SEGMENTATION TARGETING SEGMENTATION TARGETING AND POSITIONINGAND POSITIONING

Prof. GroverProf. Grover

MARKET ENTRYMARKET ENTRY

What’s the Difference?What’s the Difference?

MarketMarket

MarketSegment

MarketSegment

MarketSegmentation

MarketSegmentation

People or organizations with needs or wants and the ability and willingness to buy.

People or organizations with needs or wants and the ability and willingness to buy.

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

FINDING THE RIGHT MARKETSFINDING THE RIGHT MARKETSMarkets = people with needs/wants and the Markets = people with needs/wants and the ability and willingness to buyability and willingness to buy

Types of markets:Types of markets:

– Generic (needs) marketGeneric (needs) market

People with broadly similar needs (social)People with broadly similar needs (social)

Diverse ways of satisfying (restaurants, Diverse ways of satisfying (restaurants, movies)movies)

– Products (needs) marketProducts (needs) market

Very similar needs (thirsty for soft drinks)Very similar needs (thirsty for soft drinks)

Very close substitutes (Coke vs. Pepsi, and Very close substitutes (Coke vs. Pepsi, and what else?)what else?)

Any close substitutes or no?Any close substitutes or no?

Finding The Right MarketsFinding The Right Markets

MarketSegmetation

MarketSegmetation

MarketTargeting

MarketTargeting

MarketPositioning

MarketPositioning

Distinct groups on the basis of needs, characteristics and behaviour who might require separate products.

Distinct groups on the basis of needs, characteristics and behaviour who might require separate products.

Process of evaluating market segments’ attractiveness before entering.

Process of evaluating market segments’ attractiveness before entering.

Placing the product at a clear, attractive and desirable place keeping in mind its competitive advantages in the market place.

Placing the product at a clear, attractive and desirable place keeping in mind its competitive advantages in the market place.

Levels of Market SegmentationLevels of Market Segmentation

1. Mass marketing (1900s)1. Mass marketing (1900s) Mass producing, distributing, promoting

2. Segment marketing (1980s)2. Segment marketing (1980s) Matching the needs More efficient

3. Niche marketing3. Niche marketing Focusing sub-segment groups (SUVs)

4. Micro-level marketing4. Micro-level marketing Local area marketingLocal area marketing

Tailoring products to local markets

Individual marketingIndividual marketing Tailoring products to individual customers

Levels of Market Segmentation 2Levels of Market Segmentation 2

1.1. Mass marketing (1920s)Mass marketing (1920s) MMass producing, distributing, promoting in ass producing, distributing, promoting in

undifferentiated marketsundifferentiated markets In the 1920s with the inception of mass radio useIn the 1920s with the inception of mass radio use This gave corporations an opportunity to appeal This gave corporations an opportunity to appeal

to a wide variety of potential customersto a wide variety of potential customers Used to effect attitude change in wide audience Used to effect attitude change in wide audience

for products like toothpaste, automobiles, for products like toothpaste, automobiles, furniturefurniture

Mass marketing is the opposite of Mass marketing is the opposite of niche marketingniche marketing, where a product is made , where a product is made specially for one person or a group of persons specially for one person or a group of persons

Levels of Market Segmentation 3Levels of Market Segmentation 32. Segment marketing (1980s)2. Segment marketing (1980s)

A fairly A fairly homogeneoushomogeneous group of people having similar group of people having similar needs and needs and attitudesattitudes are likely to respond similarly to are likely to respond similarly to a given a given marketing strategymarketing strategy. They are likely to have . They are likely to have similar feelings and ideas about a similar feelings and ideas about a marketing mixmarketing mix – – i.e. the i.e. the productproduct or or serviceservice, sold at a given , sold at a given priceprice, and , and distributeddistributed and and promotedpromoted in a certain way. in a certain way.

This calls for Market Segmentation. Market This calls for Market Segmentation. Market segmentation is the process of classifying a market segmentation is the process of classifying a market into distinct subsets (segments) that behave in into distinct subsets (segments) that behave in similar ways or have matching needs. similar ways or have matching needs.

