Segmenting Targeting and Positioning


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Segmenting Targeting and Positioning

  1. 1. Segmenting TargetingSegmenting Targeting and Positioningand Positioning Maxwell RanasingheMaxwell Ranasinghe B.Sc. ( Business Administration) Hons. MAAT,B.Sc. ( Business Administration) Hons. MAAT, Attorney at Law, CPM ( New Haven- USA) MSLIMAttorney at Law, CPM ( New Haven- USA) MSLIM
  2. 2.  STP : Segmenting- Targeting-STP : Segmenting- Targeting- Positioning ( Strategic MarketingPositioning ( Strategic Marketing Thinking)Thinking)  Research into market will let know the needs andResearch into market will let know the needs and wants of customers.wants of customers.  There are different groups of customers in theThere are different groups of customers in the market place.  Very often companies may not be able to provideVery often companies may not be able to provide needs of all such groups of the market.needs of all such groups of the market.  Therefore, a company should identify groups withTherefore, a company should identify groups with simillar needs and find out the best group or groupssimillar needs and find out the best group or groups that they should offer their productsthat they should offer their products  Further a company also should consider how theirFurther a company also should consider how their product could be positioned in the minds of theproduct could be positioned in the minds of the customer so that they will see a difference amongcustomer so that they will see a difference among other products.other products.
  3. 3. STP is all about MarketsSTP is all about Markets  What are MarketsWhat are Markets  Generally the common meaning of aGenerally the common meaning of a market is “ a place where buyers andmarket is “ a place where buyers and sellers gather to buy and sell goods andsellers gather to buy and sell goods and services”. Town Center, Shopping Mall,services”. Town Center, Shopping Mall, Bazzar, Pola etc.Bazzar, Pola etc.  Marketing definition of a market comprisesMarketing definition of a market comprises the basic elements ( buyer/seller) of thethe basic elements ( buyer/seller) of the common meaning but a wider and morecommon meaning but a wider and more realistic approach. It says “ Market is arealistic approach. It says “ Market is a people with needs and wants to satisfy,people with needs and wants to satisfy, willing to buy them and have the ability towilling to buy them and have the ability to buy”buy”  Therefore a market could be anywhere inTherefore a market could be anywhere in the world as long as the above elementsthe world as long as the above elements are there.
  4. 4.  Markets could be presentMarkets could be present market or future marketsmarket or future markets  Markets could be individuals orMarkets could be individuals or organisationsorganisations  Markets may have customersMarkets may have customers and consumersand consumers  Products could be consumed orProducts could be consumed or usedused  Eg. Food: consumed -Eg. Food: consumed - shoes : used
  5. 5. Now talk with the person nextNow talk with the person next to youto you
  6. 6. Target Marketing StrategiesTarget Marketing Strategies  Mass Market ( undifferentiated)Mass Market ( undifferentiated)  As discussed market comprisesAs discussed market comprises different types of customers. Theirdifferent types of customers. Their needs and wants also differ.needs and wants also differ. Therefore a marketer tries to offerTherefore a marketer tries to offer one product to the whole market andone product to the whole market and satisfy common need of the market.satisfy common need of the market.  Company designs the product toCompany designs the product to appeal to larger number of buyers.appeal to larger number of buyers.  It relies on mass distribution, massIt relies on mass distribution, mass advertising and tries to give theadvertising and tries to give the product a superior image in peoplesproduct a superior image in peoples mind.mind.
  7. 7.  However mass marketing mayHowever mass marketing may not be able to satisfy allnot be able to satisfy all consumers as their needs andconsumers as their needs and wants differ.wants differ.  Eg. Vehicle market for SriEg. Vehicle market for Sri Lanka- Motor Cycles, smallLanka- Motor Cycles, small cars, mid size cars, luxury carscars, mid size cars, luxury cars and Jeepsand Jeeps  Further mass marketer may notFurther mass marketer may not be able to compete with morebe able to compete with more focused competitors who supplyfocused competitors who supply different types of productsdifferent types of products..
  8. 8. Differentiated (SegmentedDifferentiated (Segmented marketing )marketing ) Identifying groups with similar needsIdentifying groups with similar needs and wants is called segmentation.and wants is called segmentation.  Then it would be easy to supplyThen it would be easy to supply different products if necessary to suitdifferent products if necessary to suit the different market segmentsthe different market segments  A market segment means a largeA market segment means a large identifiable group of customers withinidentifiable group of customers within a market with similar needs anda market with similar needs and wants, purchasing power,wants, purchasing power, geographical location, buyinggeographical location, buying attitudes or buying habits.attitudes or buying habits.
