Segmentation, Targeting & Positioning

Instructor:

Dr. Ravi Shanker

Course: Marketing Management

Objectives

Define market Market segmentation Marketing mixes to target markets Marketing strategies Market segment selection considerations Segmentation variables Positioning strategy

STP ?

Possible Strategies for Target Marketing

Custom Marketing: To each his/her own.

Possible Strategies for Target Marketing

Differentiated marketing Multiple market segmentation

STP IS THE HEART OF MODERN STRATEGIC MARKETING

EVOLUTION OF STP MARKETING
MASS MARKETING : EMPHASIS ON MASS PRODUCTION MASS DISTRIBUTION & PROMOTION OF ONE PRODUCT TO ALL BUYERS. PRODUCING SEVERAL PRODUCTS TO OFFER VARIETY RATHER THAN TO APPEAL TO DIFFERENT SEGMENTS

PRODUCT VARIETY MARKETING

TARGET MARKETING

PRODUCTS & MKTG. PROGRAMS TAILERED TO EACH SELECTED SEGMENT.

Differentiated Markets
Individuals

Gps of Individuals

Niche

Segments

Mass market

Custom Marketing

One-to-one marketing Uses data based-marketing and information technology For example...
FOR REPEAT HOTEL GUESTS Your name Room preferences Special requests Smoking or non smoking Credit card number Frequent hotel user discount

Market Share and the Pareto Effect

Market Share: Pareto Effect:

20%
30% 50%

20%

80%
A small number of customers (20%) may represent a large percentage of sales (80%).

Percentage of sales that a firms product has in a particular market.

What is a Market?

All the potential customers sharing particular needs and wants who might be willing to engage in exchange to satisfy their needs or wants.

What is a Market?

Ability Willingness

Resources

Market Boundaries
Customers

Who are your own customers? Who uses the category of products? Individuals in the market who are not your customers.

Users

Prospects

MARKET SEGMENTATION
DIVIDING A MARKET INTO DISTINCT GROUPS OF BUYERS WHO MIGHT REQUIRE SEPARATE PRODUCTS OR MARKETING MIXES THE OBJECTIVE OF MARKET SEGMENTATION IS TO DETERMINE DIFFERENCES BETWEEN BUYERS OR BUYER GROUPS. A HETEROGENOUS MARKET MAY BE SUBDIVIDED INTO A NUMBER OF MORE OR LESS HOMOGENEOUS MARKET SEGMENTS.

Segmentation Works Because ...

Not all buyers alike Subgroups may be identified Subgroups smaller and more homogeneous Easier to satisfy smaller groups

NICHE
A niche is more narrowly defined group that may seek a special combination of benefits. The customers in the niche have a distinct and somewhat complex set of needs; they will pay a premium to the brand that best satisfy their needs. The niche marketer would need to specialize its operations to be successful; and the niche leader is not easily attacked by competitors.

MARKET SEGMENT V/S NICHES

Every market can be knocked down into SEGMENTS, NICHES & INDIVIDUALS. Market segments are large identifiable groups within a market, such as Insurances for savings, for investment, for escaping from paying income tax.

MARKET SEGMENTATION
DIVIDING A MARKET INTO DISTINCT GROUPS OF BUYERS WHO MIGHT REQUIRE SEPARATE PRODUCTS OR MARKETING MIXES THE OBJECTIVE OF MARKET SEGMENTATION IS TO DETERMINE DIFFERENCES BETWEEN BUYERS OR BUYER GROUPS. A HETEROGENOUS MARKET MAY BE SUB-DIVIDED INTO A NUMBER OF MORE OR LESS HOMOGENEOUS MARKET SEGMENTS.

STEPS IN MARKET SEGMENTATION, TARGETING AND POSITIONING

1. Identify segmentation variables and segment the market. 2. Develop profiles of resulting segments. 3. Evaluate the attractivenes s of each segment. 4. Select the target segment(s). 5. Identify possible positioning concepts for each target segment. 6. Select, develop, and signal the chosen positioning concept.

