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Segmentation, Targeting, & Positioning

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Market Segmentation

Dividing a market into smaller groups of

buyers with distinct needs, characteristics, orbehaviours, who might require separate

products or marketing mixes

The key is theirresponseto a different

marketing mix If all consumers respond the same way, then

there should be no need to segment a

market

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Market Segmentation

Best to use multiple approaches in order to

identify smaller, better-defined target groups.

Start with a single base and then expand to other

bases.

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Bases for SegmentingConsumer Markets

Behavioral Segmentation

Segments based on actual behavior or product usage Demographic Segmentation

Segments based on demographic factors (e.g., gender,age, income, education, etc.)

Psychographic Segmentation Segments based on state-of-mind issues (e.g., motives,

attitudes, opinions, values, lifestyles, interests,personality, etc.)

Geographic Segmentation Segments based on geographic location

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Market Segmentation Variables

Geographic: dividing a

market into different

geographical units, such asnational, regional, local, city

size, density of population,

and climate

Demographic: dividing the

market into groups based ondemographic variables such

as age,gender, family size/

life cycle, income,

occupation, education,

religion, and ethnic origin

Psychographic: dividing amarket into different groups

based on social class,lifestyle, or personalitycharacteristics

Behavioural: dividing amarket into groups based onpurchase occasion, benefitssought, user status, usagerate, loyalty status,readiness state, and attitudetowards the product

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Market Segmentation

Demographic: Age, gender, family size, income, occupation,

etc.

The most popular bases for segmentingcustomer groups.

Easier to measure than most other types of

variables.

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Market Segmentation

Age and Life-Cycle Stage

Example: P&G has different toothpastes for different age

groups.

Avoid stereotypes in promotions

Promote positive messages

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Market Segmentation

Gender

Women make 90% of home improvement decisions.

Women influence 80% of all household consumer

purchases.

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Market Segmentation

Income Identifies and targets the affluent for luxury goods.

People with low annual incomes can be a lucrativemarket.

Some manufacturers have different grades of productsfor different markets.

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Market Segmentation

Psychographic

Social class

Lifestyle

Personality

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Market Segmentation

Behavioral

Occasions:

Special promotions and labels for holidays.

(e.g.,Tour and travel packages for summer vacations)

Special products for special occasions.

(e.g., Kodak disposable cameras)

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Market Segmentation

Behavioral

Benefits Sought:

Different segments desire different benefits from products.

(e.g., P&Gs multiple brands of laundry detergents to satisfy

different needs in the product category)

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Market Segmentation

Behavioral

User Status: Nonusers, ex-users, potentialusers, first-time users, regular users

Usage Rate: Light, medium, heavy

Loyalty Status: Brands, stores, companies

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Market Segmentation

Geographic:

World region or country

Region of country

City or metro size

Density or climate

New term - Geodemography

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Effective Segmentation

To be useful, market segments must be:

Measurable: size, purchasing power, and profile

Accessible: can be reached and served

Substantial: large enough to profitably serve

Differentiable: respond differently to a marketing mix

Actionable: effective programs can be designed

Segments should be evaluated for:

Size

Growth characteristics

Structural attractiveness

Compatibility with company objectives and resources

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Market Segmentation Strategies

Traditional Approaches to MarketSegmentation

Mass Marketing

Differentiated Marketing Multi segment Approach

Market Concentration Approach Niche Marketing

Micro segment marketing

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10/14/2013 2004 Pearson Education CanadaInc.17

Selecting Market Segments

Company

Marketing MixMarket

Undifferentiated marketing

Company

Marketing Mix 1Company

Marketing Mix 2

Company

Marketing Mix 3

Segment 1

Segment 2

Segment 3

Differentiated marketing

Company

Marketing Mix

Segment 1

Segment 2

Segment 3

Concentrated marketing

Figure 7-3

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Mass Marketing Strategy

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Multisegment Strategy

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Market Concentration Strategy

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Niche Marketing Strategy

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Micromarketing

Tailoring products and marketing programs to suit the tastesof specific individuals and locations.

Local Marketing: Tailoring brands and promotions to the needs

and wants of local customer groupscities, neighborhoods,specific stores.

Individual Marketing: Tailoring products and marketingprograms to the needs and preferences of individualcustomers.

