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Consumer Behaviour

Unit 2

Unit 2

Marketing Segmentation and Positioning

Structure: 2.1 Introduction Objectives 2.2 Requirements for Effective Segmentation 2.3 Bases for Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behaviouristic segmentation Benefit segmentation Demographic-psychographic segmentation (hybrid approach) Geo-demographic segmentation (hybrid approach) 2.4 Determining How Many Segments to Enter 2.5 Product Positioning: Introduction 2.6 Positioning Strategy 2.7 Positioning Approaches Caselet: Maggis Enduring Magic 2.8 Positioning Errors 2.9 Summary 2.10 Glossary 2.11 Terminal Questions 2.12 Answers 2.13 Case Study

2.1 Introduction
The previous unit focused on the basics of consumer behaviour and consumer research. Once the data on consumers is obtained, the next step is to use the valid information and segment the consumer market. A market is composed of individuals with dissimilar needs and wants; hence, it is called a heterogeneous market. Prior to the acceptance of the marketing concept, mass marketing was the way of doing business with consumers. As organisations embraced the marketing concept and the existence of dissimilar consumer needs was acknowledged, they adopted
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segmentation strategies, where the total heterogeneous market is divided into relatively distinct homogeneous sub-groups of consumers with common needs or characteristics. After segmentation, the next step is targeting, where the marketer selects one or more segments to which it offers a specific product or service, with a distinct marketing programme. These segments constitute the target market for the marketer. 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 longterm success of the brand. The position is the way the product or the brand is perceived by consumers on important attributes. The strategies of segmentation, targeting and positioning are interlinked and are together referred to as the STP (segmentation, targeting and positioning) strategy. This unit focuses on marketing segmentation and positioning. The concept of market segmentation emerged as an extension of the marketing concept in the late 1950s. Objectives: After studying this unit, you should be able to: list the requisites for effective segmentation analyse the basis for segmentation describe what positioning means analyse positioning strategy state positioning approaches and common errors in positioning

2.2 Requirements for Effective Segmentation


The following conditions must exist for segmentation to be meaningful: Identification A marketer must determine whether the market is heterogeneous. Further, there must be some logical basis to identify and divide the population in relatively distinct homogeneous groups, having common needs or characteristics and who will respond to a marketing programme. Variables such as age, gender, income, etc., to segment the market should be identified. Sufficiency A segment must have enough number of people or profit potential so that tailoring a product or campaign to its specific needs is justified. The total market should be divided in such a manner that
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comparison of estimated sales potential, costs and profits of each segment can be estimated. Stability Companies would like to target segments that are fairly stable in terms of demographic and psychological factors and have the potential to expand over a period of time. Accessibility It must be possible to reach the target segment effectively. For instance, in some rural areas in India, media cannot be used to reach the targeted groups. It is also possible that paucity of funds prohibits the development required for a promotional campaign.

A market niche or a niche segment is composed of a more narrowly defined group of consumers who have a distinct and somewhat complex set of needs. A niche market is smaller in size, but may prove to be quite profitable if served properly. Consumers in a niche are ready to pay a premium to the marketer who best satisfies their needs. For example, G4 Power Mac computers serve the needs of a niche market, while PCs serve rather large market segments. Self Assessment Questions 1. For segmentation, the market should be __________ . 2. A narrowly defined group of consumers with complex set of needs is called __________ market.

2.3 Bases for Segmentation


Selecting the right segmentation variable is critical. For example, small car producers might segment the market on the basis of income, but they probably would not segment it on the basis of political beliefs or religion because they do not normally influence consumers automobile needs. Segmentation variables must also be measurable to segment the market accurately. For example, segmenting the market on the basis of intelligence would be difficult because this characteristic cannot be measured accurately. Marketers can use one or more variables to segment the market. Different variables are used to segment consumer markets. They are discussed in following subsections.