Two Major Approaches to Segmentation

Consumer characteristics

Consumer responses

Geographic

Demographic Psychographic

Occassion

Benefits

Usage

Attitudes

Bases for Segmenting Consumer Markets

Geographic Demographic Sociographic Lifestyle Behavior Consumption

Consumer Characteristics for Segmentation: Geographic Factors

REGION CITY SIZE RURAL / URBAN DENSITY CLIMATE

Consumer Characteristics for Segmentation: Demographic Factors

AGE GENDER FAMILY SIZE FAMILY LIFE CYCLE INCOME OCCUPATION EDUCATION RELIGION NATIONALITY / RACE

%AGE OF INDIVIDUALS BY INCOME

INCOME GROUP (MHI IN RS.) %age OF INDIVIDUALS URBAN UPTO 1,000 1000-2000 2001-3000 3001-5000 5001-8000 13 25 23 21 11 RURAL 43 33 13 6 2 TOTAL 35 31 16 10 4

8001+
NOT DISCLOSED TOTAL

5
2 100

1
2 100

2
2 100

SOURCE :IRS

Consumer Characteristics for Segmentation: Psychographic Factors

SOCIAL

CLASS LIFE STYLE PERSONALITY

Consumer Responses bases for Segmentation: Occasion

Time of the Day/ Week/ Month Regular, Occasional or Special use (Single use Camera or as a durable)

Consumer Responses bases for Segmentation: Benefits Sought

Quality Service Economy Status

Consumer Responses bases for Segmentation: Usage Rate

LIGHT MEDIUM HEAVY

Consumer Responses bases for Segmentation: LOYALTY STATUS NON USER POTENTIAL USER MEDIUM USER STRONG USER ABSOLUTE (NON, EX, I st-TIME, REGULAR)

Consumer Responses bases for Segmentation: READINOUS STATUS

UNAWARE AWARE INFORMED INTERESTED DESIROUS INTENDING TO BUY

Consumer Responses bases for Segm ATTITUDE TOWARD PRODUCT ENTHUSIASTIC +IVE INDIFFERENT NEGATIVE HOSTILE

Market Segmentation:
By Consumer Behavior (cont.)

Consumer responses: Occasions Benefits Usage frequency Attitudes

Market Segmentation:
Other Types of Segmentation

Benefit segmentation Segmentation by consumption profile Segmentation by national boundaries

MBA DEGREE BENEFIT SEG.

Quality Seeker Specialty Seeker Career Seeker Knowledge Seeker Status Seeker Degree Seeker Professional Advancers Seeker Avoiders Seeker Convenience Seeker

Essential Prerequisite for Market Segmentation:

PROFILING

For example: Pathfinders study on Indian House Wife Roper Starch Worldwide (RSW) study Etc.

The troubled home-body: Neither a leader nor an emulator, she is largely illiterate and Is the least exposed to the media. Her three prized possessions are watches, transistors and bicycles. Fashion takes a back seat and the future, according to her, is written in the stars.

The Contemporary housewife: She is on the threshold of change. While she has not given up many traditional values, she aspires for modernity and is least likely to be living in north India. Though she is happier than she was five years ago, she feels the need to do something more meaningful besides house- keeping. She is fashion-conscious, but still uses fairness skin creams and her idea of trendy clothes does not go beyond the sari.

The contended conservative: She is extremely confident and probably the most efficient householder of all. She is a great optimist. Is very conscious of the familys health and is, by and large, the advertising mans dream as she believes that ads are a great source of Information.

The Anxious rebel: Less likely to be found in the south, she would much rather be working than staying at home. She is anxious, thrifty but discerning in her shopping, though quite willing to try out new products.

The archetypal provider: Living overwhelmingly in the south, she is as satisfied being a housewife as a cat who has licked cream. She sees TV much less than the average viewer, and is disinclined towards fashion. But she is every willing to try out new food recipes, and loves to spend on her children guests.

