MARKET SEGMENTATION, TARGETTING AND POSITIONING

What is Market Segmentation?

Market segmentation involves aggregating prospective buyers into groups that have two key characteristics.

have common needs and respond similarly to a marketing action.

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Why Segment Markets?

Satisfy diverse needs by developing different products to suit various consumer needs. One Product and Multiple Market Segments Multiple Product and Multiple Market Segments Segments of One: Mass Customization

Build-to-Order (BTO) Synergy

PATTERNSOF MARKET SEGMENTATION

1.HOMOGENEOUS PREFERENCES All the consumer have roughly the same preferences. 2. DIFFERED PREFERENCES Consumers Preferences may be scattered through out the space, indicating that consumers vary greatly in their preferences 3. CLUSTERED PREFERENCES The marketing might reveal distinct preference clusters, called natural marketing segment

Types of Segmentation

Geographic Segmentation
Region City Rural Semi-Urban

Demographic Segmentation
Age Family Size Gender Income Occupation Education

Psychographic Segmentation
Socio-economic Classification Life Style(Culture-Oriented, Sports oriented, Indoor Oriented) Personality(Compulsive, Gregarious, Authoritarian, Ambitious)

Behavioral Segmentation
Occasions (Regular, Special) Benefits(Quality, Service, Economy, Speed) User Status(Non-user, Ex-user, Potential User, First time User, Regular User) Usage Rate(Light, Medium, Heavy User) Loyalty Status(Hard Core, Split ,Shifting and Switchers) Readiness Stage (Unaware, aware, interested, desirous, Intending to buy) Attitude towards the product(Enthusiastic, Positive, Indifferent, Hostile, Negative)

5 Step Segmentation Process

Needs-based Segmentation Segment Identification Segment Attractiveness(mkt growth, comp intensity, mkt access) Segment Profitability Segment Positioning Segment Acid Test Marketing Mix Strategy

Effective Segmentation Criteria

Substantiable Substantiable Identifiable and Identifiable and Measurable Measurable Accessibility Accessibility Differentiable Differentiable Actionable
Segment must be large Segment must be large enough to warrant a special enough to warrant a special marketing mix. marketing mix. Segments must be identifiable Segments must be identifiable and their size measurable. and their size measurable. Members of targeted segments Members of targeted segments must be reachable with must be reachable with marketing mix. marketing mix. Unless segment responds to a Unless segment responds to a marketing mix differently, no marketing mix differently, no separate treatment is needed. separate treatment is needed.
Programs formulated for serving segments

IMPORTANCE OF MARKETSEGMENTATION
1.Allocation of Market budget .2.Adjustment of the product to the market need. 3. To estimate level of sales in a given market 4. To overcome competition effectively. 5. To develop effective marketing programme. 6. To promote marketing activities. 7. To modify the existing product or to develop new product to satisfy needs of potential buyers .8. To have more precise definition of market 9. To contribute towards achieving company goals

TARGETTING

CRITERIA USED TO SELECT THE TARGET MARKET

Market Size Expected Growth Compatibility with the Organizations objectives and resources. Cost of reaching the segment Competitive Position

 After evaluating different segments, the company can consider 5 patterns of target market selection. SINGLE SEGMENT CONCENTRATION o A firm that has only one product and caters to a particular market segment. o Benefits of specialization but risks of higher competition. o Eg-RCC,ZODIAC SELECTIVE SPECIALIZATION o A firm selects a no. of segments, each objectively attractive and appropriate. o This multi segment strategy has an advantage of diversifying the firms risk. o Eg-P&G

 PRODUCT SPECIALIZATION o A firm makes a certain product that it sells to different market segments o Eg-Microscope MARKET SPECIALIZATION o The firm concentrates on serving many needs of a particular customer group o Eg-University Laboratories, Adult foods

 FULL MARKET COVERAGE o The firm attempts to serve all customer groups with all the products they might need. o EG-Microsoft, General Motors, Coca-Cola o It can be done in 2 ways1.Undifferentiated Marketing The firm ignores segment difference and goes after the whole market with one offer. Mass distribution and advertising 2.Differentiated Marketing The firm operates in several market segments and designs different products for each. IT creates more sales than the former and it is costly to do the business

POSITIONING

 Positioning is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market. Positioning requires the similarities and differences between brand to be defined and communicated. For this, the firm has to identify the Frame of Reference, Point of Parity and Point .of Difference.

 FRAME OF REFERENCE ----The target market that could be selected due to its potential and give the firm a better competitive advantage POINTS OF DIFFERENCE ----Attributes or benefits that consumers strongly associate with a brand and believe they cannot find it with another brand. Eg-Apple(innovation and Performance) POINTS OF PARITY ----The attributes that are not necessarily unique to the brand and could be shared by other brands. Eg-Raymond, Reid & Taylor

 CATEGORY MEMBERSHIP
The products or set of products with which a brand competes and which function as close substitutes. Target consumers may know that their brand is a leading firm, but Category membership should be informed. There are situations where a consumer knows the brands category membership but not convinced. Eg-Samsung

The positioning of Moov, Cadbury Dairy Milk

Product PositioningUsing Perceptual Maps

A perceptual map is a means of displaying or A perceptual map is a means of displaying or graphing in two dimensions the location of graphing in two dimensions the location of products or brands in the minds of consumers products or brands in the minds of consumers to enable a manager to see how consumers to enable a manager to see how consumers perceive competing products or brands relative perceive competing products or brands relative to its own and then take marketing actions. to its own and then take marketing actions.

PRODUCT POSITIONING USING PERCEPTUAL MAPS

PRODUCT DIFFERENTIATION
Product differentiation is a strategy that involves a firms using different marketing mix activities to help consumers perceive the product as being different and better than competing products.

DIFFERENTIATION STRATEGIES FOR POSITIONING Personnel Differentiation Better trained employee Eg-King Fisher Airlines Channel Differentiation Design effectively-distribution channels coverage, expertise and performance. Eg-Eureka Forbes:-direct-to-home delivery Image Differentiation Craft powerful, compelling Images Eg-Park Avenue, Marlboro etc.