Segmenting, Targeting & Positioning

Steps in the
Target Marketing Process
 The 12 billion dollar question:

 Global $12 billion dollar sneaker market for all kinds of

athletic shoes.

 Reebok’s marketing research shows that in 1971 only 1 of

every 27 women was involved in sports; today it is 1 in 3!!
Thus Reebok has put special emphasis on the female
market.
 Procter & Gamble

Sells multiple brands  Has also identified

within the same different niches within
product category for certain segments
a variety of products  Product modifications
are useful: Tide offers
Brands feature a seven different product
different mix of formulations to serve
benefits and appeal different niches’ needs
to different segments
A Market is...
(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group of people that lacks any one of

these characteristics is not a market.
 Market Segmentation
People
People or
or organizations
organizations with
with
Market
Market needs
needs or
or wants
wants and
and the
the ability
ability and
and
willingness
willingness to
to buy
buy

AA subgroup
subgroup of of people
people or
or
Market
Market organizations
organizations sharing
sharing one
one or
or more
more
Segment
Segment characteristics
characteristics that
that cause
cause them
them to
to
have
have similar
similar product
product needs.
needs.

The
The process
process ofof dividing
dividing aa market
market
Market
Market into
into meaningful,
meaningful, relatively
relatively similar,
similar,
Segmentation
Segmentation identifiable
identifiable segments
segments or or groups.
groups.
Definition

 Market Segmentation:
– Dividing a market into distinct
groups with distinct needs,
characteristics, or behavior who
might require separate products
or marketing mixes.
MARKET SEGMENTATION =

 Dividing market into segments,

each of which behaves differently
vis-à-vis your product
 Selecting certain segment(s)
 Developing one marketing plan for
each segment
 Thinking small(er)
 Market segmentation
aggregating buyers into groups that:

1. Have common needs and

2. Will respond similarly to marketing action.

The groups that result from the

market segmentation process are
called market segments.
Product/Usage Habits
Segmentation

Pillow Manufacturer
PRODUCT
SOFT MEDIUM FIRM
MARKET
PILLOW PILLOW PILLOW
Stomach s leepers L M S

Back s leepers M L M

Side s leepers S M L

Key: L, Large market; M, medium market; S, s mall market

Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!

Buyer Preference Patterns

Homogeneous preference

Diffused preference

Clustered preference
STYLE TITAN
TITAN WATCHES
WATCHES

DURABLE
Homogeneous Preference
-No natural segments
-All buyers have same preference
STYLE TITAN
TITAN WATCHES
WATCHES

DURABLE
Diffused Preference
-No pattern (…or poor research)
-Take center position
STYLE
TITAN
TITAN WATCHES
WATCHES

DURABLE
Clustered Preference
-Natural segments
-Increases as number of competitors increases
Values of the Two Segments-
Youngsters & Adults - WATCHES
Adults

Youngsters

Attribute 1 Attribute 2 Attribute 3

PRICE BEAUTY DURABILITY
Segmentation Dilemma
Mass Marketing --
(Economies of Scale)

(However, everyone is
different)
CUSTOMIZATION
Choosing a Targeting Strategy

 Undifferentiated Marketing
 Differentiated Marketing
 Concentrated Marketing
 Customized Marketing
Undifferentiated Marketing

 Appeals to a broad spectrum of

people
 Efficient due to economies of scale
 Effective when most consumers
have similar needs
 Example: Big Bazaar
 Differentiated Marketing
 Develops one or more products for each
of several customer groups with different
product needs
 Appropriate when consumers are
choosing among well-known brands with
distinctive images and it is possible to
identify one or more segments with
distinct needs for different types of
products
 Example:Lakme, Ponds, Fair & Lovely
Concentrated Marketing

 Entails focusing efforts on offering

one or more products to a single
segment
 Useful for smaller firms that do not
have the resources to serve all
markets
 Example:HMT Watches
 Customized Marketing
 Segments are so precisely defined that
products are offered to exactly meet the
needs of each individual
– Example:
 Mass customization is a related
approach in which a company modifies a
basic good to meet the needs of an
individual
– Example: Dell Computers
Segmentation

Why segment?

– Identifies opportunities and needs.

– Allows firm to focus on specific needs.

– Improves marketing mix for each segment.

– Allows small firm to exist.