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2.3.1 Geographic segmentation Geographic location of consumers is usually the starting point of all market segmentation strategy. The location of consumers helps the company plan its marketing offer. These geographic units may be nations, states, regions, areas of certain climatic conditions, urban and rural divide. The assumption is that consumers in a particular geographic area have similar preferences and consumption behaviour, different from those living in other areas. For example, people in West Bengal have different food habits and dress code than people in South India. Exporters often segment the market as Western countries, African countries and CIS countries, etc. 2.3.2 Demographic segmentation Demographic characteristics are commonly used to segment the market. Characteristics such as age and lifecycle stage, sex, education, income, marital status, family size and social class, etc. may be used singly, or in a combination, to segment a market. For example, marketers of women shaving products segment the market on the basis of gender. Toy manufacturers such as Funskool and Mattel toys segment the market on the basis of age of children. Auto manufacturers segment the market by considering income as an important variable. Producers of refrigerators, washing machines, microwave ovens, etc. take income and family size as important variables in segmenting the market. Ready-to-wear garment producers often segment the market on the basis of social class. Examples are Chirag Din, Arrow, Van Heusen, Louis Philippe, Levi and others. Social class refers to the division of society into distinct strata based on the status of members of one stratum in comparison with those of other strata. In consumer behaviour and marketing research, status is defined using one or more of the following demographic variables family income, occupational status and educational level. Some general categorisations of the social class are lower, middle and upper class. For example, an engineer and a clerk are considered members of different social classes. An income group includes members with different incomes. Within a social class, there could be different income groups. 2.3.3 Psychographic segmentation When the segmentation is based on personality or lifestyle characteristics, it is called psychographic segmentation. The inner psychological
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characteristics of a person that ascertain and indicate how a person responds to his or her environment constitute his/her personality. For example, there are people who are ambitious, confident, aggressive, impulsive, modern, conservative, gregarious, loners, extrovert or introvert, etc. 1. Lifestyle It is an indicator of how people live and spend their time and money. What people do in their spare time is often a good indicator of their lifestyle. Consumers in different countries and cultures may have characteristic lifestyles. For example, Indian women are more home-focused, less likely to visit restaurants, more price-sensitive, spend time preparing meals at home and are fond of movies. Table 2.1 depicts some lifestyle characteristics.
Table 2.1: Lifestyle Dimensions Activities Work Hobbies Social events Vacation Entertainment Club membership Community Shopping Sports Interests Family Home Job Community Recreation Fashion Food Media Achievements Opinions Themselves Social issues Politics Business Economics Education Products Future Culture Demographics Age Education Income Occupation Family size Dwelling Geography City size Stage in life cycle

Source: Joseph T. Plummer, The Concept and Application of Lifestyle Segmentation, Journal of Marketing 38, January 1974.

Lifestyle segmentation is particularly useful in case of product categories where the users self-image is considered an important factor, such as perfumes, beer, jewellery and other ego-intensive products. Activities, Interests and Opinions (AIO) inventories are a useful addition to demographic data but marketers have found the original AIO inventories as being too narrow. The current psychographics or lifestyle studies generally include the following: Attitudes that include evaluative statements about people, products, ideas and places, etc.
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Values, which refer to widely held beliefs about what is right/ acceptable/desirable, etc. Activities and interests that cover behaviours with respect to activities other than occupation that consumers devote time and effort, such as hobbies, interests, social service, etc. Demographics that relate to gender, age, education, occupation, income, family size and geographic location, etc. Media preferences, which are the specific media that consumers prefer and use. Usage rates that relate to measurements of consumption level within a particular product category and is generally recorded as heavy, medium, light or non-user.

2. Values and Lifestyles (VALS) Stanford Research Institute (SRI) developed a popular approach to psychographic segmentation called Values and Lifestyles (VALS). This approach segmented consumers according to their values and lifestyles in the USA. Figure 2.1 depicts the VALS framework. According to the present classification scheme, VALS has two dimensions. The first dimension, primary motivations, determines the type of goals that individuals will pursue and refers to the pattern of attitudes and activities that help individuals reinforce, sustain or modify their social self image. This is a fundamental human need. The second dimension, resources, refers to the physical, psychological, demographic and socio-economic factors that have an impact on the ability of consumers to make choices and to be satisfied with their choices. Particularly, resources include factors such as selfconfidence, interpersonal skills, inventiveness, intelligence, eagerness to buy, income, status and education, etc. SRI has identified three basic motivations: Ideals (principles) Individuals are guided in their choices by their beliefs and principles and not by feelings, desires and events. Achievement Individuals are heavily influenced by actions, approval and opinions of others. Self-expression (action) Individuals desire physical and social activity, variety and risk taking.
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Source : VALS framework by SRI International 1978 Fig. 2.1: Current Values and Lifestyle (VALS) Framework

