PRINCIPLES OF MARKETING (UNIT 2: Consumer Behaviour and STP Analysis)

Concept of Consumer Behaviour

▪ According to Solomon et al. (1995), consumer behaviour is a process of choosing, purchasing, using
and disposing of products and services by the individuals and groups in order to satisfy their needs
and wants.
▪ Consumer behaviour is the study of how individual customers, groups or organizations select, buy,
use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of
the consumers in the marketplace and the underlying motives for those actions.

Nature of Consumer Behaviour

▪ Influenced by several factors: Consumer behaviour is influenced by a number of factors the factors
that influence consumers include marketing, personal, psychological, situational, social and cultural
etc.
» Marketing factors such as product design, price, promotion, packaging, positioning and
distribution.
» Personal factors such as age, gender, education and income level.
» Psychological factors such as buying motives, perception of the product and attitudes towards
the product.
» Situational factors such as physical surroundings at the time of purchase, social surroundings
and time factor.
» Social factors such as social status, reference groups and family.
» Cultural factors, such as religion, social class—caste and sub-castes.
▪ Experiences a constant change: Consumer behavior is not static. It undergoes a change over a
period of time depending on the nature of products. The change in buying behavior may take place
due to several other factors such as increase in income level, education level and marketing factors.
▪ Differs from consumer to consumer: All consumers do not behave in the same manner. Different
consumers behave differently. The differences in consumer behavior are due to individual factors such
as the nature of the consumers, lifestyle and culture.
▪ Varies across regions and countries: Consumer behavior varies across states, regions and countries.
For example, the behavior of the urban consumers is different from that of the rural consumers. The
consumer behavior may also varies across the states, regions and countries. It may differ depending
on the upbringing, lifestyles and level of development.
▪ Relevance to marketers: Marketers need to have a good knowledge of the consumer behavior. They
need to study the various factors that influence the consumer behavior of their target customers.

Importance of Consumer Behaviour

▪ Modern Philosophy: It concerns with modern marketing philosophy – identify consumers’ needs and
satisfy them more effectively than competitors. It makes marketing consumer-oriented, and is the key
to succeed.
▪ Achievement of Goals: The key to a company’s survival, profitability, and growth in a highly
competitive marketing environment is its ability to identify and satisfy unfulfilled consumer needs
better and sooner than the competitors.
▪ Useful for Dealers and Salesmen: The study of consumer behavior is not useful for the company
alone. Knowledge of consumer behavior is equally useful for middlemen and salesmen to perform
their tasks effectively in meeting consumers needs and wants successfully.
▪ Adjusting Marketing Programmes over Time: Consumer behavior studies the consumer response
pattern on a continuous basis. So, a marketer can easily come to know the changes taking place in the
 market. Based on the current market trend, the marketer can make necessary changes in marketing
programme to adjust with the market.
▪ Predicting Market Trends: Consumer behavior can also aid in projecting the future market trends.
Marketer finds enough time to prepare for exploiting the emerging opportunities, and/or facing
challenges and threats.