The process consists of The process consists of segment identification, segment identification, segment characterization, segment evaluation and segment characterization, segment evaluation and target segment selectiontarget segment selection. .

Levels of Market Segmentation 4Levels of Market Segmentation 4

3. Niche marketing3. Niche marketing Focusing sub-segment groups (SUVs)

Addressing a need for a product or service that is not being addressed by mainstream providers

Niche market ventures are profitable and small in comparison to the mainstream marketplace

Due to the benefits of specialization and focus on small identifiable market segments

even without the benefit of economy of scale.

Levels of Market Segmentation 5Levels of Market Segmentation 5

4. Micro-level marketing4. Micro-level marketing Local area marketing Local area marketing – – Tailoring products to local

markets Individual marketingIndividual marketing – – Tailoring products to individual

customers

Today the emphasis is on local marketing reaching Today the emphasis is on local marketing reaching individual communities with specialized messages. individual communities with specialized messages.

The mass marketing era is being replaced by “mass The mass marketing era is being replaced by “mass personalization” personalization”

The latest trend is to bring marketing down to the The latest trend is to bring marketing down to the neighborhood level and make it personal to the neighborhood level and make it personal to the customer or specific neighborhoodscustomer or specific neighborhoods

The message be delivered to people most likely to be The message be delivered to people most likely to be your customers your customers

Market SegmentationMarket Segmentation

Dividing market into meaningful, similar Dividing market into meaningful, similar groups (or aggregating those with similar groups (or aggregating those with similar needs)needs)

Markets have a variety of product preferencesMarkets have a variety of product preferences

Marketers can better define customer needsMarketers can better define customer needs

Decision makers can define objectives and Decision makers can define objectives and allocate resources more accuratelyallocate resources more accurately

Why is segmentation important?....Why is segmentation important?....

Criteria for SegmentationCriteria for Segmentation

Substantiality

Identifiabilityand Measurability

Accessibility

Responsiveness

Segment must be large enough to warrant a special marketing

mix.

Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with marketing mix.Unless segment responds to a marketing mix differently, no separate treatment is needed.

CustomersCustomers

Basis for Customer SegmentationBasis for Customer Segmentation

ConsumerConsumerMarketsMarkets

IndustrialIndustrialMarketsMarkets

How do you Segment the markets with similar needs.How do you Segment the markets with similar needs.

Basis for Market Segmentation: Basis for Market Segmentation: Consumer MarketsConsumer Markets

Demographic factorsDemographic factors

ConsumerConsumerMarketsMarkets

Socioeconomic factorsSocioeconomic factors

Geographic Geographic factorsfactorsPsychological factorsPsychological factors

Consumption patternsConsumption patterns

Perceptual factorsPerceptual factors

Dem.

Soc.

Geo.Psy.

Con.

Per.

Major segmentation variablesMajor segmentation variables

Segmenting Consumer MarketsSegmenting Consumer MarketsGeography Demographics

Psychographics(SLIDE)

Behavioural

• Region• Market size• Market

density• Climate

• Age & Family life cycle stage (SLIDE)

• Gender• Income• Generation• Social class

• Personality traits

• Lifestyle• Values

• Benefitssought (SLIDE)

• Loyalty status

• Usage Rate (SLIDE)• Former• Potential• 1st time• Light or

irregular• Medium• Heavy

Buying decision roles of : Initiator, Influencer, Decider, Buyer and User

Behavioural (continued)

Demographic Segmentation:Demographic Segmentation:Family Life CycleFamily Life Cycle

Psychographic SegmentationPsychographic Segmentation(Psycho-demographic)(Psycho-demographic)

Personality traits (cars)Personality traits (cars)

Lifestyles (outdoor)Lifestyles (outdoor)

ValuesValuesSRI Consulting Business Intelligence (SRIC-BI) framework provides 4 group tendencies under 2

groups with higher resources and lower resources:

Higher Resources Group

•Innovators

•Thinkers

•Achievers

•Experiencers

Lower Resources Group

•Believers

•Strivers

•Makers

•Survivors

SRIC-BI is an in

ternational

business, technology, in

dustry,

and consumer research and

consulting company.