  9. 9.  If all are having the same need thenIf all are having the same need then it could be considered as the massit could be considered as the mass  If each and every body’s need isIf each and every body’s need is separately identified and served it isseparately identified and served it is called Mass Customization.called Mass Customization.  Segmentation is something betweenSegmentation is something between the Mass Marketing and Massthe Mass Marketing and Mass Customisation. It does not talk aboutCustomisation. It does not talk about serving the whole market with oneserving the whole market with one product or serving every individualproduct or serving every individual with a different product.with a different product.
  10. 10.  But it talks about groupingBut it talks about grouping customers with similar needscustomers with similar needs and serving them with theand serving them with the appropriate product.appropriate product.  Mass Market – Segmentation- MassMass Market – Segmentation- Mass CustomisationCustomisation
  11. 11. Now talkNow talk
  12. 12.  Concentrated (Niche)Concentrated (Niche) MarketingMarketing A niche is more narrowlyA niche is more narrowly defined group, seekingdefined group, seeking distintictive mix of benefits .distintictive mix of benefits . It is typically a small marketIt is typically a small market whose needs are not servedwhose needs are not served through the segmentedthrough the segmented marketing. Niche marketsmarketing. Niche markets could be identified within acould be identified within a segment by sub dividing thesegment by sub dividing the segment again.segment again.
  13. 13.  Eg. Those segments of students whoEg. Those segments of students who go for tuition classes may have ago for tuition classes may have a need for more concentratedneed for more concentrated coaching. So small group classcoaching. So small group class coaching is a Niche market withincoaching is a Niche market within the tuition going segment.the tuition going segment.  Eg. Within the furniture market thereEg. Within the furniture market there could be a market for expensivecould be a market for expensive antiques.antiques.  Niche market may not be big butNiche market may not be big but may be lucrative and may not havemay be lucrative and may not have much competition.much competition.
  14. 14.  Individual MarketingIndividual Marketing( Mass( Mass customization)customization)  The ultimate level of segmentation is toThe ultimate level of segmentation is to have segments of “one customer” perhave segments of “one customer” per segment or indvidual markets or one to onesegment or indvidual markets or one to one marketing. It could be called as massmarketing. It could be called as mass customization as well.customization as well.  Eg. Tailor made garmentsEg. Tailor made garments  Internet based ordering of computers withInternet based ordering of computers with his own specifications by an individualhis own specifications by an individual  An organisational buyer orders the exactAn organisational buyer orders the exact requirements.requirements.
  15. 15. Benefits of MarketBenefits of Market SegmentationSegmentation It will have benefits both toIt will have benefits both to marketer and the customermarketer and the customer  Understanding Customer better-Understanding Customer better- Segmenting will force theSegmenting will force the marketer to analyse themarketer to analyse the customers in the marketcustomers in the market  Understanding competitorUnderstanding competitor better- In a segmented marketbetter- In a segmented market the marketer will concentrate onthe marketer will concentrate on specific markets and will easilyspecific markets and will easily understand the behavior of theunderstand the behavior of the
  16. 16.  Allocate resources effectively ratherAllocate resources effectively rather than spread thinly across the wholethan spread thinly across the whole marketmarket  Plan well- As the market isPlan well- As the market is understood closely, it would be easyunderstood closely, it would be easy to develop a fine tuned marketingto develop a fine tuned marketing plan to suit the requirements of theplan to suit the requirements of the segmentsegment  Expanding the market- BetterExpanding the market- Better analysis of customers could increaseanalysis of customers could increase the customer base of the segment.the customer base of the segment.
  17. 17.  How to segment a marketHow to segment a market effectively (effectively (SAMAD)SAMAD)  If a market segment to beIf a market segment to be meaningful to the marketer, it shouldmeaningful to the marketer, it should be measurable, substantial,be measurable, substantial, accessible, differentiable andaccessible, differentiable and actionable.actionable.  Measurable- Should be able toMeasurable- Should be able to identify and quantify characteristics:identify and quantify characteristics: customers, buying power, volume ofcustomers, buying power, volume of business that could be done etcbusiness that could be done etc  Substantial- Segments should beSubstantial- Segments should be large enough to serve. It should belarge enough to serve. It should be substantial in value. If not it wouldsubstantial in value. If not it would
  18. 18.  Accessible- Market should beAccessible- Market should be reachable through your own salesreachable through your own sales force or through an agent or aforce or through an agent or a distributor to serve. Eg. Certain partsdistributor to serve. Eg. Certain parts of North may not be reachable to sellof North may not be reachable to sell goods.goods.  Differentiable- Segments should beDifferentiable- Segments should be different. They should be reacting todifferent. They should be reacting to marketing stimuli differently. Eg. Fullmarketing stimuli differently. Eg. Full Cream milk powder for healthy andCream milk powder for healthy and Skimmed Milk powder for HighSkimmed Milk powder for High Cholesterol patientsCholesterol patients
  19. 19.  If there is no difference amongIf there is no difference among the segments then there is nothe segments then there is no purpose in identifying thempurpose in identifying them separately.separately.  Eg. There cannot be aEg. There cannot be a difference in buying behavior ofdifference in buying behavior of a After Shave lotion betweena After Shave lotion between the Junior executives andthe Junior executives and Senior Executives.Senior Executives.