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Micro-Market Segmentation

Local marketing: tailoring

brands and promotions tothe needs and wants of

local customer groups-

cities, neighbourhoods,

and even specific stores

Individual marketing:

tailoring products andmarketing programs to the

needs and preferences of

individual customers

Mass customization: the process of creating customer-

unique value by designing products and services tailor-

made to individual needs, on a large scale

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10/14/2013

2004 Pearson Education Canada

Inc.24

Mass marketing

Segment marketing

Niche marketing

Micromarketing

Treats all customers the same

isolating broad segments &

adapting mktg to match 1+ segment

focusing on sub-segments that may

seek a special combination of benefits

tailoring products & mkt programsto specific individuals & local groups

Levels of Market Segmentation

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Evaluating Market Segments

Segment Size and Growth Analyze current segment sales, growth rates, and expected profitability.

Segment Structural Attractiveness Consider effects of: competitors, existence of substitute products, and the

power of buyers & suppliers.

Company Objectives and Resources Examine company skills & resources needed to succeed in that segment.

Offer superior value & gain advantages over competitors.

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Segmenting Business Markets

Consumer and business marketers use many of the same variables

to segment their markets. Business buyers can be segmented geographically or by benefits

sought, user status, usage rate, or loyalty status.

Additional variables unique to this market would be:

business customer demographics (industry, company size)

operating characteristics purchasing approaches

situational factors, and

personal characteristics.

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Segmenting Business Markets

Consumer and business markets use many of thesame variables for segmentation.

Business marketers can also use: Operating Characteristics

Purchasing Approaches

Situational Factors

Personal Characteristics

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Bases for SegmentingBusiness Markets

Type of Organization

Organizational Characteristics

Benefits Sought or Buying Processes

Personal and Psychological

Relationship Intensity

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Segmenting International Markets

Factors Used:

Geographic location Economic factors

Political and legal factors

Cultural factors

Intermarket Segmentation

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Requirements for EffectiveSegmentation

Measurable

Accessible

Substantial

Differentiable

Actionable

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Choosing a Market Coverage Strategy

Depends on:

Company resources

Degree of product variability

Product life cycle stage

Market viability

Competitors marketing strategies

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Market Targeting

Market targeting:

The process of

evaluating each market

segments

attractiveness, and

selecting one or more

segments to enter

Target market: a set ofbuyers sharing common

needs or characteristics thatthe company decides to

serve

May not be the largest

segment

The segment (s) that thecompany can most

profitably serve

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Five basic strategies for target market

selection: (1) Single Segment Targeting-McD,

Volkswagen

(2) Selective Targeting-Radio for youth

(3) Mass Market Targeting-IBM, Coca Cola

(4) Product Specialization-Maruti

(5) Market Specialization-Bengal peerless

Target Marketing Strategies

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Basic Target Marketing Strategies

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Socially Responsible Marketing

Smart targeting helps both companies and consumers.

Target marketing sometimes generates controversy andconcern.

Vulnerable and disadvantaged can be targeted. Cereal, cigarette and fast-food marketers have received criticism.

Internet has raised fresh concerns about potential targeting abuses.

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Market Positioning

Market positioning:

Arranging for a product to

occupy a clear,distinctive, and desirable

place relative to

competing products,

In the minds of target

consumers, Formulating competitive

positioning for a product,

and creating a detailed

marketing mix

Product position:the waythe product is defined by

consumers on importantattributes, relative to

competing products

The quicker-picker-

upper?

The uncola? Great taste, less filling?

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Choosing a Positioning Strategy

Differences need to be: Important

Distinctive Superior

Communicable

Pre-emptive

Affordable

Profitable

Unique Selling Proposition: choosing one attribute and aggressively promoting itself as

being the best on that benefit

Value Proposition: The full mix of benefits on which a product/brand is

positioned

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Relative perception

Process of creating favorable relative position: (1) Identification of target market

(2) Determination of needs, wants, preferences andbenefits desired

(3) Examination of competitors characteristics andpositioning

(4) Comparison of product offerings with competitors

(5) Identification of unique position

(6) Development of a marketing program

(7) Continual reassessment

Differentiation and Positioning

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Differentiation Strategies Product Descriptors

Product features

Advantages

Benefits

Customer Support Services

Image

Positioning Strategies Strengthen the Current Position

Repositioning

Reposition the Competition

Differentiation and Positioning

Using Product Descriptors

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Using Product Descriptorsfor Product Differentiation

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Choosing a Positioning Strategy

Identify a set of possible competitive advantages

on which to build a position.

