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Learning Objectives
 Market Segmentation
 Target Marketing
 Market Positioning
 Major bases for segmenting consumer &
...
Learning Objectives
 How companies identify attractive
market segment & choose a target
marketing strategies.
 How compa...
Market Segmentation
PREPARED BY
UMAIR
Market Segmentation
Dividing a market into smaller groups
of buyers with distinct needs ,
characteristics ,or behavior who...
Target Marketing
The process of evaluating each market
segment’s attractiveness and
selecting one or more segments to
ente...
Market Positioning
Arranging for a product to occupy a
clear, distinctive and desirable place
relative to competing produc...
Segmenting Consumer Markets
 The major variables that might be used
in segmenting consumer market are
•Geographic
•Demogr...
Geographic Segmentation
Dividing a market into different
geographical units such as nations ,
states, regions, cities or
n...
Geographic Segmentation
 World region or Country:-
Pakistan, India, America
etc.
 Country Regions:-
 Cities:-
 Density...
Demographic Segmentation
Dividing a market into group based
on demographic variables such as
age, sex, family size, family...
Demographic Segmentation
•The consumer needs, wants & usage
rates often vary closely with
demographic variables.
•Easier t...
Age & life-cycle segmentation
Dividing a market into different age
& life-cycle groups.
Different age groups are
under 6 6...
Family Life-cycle Groups
–Bachelors
–Married with no children
–Married with children
–Older couples
Gender Segmentation
Dividing a market into different groups
based on gender.
Income segmentation
Dividing a market into different
income groups
 Lower income group
 Middle income group
 Upper class
Segmenting Variables
Psychographic Segmentation
Behavioral Segmentation
Using Multiple Segmentation Basis
Psychographic Segmentation
Dividing the market into groups
according to social class, life
style or personality
characteri...
Lifestyle
A person’s pattern of living as
expressed in his or her activities,
opinions, and interest.
It involves measurem...
Social Class
 Lower lowers
 Working class
 Upper middles
 Upper uppers
Upper lowers
Middle class
Lower uppers
Personality
Adventurous
Authoritarian
Risk Taking
Ambitious
Behavioral Segmentation
Dividing the market into groups on the basis of
consumer knowledge, attitude, use or response to
a...
Behavioral Segmentation
Occasion
Segmentation
User Status
Loyalty Status
Benefit
Segmentation
Usage Rates
Occasion Segmentation
Dividing the market into groups
according to occasions when
buyers get the idea to buy,
actually mak...
Benefit Segmentation
Dividing the market into groups
according to the different benefits
that consumers seek from the
prod...
User Status
Dividing the market into the groups
according to user status .
 Non-users
 Ex-users
 Potential users
 Firs...
Usage Rates
Market can be segmented
according to usage rate.
 Light
 Medium
 Heavy
 Fast food industry has only 20% he...
Loyalty Status
Market can be segmented according
to consumer loyalty.
Consumers can be loyal to
 Brands
 Stores
 Compan...
Loyalty Status
Consumer can be grouped on the basis
of loyalty as
 Somewhat loyal
 Completely loyal
 Non loyal
Multiple Segmentation Basis
Using multiple variables for
segmentation analysis to
identify smaller, better
defined target ...
Using Multiple Segmentation Bases
 One good example of multi-variable
segmentation is “Geodemographic”
segmentation.
 On...
“PRIZM” System
The PRIZM system combines
demographic factors with buying
transaction data and lifestyle
information taken ...
PRIZM System (cont’d)
 PRIZM classifies people into 62 unique
types or clusters. Like
 Blue Blood Estates (suburban area...
PRIZM System (cont’d)
With the availability of data and
computer power, geodemographic
marketers are continually refining
...
Market Segmentation (cont’d)
Target Marketing (partially)
Market Segmentation
Segmenting Business Markets
Segmenting Business Markets
Major variables used for segmenting
business markets are:
 Demographic
1. Industry: Which ind...
Segmenting Business markets (cont’d)
 Operating Variables
4. Technology: What customer technologies
should we focus on?