The figure 2.1 shows the various lifestyle of consumers based on the concepts of basic motivations and resources, the typology breaks consumers into eight groups. Innovators (formerly actualisers) This segment is smaller in size as compared to the other seven, but may be the most attractive market because of the high incomes of the individuals who are at the leading edge of change. They are among the established or getting-established leaders in
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business or government, yet they seek challenges. Image is important to them as an expression of their taste, independence and character. These people are successful, sophisticated, active and have high self-esteem. They are interested in growth and development; they explore and express themselves in different ways. They have social and intellectual interests and are open to social change. They are guided sometimes by ideals and desires and are fond of reading. They prefer premium products to show their success to others. Thinkers (formerly fulfilled) Thinkers are motivated by ideals and exhibit behaviour according to the views of how the world is or should be. They are mature in their outlook, satisfied, comfortable, well-educated, reflective people who value order, knowledge and responsibility. They like their home and family, are satisfied with their careers, and enjoy their leisure activities at home. They are open-minded about new ideas and accept social change. As consumers, they are conservative and practical. They purchase products for their durability, functionality and value. Believers Like thinkers, believers are also motivated by ideals; their basic approach to decision-making is rational. Their moral code of conduct is deeply rooted in their psyche and is inflexible. They are conservative, conventional and have deep beliefs based on tradition, family, religion and community. Their routines are established and largely influenced by home, family, religion and social organisation. Their behaviour as consumers is predictable and conservative. Their education, income and energy is modest, but enough to meet their needs. Achievers They are motivated by the desire for achievement and make choices based on a desire to enhance their position or to facilitate their move to another groups membership that they aspire. They have goaloriented lifestyles and a deep commitment to career and family. They are more resourceful and active. Achievers are inclined to seek recognition and self-identity through achievement at work and in their personal lives. They have high economic and social status and patronise prestige products and services as well as time-saving devices that exhibit success to their peers. They value consensus, predictability and stability over risk and intimacy. Strivers They are trendy and fun-loving and are motivated by achievement. They are dependent on others to indicate what they should be
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and do. They believe money represents success and never seem to have enough of it. Their self-definition is based on approval and opinion of others around them. They are impulsive by nature, get easily bored, are unsure of themselves, and low on economic, social and psychological resources. Strivers try to mask the lack of enough rewards from their work and family; and to conceal this, they attempt to appear stylish. They try to emulate those with higher incomes and possessions, generally beyond their reach. Strivers are active consumers, shopping to them is both a social activity and an opportunity to show their peers their ability to buy. They read less but prefer to watch television. Survivors (formerly strugglers) They have narrow interests; their aspirations and actions are constrained by low level of resources. Survivors are comfortable with the familiar and are basically concerned with safety and security. They are ill-educated, with strong social bonds, low-skilled and are poor. They feel powerless and unable to have any impact or influence on events and feel that the world is changing too quickly. As consumers, they show the strongest brand loyalties, especially if they can purchase them at a discount. They are cautious consumers and represent only a modest market. They watch a lot of television, read womens magazines and tabloids. Experiencers They are young, full of vitality, enthusiastic, impulsive, rebellious and motivated by self-expression. They are avid consumers and spend a high proportion of their income on fashion, entertainment and socialising. Their desire is to feel good and have cool stuff. They are college-educated and much of their income is disposable. They have an abject disregard for conformity and authority. Experiencers seek excitement and variety in their lives and like to take risks. Their patterns of values and behaviour are in the process of being formulated. They are fond of outdoor recreation, sports and social activities. They spend heavily on clothing, music and fast food. Makers Their motivation is self-expression. They like to be self-sufficient, have sufficient income and skills to accomplish their desired goals. Makers are energetic, like to experience the world, build a house, have families, raise children and have sufficient skills backed with income to accomplish their projects. They are practical people and have constructive skills and
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energy to carry out their projects successfully. Their outlook is conservative, they are suspicious of new ideas, respect government and authority, but resent any intrusion on their rights. They are not impressed with others wealth and possessions. 2.3.4 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. Buyers can be identified according to the use occasion when they develop a need and purchase or use a product. For example, Archies greeting cards are used on many different occasions. User status, such as non-users, potential users or first-time users can be used to segment the market. Markets can also be segmented into light, medium or heavy users of a product. Brand loyalty of varying degrees can be present among different groups of consumers and may become the basis to segment the market. There are consumers who are very loyal to cigarette brands, beer and even toothpaste. Markets may also be divided by considering the level of product awareness such as unaware of the product, aware, interested, desirous or contemplating to purchase the product. Based on attitude, consumers may be enthusiastic, indifferent or hostile towards the product and these differences can be used to segment the market. 2.3.5 Benefit segmentation By purchasing and using products, consumers are trying to satisfy specific needs and wants. In essence, they look for products that provide specific benefits to them. Identifying consumer groups looking for specific benefits from the use of a product or service is known as benefit segmentation and is widely used by marketers. For example, there are distinct groups of auto buyers. One group might be more interested in economy, the other in safety and still another in status, etc. Segmentation bases such as demographics are descriptive. These variables are useful but do not consider why consumers buy a product. Benefit segmentation has the potential to divide markets according to why consumers buy a product. Benefits sought by consumers are more likely to determine purchase behaviour than are descriptive characteristics.

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Benefit segmentation can be seen in the toothpaste market; fresh breath, decay prevention and whiter teeth are some examples and the brands involved are Colgate Total, Close-Up and Promise, etc. Table 2.2 depicts the benefit segmentation of the toothpaste market.
Table 2.2: Benefit Segmentation of Toothpaste Market Demographic Principal PsychoBehavioural Brands CharacteBenefit graphics Characteristics Favoured ristics Sought Characteristics Brightness of teeth (cosmetic) Decay prevention (medicinal) Outgoing, active Smokers fun-loving, high sociability Health conscious Heavy users Teenagers, youngsters Large families Children Close-Up, Promise, Aquafresh Pepsodent, Colgate Total, Forhans Aquafresh, Colgate Neem, Babool, Vicco Vajradanti

Taste Self-indulgent, (good taste, hedonistic flavour) Low price (economy)

