This document discusses market segmentation and positioning. It defines market segmentation as dividing a market into distinct groups based on needs, characteristics, or behavior. Companies segment markets to target customer groups they can serve most effectively. The document outlines different levels of segmentation from mass marketing to niche marketing. It also discusses variables used to segment consumer and business markets, as well as international markets. Effective segmentation requires segments that are measurable, accessible, substantial, differentiable, and actionable. Market positioning involves defining a product's place in customers' minds relative to competitors. Companies identify competitive advantages and determine an overall value proposition for positioning.

1. 1
Market Segmentation
Dividing a market into distinct groups of
buyers on the basis of
Needs
Characteristics or
Behavior
who might require separate products or
marketing mixes

2. 2
Reasons for Market Segmentation
 Cannot appeal to all buyers
 Large scattered buyers
 Varying needs & buying practices
 Companies have differing abilities to
serve different segments…
Therefore companies must identify parts of the
market that they can serve best & most
profitably

3. 3
5 Important Segmentation Topics
1. Market segmentation levels
2. Segmenting Consumer markets
3. Segmenting Business markets
4. Segmenting International markets..
5. Effective Segmentation Requirements

4. 4
Levels of Marketing
Niche marketing MicromarketingMass marketing Segment marketing
Complete Segmentation

5. 5
Levels of Marketing
1.Mass Marketing
Advantages
 One product company to start with -
GM, Coke
 Creates large potential
 Low cost…
 Low prices /high margins

6. 6
Levels of Marketing
Mass Marketing
Difficulties
 Overtime they splinter into smaller
segments…
 Proliferation of distribution channels / ad
media leading to segmented
marketing

7. 7
Levels of Marketing
2.Segment Marketing
 Isolating broad segments that make up
the market and adapting the marketing
to match the needs of one or more
segments

8. 8
Levels of Marketing
Segment marketing
Advantages
 More focused - efficient Eg. Marriott
 Business travelers
 Families
 Customized packages
 Effective communication programs…
 Less intensity of competition- fewer focused
competitors

9. 9
Levels of Marketing
3.Niche Marketing
 Focusing on sub segments or niches
with distinctive traits that may seek a
special combination of benefits

10. 10
Levels of Marketing
Niche marketing
Advantages
 Serve Niches unimportant to big
players…
 Sometimes big companies like Nike
serve niches as well

11. 11
Levels of Marketing
4.Micromarketing
 The practice of tailoring products and
marketing programs to suit the tastes of
specific individuals and locations –
includes local marketing & individual
marketing

12. 12
Levels of Marketing
 4.Micromarketing
 Local marketing
Tailoring brands and promotions to the
needs and wants of local customer groups
– cities neighborhoods or even stores.
Eg Citibank : different services in different
branches depending on differing
demographics

13. 13
Levels of Marketing
4.Micromarketing
Local Marketing
Benefits
 Closer to customer
 Closer to retailers…
Problems
 Drives up manufacturing / marketing costs
 Brand’s overall image can get diluted

14. 14
Levels of Marketing
4.Micromarketing
Individual Marketing
 Tailoring products and marketing programs to
the needs & preferences of individual
customers.
 This is also labeled as
 One to one marketing
 Customized marketing
 Eg. Dell computers

15. 15
Segmenting Consumer markets
 A marketer has to try different segmentation
variables , alone or in combination - to find
the best way to view the market
 Different market variables used for
segmenting the consumer markets are:-
 Geographic
 Demographic
 Psychographic
 Behavioral
 Occasion
 Benefit

16. 16
Segmenting Consumer markets
Six different market variables
1.Geographic segmentation
 Dividing a market into different
geographical units such as
 Nations
 States
 Regions…
 Cities etc

17. 17
Segmenting Consumer markets
Six Segmentation variables
2.Demographic segmentation
 Dividing the market into groups based on demographic
variables such as
 Age & life cycle
 Gender
 Family size
 Family life cycle
 Income
 Occupation
 Education
 Religion
 Race
 Nationality

18. 18
Segmenting Consumer markets
Six Segmentation variables
2.Demographic segmentation
Age & life cycle
Example
 McDonald’s targets children , teens, adults, &
seniors thru different ads & media
 Ads to teens feature dance – beat music,
adventure…
 Ads for seniors feature softer & sentimental.

