Market Segmentation, Targeting and
Positioning
By : Prof Sameer Kulkarni
1
The Starting Point
• Mass Marketing:
The Seller engages in –
1. Mass marketing>mass production>mass
distribution>and mass promotion
ONE PRODUCT FO ALL BUYERS.
It creates the largest potential market>leads to
lower costs>lower prices>higher margins
2
Segment Marketing
• Role of Marketer
• The marketer does not create the segments
• The marketer identifies the segments and
decide which one to target
• The company can better
design>price>disclose& deliver the product
to satisfy the target market.
3
Benefits of Segmentation
•
•
•
•
Effective use of resources
Gain a focus
Create Value for a target market
Positioning
4
Steps in Market Segmentation,
Targeting, and Positioning
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop segment profiles
Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments
Market Positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each segment
5
Step 1. Market Segmentation
Levels of Market Segmentation
Through Market Segmentation, Companies Divide Large, Heterogeneous
Markets into Smaller Segments that Can be Reached More Efficiently And
Effectively With Products and Services That Match Their Unique Needs.
Mass Marketing
Same product to all consumers
(no segmentation, i. e. a commodity)
Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Thumsup)
6
Steps in Market Segmentation,
Targeting, and Positioning
Market
Segmentation
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
Market
Targeting
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Positioning
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
positioning
concept
Basic Market-Preference Patterns
Sweetness
(c) Clustered
preferences
Creaminess
(b) Diffused
preferences
Creaminess
Creaminess
(a) Homogeneous
preferences
Sweetness
Sweetness
Step 2. Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Niche Marketing
Different products to subgroups within segments
(more segmentation)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Local Marketing
Individual Marketing
Tailoring brands/ promotions
to local customer groups
Tailoring products/ programs
to individual customers
Bases for Segmenting
Consumer Markets
Geographic
Region, City or Metro
Size, Density, Climate
Demographic
Age, Gender, Family size
and Fife cycle, Race,
Occupation, or Income ...
Psychographic
Lifestyle or Personality
Behavioral
Occasions, Benefits,
Uses, or Attitudes
Step 3. Market Segmentation
Geographic Segmentation
International
National
Regional/City
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Geographic Bases
• Region
• Density
• Climate
• Population
Step 4. Market Segmentation
Bases for Segmenting Business Markets
Personal
Characteristics
Situational
Factors
Demographics
Bases
for Segmenting
Business
Markets
Purchasing
Approaches
Operating
Characteristics
Step 5. Market Segmentation
Demographic Segmentation
• Dividing the market into groups based
on variables such as:
– Age
– Gender
– Family size or life cycle
– Income
– Occupation
– Education
– Religion
– Race
– Generation
– Nationality
14
Step 6. Market Segmentation
Psychographic Segmentation
Divides Buyers Into Different Groups Based on:
15
Step 7. Market Segmentation
Behavioral Segmentation
• Dividing the market into groups
based on variables such as:
– Occasions
– Benefits
– User status
– Usage rate
– Loyalty status
– Readiness stage
– Attitude toward product
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Behavioral Bases
• User Status & Brand Loyalty
• Personality/Lifestyle
• Social Class
•
•
•
•
Occasion
Readiness to Buy
Benefits Sought
Usage Rate
Step 8. Market Segmentation
Segments must respond differently to different marketing mix
elements & programs
Requirements
for effective segmentation
Measurable
Accessible
Substantial
Actionable
• Size, purchasing power, profiles
of segments can be measured.
• Segments can be effectively
reached and served.
• Segments are large or profitable
enough to serve.
• Effective programs can be
designed to attract and serve
the segments.
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Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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Step 9. Market Targeting
Market Coverage Strategies
A. Undifferentiated Marketing
Company
Marketing
Mix
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 3
Market
B. Differentiated
Marketing
Segment 1
Segment 2
Segment 3
C. Concentrated Marketing
Company
Marketing
Mix
Segment 1
Segment 2
Segment 3
20
Step 10. Market Targeting
Evaluating Market Segments
Segment Size and Growth
Analyze sales, growth rates and expected profitability
for various segments.
Segment Structural Attractiveness
Consider effects of: Competitors, Availability of
Substitute Products and, the Power of Buyers &
Suppliers.
Company Objectives and Resources
Company skills & resources relative to the segment(s).
Look for Competitive Advantages.
Choosing a market-coverage
strategy
•
•
•
•
Company resources
Degree of product homogeneity
Market homogeneity
Competitors’ strategies
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Five Patterns of Target Market
Selection
Single-segment
concentration
Product
specialization
Selective
specialization
M1 M2 M3
M1 M2 M3
M1 M2 M3
P1
P1
P1
P2
P2
P2
P3
P3
P3
Market
specialization
Full market
coverage
M1 M2 M3
P = Product
M = Market
M1 M2 M3
P1
P1
P2
P2
P3
P3
Step 11. Market Targeting
Choosing a Market-Coverage Strategy
Company
Resources
Product
Variability
Product’s Life-Cycle
Stage
Market
Variability
Competitors’
Marketing Strategies
Positioning is the act of
designing the company’s
offering and image to
occupy a distinctive
place in the the target
market’s mind.
Step 12: Positioning for Competitive
Advantage
• Product’s Position - the way the product is
defined by consumers on important attributes the place the product occupies in consumers’
minds relative to competing products.
Marketers must:
–Plan positions to give their products the
greatest advantage in selected target
markets
26
Positioning Strategies
•
•
•
•
•
•
Positioning by specific product attributes
Positioning by benefits
Positioning for user category
Positioning for usage occasion
Positioning against another competitors
Positioning against another product
class
27
Steps to Choosing and Implementing
a Positioning Strategy
• Step 1. Identifying Possible Competitive
Advantages: Competitive Differentiation.
• Step 2. Selecting the Right Competitive
Advantage: Unique Selling Proposition
(USP).
• Step 3. Communicating and Delivering
the Chosen Position.
28
The BCG Competitive
Advantage Matrix
Size of the
Advantage
Number of Approaches
to Achieve Advantage
Few
Many
Large
Volume
Specialized
Small
Stalemated
Fragmented
Product Differentiation
•
•
•
•
•
Physical attributes
Service differentiation
Personnel differentiation
Location
Image differentiation
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Product Differentiation
Form
Features
Performance
Durability
Reliability
Repairability
Quality
Style
Conformance
Quality
Design
Services Differentiation
Installation
Customer
Consulting
Delivery
Customer
Training
Maintenance
& Repair
Miscellaneous
Services
Ordering
Ease
Which differences to promote?
•
•
•
•
•
•
•
Important to customers
Distinctive
Superior
Communicable to customers
Preemptive
Affordable
Profitable
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Image Differentiation
Media
Atmosphere
Symbols
Events
Important
Profitable
Distinctive
Differences Worth
Establishing
Affordable
Superior
Preemptive
Perceptual Map
Positioning
map of
service level
versus
price. Source:
MARG, 2007
36
Positioning Strategies
• Product Attributes
• Benefits, Problem Solutions & Basic Needs
•Cholesterol
Free Oil:Dhara
•
• Specific Use : Gift for all Events Titan
• Against Other Products: Tata salt Vs. Captain Cook
• Product User :Fashion loving , Well to do Consumers :Vimal fabrics
• Against a Competitor
•Price & Quality