SEGMENTATION, TARGETING and POSITIONING 3rd unit marketing management As per VTU university syllabus

1. MARKET SEGMENTATION, TARGETING &
POSITIONING

2. 3RD UNIT SYLLABUS
Concept of Market Segmentation, Benefits, Requisites of Effective
Segmentation, Bases for Segmenting Consumer Markets, Market
Segmentation Strategies. Targeting - Bases for identifying target
Customer target Marketing strategies, Positioning - Meaning, Product
Differentiation Strategies, Tasks involved in Positioning. Branding -
Concept of Branding, Types, Brand Equity, Branding strategies.

3. SEGMENTATION
 Segmentation is the process of classifying customers into
groups which share some common characteristic
 A marketing strategy in which a large, heterogeneous
market is broken down into small, more homogeneous
segments, and a separate marketing program is developed
for each segment.
 According to Philip kotler , “ Market segmentation is sub-
dividing a market into distinct and homogeneous subgroups
of customers, where any group can conceivably be selected
as a target market to be met with distinct marketing mix.”

4. STAGES OF MARKETING
 Mass marketing
 Product-variety marketing
 Target marketing
 Micromarketing
 Customized marketing

5. ADVANTAGES OF SEGMENTATION
 The process of breaking up a homogeneous market into
heterogeneous segments forces the marketer to analyse
and consider both the needs of the market and the
company’s ability to competently serve those needs –
thereby making the company better informed about its
customers
 Competitor offerings and marketing positioning must also
be analysed in this context so the company must consider
what its competitive advantages and disadvantages are,
helping it to clarify its own positioning strategy
 Limited resources are used to best advantage, targeted at
those segments that offer the best potential

6. LEVELS OF MARKET SEGMENTATION
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
to individual customers

7. FACTORS INFLUENCING SEGMENTATION
 Size, objectives and resources of the
company
 Type of product and market
 Competitive structure of the industry
 Life cycle stage
 Competitive strategy of firm

8. SEGMENTATION VARIABLES
Segmentation Variables
Geographic
Demographic Psychographic
Behavioral

9. GEOGRAPHIC SEGMENTATION
 Division of the market based on the location of
the target market
 People living in the same area have similar
needs and wants that differ from those living in
other areas
 Climate
 Population density
 Taste
 Micromarketing

10. DEMOGRAPHIC SEGMENTATION
 Partitioning of the market based on factors such as
 age
 gender
 marital status
 Income
 Social class
 Family size
 occupation
 education
 ethnicity

11. PSYCHOGRAPHIC SEGMENTATION
 Dividing buyers into different groups based on social
class, lifestyle, values, beliefs and personality
characteristics
 Marketers use it to further refine a target market
 Its appeal lies in the vivid and practical profiles of
consumer segments that it can produce
 Accomplished by using AIO inventories
 AIO research seeks consumers’ responses to a large
number of statements that measure
 Activities
 Interests
 Opinions

12. BEHAVIOUR SEGMENTATION
 Buyers are divided into groups based on their
knowledge, attitude, and use or response to a
product
 The best starting point for building market segments
 occasions
 Types
 Special occasion segmentation
 Benefits sought
 User status
 Usage rate
 Loyalty status
 Buyer readiness stage

13. REQUIREMENTS FOR EFFECTIVE SEGMENTATION
• Size, purchasing power, profiles
of segments can be measured.
• Segments must be effectively
reached and served.
• Segments must be large or
profitable enough to serve.
Measurable
Accessible
Substantial
Differential
Actionable
• Segments must respond
differently to different marketing
mix elements & actions.
• Must be able to attract and serve
the segments.

14. STEPS IN THE SEGMENTATION PROCESS
 Determine Market Boundaries
 Decide which Segmentation Bases to Use
 Analyze (Consider) Segmentation Data
 Develop a Profile of Each Segment
 Target the Segments to be Served
 Design a Marketing Plan

15. BASIS FOR SEGMENTATION OF INDUSTRIAL
PRODUCTS
 Size of the industry
 Small scale, medium scale & large scale industry
 Geographical location
 End use
 Buyer behavior/ motivation or purchase
criteria
 Benefits sought

16. TARGET MARKET
 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.
 Any marketing strategy must include a
detailed (specific) description of this.

