Segmentation, Targeting, Positioning & Differentiation –

Cornerstones of Marketing Management

Submitted by : Ankush Puri Amit Kumar

Steps in Market Segmentation, Targeting, and Positioning

1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingsegments

MarketSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegment(s)

MarketTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicate

the chosenpositioning

concept

MarketPositioning

Step 1. Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)Segment Marketing

Different products to one or more segments(some segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Local MarketingTailoring brands/ promotions

to local customer groups

Individual MarketingTailoring products/ programs

to individual customers

Steps in the Market Segmentation Process

• Determine Market Boundaries• Decide Which Segmentation Variables to Use• Collect and Analyze Segmentation Data• Develop a Profile of Each Segment• Target Segments to be Served• Design a Marketing Plan

Bases for Segmenting Consumer Markets

Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or MetroSize, Density, Climate Demographic

Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Lifestyle or PersonalityPsychographic

Step 1. Market SegmentationBases for Segmenting Business Markets

Basesfor Segmenting

BusinessMarkets

DemographicsPersonalCharacteristics

SituationalFactors

OperatingCharacteristics

PurchasingApproaches

Measurable

Accessible

Substantial

Differential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

Actionable

• Size, purchasing power, profiles of segments can be measured.

• Segments must respond differently to

different marketing mix elements & actions.

• Must be able to attract and serve

the segments.

Effective Segmentation

Descriptive Bases

• Age• Gender• Income• Occupation• Education• Family Size or Family Life Cycle• Religion or Nationality

Geographic Bases

• Region

• Density

• Climate

• Population

Behavioral Bases

• User Status & Brand Loyalty

• Personality/Lifestyle• Social Class• Occasion• Readiness to Buy• Benefits Sought• Usage Rate

Single Versus Multiple Variable Segmentation

Step 2. Market TargetingEvaluating Market Segments

Segment Size and GrowthAnalyze 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 ResourcesCompany skills & resources relative to the segment(s).Look for Competitive Advantages.

Five Patterns of Target Market Selection

Single-segmentconcentration

ProductspecializationM1 M2 M3

P1

P2

P3

Selectivespecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3 Full marketcoverage

P1

P2

P3

Marketspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductM = Market

Step 2. Market TargetingMarket Coverage Strategies

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 3

Market

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 2. Market TargetingChoosing a Market-Coverage

StrategyCompany Resources

ProductVariability

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. P 298

Product Differentiation

Form Fea-tures

Perfor-mance Quality

Conform-ance

Quality

Dura-bility

Relia-bility

Repair-ability Style Design

Delivery

Services Differentiation

OrderingEase

Maintenance& Repair

CustomerTraining

Installation CustomerConsulting

MiscellaneousServices

Media Atmosphere

Symbols

Events

Image Differentiation

Differences WorthDifferences WorthEstablishingEstablishing

Affordable Superior

Profitable

Preemptive

Distinctive

Important

• Important:-the difference delivers a highly valued benefit to a sufficient number of buyer.

• Distinctive:-the difference is delivered in a distinctive way.

• Superior:-the difference is superior to other ways of obtaining the benefit

• Preemptive:-the difference cannot be easily copied by competitors.

• Affordable:-the buyer can afford to pay for the difference.

• Profitable:- the company will find it profitable to introduce the difference.

Positioning Strategies

• Product Attributes• Benefits, Problem Solutions & Basic Needs• Price & Quality• Specific Use• Against Other Products• Product User• Against a Competitor

PRODUCT DIFFERENTIATION

(1)FORM:-the Size,Shape ,Physical structure

for eg.(Aspirin-dosage,size,shape,colour, coating or action time.)

(2) FEATURES :-Supplements its basic function calculate customer value VS. CO. cost for each potential features.

for eg. ;-Auto Cos.-several trim levels which lowers manufacturing cost and Inventory costs.

• (3) PERFORMANCE QUALITY :-Level at which primary characteristics operate.eg;-Shlitz driven in it dust when it lowered “Q”.

“Q’ becoming increasingly parameter for differentiation. Catalogues J crow raising prices of merchandise as its raise “Q” highly.

• (4) Conformance quality:- Every Porsche 944 designed to accelerate to 60 mph within 10 second. (C.Q.)

• (5) Durability :-long lasting-people think more for vehicles & kitchen appliances. (p/c’s video cameras must not be exposed to rapid obsolescence )

• Reliability:- means that a product will not malfunction. e.g.. -Maytag. (major home appliances.)

• Style:-100 k & feel e.g.:- car buyers pay high appl. Comp/Mont blanc/H.D.

• To be branded, products must be differentiated .Perdue chicken , Bayer aspirin , tata steel , P&G tide , cheer ,gain candy detergents, Otis making elevators smart.

Personnel diff.

• Company can gain a strong competitive advantage through having better trained people.eg;-Singapore airlines.

Channel diff.

• Company can achieve competitive advantage through the way they design their distribution channel coverage , expertise ,and performance.eg. (caterpillar)

Image diff.

• Buyers respond differently to company and brand image.eg.Marlboro-(machocowboy)

DIFFERENTIATION

• Process of adding a set of meaningful and valued differences to distinguish companies offerings from competitors offering. For eg.South west airlines .

Differentiations VariablesProduct Services Personnel Channel

Form Ordering ease Competence Coverage

Features Delivery courtesy Expertise

Performance Installation Credibility Performance

Conformance Customer Reliability

Durability Training Responsiveness

Reliability C. Consulting Communication

Reparability Maintenance Repair

Style Miscellaneous

Design

Differentiation Strategies

Parameter Example

Product Features Cielo car, IFB washing machine, Sony Trinitron TV

Performance Quality Dove beauty soap,100 pipers whisky.

Exclusivity Style Tanisque watches,Madura coats, Van Heusen,Louies Philippe.

Product Design VIP Elanza suitcases, Bentley ties.

Product range & variety Revlon cosmetics, Ray ban sunglasses.

Service Quality Citibank, Otis elevators, eureka Forbes vacuum cleaners

Packaging Sand piper beer

Positioning Strategy

Bases Used Example

Brand Name Antiquity Whisky, Monte Carlo Sweaters. orchids Cosmetics

Consumer aspiration Esteem,Cielo Cars, Raymond's Suitings

Brand Personality Escorts Yamaha Bikes,Raymondes Suitings

Selective Consumer Reach

Mercedes

Décor of distribution market

Arrow shirts, Allen Solly Trousers Tanisq Watches

Event Sponsorship Archers peacks Schnappes Malibu unlike never