Mint lovers

Price-conscious, Heavy users, independent deal prone

Men, traditional

Source: (Adapted with changes from Russell J. Haley, Benefit Segmentation: A Decision Oriented Research Tool. Journal of Marketing, July 1963, pp. 30 35. Also, Haley, Benefit Segmentation 20 Years Later, Journal of Consumer Marketing Vol. 1, 1984)

2.3.6 Demographic-psychographics segmentation (hybrid approach) Demographic and psychographic profiles work best when combined because combined characteristics reveal very important information about target markets. Demographic-psychographic information is particularly useful in creating consumer and audience profiles. Combined demographic-psychographic profiles reveal important information for segmenting mass markets, provide meaningful direction as to which type of promotional appeals are best suited and selecting the right kind of advertising media that is most likely to reach the target market. For example, a demographic/psychographic profile of consumers of a women-based magazine may include demographics such as age, education, marital status, employment status, income and so on and psychographic variables such as activities of interest/participation, fashion interests, household/relationships concerns and so on.
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2.3.7 Geo-demographic segmentation (hybrid approach) This approach is based on the premise that people who live close to one another are likely to have similar economic status, tastes, preferences, lifestyles and consumption behaviour. Geo-demographic segmentation is particularly useful when a marketer can isolate his/her best potential customers (based on personalities, goals and interests) in terms of where they live. For products and services used by a wide cross-section of society, this approach may not be suitable. Table 2.3 depicts the market segmentation variables for consumer markets.
Table 2.3: Market Segmentation Variables for Consumer Markets Segmentation Variable Geographic segmentation Region City size Density of area Climate Demographic segmentation Age Sex Family size Family life cycle Sample Breakdown North, South, East and West Metropolitan areas, small cities, towns Urban, suburban, rural Temperature, hot, cold, humid Under 6, 7-12, 13-19, 20-34, 35-49, 50-64, 65+ Male, female 1-2, 3-4, 5+ Bachelors, young married, young married with children, older married with children older married with grown up children, empty nesters, other Single, married, divorced, widowed Under Rs.10,000 Rs.10,000-20,000 Rs.20,000-30,000 Rs.30,000-50,000 Rs.50,000-1,00,000 Over Rs.1,00,000 High school, graduate, post graduate Professional, blue collar, white collar, agricultural Hindu, Muslim, Christian, Sikh, Jain, Parsi, Buddhist Page No. 40

Marital status Income

Education Occupation Religion Sikkim Manipal University

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Psychographic segmentation Needs motivation Personality Perception Lifestyle VALS 2 Social class Behaviouristic segmentation Occasions User status Usage rate Brand loyalty Awareness status Benefit segmentation Benefit sought

Shelter, safety, security, affection, sense of self worth Extroverts, introverts, aggressive, complaint, compulsive, ambitious, etc. Low risk, moderate risk, high risk Attitudes, values, interests Innovators, thinkers, believers, achievers, strivers, experiencers, makers, strugglers Lower, middle, upper Regular, special Non-user, ex-user, potential user, first-time user, regular user Heavy users, medium users, light users None, medium, strong Unaware, aware, interested, enthusiastic Convenience, durability, reliability, prestige, economy, value for money

Source: Adapted with changes from Schiffman & Kanuk Consumer Behavior and Philip Kotler Marketing Management.

Activity 1: Collect information for: (a) A consumer non-durable product, (b) A consumer durable product, (c) A service. Determine what segments these products are targeted at. Hint: Look at segments with homogenous needs that are seeking the mentioned products. Self Assessment Questions 3. Daily newspapers publishers adopt the ______ segmentation strategy. 4. Cosmetics companies segment the market on the basis of ______. 5. Market for pure necessities is mostly segmented on the basis of social class. (True/False)
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6. Innovators are likely to buy a Versace jacket as they are image conscious. (True/False) 7. Brand loyalty is a result of past experiences with the product and is often used to segment the market. (True/False)