The Importance of
Market Segmentation

 Markets have a variety of product

needs and preferences

 Marketers can better define

customer needs

 Decision makers can define objectives

and allocate resources more accurately
Criteria for Successful
Segmentation
Substantiality
Substantiality

Identifiability
Identifiability

Criteria
Criteria Accessibility
Accessibility
for
for
Market
Market
Segments
Segments
Responsiveness
Responsiveness
 Criteria for Segmentation
Segment
Segment must
must be
be large
large
Substantiality
Substantiality enough
enough to
to warrant
warrant aa special
special
marketing
marketing mix.
mix.
Identifiability
Identifiability Segments
Segments must
must be
be identifiable
identifiable
Measurability
Measurability and
and their
their size
size measurable.
measurable.
Members
Members ofof targeted
targeted segments
segments
Accessibility
Accessibility must
must be
be reachable
reachable with
with
marketing
marketing mix.
mix.
Unless
Unless segment
segment responds
responds to to aa
Responsiveness
Responsiveness marketing
marketing mix
mix differently,
differently, no
no
separate
separate treatment
treatment isis needed.
needed.
WHEN DO YOU HAVE "GOOD"
SEGMENTS?

 You can reach them

 Group is large enough to be
profitable
 You have the capability to build a
marketing program target for them
Segmentation Bases

Characteristics of
individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
Bases for Segmentation
Geography
Geography

Bases Demographics
Demographics
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Behavioral
Behavioral
Geographic Segmentation

 Region of the country or world

 Market size

 Market density : TV Companies

 Climate: woollen clothes

 City
Bases for Segmentation
Geography
Geography

Bases Demographics
Demographics
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Behavioral
Behavioral
Bases for
Demographic Segmentation
 Age: Cartoon Network; MTV; News Channels
 Gender: Cosmetics & After Shave
 Income: Economical & Luxury goods
 Ethnic background: Food
 Family Life Cycle: Life Insurance Companies
 Generation: Apparels
 Education
 Occupation: PC Selling
Bases for Segmentation
Geography
Geography

Bases Demographics
Demographics
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Behavioral
Behavioral
 Psychographics
 Psychographic segments market in
terms of shared attitudes, interests, and
opinions
 Segments include demographic
information such as age and income, but
also includes richer descriptions
 Some organizations develop their own
psychographic segments for their
consumers, but others utilize national
systems (VALS by SRI International)
Bases for
Psychographic Segmentation

Personality
Personality

Motivation
Motivation

Lifestyles
Lifestyles
Psychographic
Psychographic
Segmentation
Segmentation
Attitude
Attitude
MOTIVATION
••Health
Health Supplements
Supplements
••Cosmetics
Cosmetics
••Safola
Safola
••Life
Life Insurance
Insurance
••LG
LG Products
Products
Life Style: VALS
VALS Framework
••PRINCIPLE
PRINCIPLE ORIENTED:
ORIENTED:
••Fulfilled:
Fulfilled: Mature,
Mature, Well
Well Educated,
Educated, Informed,
Informed, Respectful
Respectful but
but
Open
Open minded
minded
••Believers:
Believers: Conservative,
Conservative, Conventional,
Conventional, follow
follow established
established
rules
rules
••STATUS
STATUS ORIENTED:
ORIENTED:
••Achievers:Committed
Achievers:Committed to to family
family and
and Work,
Work, Image
Image is
is very
very
Important
Important
••Strivers:
Strivers: Unsure
Unsure of
of themselves,
themselves, Money
Money is
is aa measure
measure ofof
success
success
••ACTION
ACTION ORIENTED:
ORIENTED:
••Experiencers:
Experiencers: Young,
Young, Vital,
Vital, Enthusiastic,
Enthusiastic, rebellions
rebellions
••Makers:
Makers: Practical,
Practical, Suspicious
Suspicious of
of new
new ideas,
ideas, value
value working
working
with
with their
their hands
hands
Bases for Segmentation
Geography
Geography

Bases Demographics
Demographics
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Behavioral
Behavioral
Benefit Segmentation

The process of grouping

customers into market
segments according to
the benefits they seek
from the product .
Maruti Esteem, Honda City
Bases for Segmentation
Geography
Geography

Bases Demographics
Demographics
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Behavioral
Behavioral
Segmenting by Behavior

 Behavioral segmentation slices

consumers on the basis of how they
act toward, feel about, or use a
product
 Market Segmentation

Behavioral Segmentation
Variables
 Occasions
 User Rates: Airlines
 User Status
 Loyalty Status: Credit
Cards
 Readiness Stage

 Attitude Toward the Product

 Business Marketing Segmentation
Geographic

Customer Type
Macro-
Macro-
segmentation
segmentation Customer Size

Product Use
Business
Business
Markets
Markets
Purchasing Criteria

Purchasing Strategy
Micro-
Micro-
segmentation
segmentation Importance
Personal
Characteristics
 Steps in Segmenting a Market

Select Choose Select Profile Select Design,

a bases descrip- and target imple-
market for tors analyze markets ment,
for segmen- segments maintain
study tation mkting
mix
Target Market
A group of people or
organizations for which an
organization designs,
implements, and maintains a
marketing mix intended to
meet the needs of that group,
resulting in mutually
satisfying exchanges.
Strategies for Selecting
Target Markets

