segmentation, targeting & positioning of services

Segmenting, Targeting, and Positioning

Marketing Process Involves

• Market segmentation• Targeting market• Positioning• Marketing mix

Job seekers(Market Size 20 %)

Students (Market Size 30 %)

Foreign Travelers(Market Size 5 %)

Conversion Possibility 40%

Conversion Possibility 70%

Conversion Possibility 50%

Middle Class Population

Target

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

Basic Market-Preference Patterns

(a) Homogeneous(a) Homogeneous (c) Clustered(c) Clustered(b) Diffused(b) Diffused

Mar

ket

Costumer / Consumer

Mar

ket

Costumer / Consumer

Mar

ket

Costumer / Consumer

HomogeneousHomogeneousHeterogeneous Market

“A market in which distinctive and different customer needs can be identified and which can then be used as a basis for segmentation; opposite” of homogeneous.”

HomogeneousHomogeneousHeterogeneous Market

DiffusedDiffused

ClusteredClustered

Step 1. Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers (no segmentation)

Mass MarketingSame product to all consumers (no segmentation)

Segment MarketingPdt./ service to one or more segments (some segmentation)

Segment MarketingPdt./ service to one or more segments (some segmentation)

MicromarketingProducts / service to suit the tastes of individuals and locations

(complete segmentation)

MicromarketingProducts / service to suit the tastes of individuals and locations

(complete segmentation)

Niche MarketingPdt./service to subgroups within segments (more segmentation)

Niche MarketingPdt./service to subgroups within segments (more segmentation)

Local Marketing

Tailoring brands / promotions to local customer groups

Individual Marketing

Tailoring products / programs to individual

customers

Target the Mass Market versus the Individual Consumer

12

Mass Market

Niche Micro-marketing The

Individual

Personal-ization

Micro-marketingNiche

Standardized Marketing Mix

Continuum of Market Segmentation Size

Continuum of Market Segmentation Size

Segment Marketing

Segment Marketing

Mass MarketingSame product /service to all consumers (no segmentation)

Segment Marketing Products / service to one or more segments (some segmentation)

Niche Marketing Products / service to subgroups within segments (more segmentation)

Micromarketing Products / service to suit the tastes of individuals and locations

(complete segmentation)

Local MarketingTailoring brands / promotions to local customer groups

• Salary Account• Suvidha Account• Privileged Account• Training Center

Individual MarketingTailoring products/ programs to individual customers

• Computer Institution• Designer Outfits

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

Effective Segmentation

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

ActionableActionable

• 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.

Bases of Market Segmentation

Geographic

Demographic

Psychographic

Behavioral Occasion

Benefits-Sought

• Region / Country• Density•Climate

•Age•Gender•Family Size•Income•Occupation•Education•Religion•Race•Nationality

•Social Class•Lifestyle•Personality

•Benefits•User Status•Usage rate•Loyalty Status•Readiness•Attitude

•Segmenting market based on occasion when buyers get the idea to buy or actually make their purchase, or use the purchased item.

•Markets can be segmented based on the benefits that consumers desire from using a specific product

Geographic Segmentation

Demographic Segmentation

Psychograph Segmentation

Behavioral Segmentation

Occasion Segmentation

Benefits-Sought Segmentation

Step 2 Market TargetingEvaluating Market Segment

• Segment Structural Attractiveness Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

• Segment Size and Growth– Analyze sales, growth rates and expected profitability

for various segments.

• Company Objectives and Resources– Company skills & resources relative to the segment(s).– Look for Competitive Advantages.

Target Market

• “ A set of buyer sharing common needs or characteristics that the company decide to serve”

Five Patterns of Target Market Selection

Single-segmentconcentration

Productspecialization

M1 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

Single-segmentconcentration

Selectivespecialization

M1 M2 M3 P1

P2

P3

Selectivespecialization

M1 M2 M3 P1

P2

P3

Productspecialization

M1 M2 M3 P1

P2

P3

Marketspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketcoverage

P1

P2

P3

Step 2. Market TargetingMarket Coverage Strategies

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

CompanyMarketing

Mix

CompanyMarketing

MixMarketMarket

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

B. Differentiated Marketing

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

C. Concentrated Marketing

Step 2. Market TargetingChoosing a Market-Coverage

StrategyCompany Resources

ProductVariability

Product’s Life-Cycle Stage

Market Variability

Competitors’Marketing Strategies

Positioning the Offering

Positioning is the act of designing the company’s

offering and image to occupy a distinctive place in the

target market’s mind.