2.4 Determining How Many Segments to Enter


There are three strategic options available to marketers: 1. Undifferentiated marketing This strategy involves ignoring differences among consumers and offering a single product or service to the entire market. This strategy of mass marketing focuses on what is common among the various consumer needs rather than what is different. For more than 90 years, Coca-Cola offered only one product version to the whole market and hoped that it would appeal to everyone. Undifferentiated marketing provides cost economies. Another classic example in the Indian context is that of the Ambassador car. There was only one product from Hindustan Motors that catered to all segments. 2. Differentiated marketing The marketer decides to enter several market segments or niches and develops separate products for each. For instance, Maruti produces different models of cars for various segments, Nike offers athletic shoes for different sports and Coca-Cola and Pepsi offer different versions of their soft drinks. Companies producing toiletries offer different versions of toilet soaps for dry skin, oily skin and normal skin. These companies expect higher sales volumes by offering different product versions and a stronger position within each segment. Differentiated marketing strategy increases costs considerably. 3. Concentrated marketing The strategy of concentration appeals to companies with limited resources. In this situation, the company targets a segment and goes for a large market share instead of a small share in a larger segment. Recycled paper producers, such as Wizard India, focus on the market for greeting cards or wedding cards. Oshkosh Trucks is the largest producer of airport rescue trucks. Concentrated strategy involves more than normal risks. If a powerful competing company decides to enter the same segment, it may become quite tough for the smaller company. At the same time, it gives a company the
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opportunity to build high levels of brand loyalty and later entrants in the market may find it difficult and expensive to succeed in such a market. Undifferentiated or mass marketing is more appropriate for uniform products or when most buyers have the same taste and react to marketing efforts in the same way. Products such as salt, sugar or steel etc. are examples where undifferentiated marketing is used. Concentrated marketing makes more sense when the company resources are limited. Differentiated strategy is more appropriate when the products can vary in design or features such as autos, cameras and computers, etc. When producers of the same product category use segmentation, mass-marketing or undifferentiated marketing could be very risky for a company. However, when others use undifferentiated or mass marketing strategy, differentiated marketing can gain much advantage for a company. Self Assessment Questions 8. Markets that are not segmented by the marketers and have a single offer provided to all consumers are called ___________ markets. 9. HUL produces and promotes different versions of All Clear shampoos. This is a case of ___________ marketing.

2.5 Product Positioning: Introduction


Positioning is the perception of a brand or product in the mind of a target consumer and reflects the essence of that brand or product in terms of its functional and non-functional benefits as judged by the consumer. 7Up was projected as the un-cola positioned as an alternative to the colas. Two simple words crystallised things in the consumers minds. HULs soap Lux is positioned as the beauty soap of female film stars and Dettol is the antiseptic for minor nicks and cuts. BMW car is positioned as the ultimate driving machine. As markets become more crowded and competitive with similar types of products, consumers rely more on the products image than on its actual characteristics in making their buying decisions. Positioning maps Products or services are 'mapped' together on a 'positioning map'. This allows them to be compared and contrasted in relation to each other. This is the main strength of this tool. Marketers decide on a competitive position
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that enables them to distinguish their own products from the offerings of their competitors (hence the term positioning strategy). The marketer would draw out the map and decide on a label for each axis. They could be price (variable one) and quality (variable two) or comfort (variable one) and price (variable two). The individual products are then mapped out next to each other. Any gaps could be regarded as possible areas for new products. The Figure 2.2 depicts the Positioning of Dominant Chocolate brands in the Indian Market.

Source : Chocolate Confectionery India,", Euromonitor International : Country Sector Briefing, November 2010 Fig. 2.2: An Example of Positioning Map

Activity 2: Draw a positioning map for different brands of toothpastes that are available in the Indian market. Consider the two variables as price and recognition (popularity or usage). Hint: List down toothpastes brands and map them as per the variables.

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Self Assessment Questions 10. ___________ is often referred to as battle for consumers mindshare. 11. ___________ allows the products and services to be compared and contrasted in relation to each other.

2.6 Positioning Strategy


Jack Trout and Al Ries suggest that managers should ask themselves six basic questions to create a position for a product or service: 1. What position, if any, do we already have in the prospects mind? (This information must come from the marketplace, not the managers perceptions.) 2. What position do we want to own? 3. What companies must be outgunned if we are to establish ourselves in that position? 4. Do we have enough marketing money to occupy and hold the position? 5. Do we have the guts to stick with one consistent positioning strategy? 6. Does our creative approach match our positioning strategy? The brand or product manager must determine which strategy is best suited in a given situation to position the brand or the firm, as the case may be. The exercise to determine the positioning strategy is not easy and could prove to be difficult and quite complex. Six steps need to be taken to arrive at a decision about positioning: Identify competitors This requires broad thinking. The competing products may not be only those that come from the same product category with which the brand competes directly. For example, CocaCola competes not only with other colas such as Pepsi but also with other aerated and non-aerated soft drinks as well as packaged juices. The marketer must consider all likely competitors, various use situations and usage effects on the consumer. Assess consumers perceptions of competition After defining the competition, it is important to determine how consumers perceive competing products. To do this, a set of product attributes, such as product characteristics, consumer benefits, product uses or product users are chosen for comparison. The task is to identify attributes
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relevant and important to the consumer and exclude those that may not be taken into account by the consumer while comparing competing products. Determine competitors position This exercise is undertaken to reveal how the competing brands, including the companys own, are positioned and what their relative position is in the consumers perceptual map. It also determines which are the competing brands that consumers consider as similar and the ones that they consider dissimilar. Analyse consumers preferences The analysis so far discussed would determine where the product should be positioned in the perceptual map. The next step requires the identification of segments or clusters of customers who prefer this product location in the perceptual map. Customers who value a certain set of attributes or benefits would form a segment. It is important for marketer to determine the size and profitability of this segment. An ideal product would be the one that is preferred over all others. Make the positioning decision At this point, marketers may attain clarity regarding what positioning would be appropriate. In many situations, however, it may become necessary to rethink. Positioning usually involves segmenting the market and choosing one or more segments. Monitor the position How strongly and advantageously a position is maintained in the market should be monitored periodically by using tracking studies to measure the image of the brand or the company.