Behavioural SegmentationBehavioural Segmentation

Marketers often segment markets based Marketers often segment markets based on how consumers interact with the on how consumers interact with the product; andproduct; andmarketers must determine exactly what marketers must determine exactly what benefits are important to the customerbenefits are important to the customer different consumers will seek different benefits different consumers will seek different benefits

from a product or service and will associate it from a product or service and will associate it with different occasionswith different occasions

benefits arise not only from the product but benefits arise not only from the product but from the process of acquiring itfrom the process of acquiring it

Behavioural Segmentation …Behavioural Segmentation …

Marketers are now segmenting markets on Marketers are now segmenting markets on the basis of the the basis of the occasionsoccasions that customers that customers associate with use of the productassociate with use of the product

a widely-used approach to segmentation a widely-used approach to segmentation involves dividing the market on the basis of involves dividing the market on the basis of usage ratesusage rates; many marketers target the ; many marketers target the “heavy users”“heavy users”

once segments have been identified, once segments have been identified, profilesprofiles of segment members are prepared of segment members are prepared

Benefit SegmentationBenefit Segmentation

These are those group consumers whose These are those group consumers whose needs/wants are different/ unique (and not needs/wants are different/ unique (and not by gender, age, lifestyle etc.)by gender, age, lifestyle etc.)

What do you need/want What do you need/want from your shampoo from your shampoo (Clinic, H&S, Pantene), (Clinic, H&S, Pantene), bathing soaps (Cinthol, bathing soaps (Cinthol, Detol), cell phone?Detol), cell phone?

Usage Rate SegmentationUsage Rate Segmentation

Group by amount / rate of consumption (1Group by amount / rate of consumption (1stst time time user, regular user, ex-users, potential users, light user, regular user, ex-users, potential users, light users, heavy users)users, heavy users)

Target market: Unawares-Aware, Not tried - TriedTarget market: Unawares-Aware, Not tried - Tried

Not Tried (opinion)Not Tried (opinion) – Negative, Neutral, Favourable – Negative, Neutral, Favourable

Tried (opinion)Tried (opinion) – Rejector, Non-repeater, Repeater – Rejector, Non-repeater, Repeater

• RepeaterRepeater - Loyal to other Brands, Switcher, - Loyal to other Brands, Switcher, Loyal to brandLoyal to brand

• Loyal to brandLoyal to brand – Light user, Regular user, Heavy user – Light user, Regular user, Heavy user

Basis for Market Segmentation: Basis for Market Segmentation: Business MarketsBusiness Markets

BusinessBusinessMarketsMarkets

• End-use segmentsEnd-use segments

• Product segmentsProduct segments

• Geographic segmentsGeographic segments

• Common buying factor Common buying factor segmentssegments

• Customer size segmentsCustomer size segments

Geo.

Pro.

End.

Buy.

Size

Major segmentation variablesMajor segmentation variables

Basis for Market Segmentation: Basis for Market Segmentation: International MarketsInternational Markets

Int’lInt’lMarketsMarkets• Economic factorsEconomic factors

• Political -Legal factorsPolitical -Legal factors

• Geographic segmentsGeographic segments

• Common buying needs factorsCommon buying needs factors

• Customer size segmentsCustomer size segments

Geo.

Pol.

Eco.

Buy.

Size

1.1. Segmenting international markets is far greater challenging. Segmenting international markets is far greater challenging.

2.2. Groupings on the basis of distinct buying needs and Groupings on the basis of distinct buying needs and behaviors is necessary.behaviors is necessary.