Consumer Buying Decision Process

▪ The purchase is only the visible part of a more complex decision process created by the consumer for
each buying decision he makes. However, it is important to note what happens before and after such
purchase, and focus on the factors influencing the choice of product purchased by the consumer.
▪ Engel, Blackwell and Kollat have developed a model of consumer buying decision process in five
steps: problem of recognition, information search, alternative evaluation, purchase decision and post-
purchase behavior.
(i) Problem of recognition: The need recognition is the first and most important step in the
buying process. If This recognition happens when there is a lag between the consumer’s actual
situation and the ideal and desired one. However, not all the needs end up as a buying
behavior. It requires that the lag between the two situations is quite important. But the “way”
(product price, ease of acquisition, etc.) to obtain this ideal situation has to be perceived as
“acceptable” by the consumer based on the level of importance he attributes to the need.
(ii) Information search: Once the need is identified, it’s time for the consumer to seek information
about possible solutions to the problem. He will search more or less information depending
on the complexity of the choices to be made but also his level of involvement. Then the
consumer will seek to make his opinion to guide his choice and his decision-making process
with internal information and external information.
(iii) Alternative evaluation: Once the information collected, the consumer will be able to evaluate
the different alternatives that offer to him, evaluate the most suitable to his needs and choose
the one he thinks it is best for him. In order to do so, he will evaluate their attributes on two
aspects. The objective characteristics (such as the features and functionality of the product) but
also subjective (perception and perceived value of the brand by the consumer or its
reputation).
(iv) Purchase decision: Now that the consumer has evaluated the different solutions and products
available for respond to his need, he will be able to choose the product or brand that seems
most appropriate to his needs. Then proceed to the actual purchase itself. His decision will
depend on the information and the selection made in the previous step based on the perceived
value, product’s features and capabilities that are important to him.
(v) Post-purchase behavior: Once the product is purchased and used, the consumer will evaluate
the adequacy with his original needs (those who caused the buying behavior). And whether he
has made the right choice in buying this product or not. He will feel either a sense of satisfaction
for the product (and the choice). Or, on the contrary, a disappointment if the product has fallen
far short of expectations. So, by improving their knowledge of the Consumer Buying Decision
Process, brands can improve their marketing strategy to effectively respond and be present
with their customers at each stage of their buying behavior, and thus, raise and create a need,
strengthen their relationship with their customers and grow their sales.