Self Assessment Questions 12. For Hero Honda Karizma, Tata Nano is also a potential competitor. (True/False) 13. The logos and mascots of the company, like Air Indias Maharaja, can be used for positioning the offering. (True/False)

2.7 Positioning Approaches


Marketers manage product positioning by focusing their marketing activities on a positioning strategy. Pricing, promotion, channels of distribution, and
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advertising all are geared to maximise gains from the chosen positioning strategy. According to C. Merle Crawford, common bases used for positioning include: Features refer to objective physical or performance characteristics and are often used to differentiate products. For example, Amazon.com has a unique I-click ordering facility. Some automobiles claim Zero to 100 Kph in 6 seconds. This sort of positioning is more common with industrial products. Benefits or characteristics of products are emphasised such as Volvos emphasis on safety and durability and Nirmas benefit of low price. Usage includes end use, demographic, psychographic or behavioural segments for whom the product is meant. It also includes product popularity. For example, Rasna for children at a party, Goodnight mosquito repellent especially during night. Parentage means the lineage denoting who makes the product. Buying a car is like getting married. Its a good idea to know the family first, advises The Mercedes S Class model. Companies proudly trumpet their names such as Sony Vaio, Tata Indica, Fiat Palio, etc. Manufacturing process is often used to position the product. Some expensive watches claim to be hand crafted, an appealing proposition in an age of mass produced artifacts. Ingredients are sometimes highlighted to create a position. For example, some garment manufacturers claim one hundred percent cotton, or hundred percent Merino wool. Endorsements are made either by experts or a common person with whom the target customers are likely to identify. For example, Abhishek Bachchan endorsing Idea Cellular mobile service provider, Michael Jordan using Nike shoes, and the unforgettable Lalitaji (a savvy middle class housewife concerned about family budget) in the 1980s and her enduring advice that Surf Ki Kharidari Mein Hi Samajhdari Hai. (Its wise to buy Surf). Comparison with a competitors product is a fairly common positioning approach. Avis compared itself with Hertz, stressing that it tries harder because it is the second-biggest car rental company. Samsung Laser
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Printer compared itself with HP Laserjet and thereby jumped cleverly onto the same platform. Pro-environment approach to positioning aims to show that the company is a good citizen. Canon mentions on its packages, Made from recycled material. Product class such as freeze-dried coffee shown as a product that is a different one from instant or regular coffee. Dove soap positioned as a moisturiser and not the toilet soap, and Pears as a glycerine soap. Price/quality is a powerful positioning technique. Zenith Computers say Multinational quality, Indian price. Country or geographic area, such as German engineering, Russian vodka, Benarsi silk sari, or Dehradun rice.

Repositioning No matter how well a product appears to be positioned, the marketer may be forced to decide on its repositioning in response to new opportunities or threats. The product may be provided with some new features or it may be associated with some new uses and offered to the existing or new markets. Johnson & Johnson repositioned their baby shampoos and lotions for the adult market by changing the promotional and packaging strategy. This was in response to growing opportunities due to lifestyle changes. It is often difficult to reposition a product or brand because of consumers entrenched perceptions and attitudes. Similarly, Nivea cream, which initially was targeted at women, repositioned itself to expand its market segment to include men consumers as well.

Caselet: Maggis Enduring Magic


Maggi Noodles, launched by Nestle India in 1984, was a product that attained overnight success. The product has been a great success over the last 30 years and continues to enjoy a strong position in the Rs.1,300-crore noodles market that it has been instrumental in creating. Maggis success can be attributed to its appropriate segmentation, targeting and brilliant positioning (STP) strategies. Segmentation and targeting Nestle segmented the market for Maggi based on factors such as age, eating habits and lifestyle of urban consumers. It broadly pursued the inSikkim Manipal University Page No. 48

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home segment of the snack category initially targeting kids and mothers. Over the years, its target market has expanded to include youth, working women, office goers and the health conscious. Positioning When Maggi was launched, noodles was not a traditional Indian snack. It was thus a challenge for the company to establish an alien product and taste and concurrently find a relevant consumption benefit. Through consumer research, Nestle decided that the most beneficial positioning for Maggi would be as a home-made, tasty and instant inbetween snack, particularly for children who like to experiment with food unlike adults. Accordingly, it was positioned as a fast-to-cook, good-to-eat snack that went well with the mother-child caring and nurturing relationship. The advertisement, which said 2-minute noodles, fascinated young mothers who could cook something for their hungry kids in just two minutes. It was perceived as a convenient product for mothers and a fun product for children. Overall, Maggi had discovered a vacant lucrative position, which it tapped very well. The figure 2.3 shows the range of flavours available in Maggi nodles. Competition

Source: (n.d.). Retrieved 09 28, 2012, from www.marketingfaq.com: http://marketingfaq.net/2012/01/maggi-minute-brand/ Fig. 2.3: Range of Flavours in Maggi noodles.