Major segmentation variablesMajor segmentation variables

Consider that Coca cola and Sony operate in 200 countries; Consider that Coca cola and Sony operate in 200 countries;

and what kind of challenges they faceand what kind of challenges they face

6 Steps to Segment a Market6 Steps to Segment a Market

Select a market

for study

Choosebasisfor

segmen-tation

Effectively describes

your segment

Profileand

analyzesegments

Selecttarget

markets

Design marketing

mix - implement & maintain

Effective SegmentationEffective Segmentation

Market segments must be: Market segments must be:

MeasurableMeasurable

AccessibleAccessible

SubstantialSubstantial

DifferentiableDifferentiable

ActionableActionable

A Good Segment therefore is…A Good Segment therefore is…

Homogenous withinHomogenous within: group members are : group members are similarsimilarHeterogeneous betweenHeterogeneous between: group members : group members outside the group distinctly differ (choose outside the group distinctly differ (choose the best)the best)SubstantialSubstantial: large enough and sustainable : large enough and sustainable for above average profit for above average profit OperationalOperational: workable (identify and choose : workable (identify and choose China China India)India)

TargetingTargeting

Strategies for Selecting Strategies for Selecting Markets Segments Markets Segments

A: Undifferentiated targetingA: Undifferentiated targeting

B: Differentiated targetingB: Differentiated targeting

C: Concentrated targetingC: Concentrated targeting

1

Company Marketing

mix

Market

Product Mix 1

Product Mix 2

Product Mix 3

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

Product Mix 1Mix 2Mix 3

Strategies for Selecting Strategies for Selecting Markets Segments Markets Segments

Undifferentiated TargetingUndifferentiated TargetingOne market, one mix (school note books/ plain toilet One market, one mix (school note books/ plain toilet paper)paper)Any other examples?Any other examples?

Concentrated TargetingConcentrated TargetingMultiple markets & mix for eachMultiple markets & mix for eachExamples include Fiat, Ford, Honda, Hyundai, Examples include Fiat, Ford, Honda, Hyundai, Mercedes and what else?Mercedes and what else?

Multi-segment TargetingMulti-segment TargetingMultiple markets share mix (bad idea)Multiple markets share mix (bad idea)Advantages = Advantages = Greater financial success; Economies of Greater financial success; Economies of scalescaleDisadvantages= Disadvantages= Higher costsHigher costs

1

One-to-One MarketingOne-to-One Marketing

Information-IntensiveInformation-Intensive

Long-TermLong-Term

One-to-OneMarketing is...One-to-One

Marketing is...

IndividualizedIndividualized Cost ReductionCost Reduction

Has a Goal of…Has a Goal of…

Customer LoyaltyCustomer Loyalty

Increased RevenueIncreased Revenue

PersonalizedPersonalized

Customer RetentionCustomer Retention

2

One-to-One MarketingOne-to-One Marketing

One-size-fits all marketing is lame.One-size-fits all marketing is lame.

Direct / personal marketing will grow to meet Direct / personal marketing will grow to meet needs of busy consumers.needs of busy consumers.

We will be loyal to companies that have We will be loyal to companies that have earned—and reinforced—our loyalty. earned—and reinforced—our loyalty.

Mass-media approaches will decline as Mass-media approaches will decline as technology allows better customer tracking.technology allows better customer tracking.

TrendsTrends

3

Selecting Target MarketsSelecting Target Markets

Target segments should be compatible with Target segments should be compatible with the organization’s goals and imagethe organization’s goals and imageThe market opportunity represented by the The market opportunity represented by the segment must match the company’s segment must match the company’s resourcesresourcesThe segment must represent an opportunity The segment must represent an opportunity to generate enough sales to generate a to generate enough sales to generate a profitprofitThe company should select target segments The company should select target segments where it can enjoy a competitive advantagewhere it can enjoy a competitive advantage

4

TargetTarget Market StrategiesMarket Strategies

Market aggregation:Market aggregation: target the product or target the product or service to a mass market with little service to a mass market with little differentiationdifferentiationSingle-segment segmentation:Single-segment segmentation: selecting a selecting a single segment to target; if the segment is single segment to target; if the segment is small, this may be considered a “niche’ small, this may be considered a “niche’ strategystrategyMultiple-segment segmentation:Multiple-segment segmentation: identifying identifying two or more segments as target markets; two or more segments as target markets; involves developing a different marketing involves developing a different marketing approach for eachapproach for each

5

PositioningPositioning

PositioningPositioning

Developing a marketing Developing a marketing

mix to influence mix to influence

potential customers’ potential customers’

overall perception of a overall perception of a

brand, product line, or brand, product line, or

organization in general.organization in general.

