Marketing segmentation, targeting and positioning, Value delivery process, Customer value.

1. Atul Fegade
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2. • Rs. 2000 (Manufacturing)
• Rs. 1000 (Marketing & endorsers)
• Rs. 2000 (Distribution)
• Rs. 2000 (Retailer’s profit)
• Rs. 7000 (Customer)
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3. • The traditional view of marketing is that the firm makes
something and then sells it.
• Will not work in economies where people face abundant choice.
• New belief: marketing begins with the planning process.

4. LBS’s Nirmalya Kumar’s 3 “Vs” approach to marketing:
• Define the value segment (customer needs)
• Define the value proposition
• Define the value network
Dartmouth's Frederick Webster views marketing in terms
of:
• Value defining process: Market research & company
self analysis
• Value developing processes: Product development
• Value delivering processes: Advertising & Distribution

5. The value chain is a tool for identifying
ways to create more customer value
because every firm is a synthesis of
primary and support activities
performed to design, produce, market,
deliver, and support its product.
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7. Value creation and delivery consists of three
parts:
• Choosing the value (segment the market,
define target market, develop “offering”).
• Providing the value (product features,
prices, and distribution channels).
• Communicating the value (sales force,
advertising, and promotional tools).

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9. • General
– Horlicks (Classic Malt, Chocolate Delight, Kesar
Badam, Elaichi),
– Lite Horlicks (Original, Badam),
– Horlicks Oats
• Toddlers
– Junior Horlicks (stage-1, stage-2, Chocolate,
Original)
– Horlicks Growth (Chocolate, Vanilla)
• Women
– Women’s Horlicks (Caramel, Chocolate),
– Mother’s Horlicks (Vanilla, Kesar)
• Horlicks Protein + (Chocolate, Vanilla)
• Horlicks Cardia +,
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11. 4-11
 The breaking down or building up of
potential buyers into groups called
Market Segments
 Market segments are the relatively
homogeneous groups of prospective
buyers that result from the market
segmentation process.
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12. 4-12
• Market Segmentation
– Process of dividing a large market into smaller
target markets, or customer groups with similar
needs and/or desires
– A marketing term referring to the aggregating of
prospective buyers into groups (segments) that
have common needs and will respond similarly
to a marketing action.
– Market Segmentation is the sub-dividing of
customers into homogenous sub-set of
customers where any sub-set may conceivably
selected as market target to be reached with
distinct Marketing Mix – Philip Kotler
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14. • To leverage scarce resources; in other
words, to ensure that the elements of the
marketing mix, price, distribution, products
and promotion, are designed to meet
particular needs of different customer
groups.
• To provide selected offerings for selected
groups of people, most of the time.
• To focus on specific customers’ needs,
in the most efficient and effective way.
• Product Differentiation.
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15. • Focus of the Company
• Increase in competitiveness
• Market expansion
• Customer retention
• Have better communication
• Increases profitability
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19. Geographic
Demographic
Psychographic Behavioral
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20. • Nations, states, regions, countries, cities, or
neighbourhoods etc.
• Grass root marketing – banks, in city courier companies
• Region – South, West, East, North.
• City – Class-I, Class-II, metro cities, mini metros etc.
• Rural, Semi-urban & Urban – literacy level, income,
spending power & availability of infrastructure such as
electricity, telephone network, & roads. Social & cultural
operation differs which affect market potential, buying
pattern & habit.
• India more than 5000 towns & over 638000 villages.
• Difference in preferences, purchase pattern, & behaviour.
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21. • Size of geographical market.
• Logistics issues – use of sophisticated & software
for physical distribution.
• Geographical market vary in their product
requirements.
– Dry summer season, desert coolers.
– Hot & humid areas, air conditioners.
– Food habits, In south – freshly brewed coffee while
other areas mostly prefer tea.
– Some part - strong tea, other Nilgiri tea.
– Ashirvad & MTR
– Curry powder, pickles etc
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22. • Age - > 6yrs, 6-11, 12-19, 20-34, 35-49, 50-60, 60+ yrs.
• Family size – Young-single, Young-married-no children, young-
married-youngest child under 6, young-married-youngest child above
6, older-married-with children, older-married-no children under 18,
older-single, other.
• Gender – Male, Female
• Income – up to Rs. 40000 pa, 40001-80000 pa, 80001-120000 pa,
120001-160000 pa, above 160000 pa
• Occupation – Unskilled, Skilled, Semi skilled, traders, businessman,
clerical, Jr. executives, Sr. Executives.
• Education – Illiterate, school upto 4 yrs, between 5 to 9yrs.
Graduate, postgraduate.
• Religion, race, generation, nationality, & social class etc.
• Demographic variables are associated with consumer needs & wants
and are easy to measure.
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23. • Age & Life-cycle stage
– Toys, books, magazines, digital games, candies,
chocolates, biscuits, fruit juices, packaged foods –
targeted towards_________
– J & J’s Baby soap, talcum powder, oil.
– Pears in pink colour.
– Disney’s books.
– Aastha, Sanskar for _______ generation.
– Cartoon network, Disney, Jetix, , Hungama, Pogo,
Nickelodeon for _______ generation.
– MTV, Channel V, Bindass etc for ________
– Discovery, National Geographic for people who are
interested in nature, science, geography & similar
subjects.
– Clearasil_____, Glucose D________, Jewelry______
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25. • Life Stage
– Getting married, deciding to buy home,
sending child to school, taking care of older
