Market Segmentation,

Targeting and Positioning

1
 Lesson Overview
• Related concepts: market segmentation,
target marketing, and positioning
• Process of market segmentation, its benefits
and conditions for use
• Target-market strategies
• Steps in developing a positioning strategy
• Methods of forecasting demand of market
segments

2
 Indian Automobile Industry - STP
Mercedez Benz,
BMW,
Chevrolet Optra, Toyota Lexus
Sonata Luxury
Honda Civic
Baleno,
Toyota Corolla
Accent
Mid Size
Ford Ikon,
Esteem, i10 Family
Opel Corsa
Getz, Swift Santo

Economy
Maruti 800 Zen, Alto

Who are the main passenger car manufacturers in India? 3

 Markets

MARKET SEGMENTS
MARKET SEGMENTS

TARGET MARKET
TARGET MARKET

MARKET SEGMENTATION
MARKET SEGMENTATION

What are markets? 4

 Markets

Market segments for Bicycles

11 22
(Exercisers)
(Exercisers) (School-goers)
(School-goers)

33 44
(Transportation riders)
(Transportation riders) (Adventurers)
(Adventurers)

5
 Markets
MARKET SEGMENTS
MARKET SEGMENTS
Groups of
Groups of customers
customers with
with different
different wants,
wants,
buying preferences
buying preferences or
or product-use
product-use behavior
behavior

TARGET MARKET
TARGET MARKET
AA market
market segment
segment on on which
which
the seller
the seller decides
decides to
to focus
focus efforts
efforts

6
 Market Segmentation

Process of
Process of dividing
dividing the
the total
total market
market
for aa good
for good or
or service
service into
into several
several smaller,
smaller,
internally homogeneous
internally homogeneous groupsgroups

Members of
Members of each
each group
group are
are
similar with
similar with respect
respect to
to the
the factors
factors
that influence
that influence demand
demand

7
Process of Market Segmentation

Identify wants
Identify wants within
within aa market
market

Identify characteristics
Identify characteristics that
that
distinguish the
distinguish the segments
segments

Determine potential
Determine potential ofof the
the segments
segments and and
how well
how well they
they are
are being
being satisfied.
satisfied.

8
Market Segmentation Conditions

Measurable
Measurable Segment isis
and Segment
and Accessible
Accessible
data obtainable
data obtainable
Large enough
Large enough
to be
to be
Profitable
Profitable

MICROMARKETING
MICROMARKETING
Treat each
Treat each single
single customer
customer
as aa separate
as separate segment
segment
9
Market Segmentation - First Cut

Customer’s reason
Customer’s reason for
for buying
buying

CONSUMER
CONSUMER
Purchase for
Purchase for personal
personal use
use

BUSINESS
BUSINESS
Purchase to
Purchase to use
use in
in organizations,
organizations,
to resell,
to resell, or
or to
to make
make other
other products
products
10
 Segmentation Bases
for Consumer Markets
1.Geographic
1.Geographic Possible
Possible Market
Market Segments
Segments
Location
Location

Urban-
Urban- Rural
Rural •• Rural,
Rural, Urban
Urban
•• Metro,
Metro, Large
Large towns,
towns,
District,
District, Mufussil
Mufussil Small
Small towns,
towns, Villages
Villages
population
population >> 1000,
1000,
Metro,
Metro, Non-Metro
Non-Metro << 1000
1000 etc
etc
•• Coastal,
Coastal, Non-coastal
Non-coastal
Any
Any Other
Other •• etc
etc

11
 Segmentation Bases
for Consumer Markets (Contd)
2.Demographic
2.Demographic Possible
Possible Market
Market Segments
Segments

Age •• Infant
Infant (newly
(newly born–1
born–1 yr) yr)
Age
child
child (1–12
(1–12 yr),
yr), teens
teens
Income
Income (13–19),
(13–19), adolescent
adolescent (16 (16
–19),
–19), youth
youth (20–35),
(20–35),
Gender
Gender middle-aged
middle-aged (36(36 –– 50),
50),
elders
elders or
or seniors
seniors (50+
(50+ etc)
etc)
Occupation
Occupation •• Male,
Male, Female
Female
•• Blue/white
Blue/white Collar,
Collar, traders,
traders,
…More
…More teachers,
teachers, university
university
professors,
professors, student,
student,
….More
….More housewife
housewife etc.
etc. ----
---- (Contd)
(Contd)12
 Kids Reign Supreme in FMCG Purchase
80 71
% of
Kids 59
Who 60 52
Influence
What
FMCG
40
Brand
Their
Family
Buys 20