1

How is Reliance Fresh Positioned?How is Reliance Fresh Positioned?

PositioningPositioning is the image of your brand held by is the image of your brand held by the public and especially, your segment.the public and especially, your segment.

Usually try to position on attributes consumer Usually try to position on attributes consumer sees as important, such as speed, sees as important, such as speed, convenience, safety.convenience, safety.

Positioning MapsPositioning Maps (or (or perceptual mapsperceptual maps) help see ) help see how key players in a market are viewed by how key players in a market are viewed by consumers. Helps to see competitive clusters consumers. Helps to see competitive clusters and market gaps.and market gaps.

Positioning for the Market Segment

2

Positioning Maps (or Perceptual maps)Positioning Maps (or Perceptual maps)

AttributeAttribute

Price and QualityPrice and Quality

Use or ApplicationUse or Application

Product UserProduct User

Product ClassProduct Class

CompetitorCompetitor

EmotionEmotion

Positioning BasePositioning Base3

Positioning StrategiesPositioning Strategies

Against Competition:Against Competition: “We’re as good or better” “We’re as good or better” Cola wars, small car segment.Cola wars, small car segment.Market Gap:Market Gap: Find spot others missed. Niche Find spot others missed. Niche producers may make vinyl records.producers may make vinyl records.Set Brand ApartSet Brand Apart:: Stress your differences and Stress your differences and avoid head-to-head competition. “avoid head-to-head competition. “Nina Ricci”Nina Ricci”Leadership:Leadership: Be the one others follow. Used by Be the one others follow. Used by a personality.a personality.Lifestyle Segment AppealsLifestyle Segment Appeals:: Use lifestyle to Use lifestyle to define. Some buy fancy cameras to take define. Some buy fancy cameras to take creative photography, others to impress.creative photography, others to impress.

4

Niche MarketingNiche Marketing

This is a specific form of This is a specific form of positioning positioning The company decides to occupy a market niche The company decides to occupy a market niche where it can be distinct and the competition is where it can be distinct and the competition is weakweakIdentify segments that are not well served or not Identify segments that are not well served or not identifiedidentifiedDetermine how to gain a competitive advantageDetermine how to gain a competitive advantageExpand the niche by meeting consumer needsExpand the niche by meeting consumer needsDefend the niche position by improving product Defend the niche position by improving product and service offeringsand service offerings

5

RepositioningRepositioning

This is a variation of a This is a variation of a positioning strategypositioning strategy that that involves changing the market position of a involves changing the market position of a

brand or store in response to changes taking brand or store in response to changes taking place in the broader market environment.place in the broader market environment.

India is passing through this stage today. India is passing through this stage today. Everyone is trying to redefine their product and Everyone is trying to redefine their product and aligning them with the younger generation. Ex- aligning them with the younger generation. Ex-

Godrej, Shoppers Stop!Godrej, Shoppers Stop!

6

Effective PositioningEffective Positioning

1.1. Assess the positions occupied by Assess the positions occupied by competing productscompeting products

2.2. Determine the dimensions underlying Determine the dimensions underlying these positionsthese positions

3.3. Choose a market position where Choose a market position where marketing efforts will have the marketing efforts will have the greatest impactgreatest impact

7

Product Differentiation:Product Differentiation:a positioning strategya positioning strategy

A positioning strategy that some A positioning strategy that some firms use to distinguish their firms use to distinguish their products from those of competitors.products from those of competitors.

Are distinctions real or perceived?Are distinctions real or perceived?

8

SummarySummary

Generic vs. Product marketsGeneric vs. Product markets

Segmentation: CriteriaSegmentation: Criteria

Basis for segmentingBasis for segmenting

Strategies of segmentationStrategies of segmentation

Positioning / RepositioningPositioning / Repositioning

Thank you!Thank you!