Market Segmentation and Positioning Concepts

The concept of market segmentation emerged as an extension of the marketing

concept in the latter part of 1950s.

A market is composed of individuals with dissimilar needs and wants and for this reason it is called a heterogeneous market. Market segmentation is the process of dividing the total heterogeneous market into relatively distinct homogeneous sub-groups of consumers with common needs or characteristics and selecting one or more segments to target with distinct 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.

Prior to 1950s Mass marketing,mass production,distribution,promotion of one product to all buyers Henry Ford Model- T black colour

Micro marketing at one of four levels: Segments Niches Local Areas Individuals PreferencesClustered preferences result when natural market segments emerge from groups of consumers with shared preferences.

Niche marketing customers have distinct set of needs,pay premium.Godrejs Ezee for wollen clothes Local marketing marketing programmes tailored to the needs of local customer groups Individual marketing- one to one marketing

Requirements for Effective Segmentation

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.
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. The total market should be divided in such a manner that comparison of estimated sales potential, costs and profits of each segment can be estimated.

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One or more segments must have enough profit potential that would justify developing and maintaining a marketing programme.
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. Cont.

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.
Segmentation studies help identifying the most appropriate media for promotional

messages. Almost all media vehicles use segmentation studies to determine the characteristics of their audience and publish their findings to attract marketers seeking a similar audience.
Bases for Segmentation

Geographic Segmentation
Demographic Segmentation Psychographics Segmentation Lifestyle
Cont.

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. 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.

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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. Marketers should also appreciate that many benefits sought by consumers are subject to change with changing technologies, changing social values and competitive offers. This requires that marketers must constantly reassess benefit segments.
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Demographic-psychographics Segmentation (Hybrid Approach)

Demographic-psychographics information is particularly useful in creating consumer profiles 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.
Geodemographic 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. Geodemographic segmentation is particularly useful when a marketer is capable of isolating its prospects with similar personalities, goals, interests and in terms of where they live. For products and services used by a wide cross-section of society, this approach may not be suitable. Cont.

Determining How Many Segments to Enter Undifferentiated Marketing: This strategy of mass marketing focuses on what is common in the needs of consumers 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. Differentiated Marketing: 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. These companies expect higher sales volumes by offering product versions and a stronger position within each segment. Differentiated marketing strategy increases costs considerably. Concentrated Marketing: 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.

Positioning
The entire combination of marketing mix elements attempts to communicate the brands position to consumers. Product positioning is a decision reached by a marketer to try to achieve a defined brand image relative to competition within a market segment.
Positioning is the perception of a brand or product it brings about in the mind of a target consumer and reflects the essence of that brand or product in terms of its functional and nonfunctional benefits as judged by the consumer.

A Hypothetical Perceptual Map for Four Cars

Stylish, prestigious x Mercedes Honda Accord x

Conservative, older

Sporty, fast

Ambassador

Palio

Practical, economical

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Determining the 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? 2. What position do we want to own? 3. What companies must be outgunned if we are to establish 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? Six steps need to be taken to reach a decision about positioning. Identify competitors Assessment of consumers perceptions of competition Determining competitors position Analysing the consumers preferences Making the positioning decision Monitoring the position

Some Popular Positioning Approaches

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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Positioning Errors

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Underpositioning: This refers to a state of buyers having only a vague idea of the brand and consider it just another me too brand in a crowded product category. The brand is not seen to have any distinctive association.
Overpositioning: In this situation, buyers have too narrow an image of the

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brand. Thus, buyers might think that Apple makes only very expensive computers when in fact Apple offers several models at affordable prices.
3. Confused positioning: Sometimes, in an attempt to create too many associations or repositioning, the brand very frequently results in confusing

the buyers.
4. Doubtful positioning: This situation may arise when customers find brand claims unbelievable keeping in view the product features, price, or the manufacturer.