5...
Segmenting Business markets (cont’d)
 Purchasing Approaches
7. Purchasing-function organization: Should we serve
companie...
Segmenting business Markets (cont’d)
 Situational Factors
12. Urgency: Should we serve companies
that need quick sudden d...
Segmenting Business Markets (cont’d)
 Personal Characteristics
15. Buyer-seller similarity: should we serve
companies who...
Segmenting Business Markets
 Additional Variables Used by Business
Markets
 Serving More Then One Markets
 American Exp...
Market Segmentation
Segmenting International
Markets
Segmenting International
Markets
 Usage of common variables (as described
before)
 The concept of Inter market Segmentat...
Market Segmentation
Requirement for effective
segmentation
Requirement for effective
segmentation
 Measurable
 Accessible
 Substantial
 Differentiable
 Actionable
Target Marketing
Target Marketing
The process of evaluating each market
segment’s attractiveness & selecting
one or more segments to enter
Evaluating Marketing Segments
Involvement of 3 factors
 Segment size and growth
 Segment structural attractiveness
 Com...
Selecting Target Market Segments
 Defining Target Market
 Levels of Target Marketing
 Undifferentiated Marketing (very ...
Undifferentiated Marketing
A market-coverage strategy in
which a firm decides to ignore
market segment differences & go
af...
Differentiated Marketing
A market-coverage strategy in
which a firm decides to target
several market segments and
designs ...
Target Marketing (cont’d)Target Marketing (cont’d)
Concentrated MarketingConcentrated Marketing
 A market coverage strategy in which a firm goes after aA market coverage st...
Micro MarketingMicro Marketing
• The practice of tailoring products andThe practice of tailoring products and
marketing pr...
Types of MicromarketingTypes of Micromarketing
Local MarketingLocal Marketing
Tailoring brands and promotion to the needsT...
Local MarketingLocal Marketing
DrawbacksDrawbacks
 Can drive up manufacturing and marketing cost byCan drive up manufactu...
Local MarketingLocal Marketing
Benefits
 Helps a company to market more effectively in
the face of pronounced regional an...
Individual MarketingIndividual Marketing
 Tailoring productsTailoring products
and marketingand marketing
programs to nee...
Mass CustomizationMass Customization
Mass customization is the processMass customization is the process
through which firm...
Socially Responsible TargetSocially Responsible Target
MarketingMarketing
 Some segments are atSome segments are at
speci...
Choosing a Target- Marketing
Strategy
requires consideration of :
 Company resources
 The degree of product variability
...
Positioning for Competitive
Advantage
Positioning
The way the product is defind by consumers on
important attributes ---- The place the product occupies
in cons...
Product Position
The way the product is defined by
consumers on important attributes-the
place the product occupies in
con...
Positioning Maps
Positioning maps are a useful tool for
giving you a graphical idea of where
your product stands vis-à-vis...
Orientation
Positioning Map: Large Luxury SUVs
Range
rover
High Lincoln Navigator
Escalade
Hummer H1
Hummer H2
Price Lexus...
Choosing a Positioning Strategy
The positioning task consist of three steps.
 Identify Possible Competitive
Advantages
 ...
Identify Possible Competitive
Advantages
An advantage over competitors gained by
offering consumers greater value either
t...
Identify Possible Competitive
Advantages
Product Differentiation
i.e.
Features,
Performance,
Style,
Design or Attributes.
Service Differentiation
i.e.
Delivery,
Installation,
Repair Service,
Customer Training Services.
Image Differentiation
i.e.
Symbols,
Atmospheres,
Events.
Personnel Differentiation
i.e.
Hiring and training better people
than others do.
Choosing the Right Competitive
Advantages
 How many differences to promote?
Unique Selling Proposition (USP)
USP is to promote only one benefit to the target marke...
Cont’d
• Others think that company should
position themselves on more than one
differentiator.
e.g. Unilever (Three-in-one...
 Under positioning:-Buyers have only a
vague idea of the brand.