family members, marrying off their children,
planning for retirement etc.
– Furniture, kitchen appliances, cooking gas
connection becomes necessary when ____.
– Saving cum insurance schemes for young
parents to plan for children’s education or
for retirement.
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26. • Gender
– Women – more communal minded, focus on
immediate environment etc.
– Men – more self expressive & goal directed, focus
on environment which helps them to achieve a
goal.
– Clothing, hairstyle, cosmetics, & magazines.
– Park Avenue – masculine or feminine.
– Men prefer motorcycles, women prefer scooters.
– Van Huesen, Allen Solly, Emami etc.
– Household-use product & groceries.
– Dove & Axe.
– Television programs & channels (Food Food),
Automobile industry.
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28. • Income
– Determine ability of consumer to participate in
the market exchange.
– Automobiles, clothing, cosmetics, financial
services & travel
– Rolex, Omega, Tag Heuer, Xylys etc.
– Nirma targeted at middle income segment.
– Detergent, shampoo, hair oil available in small
sachets for one time consumption.
– Aravind Eye care system to offer world class
eye care to poor people in urban & rural area.
– Big Bazaar, D-Mart
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30. • Generation
– Generation is influenced by times in which it
grows up – music, movies, politics, &
defining events of the period.
– Cohorts, members share same major
cultural, political, & economic experiences &
have similar outlooks & values.
– Younger generation
– Generation X, Y, Z (millennial)
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31. • Science of using psychology & demographics to better
understand consumers.
• Psychological/personality traits, lifestyle, values.
• Vegetarian & non vegetarian (many avoid beef).
MacDonald’s.
• Halal & Jhatka chicken.
• Titan – edge, regalia, nebula, raga, Fastrack, Sonata etc.
• Maggie, Top Ramen, Aashirvaad – ready to eat or fast to
cook.
• Femina
• Hidesign.
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32. • VALS segmentation
– Horizontal
• Primary Motivation
– Ideals
» The segment guided by knowledge and principles
– Achievement
» Looking for products and services that demonstrate
success to their peers
– Self-Expression
» Desire social or physical activity, variety and risk
– Vertical
• Resources (education, income, health)
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34. • Higher resources
– Innovators
• Successful, sophisticated, active, people with high self
esteem. Niche oriented products & services (Luxury products)
– Thinkers
• Mature, satisfied & reflective people who are motivated by
ideals & who value order. Knowledge, & responsibility. Seek
durability, functionality & value in purchase. (Branded shoes,
Renowned books)
– Achievers
• Successful, goal oriented people who focus on career &
family. Favour premium products. (Honda, i-pad)
– Experiencers
• Young, Enthusiastic, impulsive who seek variety &
excitement. High spending on fashion, entertainment &
socializing. (Designer cloths, stylish footwear)
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35. • Lower resource
– Believers
• Conservative, conventional, & traditional with concrete beliefs.
Prefer familiar products & are loyal to established brands.
(prefer old established brands, local news channels)
– Strivers
• Trendy & Fun loving who are resource constrained. Favour
stylish products & try to emulate. (Coke classic, lottery)
– Makers
• Practical, down to earth, self sufficient people, like to work
with hands. Seek product with practical or functional purpose.
(Basic shirt, comfortable chair)
– Survivors
• Elderly, passive, concerned about change. Loyal to their
favorite brands. (Medicines, milk and bread)
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36. • Social Class
– Cars, clothing, home furnishing, leisure
activities, reading habits, retailers & many
companies design products & services for
specific social classes.
– Caste system
– SEC (Socio Economic Classification)
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37. • On the basis of their knowledge of, attitude
towards, use of, response to product.
• Decision Roles
– Initiator, Influencer, Decider, Buyer, & User.
– Useful for communication strategy.
– Pharma companies influence Doctors’
prescription behaviour by providing technical
information about products.
– Shaving products
– Kitchen appliances.
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38. • Behavioral Variables
– Occasions – Archies & Hallmark make
cards for birthdays, weddings, Id, Diwali etc.
• Cars heavily advertised in _______ times.
• Chocolates, snacks, sweets on V-Day.
• Orange Juice promoted as cool, healthful
refresher at all the time.
• When do you think people prefer to drink orange
juice?
• Diet Coke, Coca-Cola as family drink
• Parle-G, Monaco.
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39. • Behavioral Variables
– Benefits
• Shampoos - basic cleaning of hair, conditioning
effect, medicinal treatment, suitability to hair
types. Clinic +, Chick, Pantene, Head &
Shoulder & Sunsillk.
• Bathing soap – Liril, Dettol, Cinthol.
• Sports
– Health drinks, sports shoes, cloths
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40. • Behavioral Variables
– User Status
• Nonusers, ex-users, potential users, first-time users & regular
users.
• Market leaders – attract potential users
– Usage rate
• Light, medium & heavy product users.
• Mobile phone service providers depends upon heavy users
(ARPU).
• Low tariffs for new users.
– Buyer Readiness Stage
• Aware & Unaware, some are informed, some are interested,
some desire the product, some intend to buy.
• Marketing Funnel
• E.g.. Life Cell baby cord – Umbilical cord stem cell banking.
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41. • Behavioral Variables
– Loyalty Status
• Hard core loyals, split loyals, shifting loyals, Switchers.
• Habit, indifference, a low price, high switching cost,
unavailability of other brand.
• Loyalty programs.
– Attitudes
• Enthusiastic, Positive, Indifferent, Negative & Hostile.
• Political campaign
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Enthusiastic Positive Indifferent Negative Hostile