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Maggis positioning automatically defined its competition which included all snack products. These varied from ready-to-eat snacks such as biscuits, wafers and peanuts to ready-made snacks such as samosas. All these products constitute bought-out items. Table 2.4 depicts Maggis STP strategy.
Table 2.4: Maggis STP Strategy Segmentation Age Eating habits lifestyle of urban consumers Targeting Kids Youth Working women Office goers Health conscious Positioning Fast to cook, good to eat

The brands success today Although its been almost 30 years since Maggi was launched, the product continues to be popular even today. The space that the product enjoys in the minds of consumers is evident from the fact, as studies reveal, that there are generations that grew up eating Maggi and they continue to love the brand as adults. And now their kids too are eating the same product.

Fig. 2.4: Competing Brands against Maggi

The figure 2.4 depicts the Competing Brands against Maggi. The market scenario today is different from the time Maggi was launched. Several competing products such as Top Ramen (IndoNissin), Knorr soupy noodles (HUL), Yippee noodles (Sunfeast), Foodles (GSK), etc., have entered the market in the last decade. However, these brands require a very competent
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combination of technology, expertise, and consumer understanding to equal what Maggi has accomplished over the years. In addition, it is not easy to replicate the concrete emotional connect that consumers have with Maggi and the space that the brand occupies in consumer minds. To hold its base in its target market with the changing times and competition, Maggi came out with several variants such as vegetable atta noodles, rice mania and cuppa noodles to complement the already existing classic noodles. Maggi has also come out with a new noodle multi-grain variant called `Multigrainz' and is going all out to promote it as a nutritious food for kids. Table 2.5 depicts the product variants under Maggi.
Table 2.5: Maggi Products Variants for the Target Market Product Classic Noodles Vegetable Atta Noodles Rice Mania Cuppa Mania Target Market Children in the 5-10 years age group Health Conscious Teenagers Office goers, working women www.

(Source: Adapted from articles/information on www.mydigitalfc.com, slideshare.net and http://strategicmoves.wordpress.com)

Activity 3: Discuss some car brands in the Indian market. Determine how each car is positioned and whether the positioning is distinct. Explain how their ads convey their positioning. Hint: Consider the two variables as price and recognition (popularity or usage) Self Assessment Questions 14. When Hertz says, We are Hertz, they are not, they are positioning on the basis of quality. (True/False) 15. Castrols tagline, Its not just oil, its liquid engineering, indicates positioning by product class. (True/False) 16. When Lufthansa says, There is no better way to fly, they are positioning on the basis of competition. (True/False)

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2.8 Positioning Errors


Common errors in positioning are: Under-positioning This refers to a state of buyers having only a vague idea of the brand and considering it just another me too brand in a crowded product category. The brand is not seen to have any distinctive association. For example, Volvo being positioned as drive safely did not communicate any clear idea. Over-positioning In this situation, buyers have too narrow an image of the brand if it is promoted as a premium product. Thus, buyers might think that Apple makes only very expensive computers when, in fact, Apple offers several models at affordable prices. Confused positioning Sometimes, attempts to create too many associations, claims or benefits or frequently reposition the brand only serves to only confuse buyers. For example, Pepsi had once introduced a clear cola with the brand name Crystal Pepsi. Consumers thought that if it was not brown it could not be a cola. Hence, the product failed in the market. Doubtful positioning This situation may arise when customers find brand claims unbelievable keeping in view the product features, price or the manufacturer. For example, a mutual fund claiming to offer 100 percent returns on investment, detergent powders claiming to clean all kinds of stains.

Self Assessment Questions 17. Brands like Ponds, Head and Shoulders, All Clear, Dove, etc. are all victims of under-positioning. (True/False) 18. Too much positioning by creating many associations with the brand can confuse customers. (True/False)

2.9 Summary
Recapitulation of important concepts discussed in this unit: The concept of market segmentation is based on the fact that all consumers are not alike. They differ in their needs, wants, desires, income, education, lifestyles and so on.

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Market segmentation is the process of dividing the heterogeneous market into relatively homogenous sub-groups of consumers with somewhat similar characteristics. Many approaches are used to segment the market. Some of the popular bases for segmentation are geographic, demographic, psychographic and behavioural. The marketer generally has options either to adopt undifferentiated marketing, differentiated marketing, or concentrated marketing. Product positioning is the decision by a marketer to try to achieve a welldefined and differentiated brand image relative to competition in a targeted market segment. Important positioning strategies revolve around answering certain questions convincingly and more effectively, than competitors.

