Segmentation, Targeting And Positioning

Segmentation, Targeting and Positioning

Learning Objectives 1.

2. 3.

4.

Learn the three steps of target marketing, market segmentation, target marketing, and market positioning Understand the major bases for segmenting consumer and business marketing strategy Know how companies identify attractive market segments and choose target marketing strategy Realize how companies position their products for maximum competitive advantage in the marketplace

Steps in market segmentation, targeting and positioning  Market Segmentation  

Identify bases for segmenting the market Develop segment profiles

 Target Marketing  

Develop measure of segment attractiveness Select target segments

 Market Positioning  

Develop positioning for target segments Develop a marketing mix for each segment

Market Segmentation 

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

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 :::::::::::::: Attri. ::::::::::::: ::::::::::::: Y :: :::::::::::::::: :::::::::::: Y :::::::::::::: ::::::::::::::

Attribute Y

Attribute X

Attribute X

A.Homogeneous Preferences

B.Diffused Preferences

Attribute X C.Clustered Preferences

Niche, Local, Customerisation  A niche is more narrowly defined customer

group seeking a distinctive mix of benefits.  Local marketing is tailored to the needs and wants of local customer groups.  Customised marketing is one-to-one marketing.s

ADVANTAGES OF MARKET SEGMENTATION 

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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.

Requirements for Effective Segmentation 

Measurable 

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Accessible 

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Large and profitable enough to serve

Differentiable 

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Can be reached and served

Substantial 

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Size, purchasing power, and profile of segment

Respond differently

Actionable 

Effective programs can be developed

SEGMENTATION ANALYSIS (BASIS OF SEGMENTATION) 

CONSUMER CHARACTERISTICS (1) Geographic ( Region, city, rural and semi-urban areas ) (2) Demographic ( age, life cycle stage, generation, family size, gender, income, occupation, education, socio-economic classification ) (3) Psychographic ( life style, psychological/personality traits, values)

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CONSUMER RESPONSES (4) Behavioral Segments (Buyer readiness stage, Benefits sought, Usage rate, Attitude, Loyalty, Occasions, User status)

Segmenting Business Markets 

Demographic segmentation 

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Operating variables 

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Technology, usage status, customer capabilities

Purchasing approaches Situational factors 

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Industry, company size, location

Urgency, specific application, size of order

Personal characteristics 

Buyer-seller similarity, attitudes toward risk, loyalty

Segmenting International Markets 

Geographic segmentation 

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Economic factors 

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Population income or level of economic development

Political and legal factors 

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Location or region

Type / stability of government, monetary regulations, amount of bureaucracy, etc.

Cultural factors 

Language, religion, values, attitudes, customs, behavioral patterns

Target Marketing  Target Market 

Consists of a set of buyers who share common needs or characteristics that the company decides to serve

Target Marketing  Evaluating Market Segments  

Segment size and growth Segment structural attractiveness • • • •

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Level of competition Substitute products Power of buyers Powerful suppliers

Company objectives and resources

Target Marketing  Selecting Target Market Segments    

Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual)

FIVE PATTERNS OF TARGET MARKET SELECTION  Single Market Concentration  Market Specialization  Product Specialization  Selective Specialization  Full Coverage

FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGY  1.  2.  3.  4.  5.

Company’s Resources Product Homogeneity Product Stage in the Life Cycle Market Homogeneity Competitive Marketing Strategy

Positioning  Positioning: 

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The place the product occupies in consumers’ minds relative to competing products. Typically defined by consumers on the basis of important attributes. Involves implanting the brand’s unique benefits and differentiation in the customer’s mind. Positioning maps that plot perceptions of brands are commonly used.

POSITIONING STRATEGIES  Identifying possible competitive

advantages Differentiation can be based on Products Services Channels People Image

Product Differentiation       

Form- size, shape or physical structure Features- supplement to basic function. Performance Quality-the level at which the product’s

primary characteristics operates. Conformance Quality- the degree to which all the produced units are identical and meet the promised specifications. Durability- a measure of the product’s expected operating life under natural or stressful conditions. Reliability- a measure of the probability that a product will not malfunction within a specified time period. Reparability- a measure of the ease of fixing a product when it fails

Style Quality can be communicated by choosing physical signs and cues 

Services Differentiation  Ordering ease  Delivery  Installation  Customer training  Customer consulting  Maintenance and repair

Personnel Differentiation  Competence  Courtesy  Credibility  Reliability  Responsiveness  Communication

Channel Differentiation  Coverage  Expertise  Performance

Image Differentiation  Image is the way the public perceives the

company or its products.  Identity is the way a company aims to identify or position itself or its products.  Symbols, colours, slogans, atmosphere,  Events and employee behaviour

Choosing the right competitive advantage How many differences to promote? •Unique selling proposition •Several benefits Which differences to promote? Criteria include: •Important •Distinctive •Superior •Communicable •Preemptive •Affordable •Profitable

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.

Choosing a positioning strategy 

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Value propositions ( the whole cluster of benefits the company promises to deliver )represent the full positioning of the brand Possible value propositions:  More for More  More for the Same  More for Less  The Same for Less  Less for Much Less

Some examples

Lays

Dove

Amul : The taste of India

Hindustan Unilever Limited

HDFC Standard Life Insurance