 Over Positioning:-Buyers may have
too narrow an image o...
Which differences to promote?
 A company should carefully select the
way in which it will distinguish itself
from compet...
Cont’d
 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
Selecting An Overall Positioning
Strategy
Value Proposition
The full Positioning of a brand.
In simpler words, the full mix of
benefits upon which a brand is
positi...
Major Value Propositions
More for more
More for the same
The same for less
Less for much less
More for less
More for More Proposition
Providing the most upscale product or
service and charging a higher price
to cover the higher co...
More for The Same Proposition
Providing a brand offering comparable or
even better quality to that of
competitor/s’ upscal...
The Same for Less Proposition
Providing equivalent quality products
at a Lower Price. It can be a
powerful value propositi...
Less for Much Less Proposition
Providing lower performance or
quality products as required by the
consumers at a Much Lowe...
More for Less Proposition
Providing even better or the best products
or services compared to the competitor/s
at Lower or ...
Developing a Positioning
Statement
A Positioning Statement summarizes
company or brand positioning by
targeting the segmen...
Communicating and Delivering
the Chosen Position
Keeping a permanent channel to
Communicate the desired position
to target...
Market segmentation,Target Marketing, Market Positioning
Market segmentation,Target Marketing, Market Positioning
Market segmentation,Target Marketing, Market Positioning
Market segmentation,Target Marketing, Market Positioning
Market segmentation,Target Marketing, Market Positioning
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Market segmentation,Target Marketing, Market Positioning

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Market Segmentation
Target Marketing
Market Positioning

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Market segmentation,Target Marketing, Market Positioning

  1. 1. Learning Objectives  Market Segmentation  Target Marketing  Market Positioning  Major bases for segmenting consumer & business markets.
  2. 2. Learning Objectives  How companies identify attractive market segment & choose a target marketing strategies.  How companies position their products for maximum competitive advantage in the market place.
  3. 3. Market Segmentation PREPARED BY UMAIR
  4. 4. Market Segmentation Dividing a market into smaller groups of buyers with distinct needs , characteristics ,or behavior who might require separate products or marketing mixes.
  5. 5. Target Marketing The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
  6. 6. Market Positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers.
  7. 7. Segmenting Consumer Markets  The major variables that might be used in segmenting consumer market are •Geographic •Demographic •Psychographic •Behavioral
  8. 8. Geographic Segmentation Dividing a market into different geographical units such as nations , states, regions, cities or neighborhoods.
  9. 9. Geographic Segmentation  World region or Country:- Pakistan, India, America etc.  Country Regions:-  Cities:-  Density:- Urban, suburban, rural.  Climate:- Northern, southern.
  10. 10. Demographic Segmentation Dividing a market into group based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race & nationality.
  11. 11. Demographic Segmentation •The consumer needs, wants & usage rates often vary closely with demographic variables. •Easier to measure •Even when market segments are defined on some other bases their demographic characteristics must be known.
  12. 12. Age & life-cycle segmentation Dividing a market into different age & life-cycle groups. Different age groups are under 6 6-11 12-19 20-34 35-49 50-64 65+
  13. 13. Family Life-cycle Groups –Bachelors –Married with no children –Married with children –Older couples
  14. 14. Gender Segmentation Dividing a market into different groups based on gender.
  15. 15. Income segmentation Dividing a market into different income groups  Lower income group  Middle income group  Upper class
  16. 16. Segmenting Variables Psychographic Segmentation Behavioral Segmentation Using Multiple Segmentation Basis
  17. 17. Psychographic Segmentation Dividing the market into groups according to social class, life style or personality characteristics.
  18. 18. Lifestyle A person’s pattern of living as expressed in his or her activities, opinions, and interest. It involves measurement of AIO dimensions.
  19. 19. Social Class  Lower lowers  Working class  Upper middles  Upper uppers Upper lowers Middle class Lower uppers
  20. 20. Personality Adventurous Authoritarian Risk Taking Ambitious
  21. 21. Behavioral Segmentation Dividing the market into groups on the basis of consumer knowledge, attitude, use or response to a product.
