Marketing Management Text and Cases Market Segmentation, Targeting & Positioning

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Market Segmentation, Targeting & Positioning
© SHH Kazmi, 2007

Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Market segmentation is the process of dividing the total market into relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics that lead them to respond in similar ways to a particular marketing programme. A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

Excel Books

Market Segmentation, Targeting & Positioning

Requirements for Effective Segmentation
Five conditions must exist for segmentation to be meaningful: 1. A marketer must determine whether the market is heterogeneous. If the consumers¶ product needs are homogeneous, then it is senseless to segment the market. 2. There must be some logical basis to identify and divide the population into relatively distinct homogeneous groups, having common needs or characteristics and which will respond to a marketing programme. Differences in one market segment should be small compared to differences across various segments. 3. The total market should be divided in such a manner that comparison of estimated sales potential, costs, and profits of each segment can be done. 4. One or more segments must have enough profit potential that would justify developing and maintaining a marketing programme. 5. It must be possible to reach the target segment effectively. For instance, in some rural areas in India, there are no media that can be used to reach the targeted groups. It is also possible that paucity of funds prohibits the © SHH Kazmi, 2007 development required for a promotional campaign.
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Market Segmentation, Targeting & Positioning

How Segmentation Helps
Segmentation studies are used to uncover needs and wants of specific groups of consumers for whom the marketer develops especially suitable products and services to satisfy their needs.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Bases for Segmentation
A segmentation variable is a characteristic of individuals, groups or organisations that marketers use to divide and create segments of the total market. Segmentation descriptors fall under four major categories and include geographic variables, demographic variables, psychographic variables, and behaviouristic variables.     Geographic variables focus on where the customers are located. Demographic variables identify who the target customers are. Psychographic variables refer to lifestyle and values. Behaviouristic variables identify benefits customers seek, and product usage rates.
© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Geographic variables Region Urban, Rural City size Climate Terrain Personality attributes Motives Lifestyle Market density Psychographic variables Nation State

Demographic variables Gender Age Race Religion Social class Family size Occupation Family life cycle Income Education

Behaviouristic variables Usage volume, Occasion End use Benefits sought Brand loyalty Price sensitivity

Segmentation Variables

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

Excel Books

Market Segmentation, Targeting & Positioning

Geographic Segmentation
Geographic segmentation focuses on dividing markets into different geographic units, such as regions, nations, states, urban, rural, etc.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

Excel Books

Market Segmentation, Targeting & Positioning

Demographic Segmentation
Demographic characteristics are commonly used to segment the market. Factors such as age, sex, education, income, marital status, household life cycle, family size, social class, etc., are used singly, or in a combination, to segment a market.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

Excel Books

Market Segmentation, Targeting & Positioning

Psychographics Segmentation
When segmentation is based on personality or lifestyle characteristics, it is called psychographic segmentation.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Behaviouristic Segmentation
Dividing the market on the basis of such variables as use occasion, benefits sought, user status, usage rate, loyalty status, buyer readiness stage and attitude is termed as behaviouristic segmentation.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Demographic-Psychographics Segmentation (Hybrid Approach)
Demographic and psychographic profiles work best when combined together because combined characteristics reveal very important information about target markets.

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Segmentation Variables for Organisational Markets
Main approaches to segment organisational markets can be grouped under four heads:      Geographic Location Customer Size Product Use Type of Organisation Buying Behaviour and Situation

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Targeting Market Segments
Instead of aiming a single product and marketing programme at the mass market, most companies identify relatively homogeneous segments and accordingly develop suitable products and marketing programmes matching the wants and preferences of each segment.

© SHH Kazmi, 2007

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Segment Attractiveness and Business Strength Factors
The attractiveness of a market segment can be evaluated based on the company¶s current business strength and market potential assessment.

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Product Positioning
Product positioning is a decision reached by a marketer to try to achieve a defined brand image relative to competition within a market segment. Product positioning decisions are strategic decisions and have an impact on long-term success of the brand.

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Common bases used for positioning include:            
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Features Benefits Usage Parentage Manufacturing process Ingredients Endorsements Comparison Pro-environment Product class Price/quality Country or geographic area
© SHH Kazmi, 2007

Marketing Management Text and Cases, S H H Kazmi

Excel Books

Market Segmentation, Targeting & Positioning

The Process of Determining the Positioning Strategy
Steps Need to be Taken to Reach a Decision about Positioning      Identify Competitors Assessment of Consumers¶ Perceptions of Competition Determining Competitor¶s Position Analysing the Consumers¶ Preferences Making the Positioning Decision

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Writing a Positioning Statement or a Value Proposition
It is a statement expressed clearly and in few words that identifies the target market for which the product is intended. It also specifies the product category in which it competes and highlights the unique benefit it offers.

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

How Many Differences to Promote?
Successful positioning depends on effectively communicating the brand¶s differential advantage. A USP is an outstanding advantage and the best strategy to create a product¶s position, provided it is not only persuasive for the consumers but also sustainable.

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Positioning Errors 
   Underpositioning Overpositioning Confused positioning Doubtful positioning

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Marketing Management Text and Cases, S H H Kazmi

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Market Segmentation, Targeting & Positioning

Some popular positioning approaches are:          Positioning by Corporate Identity Positioning by Brand Endorsement Positioning by Product Attributes and/or Benefits Positioning by Use Occasion and Time Positioning by Price-Quality Positioning by Product Category Positioning by Product User Positioning by Competitor Repositioning

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