19. 19
Segmenting Consumer markets
2.Demographic segmentation
Gender segmentation
Example
 Automobile industry :uses gender segmentation.
More than 50% of car buying decisions are taken by
women in the US.
 Women have less upper body strength, long finger
nails and more safety concerns.
 In all new Cadillac cars-they take care by providing
 Easy opening hoods & trunks,
 Seat belts that fit women easier and
 An increased emphasis on safety

20. 20
Segmenting Consumer markets
Six Segmentation variables
2.Demographic segmentation
Income segmentation
 Dividing the market into different
income groups
Examples..
 Automobiles, clothing, cosmetics,
financial services & travel etc.

21. 21
Segmenting Consumer markets
Six Segmentation variables
3.Psychographic segmentation
 Dividing the market into different groups
based on
 Social class
 Lifestyle or
 Personality characteristics

22. 22
Segmenting Consumer markets
Six Segmentation variables
4.Behavioral segmentation
 Dividing the market into different groups
based on
 Consumer knowledge, Eg. Vsnl broad band
packages –time based, & usage based
 Attitude, Eg. Atttude towards movie /entertainment
– differential pricing for different timings
 Use or response to a product-mobile phones

23. 23
Segmenting Consumer markets
Six Segmentation variables
5.Occasion segmentation
 Dividing the market into different groups
according to occasions when buyers get the
idea
 to buy-in trade fairs/exhibitions
 actually make the purchase or
 use the purchased item
 Example :seasonal products like refrigerators ,
ACs, or geysers

24. 24
Segmenting Consumer markets
Six Segmentation variables
6.Benefit segmentation
 Dividing the market into different groups
according to the different benefits that
consumers seek from the product
(a) Benefits sought
 Example :Travel
 With family- relax
 Adventure / education
 Gambling / Fun

25. 25
Segmenting Consumer markets
Benefit segmentation
(b) User status
 Non users
 Ex users
 Potential users
 First time users…
 Regular users

26. 26
Segmenting Consumer markets
Benefit segmentation
(c) Usage rate
 Light
 Medium
 Heavy : small % of market but high % of total
consumption

27. 27
Segmenting Business markets
Five Major segmentation variables
1.Demographics
 Industry: Which buyer industry to focus
on ?
 Co.size : What size of co. to focus on?
 Location: Which geographical area to
focus on?

28. 28
Segmenting Business markets
Five Major segmentation variables
2.Operating variables
 Technology: What customer technologies to
focus on ?
 User-nonuser status : Should we focus on
high , medium, heavy or non users ?
 Customer capabilities

29. 29
Segmenting Business markets
Five Major segmentation variables
3.Purchasing approaches
 Purchasing function organization : Focus on
companies with centralized or decentralized
purchasing function ?
 Power Structure :Focus on engineering,
financing or marketing dominated cos. ?...
 Purchase criteria :Focus on cos seeking
quality, price or service ?

30. 30
Segmenting Business markets
Five Major segmentation variables
4.Situational factors
 Urgency :Should we focus on cos which need
quick delivery or service?
 Specific application: Should we focus on a
few applications of our product rather than
all ?...
 Size of order :Should we focus on large or
small orders ?

31. 31
Segmenting Business markets
Five Major segmentation variables
5.Personal characteristics
 Buyer seller similarity :Should we focus on
cos whose people and values are similar to
ours ?
 Attitude towards risk :Should we focus on risk
taking or risk avoiding customers ?...
 Loyalty :Should we focus on cos. that show
high loyalty to their suppliers ?

32. 32
Segmenting international markets
Five Segmentation variables
 1.Geographic location: Grouping cos by
regions-
 US,
 Western Europe,
 Asia Pacific,
 Middle East, or
 Africa.
Nations close to each other may have common traits
& behaviors.