Choose the right competitive advantages.

Select an overall positioning strategy.

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Positioning Strategies

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Types

Product Positioning

Brand positioning Market positioning

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Product positioning strategies

1. By attribute or benefit- This is the most

frequently used positioning strategy. For a

light beer, it might be that it tastes great or

that it is less filling. For toothpaste, it might

be the mint taste or tartar control.

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2. By use or application- The users of Apple

computers can design and use graphics

more easily than with Windows or UNIX.

Apple positions its computers based on how

the computer will be used.

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3. By user- Facebook is a social networking

site used exclusively by college students.

Facebook is too cool for MySpace and

serves a smaller, more sophisticated cohort.

Only college students may participate with

their campus e-mail IDs.

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4. By product or service class- Margarine

competes as an alternative to butter.

Margarine is positioned as a lower cost and

healthier alternative to butter, while butter

provides better taste and wholesome

ingredients.

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5. By competitor- BMW and Mercedes often

compare themselves to each other

segmenting the market to just the crme de

la crme of the automobile market. Ford and

Chevy need not apply.

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6. By price or quality- Tiffany and Costco

both sell diamonds. Tiffany wants us to

believe that their diamonds are of the highest

quality, while Costco tells us that diamonds

are diamonds and that only a chump will pay

Tiffany prices.

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Brand positioning

A product can be positioned based on 2 main

platforms: The Consumer and The

Competitor. When the positioning is on the

basis of CONSUMER, the campaigns and

messages are always targeted to the

consumer himself (the user of theproduct),Peter England, Louis Philip

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On Competitor, Dettol tv commercials

concentrate on total p0rotection only given

by Dettol and no other product

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By product attributes

Ariel cleaning micro systems

Colgate preventing cavity and promotingfresh breath

Promise broke this claim by having clove

differentiating the product

Maruti suzuki fuel efficiency and safety

Nirma lower price than HUL

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Positioning by Use/application

Surf excel hai na!

Clinic all clear dare to wear black

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By product class

Airlines as against trains or buses

Music CDs with cassettes industry

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By product user

Motorola mobile

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In google positioning strategies : keywords

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FundamentalPositioning Themes

Benefit Positioning

User Positioning

Competitive Positioning

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Positioning for Competitive Advantage

Products position is the way the product is

defined by consumers on important attributes.

The place the product occupies in consumersminds relative to competing products.

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Positioning for Competitive Advantage

Competitive advantage:an advantage over competitorsgained by offering consumers greater value, eitherthrough lower prices or by providing more benefits thatjustify higher prices

Three Important Steps:

Identifying a set of possibly competitive advantages upon

which to build a position Choosing the right competitive advantages

Selecting an overall positioning strategy

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Identifying Possible CompetitiveAdvantages

Key to winning target customers is to understandtheir needs better than competitors do and to

deliver more value. Competi t ive advantage extent to which a

company can position itself as providing superiorvalue.

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Identifying Possible CompetitiveAdvantages

Product differentiation

Services differentiation

Image differentiation

People differentiation

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Choosing Right CompetitiveAdvantages

Important

Distinctive

Superior

Communicable

Preemptive

Affordable

Profitable

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Communicating and Delivering theChosen Position

Company must take strong steps to deliver andcommunicate the desired position to target consumers.

The marketing mix efforts must support the positioningstrategy.

Must monitor and adapt the position over time to matchchanges in consumer needs and competitors strategies.

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Positioning Errors

Under positioning: Failing to really position the company at all.

Over positioning: Giving buyers too narrow a picture of the company.

Confused Positioning: Leaving buyers with a confused image of a company.

Doubtful Positioning: Finding it hard to believe the brand claims w.r.t products

features, or price

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Repositioning

Used to revive an ailing brand or fix a

lackluster new market entry

Advertising themes and positioning can betrendy and become outdated

The challenge: Changing perceptions of a

brand forged over years of advertising.

Market Segmentation Targeting and Positioning

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Market Segmentation, Targeting, and Positioning

Develop profiles of

resulting segments

Market

Segmentation

Develop measures of

segment attractiveness

Select the

target segment(s)

Develop positioning

for each segment

Develop marketing mix

for each segment

Identify bases for

segmenting market

Markettargeting

Market

positioning