Factors influencing Consumer Buying Behaviour

There are many factors that influence the buyer behavior. There are different processes involved in the
consumer behavior. They are discussed as follows:
▪ Marketing Factors: Each element of the market mix – product, pricing, promotion and place has the
potential to affect the buying process at various stages.
o Product: The uniqueness of the product, the physical appearance and packaging can influence
buying decision of a consumer.
o Pricing: Pricing strategy does affect buying behaviour of consumers. Marketers must consider
the price sensitivity of the target customers while fixing prices.
o Promotion: The various elements of promotion such as advertising, publicity, public relations,
personal selling, and sales promotion affect buying behaviour of consumers.
o Place: The channels of distribution, and the place of distribution affects buying behaviour of
consumers. Marketers makes an attempt to select the right channel and distribute the products
at the right place.
▪ Personal Factors: The personal factors of a consumer may affect the buying decisions. The personal
factors include:
o Age Factor: The age factor greatly influences the buying behaviour. For instance, teenagers
may prefer trendy clothes, whereas, office- executives may prefer formal clothing.
o Gender: The consumer behaviour varies across gender. For instance, formal apparels are
designed for women as they work increasingly more in the corporate sector.
o Education: Highly educated persons may spend on books, personal care products etc. But a
person with low or no education may spend less on personal grooming products, general
reading books, and so on.
o Income Level: Normally, higher the income level, higher is the level of spending and vice-
versa. But this may not be always the case in developing countries, especially in the rural areas.
o Status: Persons enjoying higher status in the society do spend a good amount of money on
luxury items such as luxury cars, luxury watches, premium brands of clothing, jewellers etc.
o Other Personal Factors: The other personal factors such as personality, lifestyle, family size,
etc., influence consumer behaviour.
▪ Psychological Factors: A person’s buying behaviour is influenced by psychological factors such as
o Learning: It refers to changes in individual behaviour that are caused by information and
experience. For example, when a customer buys a new brand and is satisfied by its use, then
he/she is more likely to buy the same brand the next time. Through learning, people acquire
beliefs and attitudes, which in turn influence the buying behaviour.
o Attitude: It is a tendency to respond in a given manner to a particular situation or object or
idea. Consumers may develop a positive, or negative or neutral attitude towards certain
product or brands, which in turn would affect his/her buying behaviour.
o Motives: A motive is the inner drive that motivates a person to act or behave in a certain
manner. The marketer must identify the buying motives of the target customers and influence
them to act positively towards the marketed products.
o Perception: It is the impression, which one forms about a certain situation or object. A
motivated person is ready to act. But the way or the manner in which he acts is influenced by
his/her perception of the situation.
o Beliefs: A belief is a descriptive thought, which a person holds about certain things. It may be
based on knowledge, opinion, faith, trust and confidence. People may hold certain beliefs of
certain brands/products. Beliefs develop brand images, which in turn can affect buying
behaviour.
▪ Situational Influences: Major situational influences include the physical surroundings, social
surroundings, time, the nature of the task, and monetary moods and conditions.
o Physical Surroundings: The physical surroundings at the place of purchase affects buying
behaviour. For instance, when a customer is shopping in a store, the features that affects buying
behaviour would include the location of the store, the decor, the layout of the store, the noise
level, the way merchandise is displayed, and so on.
 o Social Surroundings: The social surroundings of a situation involve the other people with the
customer that can influence buying decision at the point of purchase.
o Time Factor: Customers may make different decisions based on when they purchase – the hour
of the day, the day of the week, or the season of the year. For instance, a consumer who has
received a pay cheque on a particular day may shop more items, than at the end of the month
when he is short of funds.
o Momentary Conditions: The moods and conditions of the customer at the time of purchase
may also affect the buying decision. A customer who is very happy would make a different
buying decision, as compared to when he is not happy.
▪ Social Factors: The social factors such as reference groups, family, and social and status affect the
buying behaviour:
o Reference Groups: A reference group is a small group of people such as colleagues at work
place, club members, friends circle, neighbours, family members, and so on. Reference groups
influence its members as follows: (i) they influence members’ values and attitudes, (ii) they
expose members to new behaviours and lifestyles, and (iii) they create pressure to choose
certain products or brands.
o Family: The family is the main reference group that may influence the consumer behaviour.
Nowadays, children are well informed about goods and services through media or friend
circles, and other sources.
o Roles and Status: A person performs certain roles in a particular group such as family, club,
organisation, and so on. People may purchase the products that conform to their roles and
status, especially in the case of branded clothes, luxury watches, luxury cars, and so on.
▪ Cultural Factors: Culture includes race and religion, tradition, caste, moral values, etc. Culture also
include sub-cultures such sub-caste, religious Sects, language, etc.
o Culture: It influences consumer behaviour to a great extent. Cultural values and elements are
passed from one generation to another through family, educational institutions, religious
bodies, social environment, etc. Cultural diversity influences food habits, clothing, customs and
traditions, etc.
o Sub-Culture: Each culture consists of smaller sub-cultures that provide specific identity to its
members. Subcultures include sub-caste, religious sects, geographic regions etc. Marketers
may adopt multicultural marketing approach, i.e., designing and marketing goods and services
that cater to the tastes and preferences of consumers belonging to different sub-cultures.

Black Box Model of Consumer Behaviour

The Black Box Model of Consumer Behaviour is a model used in the study of the buying behaviour of
consumers. The model assumes that what takes place in the consumer's 'black box' of the consumer's
mind can be inferred from a study of observed stimuli and responses.
Concept of Segmentation (in STP Analysis)

Market segmentation is the process of dividing a market of potential customers into groups, or segments,
based on different characteristics. The segments created are composed of consumers who will respond
similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

Importance of Market Segmentation (in STP Analysis)

▪ Co-ordination of product and marketing appeals: As market segmentation presents an opportunity

to understand the nature of the market, the seller can adjust his thrust to attract the maximum number
of customers by various publicity media and appeals.
▪ Better position to spot marketing opportunities: As the producer can make a fair estimate of the
volume of his sale and the possibilities of furthering his sales in the regions where response of the
customers is poor.
▪ Allocation of marketing budget: It is on the basis of market segmentation that marketing budget is
adjusted for a particular region or locality. Specific budget can be allocated according to different
market segments.
▪ Meeting the competition effectively: It helps the producer to face the competition of his rivals
effectively. The producer can adopt different strategies for different markets taking into account the
rival’s strategies.
▪ Effective marketing programme: It helps the producer to adopt an effective marketing programme
and serve the consumer better at comparatively lower cost. Diverse marketing programmes can be
attached for various segments.