2.10 Glossary
Brand loyalty Consistent preference and/or purchase of a specific product or service brand. Concentrated marketing Targeting a product or service to a single market using an exclusive marketing mix. Differentiated marketing Targeting one or two segments with a marketing mix customised as per the needs of the segments. Geographic segmentation Segmentation based on location. Hybrid segmentation A combination of segmentation bases. Lifestyle A way of life that is an indicator of how people live and spend their time and money. Mass marketing Offering the same product and marketing mix to all consumers. Psychographics It is the science of using psychology and demographics to study the lifestyle patterns of consumers. Positioning Establishing a unique image for a brand in the minds of customers with respect to competition. Repositioning A marketing strategy that changes the positioning of a product or brand in order to change market position and alter consumer perceptions about a brand vis--vis other brands.
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STP The process of segmenting, targeting and positioning an offer in the market. Segmentation The process of segregating a heterogeneous market into a set of homogeneous groups of customers that differ from other groups in terms of their needs. Social class Grouping of people in a society into a hierarchy of classes based on status such that people in the same class enjoy relatively the same status, values and behaviour and people of all other classes have either higher or lower status. Targeting Choosing a distinct market segment at which to aim a marketing strategy.

2.11 Terminal Questions


1. Discuss the various bases of market segmentation. 2. Explain the VALS theory with suitable examples describing each type of consumer. 3. Distinguish between differentiated, undifferentiated and concentrated marketing. Give appropriate examples. 4. What is positioning and how does it benefit a brand? 5. What are the popular positioning approaches that companies use? Give examples.

2.12 Answers
Self 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Assessment Questions Heterogeneous Niche Geographic Demographic False True True Undifferentiated Differentiated Positioning Positioning map True
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13. 14. 15. 16. 17. 18.

True False True True False True

Terminal Questions 1. Bases for segmentation are geographics, demographics, psychographics, behaviour toward product use, benefits sought and hybrid combinations. For more details, refer section 2.3. 2. Stanford Research Institute (SRI) developed a popular approach to psychographic segmentation called VALS (Values and Lifestyles). This approach segmented consumers according to their values and lifestyles in the USA. Figure 2.1 depicts the VALS framework. For more details, refer section 2.3. 3. Difference lies in which markets are being targeting and how. Basically, there are three strategic options available to marketers: Undifferentiated Marketing Differentiated Marketing Concentrated Marketing For more details, refer section 2.4. 4. Positioning is the perception of a brand or product in the mind of a target consumer and reflects the essence of that brand or product in terms of its functional and non-functional benefits as judged by the consumer. For more details, refer section 2.5. 5. Companies can position on the basis of price, quality, competition etc. Pricing, promotion, channels of distribution, and advertising all are geared to maximise gains from the chosen positioning strategy. For more details, refer section 2.7.

2.13 Case Study


Different Individuals, Different Lifestyles Rama Devi, the contented conservative Rama lives a good life being a devoted wife, a doting mother of two schoolgoing sons and a god-fearing housewife. She lives her life by traditional
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values she cherishes getting up at the crack of dawn, getting the house cleaned up, having the breakfast of Aloo Parathas ready in time before the childrens school-bus honks, laying down the dress for her government servant husband to wear after bathing, and doing her daily one-hour puja. She fasts every Monday for the welfare of her family, looks at the freely mixing and sexually liberal youngsters with deep disdain and cannot understand the modern young womans greed for money, jewellery and jobs. Her one abiding interest outside the household is the Ganesh Mandir that she visitsevery Wednesday, ever since she got married. She lacks higher education and hence has little appreciation for the arts, literature, and the sciences. Her ample spare time is spent watching TV, which is her prime source of entertainment and information. Momeeta, the affluent sophisticate Momeeta was born Mamta, but elevated herself to Momeeta after getting married to a business tycoon. Momeeta is an elegant woman with style. She lives in Mumbai because that is where she wants to be. She likes the economic and social aspects of big city living and takes advantage of her contacts. Momeeta is a self-confident, on-the-go woman, and not a homebody. She is fashion conscious and clothes herself in the latest designer dresses. She is financially very secure and hence does not shop with care. She shops for quality, exclusivity and the brand name, not the price. She frequently travels abroad, buys expensive gifts for friends, and has an international understanding on what is chic at the moment. Discussion Question: As a marketer, how will this information help you? Name some brands that suit the personality types of Rama Devi and Momeeta. Hint: Marketers can put both these women in different segments based on psychographic differences.
(Source: Consumer Behaviour-Text and Cases, SHH Kazmi, Excel Books)

References: Consumer Behavior by Leon G Schiffman and Leslie Lazar Kanuk, Prentice Hall India

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Marketing Management Analysis, Planning, Implementation and Control by Philip Kotler, Prentice Hall India Consumer Behaviour: Text and Cases by Satish K Batra and SHH Kazmi, Excel Books, New Delhi

E-references: www.mydigitalfc.com, www.slideshare.net http://strategicmoves.wordpress.com

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