  20. 20.  ActionableActionable Effective marketing programs could beEffective marketing programs could be formulated to attracting and serving theformulated to attracting and serving the segment.segment. Even if you identify a market segment withEven if you identify a market segment with a specific requirement, if you do not have aa specific requirement, if you do not have a product to offer or if your staff is notproduct to offer or if your staff is not capable of offering something attractive tocapable of offering something attractive to that segment then the purpose ofthat segment then the purpose of identifying that segment is of no use.identifying that segment is of no use. E.g. Siksil may not be in a position to offerE.g. Siksil may not be in a position to offer classes for an identified specific segmentclasses for an identified specific segment of students who wants a Group Classof students who wants a Group Class restricted for 10 students.restricted for 10 students.
  21. 21. Now talkNow talk
  22. 22. Segmenting ConsumerSegmenting Consumer MarketsMarkets  Following bases are used toFollowing bases are used to segment the consumer marketssegment the consumer markets (A)(A) Geographic Segmentation-Geographic Segmentation- Dividing the market into differentDividing the market into different geographic areas such asgeographic areas such as Countries ( England, USA, India, Pakistan) ,Countries ( England, USA, India, Pakistan) , Regions ( North East, Hilly, flat, Valleys)Regions ( North East, Hilly, flat, Valleys) Density ( high, Mid, low population) andDensity ( high, Mid, low population) and Climate ( cold, tropical, mediumClimate ( cold, tropical, medium))
  23. 23.  (B) Demographic segmentation(B) Demographic segmentation  Dividing the market by taking theDividing the market by taking the characteristics of people in the market.characteristics of people in the market.  Age- ( <1 – 1to 5- 6 to 12- 13 to 19 – 20 toAge- ( <1 – 1to 5- 6 to 12- 13 to 19 – 20 to 30 – 30-50 over 55)30 – 30-50 over 55)  Generation – Baby boomers( US afterGeneration – Baby boomers( US after war), New generation, Older Generationwar), New generation, Older Generation etc.etc.  Nationality- Sri Lankan, Indian, American,Nationality- Sri Lankan, Indian, American, ChineseChinese  Social Class- Lower low, low, low middle,Social Class- Lower low, low, low middle, middle, upper middle- low upper. Upper.middle, upper middle- low upper. Upper. Upper Upper( affluent)Upper Upper( affluent)
  24. 24.  Family Size ( 1-2, 3-5, 5-7)Family Size ( 1-2, 3-5, 5-7)  Education upto 5, upto 8 uptoEducation upto 5, upto 8 upto O/L, AL, Degree, OtherO/L, AL, Degree, Other  Religion – Buddhist, Islam,Religion – Buddhist, Islam, Hindu, Catholic, ChristianHindu, Catholic, Christian  Race- Sinhala, Tamil, MoslemRace- Sinhala, Tamil, Moslem  Occupation- Farmer, teacher,Occupation- Farmer, teacher, doctor, lawyer, Police, Army,doctor, lawyer, Police, Army, Politician, Singer, Actor,Politician, Singer, Actor, JournalistJournalist
  25. 25. ( C ) Psychographic Segmentation( C ) Psychographic Segmentation Here life styles and personalitiesHere life styles and personalities are taken into consideration inare taken into consideration in segmenting the marketssegmenting the markets Life style-Life style- People have differentPeople have different ways of living. Cultureways of living. Culture influences a lot in this aspect.influences a lot in this aspect. Eg. Outdoor types and homelyEg. Outdoor types and homely types, sports and fitness loverstypes, sports and fitness lovers
  26. 26.  PersonalityPersonality- People have- People have different types of personalities.different types of personalities. Sincere, exciting, amiable,Sincere, exciting, amiable, stern, aggressive, calm,stern, aggressive, calm, cunning, skeptical, jovial etc.cunning, skeptical, jovial etc.
