Market Segmentation, Targeting and Positioning

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

Indian Automobile Industry - STP

Mercedez Benz, BMW, Toyota Lexus

Chevrolet Optra, Sonata Baleno, Accent Esteem, i10 Getz, Swift

Luxury
Honda Civic Toyota Corolla

Mid Size Family

Ford Ikon, Opel Corsa Santro

Economy
Maruti 800 Zen, Alto

Who are the main passenger car manufacturers in India?

Markets
MARKET SEGMENTS

TARGET MARKET

MARKET SEGMENTATION
What are markets?

Markets
Market segments for Bicycles

1 (Exercisers) 3 (Transportation riders)

2 (School-goers) 4 (Adventurers)

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

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

Market Segmentation
Process of dividing the total market for a good or service into several smaller, internally homogeneous groups Members of each group are similar with respect to the factors that influence demand

Process of Market Segmentation

Identify wants within a market

Identify characteristics that distinguish the segments

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

Market Segmentation Conditions

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

MICROMARKETING Treat each single customer as a separate segment

Market Segmentation - First Cut

Customers reason for buying

CONSUMER Purchase for personal use

BUSINESS Purchase to use in organizations, to resell, or to make other products

Segmentation Bases for Consumer Markets

1.Geographic Location Urban- Rural District, Mufussil Metro, Non-Metro Any Other
Possible Market Segments

Rural, Urban Metro, Large towns, Small towns, Villages population > 1000, < 1000 etc Coastal, Non-coastal etc

Segmentation Bases for Consumer Markets (Contd)

2.Demographic Age Income Gender Occupation More .More
Possible Market Segments Infant (newly born1 yr) child (112 yr), teens (1319), adolescent (16 19), youth (2035), middle-aged (36 50), elders or seniors (50+ etc) Male, Female Blue/white Collar, traders, teachers, university professors, student, housewife etc. ---- (Contd)

Kids Reign Supreme in FMCG Purchase

80

71 59

% of Kids Who Influence What FMCG Brand Their Family Buys

60

52

40

20

Biscuits

Burgers and Pizzas

Fruit Juices

Segmentation Bases for Consumer Markets (Contd)

2.Demographic Age Gender Occupation Education Marital status
Possible Market Segments

Family size & Structure

Illiterates, literates, high school, secondary, graduate, post graduate, post doctorates. Unmarried, married Families with 3 or <, with 4, 5 or >members.

Socio-economic Pyramid of Indian Population

A1 & A2 (9.5%) B1 & B2 (17%) Graduates, whitecollar workers, and professionals

Typically SSC qualified, about 40% Graduates; 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

Psychographics In the field of marketing, psychographic variables are any attributes relating to personality, values, attitudes, interests, or lifestyles. They are also called IAO variables (for Interests, Activities, and Opinions).

Segmentation Bases for Consumer Markets (Contd)

3.Psychographic
Possible Market Segments -Ambitious, self-confident, Aggressive, Introverted, Extroverted, Sociable, Achievers, etc -Activities (Spiritual, Yoga, travel); Interests(Music, Politics, Art etc); Opinions (Conservation, capitalism) -Values and lifestyles (VALS), List of Values (LOV)

Personality Life-style

Values

Segmentation Bases for Consumer Markets (Contd)

4.Behavioral
Possible Market Segments Virtually for all Products (Titan, Garden HMT, Pepsodent) Heavy, Medium, Low user, Non-user Rasana Hard Core, Soft Core, Switchers

Benefits Desired Product Usage Use Situations Customer Loyalty

Segmentation Bases for Business Markets

Bases for Segmentation
Possible Market Segments

Customer Location
Customer Size

Product End Use

Customer located in one site will have one market plan and other in another Large, Medium and Small buyers (Payment terms, packaging, call frequency etc different ) For steel manufacturer it could be construction, office furniture, cable, automobile etc

Segmentation Bases for Business Markets

Bases for Segmentation
Possible Market Segments In any end use segment , we can further segment based on purchase criteria say buyers being insensitive, sensitive and highly sensitive to price change. We can also segment them according to their needs, say Standardized or Customised products.

BUYER Behavior, Motivation, or Purchase criteria

Segmentation Bases for Business Markets

Bases for Segmentation
Possible Market Segments

- Purchase Criteria, Size, & Geography -Buying Situation

Matrix Approach New Task Buying, Straight rebuy, Modified rebuy

Target-Market Strategy
Market-aggregation Strategy
mass-market undifferentiated-market

and
Product differentiation Strategy

Single Marketing Strategy

shotgun

Target-Market Strategy

Single-Segment Strategy
concentration

One Marketing Mix

NICHE MARKETERS

Target-Market Strategy

Multiple-Segment Strategy Multiple Marketing Mixes

Selecting a Target Market -Guidelines

Compatible with companys goals Match target market opportunity with company resources.

Profit that justifies investment Competitors are few and/or weak

Positioning
What is a Position?

A position is the way a firms product, brand, or organization is viewed relative to the competition by current and prospective customers.

So what is Positioning?
Firm creating and maintaining in the minds of a target market a particular Image relative to competing products
THREE STEPS Select position concept

Design the feature that conveys position

Coordinate the marketing mix to convey position

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

Perceptual Mapping
An analytical technique that enables marketers to plot graphically consumers perceptions concerning product attributes of specific brands

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Perceptual Map for different brands of bar soap

High moisturizing Dove
7
1 4 5

Nondeodorant
8 6 3

Deodorant

Lifebuoy
2

What bar soap? What position?

Low moisturizing

Perceptual Mapping toothpastes

Freshness Whiteness Prevent tooth decay bacteria Medicinal / Curative properties Clove oil Foam Healthy tooth / gums

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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

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 reestablish its attractiveness in its market it is engaging in repositioning.

Repositioning of Brands - Horlicks

Initially introduced as a substitute and additive to milk and positioned as food for convalescing and nutrient supplement for kids.

From a boring nutritional drink, repositioned by launching it in vanilla, chocolate and honey versions. Introduced other variants like Jr.Horlicks, Mother Horlicks and Womens Horlicks
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Repositioning of Brands - Cadbury

In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe for children.

Repositioned as:
In the Mid 90's the category was re-defined by the very popular `Real Taste of Life' campaign, shifting the focus from `just for kids' to the `kid in all of us'. It appealed to the child in every adult. The "girl dancing on the cricket field" has remained etched in everyone's memory, as the most spontaneous & un-inhibited expression of happiness. The 'Khanewalon Ko Khane Ka Bahana Chahiye' campaign. This campaign built social acceptance for chocolate consumption amongst adults, by showcasing collective and shared moments. Mischievous, bubbly teenagers getting out of their 'stuck and hungry' situations by having a Cadbury Perk. Cadbury Perk became the new mini snack in town and its proposition "Thodi si pet pooja" went on to define its role in the category.
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