Criteria for Market Segmentation

▪ Measurable and Obtainable: The size, profile and other relevant characteristics of the segment must
be measurable and obtainable in terms of data. It has to be possible to determine the values of the
variables used for segmentation with justifiable efforts. This is important especially for demographic
and geographic variables. For an organisation with direct sales (without intermediaries), the own
customer database could deliver valuable information on buying behaviour (frequency, volume,
product groups, mode of payment etc).
▪ Relevant: The size and profit potential of a market segment have to be large enough to economically
justify separate marketing activities for this segment. If a segment is small in size then the cost of
marketing activities cannot be justified.
▪ Accessible: The segment has to be accessible and servable for the organisation. That means, the
customer segments may be decided considering that they can be accessed through various target-
group specific advertising media such as magazines or websites the target audience likes to use.
▪ Substantial: The segments should be substantial to generate required returns. Activities with small
segments will give a biased result or negative results.
▪ Valid: This means the extent to which the base is directly associated with the differences in needs and
wants between the different segments. Given that the segmentation is essentially concerned with
identifying groups with different needs and wants, it is vital that the segmentation base is meaningful
and that different preferences or needs show clear variations in market behaviour and response to
individually designed marketing mixes.

Bases of Market Segmentation

GEOGRAPHIC SEGMENTATION
Region North India, South India, North-East India (7-sister states), Western Ghats etc.
Country Size Large (Russia), Big (China), Small (Sri Lanka), Very Small (Bhutan)
City Size (Population) Tier-1 (over 4 million), Tier-2 (1-4 million), Tier-3 (0.5-1 million), Tier-4 (0.1-0.5 million)
▪ High-growth Tier 1 cities (over 9% of GDP): Delhi, Hyderabad, Chennai,
Ahmedabad
▪ High-growth Tier 2 cities (over 9% of GDP): Pune, Surat, Gurgaon, Chandigarh
▪ High-growth Tier 3 cities (over 9% of GDP): Anand, Gandhinagar, Karnal, Panvel
▪ High-growth Tier 4 cities (over 9% of GDP): Kota, Navsari, Aurangabad,
Modinagar
▪ Normal-growth Tier 1 cities (5-9% GDP): Bengaluru, Mumbai, Kolkata
City Growth (% of
▪ Normal-growth Tier 2 cities (5-9% GDP): Ludhiana, Jaipur, Amritsar, Bhopal,
GDP)
Rajkot
(Source: BCG Micro-
▪ Normal-growth Tier 3 cities (5-9% GDP): Bathinda, Jammu, Udaipur, Agartala
Market Analysis 2015)
▪ Normal-growth Tier 4 cities (5-9% GDP): Kottaya, Sirsa, Shillong, Barrackpore
▪ Slow-growth Tier 1 cities (below 5% GDP): NIL
▪ Slow-growth Tier 2 cities (below 5% GDP): Bareilly, Kanpur, Gorakhpur
▪ Slow-growth Tier 3 cities (below 5% GDP): Mangalore, Ambala, Mathura,
Jaigaon
▪ Slow-growth Tier 4 cities (below 5% GDP): Hoshiarpur, Imphal, Durgapur,
Bokaro
▪ Urban: Metropolitan city with population over 10,00,000 such as Kolkata
▪ Semi-Urban/ Suburban: Population between 10,000 to over 10,00,000 such as
Navi Mumbai
▪ Exurban/ Commuter Towns: Population between 1000 to 20,000 such as Vasai-
Settlement Hierarchy
Virar
▪ Rural: Village (pop. 200-800) such as Mawlynnong, hamlet (pop. less than 200)
such as Gauribidanur, isolated dwellings/ dispersed settlements (with 1-2 families)
such as areas around Kibber village in Himachal Pradesh
For example, hot summers in North India requires maintenance of continuous cold
Climatic Condition chain for perishable products; hot and humid climate of West Bengal helps in jute
cultivation etc.