Biscuits Burgers and Fruit Juices

Pizzas

13
India’s Upwardly Mobile Market (Households)

400

300

200

100

Very Consuming Climbers Aspirant Destitute

Rich Class (Middle class) (Lower Income) (Poor)
(million) (million) (million) (million) (million)
2001-02 15 265 429 192 140
2006-07 30 432 472 117 95
14
 Segmentation Bases
for Consumer Markets (Contd)
2.Demographic
2.Demographic Possible
Possible Market
Market Segments
Segments

Age
Age
•• Illiterates,
Illiterates, literates,
literates,
Gender
Gender high
high school,
school,
secondary,
secondary, graduate,
graduate,
Occupation
Occupation post
post graduate,
graduate, postpost
Education
Education doctorates.
doctorates.
•• Unmarried,
Unmarried, marriedmarried
Marital
Marital status
status •• Families
Families withwith 33 or
or <,
<,
Family
Family size
size &
& with
with 4,4, 55 or
or >members.
>members.
Structure
Structure 15
Socio-economic Pyramid of Indian Population
Graduates, white-
collar workers,
and professionals
A1 & A2
(9.5%)
Typically SSC qualified,
about 40% Graduates;
B1 & B2 (17%) occupation clerk/
shopkeeper

C (19.5%) Skilled workers,

clerks, salespersons, etc

D (22.4%) Same as above,

occupation profile with SSC

E1 & E2 (31.6%) Unskilled labour

16
 Segmentation Bases for Consumer
Markets (Contd)
3.Psychographic
3.Psychographic Possible
Possible Market
Market Segments
Segments

-- Ambitious,
Ambitious, self-confident,
self-confident,
Personality
Personality Aggressive,
Aggressive, Introverted,
Introverted,
Extroverted,
Extroverted, Sociable,
Sociable,
Achievers,
Achievers, etcetc
Life-style
Life-style -- Activities
Activities (Spiritual,
(Spiritual, Yoga,
Yoga,
travel);
travel); Interests(Music,
Interests(Music,
Politics,
Politics, Art
Art etc);
etc); Opinions
Opinions
(Conservation,
(Conservation, capitalism)
capitalism)
Values
Values -- Values
Values and
and lifestyles
lifestyles (VALS),
(VALS),
List
List of
of Values
Values (LOV)
(LOV)
17
 Segmentation Bases
for Consumer Markets (Contd)
4.Behavioral
4.Behavioral Possible
Possible Market
Market Segments
Segments

•• Virtually
Virtually for
for all
all
Benefits
Benefits Desired
Desired Products
Products (Titan,
(Titan, Garden
Garden
HMT,
HMT, Pepsodent)
Pepsodent)
Product
Product Usage
Usage •• Heavy,
Heavy, Medium,
Medium,
Low
Low user,
user, Non-user
Non-user
Use
Use Situations
Situations •• Rasana
Rasana
•• Hard
Hard Core,
Core, Soft
Soft Core,
Core,
Customer
Customer Loyalty
Loyalty Switchers
Switchers

18
 Segmentation Bases
for Business Markets
Bases
Bases for
for Possible
Possible Market
Market Segments
Segments
Segmentation
Segmentation
Customer
Customer Location
Location •• Customer
Customer located
located in in one
one
site
site will
will have
have one
one market
market
plan
plan and
and other
other inin another
another
Customer
Customer Size
Size •• Large,
Large, Medium
Medium and and
Small
Small buyers
buyers (Payment
(Payment
terms,
terms, packaging,
packaging, callcall
frequency
frequency etc etc different
different ))
Product
Product End
End Use
Use •• ForFor steel
steel manufacturer
manufacturer
itit could
could be
be construction,
construction,
office
office furniture,
furniture, cable,
cable,
automobile
automobile etc etc 19
 Segmentation Bases
for Business Markets
Bases
Bases for
for Possible
Possible Market
Market Segments
Segments
Segmentation
Segmentation

•• In
In any
any end
end use
use segment
segment ,, we
we
can
can further
further segment
segment based
based onon
BUYER
BUYER Behavior,
Behavior, purchase
purchase criteria
criteria –– say
say buyers
buyers
Motivation,
Motivation, or
or being
being insensitive,
insensitive, sensitive
sensitive
Purchase
Purchase criteria
criteria and
and highly
highly sensitive
sensitive to
to price
price
change.
change.
•• We
We can
can also
also segment
segment them
them
according
according to to their
their needs,
needs, say
say
Standardized
Standardized or or Customised
Customised
products.
products.
20
 Segmentation Bases
for Business Markets
Bases
Bases for
for Possible
Possible Market
Market Segments
Segments
Segmentation
Segmentation