  27. 27.  Behavioral SegmentationBehavioral Segmentation  There are different types ofThere are different types of behaviors in people and it couldbehaviors in people and it could be used as a basis forbe used as a basis for segmentation.segmentation.  Benefit- quality, service, price,Benefit- quality, service, price, durability, convenience, safetydurability, convenience, safety  Occasion- Festivals,Occasion- Festivals, Anniversary, birthday, Wedding,Anniversary, birthday, Wedding, GraduationGraduation
  28. 28.  User Status- regular- non user-User Status- regular- non user- potential- ex userpotential- ex user  Usage rate- heavy, medium, lightUsage rate- heavy, medium, light  Loyalty status- very loyal- less loyal-Loyalty status- very loyal- less loyal- not loyalnot loyal  State of readiness – ready to buy-State of readiness – ready to buy- well informed- interested-aware- notwell informed- interested-aware- not awareaware  Attitude towards a product- positive-Attitude towards a product- positive- negative- indifferent- hostilenegative- indifferent- hostile
  29. 29. Segmenting Business marketsSegmenting Business markets ( Not for SIKSIL)( Not for SIKSIL)  Demographic VariablesDemographic Variables  Operating VariablesOperating Variables  Purchasing VariablesPurchasing Variables  Situational VariablesSituational Variables  Personal VariablesPersonal Variables
  30. 30. Segmenting BusinessSegmenting Business markets…….. ( Not for SIKSIL)markets…….. ( Not for SIKSIL)  Demographic : Industry type- Size-Demographic : Industry type- Size- LocationLocation  Operating: Technology- User Status-Operating: Technology- User Status- CapabilitiesCapabilities  Purchasing : function-powerPurchasing : function-power structure- relationship-policies-structure- relationship-policies- criteriacriteria  Situational- Urgency- Specific need-Situational- Urgency- Specific need- size of ordersize of order  Personal- buyer seller similarities-Personal- buyer seller similarities- attitude for risk- loyaltyattitude for risk- loyalty 
  31. 31. Selecting the Target MarketSelecting the Target Market ( Market Targeting)( Market Targeting)  Once the segmentation doneOnce the segmentation done effectively, the challenge is to findeffectively, the challenge is to find out what market or market segmentsout what market or market segments that you are going to serve with whatthat you are going to serve with what product or productsproduct or products  Single SegmentSingle Segment  Selective SegmentsSelective Segments  Product SpecializationProduct Specialization  Market SpecializationMarket Specialization  Full Market CoverageFull Market Coverage
  32. 32. Segment the market for fishSegment the market for fish P-2 Seer (Thora) P1- Salaya P- 3 Prawns
  33. 33. Figure 8.6 Patterns of Target Market SelectionFigure 8.6 Patterns of Target Market Selection
  34. 34. Figure 8.6 Patterns of Target Market SelectionFigure 8.6 Patterns of Target Market Selection
  35. 35. Figure 8.6 Patterns of Target Market SelectionFigure 8.6 Patterns of Target Market Selection
  36. 36.  Once the Target Marketing isOnce the Target Marketing is done, the marketer shoulddone, the marketer should position the product properly inposition the product properly in the consumers mind tothe consumers mind to complete the STP process incomplete the STP process in marketingmarketing
  37. 37. What is positioningWhat is positioning  ““ Disembodied mental image ,Disembodied mental image , specifically, a location in consumersspecifically, a location in consumers mind”mind”  ““Positioning is doing something toPositioning is doing something to the collective mind of the consumer”the collective mind of the consumer”  There is a comparative perspectiveThere is a comparative perspective in positioning as positioning impliesin positioning as positioning implies the existence of something else.the existence of something else.  The positioning is the act of creatingThe positioning is the act of creating a perception or image or status ina perception or image or status in buyers mind.buyers mind.
  38. 38. Perceptual maps and positioningPerceptual maps and positioning Favorable Attitude Unfavorable attitude Low familiarity High familiarity •Your Brand •Com petito r A Competitor C Competitor B
  39. 39. Positioning is used to make a specific brandPositioning is used to make a specific brand appear to be different and better than allappear to be different and better than all competing brandscompeting brands  Key points to note areKey points to note are  - It is a strategic activity( not- It is a strategic activity( not tactical)tactical)  - It is aimed at developing a- It is aimed at developing a sustainable competitivesustainable competitive advantageadvantage  - It is concerned with managing- It is concerned with managing perceptionsperceptions  -Brand image and reputation are-Brand image and reputation are the end results
  40. 40. Strategies for brandStrategies for brand positioningpositioning Features And Attributes Benefits Problem Solving Competition Corporate reputation and image Target user Cause emotion Aspiration Value or pricing Guarantee