DEMOGRAPHIC SEGMENTATION
Below 6 (New-born/Infant/ Toddler), 6-12 (Tween), 13-19 (Teen), 20-34 (Young adult),
Age 35-44 (Mature Adult/ Parenthood), 45-60 (Middle-Aged/ Senior), Above 60 (Retired/
Old)
Male (Deodorants for men), Female (Fragrances for women), Transgenders (LGBT
Gender
marketing)
Family Size 1-3 (Nuclear Family), 3-5 (Hybrid Family), Above 5 (Joint Family)
Single-young adults, new couple, families with young children, families with
Family Status (Life-
adolescents, settling children and moving on, midlife couples entering retirement, later
cycle)
life couples with grandchildren
▪ Strugglers: Household Income less than USD 3300
Annual Household
▪ Small-Town Next Billion: Household Income between USD 3500 and USD 4000
Income
▪ Large-Town Next Billon: Household Income of USD 4000
(BCG Classification)
▪ Rural Aspirers: Household Income of USD 8500
 ▪ Urban Aspirers: Household Income between USD 8500 and USD 9000
▪ Traditional Affluent: Household Income between USD 35000 and USD 40000
▪ Professional Affluent: Household Income of USD 40000
Legislators, senior officials and managers; professionals; technicians & associate
Occupation (National
professionals; clerks; service workers and shop and market sales workers; skilled
Classification of
agricultural and fishery workers; craft and related trades workers; plant and machinery
Occupations, 2004)
operators and assemblers; elementary occupations; armed forces
Education Illiterate; literate but no formal schooling/ School up to 4 years; School: 5 to 9 years;
(New SEC SSC/ HSC; some college (including a Diploma) but not graduate; Graduate/ Post-
Classification Graduate: General; Graduate/ Post-Graduate: Professional
Hinduism (no beef), Islamism (no pork and alcohol), Christianity (some don’t eat pork,
Religion bacon or ham), Jainism (strict Jains avoid root vegetables), Jews (don’t eat meat and
dairy products in the same meal)
Nationality Indian (traditional culture), American (modern, suave lifestyle)

BENEFIT/ USP SEGMENTATION

Here, the marketer tries to showcase or highlight the benefits or USP of the brand to the customers, by dividing
the market on the basis of the perceived benefit of the product or service. This type of segmentation may be used
in clothing, appliance, consumer, cosmetic, and several other industries. Let us consider the following examples:
▪ Footwear for trail runners must be comfortable, less slippery, and must reduce the
risk of injury
Athletic Footwear
▪ Shoes of recreational runners must be comfortable, stylish, and inexpensive
Companies
▪ Shoes for professional runners must be adequately cushioned, stable, flexible, and
lightweight
▪ Price sensitive Customers go for inexpensive, discount-only products
Appliance ▪ Value-based Customers would be willing to pay extra for stainless steel finish or
Manufacturers longer warranties
▪ Status-Oriented Customers who want to buy expensive professional products
▪ Work-oriented customers would prefer inexpensive, durable mobile phones
▪ Socialite customers would prefer durable, technologically advanced and easy to use
Mobile Phone
smartphones
Manufacturers
▪ Status-driven customers would expect their phone to be technologically advanced,
expensive, sleek, and stylish
Toothpaste Some of the benefits which users expect from toothpastes include sensitivity-reduction,
Manufacturers teeth-whitening, tartar control, cavity protection, and fresh breath
▪ Fast Shoppers expect include simple aisle design, instant checkout, easy parking,
home shopping option, and extended shopping hours
▪ Smart Shoppers expect the store to offer discounts, coupons, prizes, and loyalty
programs.
Supermarkets and ▪ Day-out Shoppers enjoy spending time in the store and expect the store to keep new
Big Retails Stores products and come out with promotional offers when they visit the store
▪ Gourmet-Focused Shoppers look for high quality products, exclusive brands, good
service, and helpful store staff.
▪ Variety-Seekers expect in-store demonstrations, variety of products, and good
selection of new launches

