STP

- Supplement

Segmentation, Targeting & Positioning

The economics of the target selection process

A segmented

Selection of a target market

Market profile

depends on ..
s
j

a4
a5

a3
a2

a1

percentage of
total household
of market area i
in income class j

NPV serves a effective mechanism

to
decide target market selection

average annual
household expenditures
of income class j at
company outlet or but
the brand

pij

CFtj

(1 + r) t-1

CF = Cash flow associated with market area j in

tj
year t.

number of
total
households
in market
area I

Ni

NPV =

ROI

= Discount rate

= Number of market areas considered in

plan
Seg a3

Si = estimated annual sales of new company

outlet / brand in market area i
Seg a4

sj = average annual household expenditures

Seg a5

of

income class j at company outlet or on

the

Seg a1

brand

pij = percentage of total household of market

area I
in income class j

Segments

Cost
of
Capital

Segmentation, Targeting & Positioning

Target focus strategy

Single-segment
concentration

M1

M2

Selective
specialization

M3

M1

M2

Product
specialization

M3

M1

P1

P1

P1

P2

P2

P2

P3

P3

P3

Mitsubishi SUV -Pajero

Santro , Accent , Sonata, from Hyundai

Market
specialization

M1

M2

M1

M2

M3

P1

P2

P2

P3

P3
Barista in all product variants for the
coffee drinking population

M3

Sony TVs for all sizes

Full market
coverage

M3

P1

M2

P = Product
M = Market

MUL in Passenger car category

Segmentation, Targeting & Positioning

Market coverage strategies

Marketing Mix
Single

Single

Market

Multiple

Undifferentiated
marketing
Post Office services
consider all buyers
equal
Concentrated
marketing
Mahindra &
Mahindra jeeps
were used as
passenger vehicles
& load bearers

Multiple
Differentiated
marketing
Passenger
Transport is catered
by various types of
cars
Customized
marketing
Levis jackets /
jeans which are
customized

Segmentation, Targeting & Positioning

Positioning Bases

Positioning is

the act of designing the companys offering and image

to occupy a distinctive place in the the target markets mind relative to competitors

Positioning Bases

Attribute
Discriminating
attributes

Price &
Quality

Use or
Application

Youth

Superior
attributes

Shaving

Competitor

Senior citizen

Cuts

Price

Product
User

Washing

Child etc.

Quality

Dettol

Tours to holy
places for
senior citizens

Brand
C

Brand
A

Brand
B

Segmentation, Targeting & Positioning

Positioning Strategy

HLL repositioned
repositioned Nirma
Nirma
HLL
in the
the minds
minds of
of the
the
in
buyers by
by showing
showing
buyers
scarred hands
hands as
as aa
scarred
product usage
usage fall
fall out
out
product

De-position
De-position or
or
rere- position
position the
the
competition
competition in
in
the
consumers
the consumers
mind
mind

Reinforcing the
the message
message of
of
Reinforcing
Premium stickiness
stickiness by
by
Premium
Fevicol from
from Pidilite
Pidilite
Fevicol
Strengthen
Strengthen
its
its own
own current
current
position
position in
in the
the
consumers
consumers
mind
mind

Grab
Grab an
an
unoccupied
unoccupied
position
position

Prestige platform
platform
Prestige
for Guthka
Guthka used
used by
by
for
Manikchand
Manikchand

Segmentation, Targeting & Positioning

Positioning Platforms

Treacy and

Wiersema

Innovator

Customer intimacy

Operational excellence

Some customers favor

the firm that is
advancing on the
technological
frontier
(Product leadership)

Customers want high

responsiveness in
meeting
their individual needs

Customers want highly

reliable performance

(Customer intimacy)

(Efficiency )

Personalized banking
from ICICI

ZEN car from MUL

Innovator buyers
of I-Pod