Undifferentiated
Undifferentiated Concentrated
Concentrated Multisegment
Multisegment
Strategy
Strategy Strategy
Strategy Strategy
Strategy
Undifferentiated
Targeting Strategy
Advantages:
 Potential savings on
production and marketing
costs

Disadvantages:
Disadvantages
 Company more
susceptible to competition
Concentrated
Targeting Strategy
Advantages:
Advantages
 Concentration of resources
 Meets narrowly defined
segment
 Small firms can compete
 Strong positioning

Disadvantages:
Disadvantages
 Segments too small, or
changing
 Large competitors may market
to niche segment
Multisegment
Targeting Strategy

Advantages:
Advantages
 Greater financial success
 Economies of scale

Disadvantages:
Disadvantages
 High costs
 Cannibalization
Positioning

Developing a specific
marketing mix to influence
potential customers’ overall
perception of a brand,
product line, or organization
in general.
Position

The place a product, brand,

or group of products
occupies in consumers’
minds relative to competing
offerings.
 Procter & Gamble--11 Brands of Detergent

 Tide: all purpose family detergent, tough on stains,

keeps clothing looking like new
 Cheer with Triple Color Guard: the color expert,
guards against fading
 Bold: built in fabric softener
 Gain: gives you clean, fresh-smelling clothes
 Era: built in stain removers
 Dash: does it all for a low price
 Dreft: removes tough baby stains but gently
 Ariel: targeted to Upper Class market
 Toothpaste Example

 Pepsodent Tooth Decay

 Close-Up Freshness Appeal
 Aqua fresh Triple Benefit Teeth
 Colgate CDC Strong Teeth
 Colgate Jr. Kids brand with fluoride
 POSITIONING THE PRODUCT

Choosing a Positioning Strategy:

– Identifying possible competitive advantages
• Products, services, channels, people or image can be
sources of differentiation.
– Choosing the right competitive advantage
• How many differences to promote?
– Unique selling proposition (pick one benefit; Volvo = safety)
– Choose more than one if others share a claim to be best:

• Which differences to promote?

- Some: Important, Distinctive, Superior, Affordable, visible to buyers.
POSITIONING THE PRODUCT

 Choosing a Positioning Strategy:

– Developing a positioning statement
• Positioning statements summarize the
company or brand positioning
• EXAMPLE: To (target segment and need)
our (brand) is (concept) that (point-of-
difference).
– Communicating the chosen position
 Steps to Choosing and Implementing
a Positioning Strategy

 Step 1. Identifying a set of possible

competitive advantages:
– Competitive Differentiation.
 Step 2. Selecting the right competitive
advantage.
 Step 3. Effectively communicating and
delivering the chosen position to the market.
 Step 4: Evaluate market response and
reposition if necessary
What Kind of Advantages to Focus On?

Product
Product Product/Service
Product/Service
Class
Class Attributes
Attributes

Away
Awayfrom
from Benefits
Benefits
Competitors
Competitors Offered
Offered
G
G
H
H C
C

Against
Againstaa A
A
Usage
Usage
Competitor
Competitor E
D
D Occasions
Occasions
E
B
B F
F

Personnel
Personnel Image
Image

Users
Users
 1.Attribute
1.Attribute Positioning
Positioning GM:
GM: Safety
Safety

2.Benefit
2.Benefit Positioning
Positioning Maruti:Economy
Maruti:Economy
3.
3. Use
Use Positioning
Positioning PVR:Leisure
PVR:Leisure Based
Based
Entertainment
Entertainment

4.
4. User
User Positioning
Positioning Bungee
Bungee Jumping:
Jumping:
Adventurous
Adventurous

5.Competitor
5.Competitor Positioning
Positioning IIPM:Better
IIPM:Better Than
Than IIMs
IIMs

6.
6. Product
Product Category
Category IIMs:
IIMs: Best
Best B
B School
School
Which Competitive Advantages?

Important
Important

Profitable
Profitable Criteria Distinctive
Distinctive
for
Determining
Which
Differences
Affordable
Affordable to Superior
Superior
Promote

Preemptive
Preemptive Communicable
Communicable
How Many Differences to Promote?

Trend to broaden and position to more

segments
– Lux soap: cleanses, deodorizes, moisturizes
– Risks of disbelief and loss of clear position

Avoid
– Under positioning
– Over positioning
– Confusion
Effective Positioning

 Assess the positions of competing

products

 Determine the dimensions of these

positions

 Choose an effective market

position
Repositioning

Changing consumers’
perceptions of a brand
in relation to
competing brands.