BUYER BEHAVIOUR SEGMENTATION

Occasions Regular (Cadbury Silk), Special (Cadbury’s Celebration pack with Raksha Bandhan)
Benefits Quality (Toyota), service (Maruti), Economy (Tata Nano), Speed (Bugatti)
Non-user (does not use app-based cabs), ex-user (of Ola app), potential user (person who
User Status has bought a smartphone to use Ola app), first-time user (gets discount on first ride),
regular user (Ola user)
Usage Rate Light (rarely), medium (sometimes/ often), heavy (extensive use)
Hardcore loyalists (buy the brand all the time), split loyalists (loyal to two or three brands),
Loyalty Status shifting loyalists (move from one brand to another), switchers (no loyalty and possibly deal-
prone)
Readiness Stage Unaware, aware, informed, interested, desirous, intention to buy
Attitude towards
Enthusiastic, positive (favourable), indifferent (neutral), negative (unfavourable), hostile
Brand
 PSYCHOGRAPHIC SEGMENTATION
Culture-oriented (Tanishq, Titan Raga), sports-oriented (Reebok, Adidas), outdoor-
Lifestyle
oriented (Rolex)
Activities, Interests ▪ Activities (indoor sports, stamp collections, other hobbies etc.)
and Opinions ▪ Interests (Interested in food, technology, fashion, recreation etc.)
(AIO) ▪ Opinions (Opinions about brands, politics, current happenings etc.)
▪ Resources: Income, education, intelligence, emotional support
▪ Primary Motivation: What actually drives the individual (knowledge, desire to achieve
something)
▪ Innovators: Have their own individual tastes and are motivated in achieving the finer
things in life
VALS (Values and
▪ Thinkers: Likely to accept any social change because of their knowledge level
Lifestyles)
▪ Believers: Less likely to accept innovation on their own and are the best word of
according to
mouth consumers
Stanford Research
▪ Achievers: They are solely motivated by achievements
Institute’s VALS
▪ Strivers: Low resource consumer group which wants to reach some achievement
Framework
▪ Experiencers: Early adopters who spend heavily on food, clothing and youthful
products/ services
▪ Makers: Want self-expression but are limited by the number of resources they have
▪ Survivors: As they are not likely to change their actions regularly, they become brand
loyal customers
Social Class (New A1 (0.4%), A2 (1.8%), A3 (3.2%), B1 (4.3%), B2 (5.3%), C1 (7.5%), C2 (7.9%), D1 (11.4%), D2
SEC Classification) (14.7%), E1 (18.4%), E2 (15.4%), E3 (9.7%)

HYBRID APPROACHES TO SEGMENTATION (GEO-DEMOGRAPHIC SEGMENTATION)

This approach is based on the premise that people who live close to each other are likely to have similar
economic status, tastes, preferences, lifestyles and consumption behaviour. It is particularly useful when a
marketer is capable of isolating its prospects with similar personalities, goals, interests, and in terms of where
they live.

HYBRID APPROACHES TO SEGMENTATION (DEMOGRAPHIC-PSYCHOGRAPHIC SEGMENTATION)

Demographic and psychographic profiles work best when combined together because combined
characteristics reveal very important information about target markets. Such information is particularly useful in
creating consumer profiles and audience profiles. They provide meaningful direction as to which type of
promotional appeals or advertising media are best suited.

Concept of Targeting

Target Marketing refers to a concept in marketing which helps the marketers to divide the market into
small units comprising of like-minded people. Such segmentation helps the marketers to design specific
strategies and techniques to promote a product amongst its target market. A target market refers to a
group of individuals who are inclined towards similar products and respond to similar marketing
techniques and promotional schemes.