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44. Demographic
Operating Variables
Purchasing Approach
Situational Factors
Personal Characteristics
Industry, company size, location
Technology, user status, customer capabilities
Power structure, nature of existing relationship
Urgency, specific application, size of order
Buyer-seller similarity, loyalty, risk attitude
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45. • Refrigerators
– Geographical – N W S E
– Size – 65, 90, 165, 286, 300 liters
– Nature of consumers – households & industrial
• Washing Machines
– Density – Urban & Suburban
– Economy – middle & upper income group
– Benefits – Automatic, Semi-automatic
• Airline Services
– Region – all regions
– Density – Urban
– Occupation – service & business class
– Benefits – time & comfort
– Usage – frequent, occasion
• Banking Services
– Density – Urban, Suburban & rural
– Customers – service, business & self employed
– Psychographic
– Behaviour
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47. • Size, purchasing power, profiles
of segments can be measured.
• Segments are large or profitable
enough to serve.
Measurable
Substantial
Accessible
Differential
Actionable
• Segments must respond
differently to different marketing
mix elements & programs.
• Effective programs can be
designed to attract and serve
the segments.
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• Segments can be effectively
reached and served.

48. Full
Market
Coverage
Multiple Segments
Single
Segments
Individuals as segments
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50. • Single-Segment Concentration
– Farm equipment division of M&M
– tractors.
– Zodiac shirts, Specialty hospitals.
– Specializing in production,
distribution & promotion, high
ROI.
– Risk
– Super segment
• Selective Specialization
– Multisegment strategy to diversify
risk. P&G, HUL.
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51. • Product Specialization
– Microscope sold to universities, governments, commercial laboratories.
– Risk – New Technology
• Market Specialization
– A stationary provider to university.
• Full market coverage
– Microsoft, Coca-cola, TATA Motors.
– Undifferentiated or Differentiated
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52. • Segment by segment invasion
plan
• Megamarketing
• Ethical choice of
market segment
• Avoid consumer
backlash, public
controversy.
• Coca-cola targeting
children.
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53. 8- 55
• Evaluating Market Segments
– Segment size and growth
– Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
– Company objectives and resources

54. • A market is a set of all actual and potential buyers
• A target market is a group of people toward whom a firm
markets its goods, services, or ideas with a strategy
designed to satisfy their specific needs and preferences.
• Three strategies -
• Undifferentiated Strategy
• Differentiated
• Concentrated
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55. Segment 1
Segment 2
Segment 3
Segment 1
Segment 2
Segment 3
Company
Marketing
Mix
Company
Marketing
Mix
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 3
Market
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing

56. 8-58
• Undifferentiated marketing: when a
firm produces only one product or
product line and promotes it to all
customers with a single marketing mix
– Sometimes called mass marketing
– Much more common in the past
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57. Single
Marketing
Mix
Target Market
Organization
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58. 8-60
• Differentiated marketing: when a firm
produces numerous products and
promotes them with a different
marketing mix designed to satisfy
smaller segments
– Tends to raise costs
– Firms may be forced to practice
differentiated marketing to remain
competitive
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59. Organization
Marketing Mix 1
Target Market
Marketing Mix 2
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61. 8-63
• Concentrated marketing (niche
marketing): when a firm commits all of
its marketing resources to serve a single
market segment
– Attractive to small firms with limited
resources and to firms offering highly
specialized goods and services
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62. Single
Marketing
Mix
Target Market
Organization
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63. 8-65 MIBM MBA-I