The tight-fisted traditionalist : Leading a sheltered life, she prefers to follow the film stars in her dress habits but is particular about prices. She restricts her circle of friends to within her community and believes that girls should be educated especially to enable them to get good husbands. A majority live in north India

The affluent sophisticate: She lives mainly in the west Zone, and seems to live the by the motto Have money, will spend. She is the highest user of all kinds of consumer products and indulges more in activities-ever simple ones like writing a cheque or using a telephone which are out of reach of most housewives. She is comfortable talking to men outside her family circle, and would not mind if her

The gregarious hedonist: Found predominantly in the east, she is most likely to speak Bengali and is intensely extroverted and liberal. She does not believe in sacrificing her life to keep her family happy. Self-indulgent and willing to spend money on new products, she is a marketing mans dream.

PROFILING

PROFILING

Mrs. Chadda or Mrs. .. At

VLCC

Roper Starch Worldwide (RSW) Six Global Consumer Segments

Strivers: Place more emphasis on material & professional goals Devouts: Tradition and duty are very important. Altruist: Interested in social issues & social welfare. Intimates: Value close personal & family relationships. Fun seekers: High consumptions of restaurants, bars clubs, movies. Creatives: Strong interests in education, knowledge, technology, information.

Essential Prerequisite for Market Segmentation: PROFILING

For example: Indian Youth classified:

HAPPY GENERATION
Way more optimistic than the last. Recession, etc. is fine, but the belief is sab theek ho jayega also supplemented by the fact that they live for now and have an option overload for entertainment, careers, friends, more.

JUGAADO GENERATION
Rebellions out, jugaads in, dont fight your parents or society / work them.

XEROX GENERATION
Theyre all materialistic, shopaholics and chasing some of the same brands/ products, carrying the same phones, wearing the same sneakers, denims aur jo dikhta hai wo bikta hai make it look good! Old ads, old models, OUT!

FAME GENERATION
Its not only important to be successful/satisfied but also to be seen as being successful/satisfied- fame matters.

CONNECTED GENERATION
Technology is only as important as what technology does some of the hype around social networking, gizmos, gadgets, gaming is more youth marketing hoopla than anything else. Yes, they use it/need it to stay connected/with it but thats the role it plays.

ME GENERATION
Karan Johar lied when he said its all about loving your parents. Its about me! Meinu ki? Why should we slog our butts off if its not going to benefit us, but only our kids!, Im sincere and committed when it suits/helps me, e.g. for my own projects nahi toh lukkha-guirl is cool! Ditto on their take on issues. Climate change, lighting a candle over 26/11 and all is fine, but I take action only if I or my close friend circle meaning the core 15-20 people around me, not the 400 on my fb list are directly affected.

SHORTCUT GENERATION
This is a generation in a rush. Test matches are so boring! 5 days, who gives a shit? And its a recurring theme across choice or careers, updating cycle of play lists on their I-pod [at least thrice a week!], relationships and patience for change or a revolution to be brought about!

MULTIPLE HEROES GENERATION

There arent any singular role models, inspiration points-it could be Dhonis body language/Schumachers attitude. To Ranbirs style, from Akons dancing to Rang De Basanti. Parts from various sources that drive, inspire or excite them for different things.

HEY BHAGWAN GENERATION

Mirrored in their relationship with godits more a pal kind of equation, its Someone they wanna add on to their friend list vs. putting on a pedestal, the rituals, ceremonies, visits to shrines/ temples why? Uska kaya faayda, tell me I believe in God, but not the circus around it

STRESSED GENERATION
But its a generation also under tremendous pressure always. Pressure to perform in School, to stand out with friends, the pressure to not be labeled as wannabe of losing a friend [like the worst thing that can happen to me], for marks, placement, be seen as coolWe have more choices, but we also have way more pressure/and competition

Segment Viability
Characteristics

of segment viability:

Size: Must be large enough to generate volume for adequate profit. Identity: Should have unique characteristics that can be identified. Relevance: Must be relevant to the important characteristics of the product. Access: Must be able to be reached.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

MEASURABLE

The segment should lead themselves to some form of estimation of Size, purchasing power, profile SUBSTANTIAL The segment should be substantial and worthwhile (profitable) cultivating them. ACCESSIBLE The segment should be within reach and to be served (through distribution & communication. DIFFERENTIABL Conceptually distinguishable & respond E differently to different Mktg. Mix elements.
ACTIONABLE

Effective programmes can be

Choosing Market Segments

We need a YES

Distinguishing/stable characteristic Significant size Accessible with Distribution & promotion Responsive (similar needs) Measurable potential

response to each
of these!