Patterns of Target Market Selection

After evaluating the segments on the basis of segment potential, competitor’s position and potential goal
and objective achievement, the firm can select the segment that will be the target market(s). The firm can
consider five patterns of target market selection. They are as follows:
Single-Segment Concentration
▪ In the simplest case, the firm selects a single segment. It is
also called as concentrated marketing.
▪ Through single segment concentration strategy, the firm
achieves a strong market position in the segment owing to
its greater knowledge of the segment’s needs and the
special reputation it gains.
▪ Furthermore, the firm enjoys operating economies
through specializing its production, distribution and
promotion. As it captures leadership in the segment, the
firm can earn a high return on its investment. At the same
time, concentrated marketing involves higher than normal
risks. The particular market segment can turn bitter.

Selective Specialization
▪ In this strategy, the firm selects a number of segments,
each objectively attractive and appropriate, given the
firm’s objectives and resources.
▪ There may be little or no synergy between segments but
each segment promises to be a money maker.
▪ This strategy has the advantage of diversifying the firm’s
risk. Even if one segment becomes unattractive, the firm
can continue to earn money in other segments.

Product Specialization
▪ The firm makes a certain product that it sells to several
segments.
▪ An example would be a microscope manufacturer who
sells to university, government, and commercial
laboratories.
▪ The firm makes different microscopes for the different
customer groups and builds a strong reputation in the
specific product area. The downside risk is that the
product may be supplanted by an entirely new
technology.

Market Specialization
▪ The firm concentrates on serving many needs of particular
customer group.
▪ An example would be a firm that sells an assortment of
products only to university laboratories.
▪ The firm gains a strong reputation in serving this customer
group and becomes a channel for addition products the
customer group can use.
▪ The downside risk is that the customer group may suffer
budget cuts.
 Full Market Coverage
▪ When a company decides to enter all or at least most
segments, full coverage market segmentations is used.
▪ This is a high sales strategy, since greater penetration into
each segment is combined with broad coverage of a total
market.
▪ Extensive resources are required to implement the
strategy because it affords limited opportunity for
economies of scale.
▪ Full coverage market segmentation is therefore most
likely to be adopted by a large organization.

Concept of Positioning

According to Philip Kotler, positioning is the act of designing the company’s offerings and image so that
it occupies a distinct and valued place in the customer’s mind. The end result of positioning is the
successful creation of a market-focused value proposition, a cogent reason why the target market should
buy the product.

Importance of Positioning

A positioning strategy may be used to (i) differentiate a firm from its competitors in a mass-product market,
or, (ii) position a firm to serve target customers in one or more product- market niches.

▪ Acts as an interface between brand identity and brand image: Brand identity in the marketplace
depends on positioning. Customer’s perception of the brand develops only when the Market
Positioning is proper.
▪ Source of competitive advantage: Better marketing positioning will give the company a competitive
advantage over other firms on the market.
▪ Market Differentiation: Positioning breaks the clutter of noise. The are plenty of products, and the
number of firms delivering them is several. Positioning will help a firm to stand out in the crowd of
sellers. A clear Brand Position enables you to efficiently and effectively communicate and reach your
target audience. Clear market positioning makes the brand and its product visible and attractive to
the customers.
▪ Easy purchase decisions for customers: Consumers want easy solutions and options to make
purchase decisions. And positioning triggers an emotional response from your target audiences,
giving them a quick way to trust you and increase the interest level of customers and increase sales
numbers.
▪ Helps introduce new product successfully: Product positioning can assist a company in introducing
a new product in the market. It can position new and superior advantages of the product and can
penetrate the market easily.

Bases/ Strategies of Positioning

A good brand positioning helps to guide marketing strategy by clarifying what a brand is all about, how
it is unique, how it is similar to competitive brands, and why consumers purchase it. Thus, in simple words
brand positioning refers to the position or image which a brand enjoys in the minds of present and
potential customers. Some of the strategies (or bases) of positioning are:

▪ Positioning by product attributes and benefits: It is to associate a product with an attribute, a

product feature, or a consumer feature. Sometimes a product can be positioned in terms of two or
more attributes simultaneously. The price/quality attribute dimension is commonly used for
 positioning the products. A common approach is setting the brand apart from competitors on the
basis of the specific characteristics or benefits offered. Sometimes a product may be positioned
on more than one product benefit. Marketers attempt to identify salient attributes (those that are
important to con-sumers and are the basis for making a purchase decision).
▪ Positioning by Price/Quality: Marketers often use price/quality characteristics to position their
brands. One way they do it is with ads that reflect the image of a high-quality brand where cost,
while not irrelevant, is considered secondary to the quality benefits derived from using the brand.
Premium brands positioned at the high end of the market use this approach for positioning the
product. Another way to use price/quality characteristics for positioning is to focus on the quality
or value offered by the brand at a very competitive price. Although price is an important
consideration, the product quality must be comparable to, or even better than, competing brands
for the positioning strategy to be effective.
▪ Positioning by Use or Application: Another way is to communicate a specific image or position
for a brand to associate it with a specific use or application. Surf Excel is positioned as stain remover
‘Surf Excel hai na!’ Also, Clinic All Clear – ‘Dare to wear black’.
▪ Positioning by Product Class: Often the competition for a particular product comes from out-side
the product class. For example, airlines know that while they compete with other airlines, trains and
buses are also viable alternatives. Manufacturers of music CDs must compete with the cassette
industry. The product is positioned against others that, while not exactly the same, provide the
same class of benefits.
▪ Positioning by Product User: Positioning a product by associating it with a particular user or
group of users is yet another approach. Motography Motorola Mobile, in this ad the persona of the
user of the product has been positioned.
▪ Positioning by Competitor: Competitors may be as important to positioning strategy as a firm’s
own product or services. In today’s market, an effective positioning strategy for a product or brand
may focus on specific competitors. This approach is similar to positioning by product class,
although the competition is within the same product category in this case. Onida was positioned
against the giants in the television industry through this strategy. Onida colour TV was launched
with the message that all others were clones and only Onida was the leader— ‘Neighbour’s envy,
owner’s pride’.
▪ Positioning by Cultural Symbols: This is an additional positioning strategy wherein the cultural
symbols are used to differentiate the brands. Examples are Humara Bajaj, Tata Tea, and Ronald
McDonald. Each of these symbols has successfully differentiated the product it represents from
competitors.

Product Differentiation vs Market Segmentation

Product differentiation and market segmentation are two distinct, important marketing strategy concepts.
Product differentiation refers to the basic need to have product-related qualities that set your brand apart
from the competition. Market segmentation is the breakdown of a large target audience into smaller, more
homogenous groups of customers.

Construct Definition Example

Heterogeneity in demand functions exists such that The automobile market;
Market
market demand can be disaggregated into segments with soap market; camera
Segmentation
distinct demand function. market
A product offering is perceived by the consumer to differ Mercedes Benz in the
Product
from its competition on any physical or nonphysical automobile market
Differentiation
product characteristic including price

▪ Product Differentiation: A small business can differentiate its product using marketing techniques,
by physically changing the product or by changing the price. Using marketing, the firm can create a
 brand or image in the mind of consumers by pointing out the difference between their product and
those of their competitors.
▪ Market Segmentation: Since consumers have different needs, even when shopping for the same
product, it’s important to know who is buying a firm’s product(s). This will help them plan your
marketing, product development and pricing. They can sell a higher-priced version of the product
with extra features in specialty stores to attract young, affluent singles, and sell another version with
fewer features at a lower cost to young families or seniors.

Select Sources:

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https://theintactone.com/2018/12/21/mm-u4-topic-8-market-positioning-meaning-positioning-strategies/
Kotler, P., & Keller, K. L. (2009). Marketing management. Upper Saddle River, N.J: Pearson Prentice Hall.
March 31, 2., Apps, S., Consumer Behaviour Blogspot: Consumer behaviour definition, nature, scope, importance and applications. Retrieved
November 10, 2020, from http://consumerbehaviourr.blogspot.com/2017/03/consumer-behaviours-nature.html
Dickson, P., & Ginter, J. (1987). Market Segmentation, Product Differentiation, and Marketing Strategy. Journal of Marketing, 51(2), 1-10.
doi:10.2307/1251125