64. MASS
MARKETING
SEGMENT
MARKETING
NICHE MARKETING
LOCAL MARKETING
INDIVIDUAL MARKETING
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65. • Mass Marketing
– Mass production, mass distribution, & mass promotion of one product for all buyers.
– Creates largest potential market, leads to lowest costs & higher margins.
• Segment Marketing
– Identify segments & decide which one to target
– Better design, price, disclose, deliver product & services & fine tune marketing program.
– Car top end & base models.
– Domestic airlines
– Preference Segments - Homogeneous, Diffused & Clustered - Diagram
• Niche Marketing
– Narrowly defined customer group seeking a distinctive mix of benefits.
– Dividing segments into subsegments.
– Ezee from Godrej, Crack ointment from Paras, Itchgaurd, Neem Active by Henkel, Vicco
Vajrdanti, Meswak, Babool, Astha TV, Star Cricket by ESPN STAR, TEN Cricket,
– Pay premium price for product which will best satisfy their need.
– Himalaya Ayurvedic in India, plus size fashion by Revolution clothing pvt ltd.
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67. • Local Marketing
– Marketing programs are tailored to the need & wants of local customer
group in trading areas, neighbourhoods, even individual stores.
– Banks have branches to serve corporate customers. NRI branches in
Kerala.
– Spiderman 3 released in 5 different languages including Bhojpuri.
– Bahubali 2 released in 8 languages.
– Bharat Matrimony
– Grassroots marketing – Nike does sponsorship of local school teams.
• Individual Marketing
– Customized, One-to-One marketing.
– Customerization.
– Asian Paints offer mix & match colours.
– Ruff & Tuff ready to stitch jeans
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68. Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Niche Marketing
Different products to subgroups within segments
(more segmentation)
Local Marketing
Tailoring brands/ promotions
to local customer groups
Individual Marketing
Tailoring products/ programs
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70. • Positioning:
– The place the product occupies in consumers’
minds relative to competing products.
– Typically defined by consumers on the basis of
important attributes.
– Involves implanting the brand’s unique benefits
and differentiation in the customer’s mind.
– Positioning maps that plot perceptions of brands
are commonly used.
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75. • Identifying a set of possible competitive
advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen
position to the market
Choosing a Differentiation and Positioning Strategy

76. Competitive advantage is an advantage over
competitors gained by offering consumers
greater value, either through lower prices
or by providing more benefits that justify
higher prices
Identifying Possible Value Differences and
Competitive Advantages

77. Identifying a set of possible competitive advantages to
build a position by providing superior value from:
Choosing a Differentiation and Positioning Strategy
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation

78. ‘How Many and which one’
Difference to promote should be:
Choosing the Right Competitive Advantage
Important Distinctive Superior
Communicable Preemptive Affordable
Profitable

79. Value proposition
is the full mix of
benefits upon
which a brand is
positioned
Selecting an Overall Positioning Strategy

80. More for More More for Same Same for Less
More for Less
Less for Much Less

81. • Positioning statements summarize the
company or brand positioning
– EXAMPLE: To (target segment and need)
our (brand) is (concept) that (point-of-
difference)
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82. • Companies must be certain to DELIVER
their value propositions.
• Positions must be monitored and
adapted over time.
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83. • A value proposition is generally a clear and
succinct statement (e.g., 2-4 sentences) that
outlines to potential clients and stakeholders a
company's (or individual's or group's) unique
value-creating features.
• A value proposition is a clear statement of the
tangible results a customer gets from using
your products or services.
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84. • A value proposition is an offer to some entity
or target in which they (the possessor) get
more than they give up (merit or utility), as
perceived by them.
• A value proposition is the basic reasoning for
why people should consider your product or
service.
• Describes what you do in terms of tangible
business results. It draws interest and shares
a success story within a few words.
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85. • It’s the most technologically advanced
and robust system on the market
• We improve communication and morale
• We offer training classes in a wide
variety of areas
• My product was rated the best-in-class
by leading authorities
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86. Value propositions should be:
Clear
Concise
Credible
Consistent
over time
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90. • Tata ‘Zest’ (Product brochure)
– Design, Performance, Connectivity,
Comfort, Safety
• Fair & Lovely (fairness expert)
• Amrutanjan – Aromatic balm
message for headache (Kick out
pain)
• Linc Pens
• ITC AIM matchboxes
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