In this chapter we will go through :-1. What are the different levels of market segmentation?2. How can a company divide a market into segments ?3. How should a company choose the most attractive target markets ?4. What are the requirements for effective segmentation ?
Overview: Segmentation, Targeting & Positioning Why do this?
• Segmentation: involves finding out what kinds of consumers with different needs exist.
Processed involved in Segmentation1.Identify the existing and future wants in the current market2.Examine the attributes that distinguish the segments3.Evaluate the proposed segment ,attractiveness on the basis of measurability, accesibility,and size
Step 1. Market Segmentation Requirements for Effective Segmentation Measurable • Size, purchasing power, profiles of segments can be measured. Accessible • Segments must be effectively reached and served. Substantial • Segments must be large or profitable enough to serve. Differential • Segments must respond differently to different marketing mix elements & actions. Actionable • Must be able to attract and serve the segments.
Step 1. Market Segmentation Levels of Market Segmentation Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing Different products to subgroups within segments ( more segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation)
Step 2. Market Targeting Market Coverage Strategies Company Marketing Market Mix A. Undifferentiated Marketing Company Marketing Mix 1 Segment 1 Company Segment 2 Marketing Mix 2 Company Segment 3 Marketing Mix 3 B. Differentiated Marketing Segment 1 Company Marketing Segment 2 Mix Segment 3 C. Concentrated Marketing
Step 1. Market Segmentation Bases for Segmenting Consumer MarketsGeographic Nations, states, regions or cities Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioral Occasions, benefits, uses, or responses
Market Segmentation - Principles• Segmentation Variables – Geographic – Demographic – Psychographic – Behavioral – Other (anything!)• No single best way to segment a market.• Often best to combine variables and identify smaller, better- defined target groups.
Geographic Segmentation• Divide markets into different geographic units.• Examples: – World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc. – Country Region: Pacific, Mountain, East Coast, etc. – City or Metro Size: New York, San Francisco – Population Density: rural, suburban, urban – Climate: northern, southern, tropical, semi-tropical
Demographic Segmentation• Use Differences in: – age, gender, family size, family life cycle, income, occupation, education, race, and religion – Most frequently used segmentation variable • Ease of measurement and high availability. – Usually the worst variable to use.
Psychographic Segmentation Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic classificationoften have very different lifestyles and personalities.
Value And Lifestyle SRI Consulting Business Intelligence Consumer MotivationsConsumer recourses
• Those primarily motivated by ideals are guided by knowledge and principles.• Those motivated by achievement look for product and services that demonstrate success to their peers.• Those who motivate in self-expression desire social or physical activity ,variety , and risk.
Four groups with higher resources :-1.Innovators :-successful ,sophisticated, active ,take-charge people with high self esteem .purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services .Eg:- CEO of an MNC
• Thinkers :-Mature , satisfied ,and reflective people who are motivated by ideals and who value order, knowledge, and responsibility . They seek durability , functionality and value products(Social and emotional values)• Eg: senior professionals , politicians
• Achievers :-successful goal oriented people who focus on career and family . They favour premium products that demonstrate success to their peers.• Eg : Doctors , Lawyers ,etc
• Experiencers :- Young enthusiastic , impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion , entertainment , and socializing• Eg:- young IT prof
The four group with lower recourse are:-• 1.Believer :-conservative , conventional ,traditional people with concrete beliefs .They prefer familiar products and are loyal to established brand .• Eg:-Middle income group
2.Strivers :- Trendy and fun loving people who are resource constrained . They favor stylish products that emulate the purchases of those with greater material wealth .Eg :- Low income
3.Makers :- Practical , down to earth , self sufficient people who like to work with their hands . They seek products with a practical or functional purpose .Eg:-trade union leaders , human activists
4.Survivors :- Elderly , passive people who are concerned about change. They are loyal to their favorite brands.Eg:- retired employees, senior citizens,
Behavioral Segmentation• Occasion • Loyalty Status – Special promotions & – Nonusers, ex-users, labels for holidays. potential users, first- – Special products for time users, regular users. special occasions.• Benefits Sought • Usage Rate – Different segments – Light, medium, heavy. desire different benefits from the same products.
Loyalty Status Segmentation Hard-core Split loyals Shifting loyals Switchers
Evaluating Market Segments• Segment Size and Growth Potential – Sales, profitability and growth rates• Segment Structural Attractiveness – Competition, substitute products, – buyers & supplier power, new entrants (Porter’s Five Forces)• Company Objectives and Resources – Core competencies – “What business do we want to be in?”
Differentiated (Segmented) Marketing– Targets several segments and designs separate offers for each.– Coca-Cola (Coke, Sprite, Diet Coke, etc.)– Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)– Toyota (Camry, Corolla, Prius, Scion, etc.)
Micromarketing• Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.
Activity -2 cIdentify the bases by which companies have segmented their markets for these products (taking help from the television ads and other advertisements) : Nakshatra diamonds , Cinthol soaps , Domex toilet cleaner and parker pen .
TARGETING• Targeting is defined as a group of people or organisations for which an organisation designs , impements and maintains the marketing mix .
Selecting target market• Homogenious preference :- soft drinks market(Co-co cola )• Diffused preferences :- automobile market,HUL having different brands for soaps .• Clustered preferences :- occupation having impact on the types cloths worn.
Patterns of Target Market Selection: Product x Market Matrices
PositioningPlacing a product occupies in consumers’ minds relative to competing products.
Positioning Example eBay’s positioning: No matter what “it” is, you can find “it” on eBay!
Remember this important point. Positioning is all about perception.
This allows them to be compared and contrasted in relation to each other. This is the . main strength of this tool
Working of position map• The marketer would draw out the map and decide upon a label for each axis.• They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two).• The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.
Positioning Maps: Luxury SUVsPrice vs. Orientation Dimensions
Bases of positioning the product• Attribute positioning :- size or number of years in existence• Eg : Sunfeast positions its snacky brand as bigger lighter and crisper.
• Benefit positioning : Product is positioned as the leader in a certain benefit.• Eg : Hyundai santro• Headline – India’s best –loved family car is now also India’s ‘simplest car to drive’
• Use or Application positioning• Positioning the product as best for use and application .• Eg: Kenstar positioned its product as UNEXPECTEDLY COLD
• User positioning:- for some user group• Eg :- Parle-G for kids
• Competitor positiong :- the product claims to be better in some way than a particular competitor .
• Quality and price positioning :-The product is positioned as offering the best value .Eg : Big Bazar
Positioning Strategy• Competitive advantages• Points of Parity• Points of Difference => Differentiation Positioning results from differentiation and competitive advantages. Positioning may change over time.
Choosing the Right Competitive Advantages • The best competitive advantages are… – Important – Distinctive – Superior – Communicable – Pre-emptive – Affordable (to company and consumer) – Profitable Moral: Avoid meaningless differentiation.
Positioning Errors• Under-positioning: – Not positioning strongly enough.• Over-positioning: – Giving buyers too narrow a picture of the product.• Confused Positioning: – Leaving buyers with a confused image of the product.
Generic Product Positions & Value Propositions
In-class Activity• Describe how each of the following brands, companies, or products is positioned:
In-class Activity, Part 2• Choose one of the companies/brands and… – Identify relevant direct competitors – Choose the two dimensions that are most important to consumers – Develop a perceptual positioning map – Are there any opportunities in this category?
In-class Activity, Part 3• Choose a company and invent a segmentation scheme for that company’s customers using the variables we discussed in class.