SELECTION
Geo location and Scale Size Stage of industry Life Cycle Buying history Profitability Risk Aspirations Rate of growth Sensitivity / vulnerability Capitalization ROI

HOW SHOULD A FIRM SELECT ITS SEGMENTS

Co. Thrust Size & Growth Potential Investment needs Profitability Risk Competition Segment durability Segment Mobility Segment Visibility Segment Reachability

TARGETING
Factors in evaluating different market segments:

I)

Segment size & growth

II) Segment structural attractiveness: (To study the impact on long term profitability of: industry competitors, potential entrants, substituttes, buyers, suppliers.) Iii) cos own objectives & resources:

Positioning
Segmentation: grouping of people by needs or wants

Positioning: how a product is geared to attract this market segment

Positioning

The way consumers perceive the brand relative to its competition Unique competitive advantage Stress salient characteristics Differentiate

DEFINITION
Positioning is concerned with the identification, development and communication of a differentiated advantage which makes the brand perceived as superior & distinctive to those of its competitors in the mind of the Target segments.

POSITIONING
1940s 1960 USP (Product feature) IMAGE ERA (David Ogilvy) (Arising out of Dilution of USP due to competitive Irritation) 1970s POSITIONING ERA (Al Ries &Jack Trout) Not what you do to a product but what you do to the mind of the prospect. YOU POSITION THE PRODUCT IN THE MIND OF THE PROSPECT i.e., you communicate positioning but IT CAN BE AFFECTED BY OTHER M. MIX ELEMENTS G. LYNN SHOSTACK PROCESSES HAVE CHARACTERISTICS WHICH AFFECT POSITIONING & CAN BE STRATEGICALLY MANAGED FOR POSITIONING PURPOSES.

SEVEN POSITIONING STRATEGIES

ATTRIBUTE POSITIONING BENEFIT POSITIONING USE/APPLICATIONS POSITIONING USER POSITIONING COMPETITOR POSITIONING

Positioning on specific product feature Positioning on benefits, Problem solution or needs Positioning for specific usage occasions Positioning for user category Positioning against another product

PRODUCT CATEGORY POSITIONING

QUALITY/PRICE POSITIONING

Product class dis-association

SEVEN POSITIONING STRATEGIES

ATTRIBUTE POSITIONING BENEFIT POSITIONING USE/APPLICATIONS POSITIONING USER POSITIONING COMPETITOR POSITIONING

Gas Mileage Cotton: Cool in Summer Office Wear

Pepsi Generation
The Pepsi Challenge

PRODUCT CATEGORY POSITIONING

QUALITY/PRICE POSITIONING

Cola-, Skimmed Milk

Cheaper Detergents

Most People think I must drink at least 10 cups of coffee to be so perky in the morning. But the truth is, I like skim milk first thing. It has all the same nutrients as whole milk without all the fat. And besides, my husband got the coffee maker. MILK: What a Surprise

User Positioning

Most People think I must drink at least 10 cups of coffee Competitor Positioning to be so perky Benefit Positioning in the morning. But the truth is, I drink Use/applications Positioning skim milk first thing. It has all the same nutrients Attribute Positioning of whole milk without all the fat Product category Positioning. And besides, my husband got the coffee maker.

MILK: What a Surprise

Selection of Position

Importance Distinctiveness Communicability Superiority Affordability Profitability

Positioning Errors

Under Positioning Over Positioning Confused Positioning Doubtful Positioning

POSITIONING STRATEGIES
CONSUMER FOCUS COMPETITION FOCUS

BOTH ASSOCIATE PRODUCT BENEFITS WITH CONSUMER NEEDS BY LINKING THE PRODUCT WITH THE BENEFITS THE CONSUMER WILL DERIVE BY COMPARING THE PRODUCT AND THE BENEFITS IT OFFERS, TO THE COMPETITIION

Review

Define market Market segmentation Marketing mixes to target markets Marketing strategies Market segment selection considerations Segmentation variables Positioning strategy