Segmentation, Targeting and Positiong Market Segmentation: Market Segmentation is a technique for developing effective marketing strategies and

can be defined as the process of separating out distinctive groups of buyers with similar needs and mind sets into manageable clusters in order to develop more focused marketing strategies. Segmentation of buyers can be done for B to B markets at two levels; the company level (the type of company, size etc) and also at the individual level (type of decision maker, psychological type.) Segmentation helps in: More focused marketing strategies More effective product development and marketing programs More effective organization structure, especially for sales, service, distribution. A specific technique of segmentation is to take two dimensions and plot them against each other. For example take two variable age and income levels Age group High Very high Children Teenagers Young adults Families-young children Families- teenagers Families- empty nesters Elderly For each of these segments it is possible to do a motivation hygiene factor analysis to characterize the distinctive turn-ons and turn-offs Key questions to be answered are: What are you going to do with your segmentation anyway, once you got it? Is your segmentation genuinely unique? Does 20% of the market segments represent 80% of the market value? The process of STP: Market Segmentation positioning 1. Identify segment variables and segment the market concepts 2. Develop profiles of resulting segments Market targeting 3 Evaluate attractiveness of each segment 4.Select target segment Market 5.Identify possible positioning Income level Low Medium

6. Select & develop and communicate the chosen concept

Procedure for market segmentation 1. Survey stage: exploratory interviews, focus groups for qualitative information and questionnaire to collect data on attributes and their importance rating, brand awareness and brand rating, usage patterns, attitudes to product category, demographics geographic, psychographics, media graphics of the respondents 2. Analysis stage, using factor analysis to remove highly correlated variables and apply cluster analysis to

create specified no. of maximum different segments 3. Profiling stage. Profiled in terms of distinguishing attitude, behavior, demographic, psychographic, media patterns. One way to discover new segments is to investigate the hierarchy of attributes the consumers examine while choosing a brand

Segments to be effective must be measurable, substantial, accessible, differentiable and actionable. Key parameters for segmentation are: geographic, Demographic, psychographic, Behavioral (Occasion for use, user rate, and benefits sought, loyalty, buyer readiness, and attitude to product. Basis for segmenting business markets: * Demographics (industry, company size, location) * Operating variable (technology, user/non-user, customer requirements) * Purchasing approaches (tender based, preferred supplier basis, invite bids for every purchase) * Purchase criteria (quality, price, service on which of these should we focus.) * Situational factors (Urgency, specific applications, size of order) * Personal characteristics (Buyer, seller similarity, similar values) * Power structure (who dominates, purchase, finance ..) Market Targeting: 1. Identify market segment 2. Evaluate the opportunities in each and choose for targeting Two factors: 1. Segment attractiveness 2. Companys objectives and resources Market attractiveness: parameters are chosen, weights assigned and each segment evaluate. Weight Market size Market growth rate Historical profit margin Completive intensity Technological requirements Social political legal aspects Impact o environment Energy requirements and so on Business strength can be measured in terms of market share, growth, product quality, brand equity distribution network, promotional strength, unit costs and so on. Weights should be assigned, rating and value calculated as above. Selecting the market segment: rating Value

Single segment concentration e. g. small car segment Selective specialization e.g. focus on govt. business Product specialization e.g. microscopes Market specialization Full market coverage, all customer groups, with products they may need e. g. coke, IBM

Undifferentiated Marketing: Ignoring segment differences and going after the whole market with one offer. Design a product, a program to appeal to a broad market segment. May lead to a superior image. Differentiated Marketing: A firm operates in several segments with different marketing programs for each segment e.g. IBM

Undifferentiated, differentiated and Concentrated marketing Ignore segment differences Go after the whole market with one offer to appeal to broadest market segment Enormous cost economies in production, distribution and promotion because of standard product Is rare because of competition In a single market segment focus a firm can save costs by focusing marketing mix only in that segment.