market segmentation targeting and positioning
TRANSCRIPT
A Market is a place where the sellers of a particular good or service can meet with the buyers of that goods and services in order to facilitate an exchange.
The buyers must have something they can offer in exchange for there to be a potential transaction.
Segmentation refers to the process of bifurcating or dividing a large unit into various small units which have more or less similar or related characteristics.
Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference.
A market segment is a small unit within a large market comprising of like minded individuals.
One market segment is totally distinct from other segments.
A market segment comprises of individuals who think on the same lines and have similar interests.
The individuals from the same segment respond in a similar way to the fluctuations in the market.
Market segmentation helps the marketers to devise appropriate marketing strategies and promotional schemes according to the tastes of the individuals of the particular market segments.
Market segmentation also gives the customers clear view of what to buy and what not to buy.
Segmentation helps the organisations to know and understand their customers better.
It is actually a marketing concept which divides the
complete market setup into smaller subsets
comprising of consumers with in a similar demand,
taste and preference.
It mainly consists of four main aspects:-
It separates a market into different geographical boundaries.
One of the major geographical segmentation for marketers is the division of markets in rural & urban areas.
The following are some example of geographic variables often used for segmentation:
Region: By Continent, Country, State or by neighbourhood also
Size of metropolitan area: Segmented according to population size
Population Density Climate
It separates a market by demographic indicators including gender, age, household type, education level and income.
It is so popular with marketers that they often associated with consumer needs & want.
It is the science of using psychology & demographic to better understand consumers.
It separates a market by lifestyle as well as values and beliefs.
Marketers divide buyers into groups on the basis of their knowledge of, attitude towards, use of, or response to a product.
Some behavioural variables include: Benefits Sought Usage Rate Brand Loyalty User Status Readiness to buy Occasions .
Step I: Identify Segmented Markets
Step II: Analyze Each Segment
Step III: Evaluate Market Opportunities
Step IV: Select Target Segments
We have divided the We have divided the market into market into segments. segments.
What next?What next?
Its time to answer the Its time to answer the basic question.basic question.
Which customers will Which customers will the company serve?the company serve?
It is the process of It is the process of evaluationevaluation and examination and examination
of various segments and of various segments and selectionselection of those segments of those segments
in which a company serves in which a company serves best.best.
A firm must look at three A firm must look at three factors.factors.I.I.Segment size and growthSegment size and growthII.II.Segment structural Segment structural attractivenessattractivenessIII.III.Company objectives and Company objectives and resourcesresources
o Collect and analyze data on Collect and analyze data on current segment sales, growth current segment sales, growth rates and expected profitability rates and expected profitability for various segments.for various segments.
oCompanies are interested in Companies are interested in segments that have the right segments that have the right size and growth characteristics.size and growth characteristics.
The company also needs to The company also needs to examine major structural examine major structural factors that affect long run factors that affect long run segment attractiveness.segment attractiveness.
It can be seen through:It can be seen through:1 competitors1 competitors2 substitute products2 substitute products3 power of buyers3 power of buyers4 powerful suppliers4 powerful suppliers
The company must consider its The company must consider its own objectives and resources. own objectives and resources. Some attractive segments can be Some attractive segments can be dismissed quickly because they dismissed quickly because they do not mesh with the company’s do not mesh with the company’s long run objectives.long run objectives.
A company should enter only A company should enter only segments in which it can create segments in which it can create superior customer value and gain superior customer value and gain advantages over competitors.advantages over competitors.
After evaluating different After evaluating different segments, the company segments, the company must decide which and must decide which and how many segments it will how many segments it will target.target.
A A target market target market consists consists of a set of buyers who of a set of buyers who share common needs or share common needs or characteristics that the characteristics that the company decides to serve.company decides to serve.
Market targeting can be Market targeting can be carried out at different carried out at different levels. Companies can levels. Companies can target very broadly target very broadly (undifferentiated (undifferentiated marketing), very marketing), very narrowly narrowly (micromarketing), or (micromarketing), or somewhere in between somewhere in between (differentiated or (differentiated or concentrated marketing).concentrated marketing).
