Targetg Positioning

MARKET ENTRY SEGMENTATION TARGETING AND POSITIONING Prof. Grover

What’s the Difference? Market

People or organizations with needs or wants and the ability and willingness to buy.

Market Segment

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

The process of dividing a market into Market meaningful, relatively similar, Segmentation identifiable segments or groups.

FINDING THE RIGHT MARKETS Markets = people with needs/wants and the ability and willingness to buy Types of markets: – Generic (needs) market People with broadly similar needs (social) Diverse ways of satisfying (restaurants, movies) – Products (needs) market Very similar needs (thirsty for soft drinks) Very close substitutes (Coke vs. Pepsi, and what else?) Any close substitutes or no?

Finding The Right Markets

Distinct groups on the basis of Market needs, characteristics and Segmetation behaviour who might require separate products. Market Targeting

Process of evaluating market segments’ attractiveness before entering.

Market Positioning

Placing the product at a clear, attractive and desirable place keeping in mind its competitive advantages in the market place.

Levels of Market Segmentation 1. Mass marketing (1900s)  Mass producing, distributing, promoting

2. Segment marketing (1980s)  Matching the needs  More efficient

3. Niche marketing  Focusing sub-segment groups (SUVs)

4. Micro-level marketing  Local area marketing  Tailoring products to local markets

 Individual marketing  Tailoring products to individual customers

Levels of Market Segmentation 2 Mass marketing (1920s)

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Mass producing, distributing, promoting in

undifferentiated markets In the 1920s with the inception of mass radio use This gave corporations an opportunity to appeal to a wide variety of potential customers Used to effect attitude change in wide audience for products like toothpaste, automobiles, furniture Mass marketing is the opposite of niche marketing, where a product is made specially for one person or a group of persons

Levels of Market Segmentation 3 2. Segment marketing (1980s)  A fairly homogeneous group of people having similar needs and attitudes are likely to respond similarly to a given marketing strategy. They are likely to have similar feelings and ideas about a marketing mix – i.e. the product or service, sold at a given price, and distributed and promoted in a certain way.  This calls for Market Segmentation. Market segmentation is the process of classifying a market into distinct subsets (segments) that behave in similar ways or have matching needs.  The process consists of segment identification, segment characterization, segment evaluation and target segment selection.

Levels of Market Segmentation 4 3. Niche marketing  Focusing sub-segment groups (SUVs)  Addressing a need for a product or service that is not being addressed by mainstream providers  Niche market ventures are profitable and small in comparison to the mainstream marketplace  Due to the benefits of specialization and focus on small identifiable market segments  even without the benefit of economy of scale.

Levels of Market Segmentation 5 4. Micro-level marketing  Local area marketing – Tailoring products to local markets

 Individual marketing – Tailoring products to individual customers

Today the emphasis is on local marketing reaching individual communities with specialized messages. The mass marketing era is being replaced by “mass personalization” The latest trend is to bring marketing down to the neighborhood level and make it personal to the customer or specific neighborhoods The message be delivered to people most likely to be your customers

Market Segmentation Why is segmentation important?.... Dividing market into meaningful, similar groups (or aggregating those with similar needs) Markets have a variety of product preferences Marketers can better define customer needs Decision makers can define objectives and allocate resources more accurately

Criteria for Segmentation Substantiality Identifiability and Measurability Accessibility Responsiveness

Segment must be large enough to warrant a special marketing mix. Segments must be identifiable and their size measurable. Members of targeted segments must be reachable with marketing mix. Unless segment responds to a marketing mix differently, no separate treatment is needed.

Basis for Customer Segmentation Ho w do you Segme nt the ma rket s wi th s imi la r ne ed s.

Consumer Markets

Customers

Industrial Markets

Basis for Market Segmentation: Consumer Markets Major segmentation variables

Demographic factors Per.

Dem.

Consumer Con. Soc. Markets Psy.

Geo.

Socioeconomic factors Geographic factors Psychological factors Consumption patterns Perceptual factors

Segmenting Consumer Markets Geography

Demographics

• Region • Market size • Market density • Climate

• Age & Family life cycle stage (SLIDE) • Gender • Income • Generation • Social class

Psychographics (SLIDE)

• Personality traits • Lifestyle • Values

Behavioural

• Benefits sought (SLIDE) • Loyalty status Buying decision roles of : Initiator, Influencer, Decider, Buyer and User

Behavioural (continued)

• Usage Rate (SLIDE) • Former • Potential • 1st time • Light or irregular • Medium • Heavy

Demographic Segmentation: Family Life Cycle

Psychographic Segmentation (Psycho-demographic) Personality traits (cars) Lifestyles (outdoor) Values

al try, n tio dus a n in nd r , e t y in log ch a n a no ear s i I tech res y. B IC ess, mer pan R S sin nsu com bu d co ting an nsul co

SRI Consulting Business Intelligence (SRIC-BI) framework provides 4 group tendencies under 2 groups with higher resources and lower resources: Higher Resources Group

Lower Resources Group

•Innovators

•Believers

•Thinkers

•Strivers

•Achievers

•Makers

•Experiencers

•Survivors

Behavioural Segmentation Marketers often segment markets based on how consumers interact with the product; and marketers must determine exactly what benefits are important to the customer  different consumers will seek different benefits from a product or service and will associate it with different occasions  benefits arise not only from the product but from the process of acquiring it

Behavioural Segmentation … Marketers are now segmenting markets on the basis of the occasions that customers associate with use of the product a widely-used approach to segmentation involves dividing the market on the basis of usage rates; many marketers target the “heavy users” once segments have been identified, profiles of segment members are prepared

Benefit Segmentation These are those group consumers whose needs/wants are different/ unique (and not by gender, age, lifestyle etc.)