17. ADVANTAGES OF TARGET MARKETING
 Easier analysis of potential and actual
consumers
 Tailoring of products to market
 Assessment of demand potential
 Identify competing products
 Increased sales effectiveness and cost
efficiencies
 Product positioning and easy identification of
opportunities

18. DISADVANTAGES OF TARGET MARKETING
 Increased marketing costs
 Personalization can become burdensome to
manage
 Faux segmentation may be viewed cynically
 Narrow segmentation can impact brand loyalty
 Ethics and stereotyping issues

19. BASIS FOR IDENTIFYING TARGET CUSTOMERS
Market Factors
Segment Size
Segment Growth rate
Price sensitivity
Customer Barging
power
Supplier Bargaining
Power
Entry Barriers
Exit Barriers
Company
Factors
Nature of
competitiveness
New Entrants
Competitive
differentiation
Macro Factors
Political Issues
Social Trends
Environmental
Issues
Market Attractiveness Firms
Capability
Exploitable
Marketing Assets
Cost Advantage
Technological
Edge
Managerial
capabilities
Commitment

20. TARGET MARKET STRATEGIES
Single Segment
concentration
Selective
Specialization
Product
Specialization
Market
Specialization
Limited
Market
coverage Undifferentiated
Marketing
Concentrated
Marketing
Differentiated
Marketing
Full
Market
coverage

21. LIMITED MARKET COVERAGE TARGETING

22. IMPORTANT FACTORS IN TARGET MARKET
 Ethical Issues of target market
 Segment interrelationships & super
segments
 Mega Marketing
 Gradual Invasion
 Inter segment cooperation

23. POSITIONING IN THE MARKET PLACE
What is Positioning?
- It is the act of designing the company’s offering and
image to occupy a distinctive place in the target market’s
mind.
- Positioning is not what you do to the product
- Positioning is what you do to the mind of the
prospect

24. POSITIONING IN THE MARKET PLACE
Examples
Crest toothpaste
 Promotes its anti-cavity protection
Mercedes
 Promotes its great engineering
BMW
 Ultimate driving machine
Attribute can be single or even multiples

25. IMPORTANCE OF POSITIONING
 Putting the product in pre determined orbit
 Connects product offerings with target
market
 Providing competitive advantage
 Better serving and covering the market
 Providing space to brand through positioning

26. CHOOSING AND IMPLEMENTING A POSITIONING
STRATEGY
 Identifying a set of possible competitive
advantages upon which to build a position
 Selecting the right competitive advantages
 Effectively communicating and delivering the
chosen position to a carefully selected target
market

27. DEVELOPING A POSITIONING STRATEGY
 Positioning possibilities:
 Attribute positioning
 Benefit positioning
 Use or application positioning
 User positioning
 Competitor positioning
 Product category positioning
 Quality or price positioning
 Which Positioning to Promote?

28. Positioning
28
1. ATTRIBUTE POSITIONING
- Positioning on attribute
 Size
 No of years in existence
 Culture
Disneyland
Positioned as the largest manmade park in the world
Dove soap
Contains moisturizing cream
POSITIONING IN THE MARKET PLACE

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2. BENEFIT POSITIONING
 Positioned as a leader in certain benefit
McDonald’s
 Positioned as a family restaurant (QSCV)
Honda
 Economy and reliability
BMW
 Ultimate driving machine
Volvo
 Safety and Durability.
POSITIONING IN THE MARKET PLACE

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3. USE / APPLICATION POSITIONING.
 Positioning for some use or application
Nestle ‘Maggi Noodles’
 Positioned as a snack item
 Between meals
 Fast to cook, good to eat
Nestle Milkmaid
 Positioned as a base for dessert preparation.
POSITIONING IN THE MARKET PLACE

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4. USER POSITIONING
 Positioning the product as best for some user
group.
‘Red and white’ cigarettes
 Positioned for people who are bold and brave
 Give ‘bravery’ awards.
POSITIONING IN THE MARKET PLACE