Micromarketing (local or individual
marketing)
Undifferentiated (mass) marketing
Differentiated (segmented) marketing
Concentrated (niche) marketing
A market coverage A market coverage strategy in which a strategy in which a company decides to ignore company decides to ignore market segment market segment differences and go after differences and go after the whole market with one the whole market with one offer.offer.
It focuses on what is It focuses on what is common in the needs of common in the needs of customers rather than on customers rather than on what is differentwhat is different..
Advantages:Advantages:It appeals to the largest It appeals to the largest number of buyers.number of buyers.
Disadvantages:Disadvantages:Difficulties arising in Difficulties arising in developing a product that developing a product that will satisfy all consumers.will satisfy all consumers.Marketers having trouble Marketers having trouble in competing with more in competing with more focused firms.focused firms.
A market coverage A market coverage strategy in which a firm strategy in which a firm decides to target several decides to target several market segments and market segments and designs separate offers for designs separate offers for each.each.
Advantages:Advantages:Higher sales and stronger Higher sales and stronger position in each segment.position in each segment.
Disadvantages:Disadvantages:High costs due to variety of High costs due to variety of products.products.
A market coverage strategy in A market coverage strategy in which a firm goes after a large which a firm goes after a large share of one or a few segments share of one or a few segments or niches.or niches.Advantages:Advantages:Strong market positionStrong market positionEfficiency and effectivenessEfficiency and effectivenessLess number of competitors due to Less number of competitors due to niches.niches.
The practice of tailoring The practice of tailoring products and marketing products and marketing programs to the needs and programs to the needs and wants of specific wants of specific individuals and local individuals and local customer groups.customer groups.
It includes:It includes:1 local marketing and 1 local marketing and 2 individual marketing2 individual marketing
Local marketingLocal marketing: Tailoring : Tailoring brands and promotions to the brands and promotions to the needs and wants of local customer needs and wants of local customer group– cities, neighborhoods and group– cities, neighborhoods and even specific stores.even specific stores.
Individual marketingIndividual marketing: : Tailoring products and marketing Tailoring products and marketing programs to the needs and programs to the needs and preferences of individual preferences of individual customers. Also labeled as “one to customers. Also labeled as “one to one marketing” “customized one marketing” “customized marketing” and “markets of one marketing” and “markets of one marketing”.marketing”.
Company needs to consider many Company needs to consider many factors while choosing a market factors while choosing a market targeting strategy.targeting strategy.The best strategy depends on:The best strategy depends on:• Company resourcesCompany resources• Product variabilityProduct variability• Product’s life cycle stageProduct’s life cycle stage• Market variability andMarket variability and• Competitor’s marketing strategyCompetitor’s marketing strategy
Target marketing sometimes Target marketing sometimes generates controversy and generates controversy and concern when marketers attempt concern when marketers attempt to profit at the expense of to profit at the expense of targeted segments.targeted segments.
Socially responsible marketing Socially responsible marketing calls for targeting that serve not calls for targeting that serve not just the interests of the company just the interests of the company but also the interests of those but also the interests of those targetedtargeted. .
Creating an image of your product in the minds of your target customers.
Positioning is not what your company physically does to the product- it is what yours company does to the target customer’s mind.
Product positioning is the process that marketers use to determine how to communicate their product’s to their target customers based on customer needs.
Know your target audience well
Identify the product features
Unique selling propositions
Know your competitors
Ways to promote brands
Maintain the position of the brand
The STP model is a three steps model that helps a company to analyze their offering and the way they communicate its benefits and value to specific groups.
This model is useful because it helps a company identify their most valuable types of customer and then develop products and marketing messages that ideally suits them. This allows a company to engage with each group better, personalize their messages and sell much more of their product.
The companies need to use market segmentation to divide their customers into groups of people with common characteristics and needs.
This allows a company to tailor their approach to meet each group’s needs cost effectively.
This gives the company a huge advantage over its competitors who use a ‘one size fits all’ approach.
1.Your organization, product or brand cannot be all things to all people.
2.Know your customers and their needs before they come to know about you.
3.Our job as marketers are to understand how and what the customer wants to buy and help them do so.
We are all learning here; the best listeners will end up the smartest.
Josh Bernoff
Thank You