Management Science II
Dr. S.Bharadwaj
MODULE 1
Segmentation,Targeting and Positioning
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Segmentation, Targeting and Positioning Definitions
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Segmentation Variables
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Evaluation of Segments
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Summary
What is segmentation, anyone?
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What about targeting and positioning?
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Segmentation is the process of grouping people or organizations within a
market according to similar needs, characteristics, or behaviors
Dividing the market into groups
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an entire market rarely has the same tastes and preferences
it is difficult to handle all preferences too
Mercedes Benz, for example (only high-end)
Targeting is the actual selection of the segment you want to serve
the target market is the group of people or organizations whose needs a
product is specifically designed to satisfy
Positioning is the use of marketing to enable people to form a mental image
of your product in their minds (relative to other products)
1
Indian Institute of Technology Madras
Management Science II
Dr. S.Bharadwaj
STP Marketing is the name of the game
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The days of “one size fits all” are over
No longer can one say “You can have any colour as long as it is black”
Need to follow the “horses for courses” policy - no more mass marketing
Moving towards mass customization in fact
Levi’s Personal Pants
National Bicycle Company
How to segment a market?
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On what basis/bases?
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What are some criteria/variables?
Segmentation - Variables
Demographic Segmentation
Age, Gender, Income
Age
• Bicycles
• Disney’s Cartoons
• Pension Plans, Retirement Funds e.g.
• LIC
Gender
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Hasbro Toys
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Cindy for girls, GI Joe for boys
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Gillette
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Razors for men, women
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most cosmetics, perfumes etc
2
Indian Institute of Technology Madras
Management Science II
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Dr. S.Bharadwaj
Revlon, Ralph Lauren
Income
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Toyota
Lexus for high end
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Camry for the middle of the roaders
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Corolla for low end HLL soaps - Dove for high end, Hamam for low
And so on
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Income is possibly the most common basis for segmentation
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Other Demographic Variables Include Religion, Ethnicity, Occupation,
Generation (Baby Boomers, Generation Next, Yuppies) and so on
Geographic Segmentation
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snow boots in the Northern part of USA
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Of course, all International Marketing is done on a regional(geographic
basis)
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The “Same” Honda Accord is different in different countries !
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Most MNCs vary their products according to country
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special tires in the Middle East
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Taj: AP - hot food, Kerala - more coconut and so on
Behavioral Segmentation
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On the basis of occasions, product usage, benefits sought, brand loyalty
Occasions
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Y2K Cruises
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Hallmark Cards
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a greeting card for every occasion - Valentine’s Day Card, Deepavali
card
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Indian Institute of Technology Madras
Management Science II
Dr. S.Bharadwaj
Benefits Sought
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there are certain specific benefits sought - example would be Colgate
Tartar Control for Tartar
User Status
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Non-Users Vs Current Users
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Credit Card Companies
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new card vs another card
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Blood Banks, entry level cars/bikes
Usage Rate
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Heavy Users Vs. Light Users
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The Beer Market is a classic example
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Miller Lite, BudWeiser all target the heavy
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Bajaj M80 could be another candidate
user
Psychographic Segmentation
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Lifestyle products like Raymond
Evaluation of Segments
Having segmented the market, which one to choose?
What are the criteria?
Is there potential sales, growth and profit ?
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Big Emerging Markets (BEMs)
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China, India, Brazil etc
Potential Competition and Cost
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is it too much ?
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Imagine going against Microsoft in the PC OS market for someone like
Unix
4
Indian Institute of Technology Madras
Management Science II
•
Dr. S.Bharadwaj
Tata Indica was smart in battle Vs. Maruti
Potential Risk
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environmental
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doing business in Iraq now
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Or even Kashmir
Is it compatible with my current business ?
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Mercedes going “downscale” with E-Class
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will it hurt the “Mercedes” brand ?
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will it cannibalize my existing brand ?
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Air India starting a budget airline?
Summary
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STP Marketing is highly important
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Consumers are very finicky and want to feel special
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From mass marketing to mass customisation
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Segmenting is important
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let Bajaj Chetak, Ambassador, Fiat, Maruti 800 even be examples
5
Indian Institute of Technology Madras