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5. COMPETITOR POSITIONING
 Product claims to have better performance than
competitors
Brooke Bond Taj Mahal Tea
Endorsed by Zakir Hussain
 “If you find a better tea than Taj Mahal, then Zakir Hussain will stop
playing Tabla.
 Directly or indirectly refer competitors.
POSITIONING IN THE MARKET PLACE

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6. PRODUCT CATEGORY POSITIONING
 Positioning as a leader in certain category.
Maruti 1000
 Launched in 1990
 Only luxury car in India
 Positioned as ‘ultimate in luxury’
Hero Honda
 Four Stroke, fuel efficiency
 Claimed as the leader in fuel efficiency
 Fill it, shut it, forget it
Livon
 After hair wash oil
 Smooth and silky hair
POSITIONING IN THE MARKET PLACE

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7. QUALITY OR PRICE POSITIONING
 Positioning as offering the best scooters
Bajaj Scooters
 Lowest prices
 You just cannot beat a Bajaj
 Repositioned as ‘Hamara Bajaj’
POSITIONING IN THE MARKET PLACE

35.  Four major positioning errors
1. Under positioning
2. Over positioning
3. Confused positioning
4. Doubtful positioning
ERRORS IN POSITIONING

36. POSITIONING IN THE MARKET PLACE
What to avoid
1. Under positioning
 Seen as just another entry in a crowded market
 Pepsi introduces its clear crystal Pepsi 1993
 Customer not impressed
 “Clarity” not seen as an important benefit

37. POSITIONING IN THE MARKET PLACE
2. Over positioning
- Narrow image of the brand
- Trying to widen
- Customer do not accept this
- Maruti Baleno
 Customers think Maruti can make cars up to 5
lacs
 Not higher end
 Image issue
 Poor sales

38. POSITIONING IN THE MARKET PLACE
3. Confused Positioning
Company making too many claims
Dettol Soap
Started as Beauty soap
Did not click
Repositioned as Anti bacterial soap
Finally clicked

39. POSITIONING IN THE MARKET PLACE
4. Doubtful Positioning
Find it to difficult believe in what company claims
Maruti 1000
- Launches in ’89
- Positioned as ‘ultimate in luxury’
- Only luxury car
- Launch of Esteem in ’94
- More luxurious than Maruti 1000
- Is it now ‘Ultimate in luxury
- Sales dipped
- Customer confused
- Repositioned as ‘Affordable luxury’

40. TASKS INVOLVED IN POSITIONING
Competitors
identification
Determining
how
competitors
are
perceived
and
evaluated
Determining
the
competitors
position
Analyzing
customers
preference
Making the
positioning
decision
Monitoring
the position

41. BRAND
 A brand is a name, term, sign, symbol or
design, or a combination of them, intended to
identify the goods or services of one seller or
group of sellers and to differentiate them
from those of competitors.

42. ROLE OF BRANDS
Identifies the maker
Simplify product handling
Organize accounting
Offer legal protection
Signify quality
Creates barrier to entry
serve as competitive advantage
Secure price premium

43. BRANDING
Branding is endowing products
and services with the power of
the brand.

44. BRAND EQUITY
 Brand equity is the added value endowed
on products and services, which may be
reflected in the way consumers, think, feel,
and act with respect to the brand.

45. BRAND ADVANTAGES
 Improved perceptions of product performance
 Greater loyalty
 Less vulnerability to competitive marketing
actions
 Less vulnerability to crises
 Larger margins
 More inelastic consumer response
 Greater trade cooperation
 Increased marketing communications
effectiveness
 Possible licensing opportunities

46. BRAND PROMISE
 A brand promise is the marketer’s vision of
what the brand must be and do for
consumers.

47. BRAND ELEMENTS
slogans
URLs
logos
symbols
Brand
names
Characters
jingles

48. BRAND ELEMENT CHOICE CRITERIA
 Memorable
 Meaningful
 Likeability
 Transferable
 Adaptable
 Protectable