  22. 22. Behavioral Segmentation Occasion Segmentation User Status Loyalty Status Benefit Segmentation Usage Rates
  23. 23. Occasion Segmentation Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchases, or use the purchased item.
  24. 24. Benefit Segmentation Dividing the market into groups according to the different benefits that consumers seek from the product.  Procter &Gamble has identified different detergent segments.
  25. 25. User Status Dividing the market into the groups according to user status .  Non-users  Ex-users  Potential users  First time users  Regular users
  26. 26. Usage Rates Market can be segmented according to usage rate.  Light  Medium  Heavy  Fast food industry has only 20% heavy users but eat up about 60% of all food served.
  27. 27. Loyalty Status Market can be segmented according to consumer loyalty. Consumers can be loyal to  Brands  Stores  Companies
  28. 28. Loyalty Status Consumer can be grouped on the basis of loyalty as  Somewhat loyal  Completely loyal  Non loyal
  29. 29. Multiple Segmentation Basis Using multiple variables for segmentation analysis to identify smaller, better defined target groups.
  30. 30. Using Multiple Segmentation Bases  One good example of multi-variable segmentation is “Geodemographic” segmentation.  One of the leading life style segmentation systems is the “PRIZM”.
  31. 31. “PRIZM” System The PRIZM system combines demographic factors with buying transaction data and lifestyle information taken from consumer surveys, to paint a precise picture of the consumer.
  32. 32. PRIZM System (cont’d)  PRIZM classifies people into 62 unique types or clusters. Like  Blue Blood Estates (suburban areas populated by elite families)  Shotguns and pickups (populated by rural blue collar workers and families)  Hispanic Mix (highly brand conscious, quality conscious, and brand loyal)
  33. 33. PRIZM System (cont’d) With the availability of data and computer power, geodemographic marketers are continually refining their techniques by tracking and adding new segments and adjusting the older ones.
  34. 34. Market Segmentation (cont’d) Target Marketing (partially)
  35. 35. Market Segmentation Segmenting Business Markets
  36. 36. Segmenting Business Markets Major variables used for segmenting business markets are:  Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical location should we serve?
  37. 37. Segmenting Business markets (cont’d)  Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services?
  38. 38. Segmenting Business markets (cont’d)  Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: should we serve companies that? Service contacts? Systems purchases? Sealed bidding? 11. Purchasing criteria: should we serve companies that are seeking quality? Service? Price?
  39. 39. Segmenting business Markets (cont’d)  Situational Factors 12. Urgency: Should we serve companies that need quick sudden delivery or service? 13. Specific application: Should we focus on certain applications of our product rather than all applications? 14. Size of order: Should we focus on large or small orders?
  40. 40. Segmenting Business Markets (cont’d)  Personal Characteristics 15. Buyer-seller similarity: should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk-taking or risk-avoiding customers? 17. Loyalty: Should we serve companies that shoe high loyalty to their suppliers?
  41. 41. Segmenting Business Markets  Additional Variables Used by Business Markets  Serving More Then One Markets  American Express  Separate system for dealing with larger or multiple location customers.
  42. 42. Market Segmentation Segmenting International Markets
  43. 43. Segmenting International Markets  Usage of common variables (as described before)  The concept of Inter market Segmentation  Examples
  44. 44. Market Segmentation Requirement for effective segmentation
  45. 45. Requirement for effective segmentation  Measurable  Accessible  Substantial  Differentiable  Actionable
  46. 46. Target Marketing
  47. 47. Target Marketing The process of evaluating each market segment’s attractiveness & selecting one or more segments to enter
  48. 48. Evaluating Marketing Segments Involvement of 3 factors  Segment size and growth  Segment structural attractiveness  Company objectives and resources
  49. 49. Selecting Target Market Segments  Defining Target Market  Levels of Target Marketing  Undifferentiated Marketing (very broadly)  Differentiated Marketing (somewhere in between)  Concentrated Marketing (somewhere in between)  Micromarketing (very narrowly)
  50. 50. Undifferentiated Marketing A market-coverage strategy in which a firm decides to ignore market segment differences & go after the whole market with one offer.