What do you need/want from your shampoo (Clinic, H&S, Pantene), bathing soaps (Cinthol, Detol), cell phone?

Usage Rate Segmentation Group by amount / rate of consumption (1st time user, regular user, ex-users, potential users, light users, heavy users) Target market: Unawares-Aware, Not tried - Tried Not Tried (opinion) – Negative, Neutral, Favourable Tried (opinion) – Rejector, Non-repeater, Repeater • Repeater - Loyal to other Brands, Switcher, Loyal to brand • Loyal to brand – Light user, Regular user, Heavy user

Basis for Market Segmentation: Business Markets Major segmentation variables

• Geographic segments • Product segments • End-use segments • Common buying factor segments • Customer size segments

Size

Geo.

Business Buy.MarketsPro. End.

Basis for Market Segmentation: International Markets 1. Segmenting international markets is far greater challenging. 2. Groupings on the basis of distinct buying needs and behaviors is necessary. Consider that Coca cola and Sony operate in 200 countries; and what kind of challenges they face

Major segmentation variables • Geographic segments • Political -Legal factors • Economic factors • Common buying needs factors • Customer size segments

Size

Geo.

Int’l Markets Pol. Buy. Eco.

6 Steps to Segment a Market

Select a market for study

Choose basis for segmentation

Effectively describes your segment

Profile and analyze segments

Select target markets

Design marketing mix implement & maintain

Effective Segmentation Market segments must be: Measurable Accessible Substantial Differentiable Actionable

A Good Segment therefore is… Homogenous within: group members are similar Heterogeneous between: group members outside the group distinctly differ (choose the best) Substantial: large enough and sustainable for above average profit Operational: workable (identify and choose China India)

Implications of Segmentation Market aggregation is really a productionoriented strategy; it requires that the firm find some way to differentiate its product or service Increasingly, firms are turning to superior service as their differentiating strategy Multiple-segment marketing requires that the firm develop different versions of the product offering for each segment; or it may simply mean different approaches to serving segments

Targeting

Strategies for Selecting Markets Segments A: Undifferentiated targeting Company Marketing mix

Market

B: Differentiated targeting Product Mix 1

Segment 1

Product Mix 2

Segment 2

Product Mix 3

Segment 3

C: Concentrated targeting Product Mix 1 Mix 2 Mix 3

Segment 1 Segment 2 Segment 3

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Strategies for Selecting Markets Segments Undifferentiated Targeting One market, one mix (school note books/ plain toilet paper) Any other examples?

Concentrated Targeting Multiple markets & mix for each Examples include Fiat, Ford, Honda, Hyundai, Mercedes and what else?

Multi-segment Targeting Multiple markets share mix (bad idea) Advantages = Greater financial success; Economies of scale Disadvantages= Higher costs

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One-to-One Marketing One-to-One Marketing is...

Has a Goal of…

Individualized

Cost Reduction

Information-Intensive

Customer Retention

Long-Term

Increased Revenue

Personalized

Customer Loyalty

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One-to-One Marketing Trends

One-size-fits all marketing is lame. Direct / personal marketing will grow to meet needs of busy consumers. We will be loyal to companies that have earned—and reinforced—our loyalty. Mass-media approaches will decline as technology allows better customer tracking.

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Selecting Target Markets Target segments should be compatible with the organization’s goals and image The market opportunity represented by the segment must match the company’s resources The segment must represent an opportunity to generate enough sales to generate a profit The company should select target segments where it can enjoy a competitive advantage

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Target Market Strategies Market aggregation: target the product or service to a mass market with little differentiation Single-segment segmentation: selecting a single segment to target; if the segment is small, this may be considered a “niche’ strategy Multiple-segment segmentation: identifying two or more segments as target markets; involves developing a different marketing approach for each

Positioning

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Positioning Developing a marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general. How is Reliance Fresh Positioned?

Positioning for the Market Segment Positioning is the image of your brand held by the public and especially, your segment. Usually try to position on attributes consumer sees as important, such as speed, convenience, safety. Positioning Maps (or perceptual maps) help see how key players in a market are viewed by consumers. Helps to see competitive clusters and market gaps.

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Positioning Maps (or Perceptual maps)

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Positioning Base Attribute Price and Quality Use or Application Product User Product Class Competitor Emotion

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Positioning Strategies Against Competition: “We’re as good or better” Cola wars, small car segment. Market Gap: Find spot others missed. Niche producers may make vinyl records. Set Brand Apart: Stress your differences and avoid head-to-head competition. “Nina Ricci” Leadership: Be the one others follow. Used by a personality. Lifestyle Segment Appeals: Use lifestyle to define. Some buy fancy cameras to take creative photography, others to impress.

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Niche Marketing This is a specific form of positioning The company decides to occupy a market niche where it can be distinct and the competition is weak Identify segments that are not well served or not identified Determine how to gain a competitive advantage Expand the niche by meeting consumer needs Defend the niche position by improving product and service offerings

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Repositioning This is a variation of a positioning strategy that involves changing the market position of a brand or store in response to changes taking place in the broader market environment. India is passing through this stage today. Everyone is trying to redefine their product and aligning them with the younger generation. ExGodrej, Shoppers Stop!

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Effective Positioning  Assess the positions occupied by

competing products  Determine the dimensions underlying these positions  Choose a market position where marketing efforts will have the greatest impact

Product Differentiation: a positioning strategy

A positioning strategy that some firms use to distinguish their products from those of competitors. Are distinctions real or perceived?

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Summary Generic vs. Product markets Segmentation: Criteria Basis for segmenting Strategies of segmentation Positioning / Repositioning Thank you!