-- Purchase Matrix
Matrix Approach
Approach
Purchase Criteria,
Criteria,
Size,
Size, &
& Geography
Geography
-- Buying •• New
New Task
Task Buying,
Buying,
Buying Situation
Situation
•• Straight
Straight rebuy,
rebuy,
•• Modified
Modified rebuy
rebuy

21
Target-Market Strategy

Market-aggregation
Market-aggregation
Strategy
Strategy
“mass-market”
“mass-market”
“undifferentiated-market”
“undifferentiated-market”
Single
Single
and
and Marketing
Marketing
Strategy
Strategy
Product
Product differentiation
differentiation “shotgun”
“shotgun”
Strategy
Strategy

22
Target-Market Strategy

Single-Segment
Single-Segment
Strategy
Strategy
“concentration
“concentration ”” One
One
Marketing
Marketing
Mix
Mix

NICHE
NICHE
MARKETERS
MARKETERS

23
 Target-Market Strategy

Multiple-Segment
Strategy

Multiple
Marketing
Mixes

24
Selecting a Target Market
Guidelines
Compatible
Compatible
with
with company’s
company’s goals
goals
Match
Match target
target
market
market opportunity
opportunity
with
with company
company resources.
resources.

Profit
Profit that
that
justifies
justifies investment
investment

Competitors
Competitors
are
are few
few and/or
and/or weak
weak
25
 Positioning
What
What is
is aa Position?
Position?

AA position
position isis the
the way
way aa
firm’s
firm’s product,
product, brand,
brand, or
or
organization
organization isis viewed
viewed
relative
relative to
to the
the competition
competition
by
by current
current and
and prospective
prospective
customers.
customers.

26
 So what is Positioning?
Firm
Firm creating
creating andand maintaining
maintaining in
in the
the
minds
minds of
of aa target
target market
market aa particular
particular
image
image relative
relative toto competing
competing products
products

THREE STEPS

Select position concept

Design the feature that

conveys position
Coordinate the marketing mix
to convey position
27
How do you Position a Product?
STEP 1

How do you select the positioning concept?

Determine what is important to the

target market and how its members
view the competing products

Perceptual Map
28
 Perceptual Map for different brands of bar soap
High moisturizing

Dove 1
7

4 5

Non- Deodorant
deodorant
8 3

6 Lifebuoy
2
What bar soap?
What position? Low moisturizing 29
How do you Position a Product?..Contd
STEP 2

Design the feature that most

effectively conveys the position

Brand name
A Slogan
Appearance, or any other
• features of the Product,
• the Place where it is sold,
• the appearance of the employees, and
in many other ways 30
How do you Position a Product?..Contd
STEP 3

Coordinate the Marketing-mix

to convey a consistent position

What is repositioning?

When the position of any product is

eroded, or needs to be changed due to
competition, and the firm wants to re-
establish its attractiveness in its market
it is engaging in repositioning. 31
Forecasting Market Demand

MARKET SHARE
Proportion of total sales of a
Product during a stated period
in a specific market
that is captured by a single firm brand x brand y
our company brand z

MARKET FACTOR
1) exists in the market
2) is measurable
3) is related to the demand
for a product in a known way
32
Forecasting Market Demand

MARKET
MARKET POTENTIAL
POTENTIAL

Total
Total sales
sales ofof aa
Product
Product during
during aa
Period
Period inin aa specific
specific
market
market under
under
ideal
ideal conditions
conditions

33
 Forecasting Market Demand

SALES
SALES POTENTIAL
POTENTIAL

Portion
Portion of
of market
market potential
potential
that
that aa specific
specific company
company
could
could expect
expect
under
under ideal
ideal conditions
conditions

33
Forecasting Market Demand
SALES
SALES FORECAST
FORECAST

Estimate
Estimate ofof sales
sales
for
for one
one company
company
during
during aa period
period in
in aa
specific
specific market
market
assuming
assuming aa defined
defined
marketing
marketing plan
plan

33
Methods of Sales Forecasting

Market-Factor
Market-Factor Survey
Survey of
of
Analysis
Analysis Buyer
Buyer Intentions
Intentions

Executive
Executive Test
Test
Judgment
Judgment Marketing
Marketing

Sales-Force
Sales-Force Past
Past Sales
Sales
Composite
Composite and
and
Trend
Trend Analysis
Analysis
36