  51. 51. Differentiated Marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
  52. 52. Target Marketing (cont’d)Target Marketing (cont’d)
  53. 53. Concentrated MarketingConcentrated Marketing  A market coverage strategy in which a firm goes after aA market coverage strategy in which a firm goes after a large share of one or a few segments or niches.large share of one or a few segments or niches.  Normally used when company resources are limitedNormally used when company resources are limited  Company gains a better understanding of the niches itCompany gains a better understanding of the niches it caters & special reputation may be gained.caters & special reputation may be gained.  Products can be “Fine-Tuned” to assure “effectiveProducts can be “Fine-Tuned” to assure “effective marketing” focused upon specific customers.marketing” focused upon specific customers.  Can be highly profitable but also involves higher riskCan be highly profitable but also involves higher risk levels.levels.  Examples:Examples: Tetra Sea Food, Oshkosh TrucksTetra Sea Food, Oshkosh Trucks
  54. 54. Micro MarketingMicro Marketing • The practice of tailoring products andThe practice of tailoring products and marketing programs to the needs ofmarketing programs to the needs of specific individuals and local customerspecific individuals and local customer groups.groups. • Rather then seeing a customer inRather then seeing a customer in every individual, micro-marketers seeevery individual, micro-marketers see INDVIDUALS in every customerINDVIDUALS in every customer
  55. 55. Types of MicromarketingTypes of Micromarketing Local MarketingLocal Marketing Tailoring brands and promotion to the needsTailoring brands and promotion to the needs and wants of local customer groups cities,and wants of local customer groups cities, neighborhoods, and specific stores.neighborhoods, and specific stores.
  56. 56. Local MarketingLocal Marketing DrawbacksDrawbacks  Can drive up manufacturing and marketing cost byCan drive up manufacturing and marketing cost by reducing economies of scale.reducing economies of scale.  Create logistics problems as companies try to meet theCreate logistics problems as companies try to meet the varied requirements of different regional and localvaried requirements of different regional and local market.market.  Brand’s overall image my be diluted if the product andBrand’s overall image my be diluted if the product and message vary at different localities.message vary at different localities.
  57. 57. Local MarketingLocal Marketing Benefits  Helps a company to market more effectively in the face of pronounced regional and local differences in demographics and style.  Meets the needs of company's first-line customer.
  58. 58. Individual MarketingIndividual Marketing  Tailoring productsTailoring products and marketingand marketing programs to needsprograms to needs and preference ofand preference of individual customerindividual customer also labeled asalso labeled as markets of-one,markets of-one, customizedcustomized marketing and one-marketing and one- to-one marketing.to-one marketing. • At the LEGO factory website, fans can designAt the LEGO factory website, fans can design there own ultimate LEGO model, show it off, andthere own ultimate LEGO model, show it off, and bring it to life.bring it to life.
  59. 59. Mass CustomizationMass Customization Mass customization is the processMass customization is the process through which firms interact one-through which firms interact one- to-one with masses of customers toto-one with masses of customers to create customer-unique value bycreate customer-unique value by designing products and servicesdesigning products and services tailor-made to individual needs.tailor-made to individual needs.
  60. 60. Socially Responsible TargetSocially Responsible Target MarketingMarketing  Some segments are atSome segments are at special risk :special risk : • ChildrenChildren • Inner-city minoritiesInner-city minorities consumersconsumers • Internet shoppersInternet shoppers  Controversy occursControversy occurs when the methodswhen the methods used areused are questionable.questionable. • Most targeting market benefits bothMost targeting market benefits both the marketer and the consumer.the marketer and the consumer. Nacara Cosmetiques marketsNacara Cosmetiques markets cosmetics for “ethnic women whocosmetics for “ethnic women who have a thirst for the exotic”have a thirst for the exotic”
  61. 61. Choosing a Target- Marketing Strategy requires consideration of :  Company resources  The degree of product variability  Products life-cycle stage  Market variability  Competitors’ marketing strategies
  62. 62. Positioning for Competitive Advantage
  63. 63. Positioning The way the product is defind by consumers on important attributes ---- The place the product occupies in consumers’ minds relative to competing products.
