Segmenting, Targeting &

Positioning
Figure 8.1: Steps in the
Target Marketing Process
Sells multiple brands
within the same
product category for
a variety of products
Brands feature a
different mix of
benefits and appeal
to different segments
Has also identified
different niches within
certain segments
Product modifications
are useful: Tide offers
seven different product
formulations to serve
different niches needs
Procter & Gamble
Market Segmentation
Market
Market
Segment
Market
Segmentation
People or organizations with
needs or wants and the ability and
willingness to buy
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 meaningful, relatively similar,
identifiable segments or groups.
MARKET SEGMENTATION =
Dividing market into segments,
each of which behaves differently
vis--vis your product
Selecting certain segment(s)
Developing one marketing plan for
each segment
Thinking small(er)
PRODUCT
MARKET
SOFT
PILLOW
MEDIUM
PILLOW
FIRM
PILLOW
Stomach sleepers
Back sleepers
Side sleepers
Key: L, Large market; M, medium market; S, small market
L
L
L
M
M
M
M
S
S
Product/Usage Habits
Segmentation
Pillow Manufacturer
Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!
Buyer Preference Patterns


Homogeneous preference

Diffused preference

Clustered preference

STYLE
DURABLE
Homogeneous Preference
-No natural segments
-All buyers have same preference
TITAN WATCHES
STYLE
DURABLE
Diffused Preference
-No pattern (or poor research)
-Take center position
TITAN WATCHES
STYLE
DURABLE
Clustered Preference
-Natural segments
-Increases as number of competitors increases
TITAN WATCHES
Values of the Two Segments-
Youngsters & Adults - WATCHES
Attribute 1
PRICE
Attribute 2
BEAUTY
Attribute 3
DURABILITY
Adults
Youngsters
Segmentation Dilemma
Mass Marketing --
(Economies of Scale)
(However, everyone is
different)
CUSTOMIZATION
Choosing a Targeting Strategy
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Customized Marketing
Undifferentiated Marketing
Appeals to a broad spectrum of
people
Efficient due to economies of scale
Effective when most consumers
have similar needs
Example: Big Bazaar
Differentiated Marketing
Develops one or more products for each
of several customer groups with different
product needs
Appropriate when consumers are
choosing among well-known brands with
distinctive images and it is possible to
identify one or more segments with
distinct needs for different types of
products
Example:Lakme, Ponds, Fair & Lovely
Concentrated Marketing
Entails focusing efforts on offering
one or more products to a single
segment
Useful for smaller firms that do not
have the resources to serve all
markets
Example:HMT Watches
Customized Marketing
Segments are so precisely defined that
products are offered to exactly meet the
needs of each individual
Example:
Mass customization is a related
approach in which a company modifies a
basic good to meet the needs of an
individual
Example: Dell Computers
Segmentation
Why segment?

Identifies opportunities and needs.

Allows firm to focus on specific needs.

Improves marketing mix for each segment.

Allows small firm to exist.
The Importance of
Market Segmentation

Markets have a variety of product
needs and preferences

Marketers can better define
customer needs

Decision makers can define objectives
and allocate resources more accurately
Criteria for Successful
Segmentation
Criteria
for
Market
Segments


Substantiality
Identifiability
Accessibility
Responsiveness
Criteria for Segmentation
Substantiality
Identifiability
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.
Segmentation Bases
Characteristics of
individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases
Used to
Segment
Consumer
Markets
Geographic Segmentation
Region of the country or world

Market size

Market density : TV Companies

Climate: woollen clothes

City
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases
Used to
Segment
Consumer
Markets
Bases for
Demographic Segmentation

Age: Cartoon Network; MTV; News Channels
Gender: Cosmetics & After Shave
Income: Economical & Luxury goods
Ethnic background: Food
Family Life Cycle: Life Insurance Companies
Generation: Apparels
Education
Occupation: PC Selling

Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases
Used to
Segment
Consumer
Markets
Psychographics
Psychographic segments market in
terms of shared attitudes, interests, and
opinions
Segments include demographic
information such as age and income, but
also includes richer descriptions
Some organizations develop their own
psychographic segments for their
consumers, but others utilize national
systems (VALS by SRI International)
Bases for
Psychographic Segmentation

Psychographic
Segmentation

Personality
Motivation
Lifestyles
Attitude
MOTIVATION
Health Supplements
Cosmetics
Safola
Life Insurance
LG Products

Life Style: VALS
VALS Framework
PRINCIPLE ORIENTED:
Fulfilled: Mature, Well Educated, Informed, Respectful but
Open minded
Believers: Conservative, Conventional, follow established
rules
STATUS ORIENTED:
Achievers:Committed to family and Work, Image is very
Important
Strivers: Unsure of themselves, Money is a measure of
success
ACTION ORIENTED:
Experiencers: Young, Vital, Enthusiastic, rebellions
Makers: Practical, Suspicious of new ideas, value working
with their hands
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases
Used to
Segment
Consumer
Markets
Benefit Segmentation
The process of grouping
customers into market
segments according to
the benefits they seek
from the product .
Maruti Esteem, Honda City
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases
Used to
Segment
Consumer
Markets
Segmenting by Behavior
Behavioral segmentation slices
consumers on the basis of how they
act toward, feel about, or use a
product
Behavioral Segmentation
Variables
Market Segmentation
Occasions
User Status
User Rates: Airlines
Loyalty Status: Credit
Cards
Readiness Stage

Attitude Toward the Product

Business Marketing Segmentation
Geographic
Customer Type
Customer Size
Product Use
Business
Markets
Purchasing Criteria
Purchasing Strategy
Importance
Personal
Characteristics
Micro-
segmentation
Macro-
segmentation
Steps in Segmenting a Market
Select
a
market
for
study
Choose
bases
for
segmen-
tation
Select
descrip-
tors
Profile
and
analyze
segments
Select
target
markets
Design,
imple-
ment,
maintain
mkting
mix
Target Market
A group of people or
organizations for which an
organization designs,
implements, and maintains
a marketing mix intended to
meet the needs of that
group, resulting in mutually
satisfying exchanges.
Strategies for Selecting
Target Markets
Concentrated
Strategy
Undifferentiated
Strategy
Multisegment
Strategy
Undifferentiated
Targeting Strategy
Advantages:
Potential savings on
production and marketing
costs

Disadvantages:
Unimaginative product
offerings
Company more
susceptible to competition


Concentrated
Targeting Strategy
Advantages:
Concentration of resources
Meets narrowly defined
segment
Small firms can compete
Strong positioning

Disadvantages:
Segments too small, or
changing
Large competitors may market
to niche segment

Advantages:
Greater financial success
Economies of scale

Disadvantages:
High costs
Cannibalization

Multisegment
Targeting Strategy
Positioning
Developing a specific
marketing mix to influence
potential customers overall
perception of a brand,
product line, or
organization in general.
Position
The place a product, brand,
or group of products
occupies in consumers
minds relative to competing
offerings.
Effective Positioning
Assess the positions of
competing products

Determine the dimensions of
these positions

Choose an effective market
position
Positioning Bases
Attribute
Price and Quality
Use or Application
Product User
Product Class
Competitor

Positioning
Bases