33. 33
Segmenting international markets
Five Segmentation variables
 2.Economic factors : Grouping developed
countries and developing countries
separately
 3.Political legal factors :
 Type & stability of governments,
 Receptivity to foreign firms,
 Monetary regulations,
 Amount of bureaucracy etc.

34. 34
Segmenting international markets
Five Segmentation variables
 4.Cultural factors :
 Common language,
 Religion ,
 Values & attitudes ,
 Customs and behavioral patterns.

35. 35
Segmenting international markets
Five Segmentation variables
5.Intermarket segmentation
 Forming segments of consumers who
have similar needs and buying behavior
even though they are located in
different countries

36. 36
Requirements of Segmentation
To be useful market segmentation must be:
 Measurable
 Accessible
 Substantial
 Differentiable…
 Actionable
___________

37. 37
Market targeting
Evaluating market segments
Long term segment attractiveness can get impacted due
to the following factors :-
 Aggressive competitors
 Substitute products :
 limits prices,
 impacts profits…
 Power of buyers ;
 can force prices down,
 demand more services,
 set competitors one against the other

38. 38
Market targeting
Selecting Market Segments
Three alternative market coverage strategies
1.Undifferentiated marketing
Firm goes after the whole market with one offer
Company marketing mix
Market

39. 39
Market targeting
2.Differentiated marketing
Firm decides to target several market segments
and designs separate offers for each
Company Mktg Mix 1 Segment 1
Company Mktg Mix 2 Segment 2
Company Mktg Mix 3 Segment 3

40. 40
Market targeting
3.Concentrated marketing: Firm goes after
a large share of one or
a few submarkets
Company marketing mix
Segment 1
Segment 2
Segment 3

41. 41
Market targeting
Choosing a Market coverage strategy
 Company resources
 Eg. Limited resources- concentrated
marketing becomes more relevant…
 Product variability
 Eg. Undifferentiated marketing more suited
for uniform products like grapefruit, or steel

42. 42
Market targeting
Choosing a Market coverage strategy
 Product’s life cycle stage
 New product introduction stage-practical to launch only one
version and use undifferentiated or concentrated marketing
 Market variability
 If most buyers have same taste, react the same way to
marketing efforts- undifferentiated marketing becomes
appropriate …
 Competitor’s marketing strategy
 When competitors use differentiated or concentrated
marketing – undifferentiated marketing can be suicidal

43. 43
Positioning for competitive advantage
Product position
The way the product is defined by consumers on
important attributes – the place the product occupies
in consumers’ minds relative to competing products…
Competitive advantage
An advantage over competition gained by offering
consumers greater value , either thru lower prices or
by providing more benefits that justify higher prices

44. 44
Positioning
Identifying possible competitive
advantages
1.Product differentiation:
 Consistency,
 Durability,
 Reliability…
 Reparability

45. 45
Positioning
Identifying possible competitive
advantages
2.Services differentiation:
 Speedy delivery,
 Convenient…
 Careful

46. 46
Positioning
Identifying possible competitive advantages
3.Channel differentiation:
 coverage,
 expertise,
 performance
4.People differentiation :
 hiring & training better people
5.Brand image differentiation :
 McDonald’s golden arch,
 Prudential ,
 Pillsbury doughboy provide strong co. or brand recognition
& image differentiation

47. 47
Positioning
Which differences to Promote ?
A difference is worth establishing to the extent that it
satisfies the following criteria
 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable…
 Profitable

48. 48
Selecting an overall Positioning Strategy
Value proposition
 Consumers choose products & services that give
them the greatest value
 Marketers therefore position their key benefits that
they offer relative to competing brands
 The full positioning of a brand is called “Brand’s
Value Proposition”…
 Volvo’s value proposition hinges on safety but also
includes reliability, roominess, and styling – all for a
price that is higher than average but seems fair for
this mix of benefits

49. 49
Positioning
Possible value propositions
Benefit for Price
 More for More
 More for the Same
 The Same for Less
 Less for Much Less…
 More for Less

50. 50
Possible value propositions
More The same Less
More More for more More for the
same
More for less
The same The same for
less
Less Less for much
less
Benefits
Price