  64. 64. 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.
  65. 65. Positioning Maps Positioning maps are a useful tool for giving you a graphical idea of where your product stands vis-à-vis other products in the market at a given time.
  66. 66. Orientation Positioning Map: Large Luxury SUVs Range rover High Lincoln Navigator Escalade Hummer H1 Hummer H2 Price Lexus LX470 Land Cruiser Low Luxury Performance
  67. 67. Choosing a Positioning Strategy The positioning task consist of three steps.  Identify Possible Competitive Advantages  Choosing the Right Competitive Advantages  Selecting an overall Positioning Strategy
  68. 68. Identify Possible Competitive Advantages An advantage over competitors gained by offering consumers greater value either through lower prices or by providing more benefits that justify higher prices.  A company or market offer can be differentiated along the lines of Product, Services, Channels, People or Image
  69. 69. Identify Possible Competitive Advantages
  70. 70. Product Differentiation i.e. Features, Performance, Style, Design or Attributes.
  71. 71. Service Differentiation i.e. Delivery, Installation, Repair Service, Customer Training Services.
  72. 72. Image Differentiation i.e. Symbols, Atmospheres, Events.
  73. 73. Personnel Differentiation i.e. Hiring and training better people than others do.
  74. 74. Choosing the Right Competitive Advantages
  75. 75.  How many differences to promote? Unique Selling Proposition (USP) USP is to promote only one benefit to the target market for each brand and stick to it. e.g. Crest Toothpaste (Anticavity Protection) Wall-Mart (Always Low Prices) Choosing the Right Competitive Advantages
  76. 76. Cont’d • Others think that company should position themselves on more than one differentiator. e.g. Unilever (Three-in-one bar soap)
  77. 77.  Under positioning:-Buyers have only a vague idea of the brand.  Over Positioning:-Buyers may have too narrow an image of the brand.  Confused Positioning:- Leaving buyers with a confused image of a company. Positioning Errors to Avoid
  78. 78. Which differences to promote?  A company should carefully select the way in which it will distinguish itself from competitors.  A difference is worth establishing to the extent that it satisfies the following criteria…
  79. 79. Cont’d  Important  Distinctive  Superior  Communicable  Preemptive  Affordable  Profitable
  80. 80. Selecting An Overall Positioning Strategy
  81. 81. Value Proposition The full Positioning of a brand. In simpler words, the full mix of benefits upon which a brand is positioned.
  82. 82. Major Value Propositions More for more More for the same The same for less Less for much less More for less
  83. 83. More for More Proposition Providing the most upscale product or service and charging a higher price to cover the higher costs. e.g. Mercedes-Benz auto mobiles
  84. 84. More for The Same Proposition Providing a brand offering comparable or even better quality to that of competitor/s’ upscale one but at a Lower or The Same Price. e.g. Toyota’s Lexus line vs. Mercedes-Benz
  85. 85. The Same for Less Proposition Providing equivalent quality products at a Lower Price. It can be a powerful value proposition. e.g. Wall-Mart
  86. 86. Less for Much Less Proposition Providing lower performance or quality products as required by the consumers at a Much Lower Price.
  87. 87. More for Less Proposition Providing even better or the best products or services compared to the competitor/s at Lower or the Lowest Prices. e.g. Dell Computers Procter & Gamble
  88. 88. Developing a Positioning Statement A Positioning Statement summarizes company or brand positioning by targeting the segment, developing a need, delivering the brand name and its concept, and pointing out the competitive advantage or difference.
  89. 89. Communicating and Delivering the Chosen Position Keeping a permanent channel to Communicate the desired position to target consumers and taking actions in order to Deliver the position the company wants to build relative to competing products.

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