1. Management Science II Dr. S.Bharadwaj
Indian Institute of Technology Madras
MODULE 1
Segmentation,Targeting and Positioning
• Segmentation, Targeting and Positioning Definitions
• Segmentation Variables
• Evaluation of Segments
• Summary
What is segmentation, anyone?
• What about targeting and positioning?
• Segmentation is the process of grouping people or organizations within a
market according to similar needs, characteristics, or behaviors
Dividing the market into groups
• an entire market rarely has the same tastes and preferences
• it is difficult to handle all preferences too
• Mercedes Benz, for example (only high-end)
Targeting is the actual selection of the segment you want to serve
the target market is the group of people or organizations whose needs a
product is specifically designed to satisfy
Positioning is the use of marketing to enable people to form a mental image
of your product in their minds (relative to other products)
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2. Management Science II Dr. S.Bharadwaj
Indian Institute of Technology Madras
STP Marketing is the name of the game
• The days of “one size fits all” are over
• No longer can one say “You can have any colour as long as it is black”
• Need to follow the “horses for courses” policy - no more mass marketing
• Moving towards mass customization in fact
• Levi’s Personal Pants
• National Bicycle Company
How to segment a market?
• On what basis/bases?
• What are some criteria/variables?
Segmentation - Variables
Demographic Segmentation
Age, Gender, Income
Age
• Bicycles
• Disney’s Cartoons
• Pension Plans, Retirement Funds e.g.
• LIC
Gender
• Hasbro Toys
• Cindy for girls, GI Joe for boys
• Gillette
• Razors for men, women
• most cosmetics, perfumes etc
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3. Management Science II Dr. S.Bharadwaj
Indian Institute of Technology Madras
• Revlon, Ralph Lauren
Income
Toyota
• Lexus for high end
• Camry for the middle of the roaders
• Corolla for low end HLL soaps - Dove for high end, Hamam for low
And so on
• Income is possibly the most common basis for segmentation
• Other Demographic Variables Include Religion, Ethnicity, Occupation,
Generation (Baby Boomers, Generation Next, Yuppies) and so on
Geographic Segmentation
• snow boots in the Northern part of USA
• Of course, all International Marketing is done on a regional(geographic
basis)
• The “Same” Honda Accord is different in different countries !
• Most MNCs vary their products according to country
• special tires in the Middle East
• Taj: AP - hot food, Kerala - more coconut and so on
Behavioral Segmentation
• On the basis of occasions, product usage, benefits sought, brand loyalty
Occasions
• Y2K Cruises
• Hallmark Cards
• a greeting card for every occasion - Valentine’s Day Card, Deepavali
card
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4. Management Science II Dr. S.Bharadwaj
Indian Institute of Technology Madras
Benefits Sought
• there are certain specific benefits sought - example would be Colgate
Tartar Control for Tartar
User Status
• Non-Users Vs Current Users
• Credit Card Companies
• new card vs another card
• Blood Banks, entry level cars/bikes
Usage Rate
• Heavy Users Vs. Light Users
• The Beer Market is a classic example
• Miller Lite, BudWeiser all target the heavy user
• Bajaj M80 could be another candidate
Psychographic Segmentation
• Lifestyle products like Raymond
Evaluation of Segments
Having segmented the market, which one to choose?
What are the criteria?
Is there potential sales, growth and profit ?
• Big Emerging Markets (BEMs)
• China, India, Brazil etc
Potential Competition and Cost
• is it too much ?
• Imagine going against Microsoft in the PC OS market for someone like
Unix
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5. Management Science II Dr. S.Bharadwaj
Indian Institute of Technology Madras
• Tata Indica was smart in battle Vs. Maruti
Potential Risk
• environmental
• doing business in Iraq now
• Or even Kashmir
Is it compatible with my current business ?
• Mercedes going “downscale” with E-Class
• will it hurt the “Mercedes” brand ?
• will it cannibalize my existing brand ?
• Air India starting a budget airline?
Summary
• STP Marketing is highly important
• Consumers are very finicky and want to feel special
• From mass marketing to mass customisation
• Segmenting is important
• let Bajaj Chetak, Ambassador, Fiat, Maruti 800 even be examples
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