The BCG CompetitiveAdvantage Matrix

Volume

FragmentedStalemated

Specialized

Siz

e o

f th

e A

dva

nta

ge

SmallSmall

LargeLarge

Number of Approachesto Achieve Advantage

FewFew ManyMany

Product Differentiation

Form FeaturesPerfor-mance

QualityConform-

anceQuality

DurabilityRelia-bility

Repair-ability

Style Design

Performance of a Product

Consistency (Conformance of a Product)

Reliability

Durability

Accuracy

User Friendly (Ease of Operation)

Repair

Other Value Added Services

Value of a feature and cost

Usefulness

Looks

Performance

Services Differentiation

DeliveryDelivery

OrderingEase

OrderingEase

Maintenance& Repair

Maintenance& Repair

CustomerTraining

CustomerTraining

InstallationInstallation CustomerConsulting

CustomerConsulting

Miscellan

eou

sS

ervices

Ordering Ease

Installation

Delivery

Customer Consulting

Customer Training

Maintenance & Repair

Differentiation

• Personnel• Channel

Image Differentiation

Media Atmosphere

Symbols

Events

Media

Differences WorthDifferences WorthEstablishingEstablishing

AffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

Perceptual Map

0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.60.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2

1.01.0

0.80.8

0.60.60.40.4

0.20.2

-0.2-0.2

-0.4-0.4

-0.6-0.6

--0.80.8

MagicMagicMountainMountain

JapaneseDeer Park

BuschBuschGardensGardens

Knott’sKnott’sBerryBerryFarmFarm

LionLionCountryCountrySafariSafari

MarinelandMarinelandof theof thePacificPacific

DisneylandDisneyland

Economical

Fun ridesExercise

FantasyGood food

Easy to reach

Educational,animals

Little waitingLive shows

Positioning Process

1. Market Positioning2. Psychological Positioning

• Objective Positioning• Subjective Positioning

3. Positioning Approaches

Market Positioning

• “The market positioning process of identifying and selecting markets to determine the criteria for competitive success.”

Psychological Positioning

• “Psychological Positioning enables marketers to create a unique product image with the objective of creating interest”.

Psychological Positioning

• Objective Positioning :- The objective positioning relates to the objective attributes of physical products or service.

• Subjective Positioning :- inspiring customer with some intangible offering

Objective Positioning

Subjective Positioning

inspiring customer with some intangible offering

Positioning Strategies

• Service / Product Attributes • Benefits, Problem Solutions & Basic Needs• Price & Quality• Specific Use• Against Other Products• Product User• Competitor• Endorsement• Empathy• Service Evidence

Service / Product Attributes

Benefits, Problem Solutions & Basic Needs

Price & Quality

Specific Use

Against Other Products

Endorsement

Empathy

Service Evidence

Types of Mass Customization (1)

• The Four Faces of Mass Customization – – Joseph Pine and James Gilmore - Jan.-Feb. 1997 Harvard

Business Review

– 1. Collaborative Customization:• Consumer and producer engage in a dialogue to determine

customer requirements• Computers, clothing and footwear, furniture, some services

– 2. Adaptive Customization: • Product is designed so that users can alter it themselves to

fit unique requirements on different occasions• High-end office chairs, R7 golf club, certain electronic

devices

– 3. Cosmetic Customization: • Product is unique in appearance only• Customer’s chosen text or image on T-shirts, mouse mats,

baseball caps, mugs etc.• Also called ‘Personalization’

– 4. Transparent Customization: • Producer provides customized product without consumer

being necessarily being aware that it has been customized• Can be used when consumer’s needs are predictable or can

be easily deduced, and when customers do not want their requirements repeated.

• Example- repeat orders for customized clothing, chemicals

Collaborative Customization

Adaptive Customization

Cosmetic Customization

Transparent Customization

True Mass Customization

• True Mass Customization requires:– System for customer to specify

requirements easily e.g. Costumer service department, online ordering, call centre.

– Advanced manufacturing & communication systems

• Enable economies of scope (keep cost and price low)

– Build-to-order approach • product is not made until order is received (Book:

Build to Order and Mass Customization – David M. Anderson)

– Minimum order quantity of one

Advantages of MC

– Customer has control over product– Does not have to pay for features he/she

does not want (computers etc.)– Company does not have finished product

inventory better use of working capital– Easier for company to differentiate

product– Levels out economic fluctuations

• When slowdown occurs, less backlog of inventory• Prices do not have to be cut as much• Therefore, less likelihood of recession

What Mass Customization Isn’t

• Massive Product Variety – Customer has Choice but not Control;

– E.g. ‘Personalize your cellphone with any of our 2000 skins’

• Advanced ordering system linked to craft production• Personalization or mass customization of Marketing:

– Use of knowledge about customer to personalize marketing of standard products.

– Data gathered from loyalty schemes, etc.• Customized products with minimum quantities

– ‘Your design on a T-shirt, minimum order 100’

Examples of Mass Customization

• Dell– Build to order computers– Assembly, not manufacture (modular

components)– MC sometimes associated with higher prices

but Dell cheaper than most– Why? Massive efficiency of supply chain

management– ‘Living in Dell Time’ - Fast Company, Nov. 2004

• Clothing and Footwear– NikeID, MiAdidas, Otabo Shoes, Vans– Bivolino (shirts), U-Jeans, Land’s End, Target,

Tommy Hilfiger– Clothing and footwear very suited to MC due to

each person being unique in size and shape

• Sports Equipment– Nautilus (treadmills)

• Industrial equipment, construction– Kingspan – insulated roof and wall panels,

made to order for size, colour, insulation type

Mass Customization of Services

• Difficult to define when a service is mass customized rather than just ‘customized’

• Degree of automation required• Examples

– MyYahoo, MyMSN, Google Personalized– Personalized songs – Instasong.com– I.T. – providing services in similar way to object oriented

software – small pre-existing components of work combined to create overall service

– Requires increased efficiency and lower prices so as not to be just ‘packaging’ of existing services