SEGMENTATION, TARGETING and POSITIONING

SEGMENTATION, TARGETING and POSITIONING
3rd unit marketing management
As per VTU university syllabus

1. Market segmentation, targeting & positioning PREPARED BY Dr Virupaksha Goud

2. 3 rd unit syllabus Concept of Market Segmentation, Benefits, Requisites of Effective Segmentation, Bases for Segmenting Consumer Markets, Market Segmentation Strategies. Targeting - Bases for identifying target Customer target Marketing strategies, Positioning - Meaning, Product Differentiation Strategies, Tasks involved in Positioning. Branding - Concept of Branding, Types, Brand Equity, Branding strategies.

3. segmentation Segmentation is the process of classifying customers into groups which share some common characteristic A marketing strategy in which a large, heterogeneous market is broken down into small, more homogeneous segments, and a separate marketing program is developed for each segment. According to Philip kotler , “ Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.”

4. Stages of Marketing Mass marketing Product-variety marketing Target marketing Micromarketing Customized marketing

5. Advantages of Segmentation The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s ability to competently serve those needs – thereby making the company better informed about its customers Competitor offerings and marketing positioning must also be analysed in this context so the company must consider what its competitive advantages and disadvantages are, helping it to clarify its own positioning strategy Limited resources are used to best advantage, targeted at those segments that offer the best potential

6. Levels of Market Segmentation Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers

7. Factors influencing segmentation Size, objectives and resources of the company Type of product and market Competitive structure of the industry Life cycle stage Competitive strategy of firm

8. Segmentation Variables Segmentation Variables Geographic Demographic Psychographic Behavioral

9. Geographic Segmentation Division of the market based on the location of the target market People living in the same area have similar needs and wants that differ from those living in other areas Climate Population density Taste Micromarketing

10. Demographic Segmentation Partitioning of the market based on factors such as age gender marital status Income Social class Family size occupation education ethnicity

11. Psychographic Segmentation Dividing buyers into different groups based on social class, lifestyle , values, beliefs and personality characteristics Marketers use it to further refine a target market Its appeal lies in the vivid and practical profiles of consumer segments that it can produce Accomplished by using AIO inventories AIO research seeks consumers’ responses to a large number of statements that measure Activities Interests Opinions

12. Behaviour Segmentation Buyers are divided into groups based on their knowledge, attitude, and use or response to a product The best starting point for building market segments occasions Types Special occasion segmentation Benefits sought User status Usage rate Loyalty status Buyer readiness stage

13. Requirements for Effective Segmentation Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served. Segments must be large or profitable enough to serve. Measurable Accessible Substantial Differential Actionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

14. Steps in the Segmentation Process Determine Market Boundaries Decide which Segmentation Bases to Use Analyze (Consider) Segmentation Data Develop a Profile of Each Segment Target the Segments to be Served Design a Marketing Plan

15. Basis for segmentation of industrial products Size of the industry Small scale, medium scale & large scale industry Geographical location End use Buyer behavior/ motivation or purchase criteria Benefits sought

16. Target Market A market is a set of all actual and potential buyers A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences. Any marketing strategy must include a detailed (specific) description of this.

17. Advantages of target marketing Easier analysis of potential and actual consumers Tailoring of products to market Assessment of demand potential Identify competing products Increased sales effectiveness and cost efficiencies Product positioning and easy identification of opportunities

18. Disadvantages of target marketing Increased marketing costs Personalization can become burdensome to manage Faux segmentation may be viewed cynically Narrow segmentation can impact brand loyalty Ethics and stereotyping issues

19. Basis for identifying target customers Market Factors Segment Size Segment Growth rate Price sensitivity Customer Barging power Supplier Bargaining Power Entry Barriers Exit Barriers Company Factors Nature of competitiveness New Entrants Competitive differentiation Macro Factors Political Issues Social Trends Environmental Issues Market Attractiveness Firms Capability Exploitable Marketing Assets Cost Advantage Technological Edge Managerial capabilities Commitment

20. Target market strategies

21. Limited market coverage targeting

22. Important factors in target market Ethical Issues of target market Segment interrelationships & super segments Mega Marketing Gradual Invasion Inter segment cooperation

23. Positioning in the market place What is Positioning? It is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind. Positioning is not what you do to the product Positioning is what you do to the mind of the prospect

24. Positioning in the market place Examples Crest toothpaste Promotes its anti-cavity protection Mercedes Promotes its great engineering BMW Ultimate driving machine Attribute can be single or even multiples

25. Importance of positioning Putting the product in pre determined orbit Connects product offerings with target market Providing competitive advantage Better serving and covering the market Providing space to brand through positioning

26. Choosing and Implementing a Positioning Strategy Identifying a set of possible competitive advantages upon which to build a position Selecting the right competitive advantages Effectively communicating and delivering the chosen position to a carefully selected target market

27. Developing a Positioning Strategy Positioning possibilities: Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning Which Positioning to Promote?

28. Positioning 28 ATTRIBUTE POSITIONING Positioning on attribute Size No of years in existence Culture Disneyland Positioned as the largest manmade park in the world Dove soap Contains moisturizing cream Positioning in the market place

29. 29 2. BENEFIT POSITIONING Positioned as a leader in certain benefit McDonald’s Positioned as a family restaurant (QSCV) Honda Economy and reliability BMW Ultimate driving machine Volvo Safety and Durability. Positioning in the market place

30. 30 3. USE / APPLICATION POSITIONING. Positioning for some use or application Nestle ‘Maggi Noodles’ Positioned as a snack item Between meals Fast to cook, good to eat Nestle Milkmaid Positioned as a base for dessert preparation . Positioning in the market place

31. 31 4. USER POSITIONING Positioning the product as best for some user group. ‘Red and white’ cigarettes Positioned for people who are bold and brave Give ‘bravery’ awards. Positioning in the market place

32. 32 5. COMPETITOR POSITIONING Product claims to have better performance than competitors Brooke Bond Taj Mahal Tea Endorsed by Zakir Hussain “If you find a better tea than Taj Mahal, then Zakir Hussain will stop playing Tabla. Directly or indirectly refer competitors . Positioning in the market place

33. 33 6. PRODUCT CATEGORY POSITIONING Positioning as a leader in certain category. Maruti 1000 Launched in 1990 Only luxury car in India Positioned as ‘ultimate in luxury’ Hero Honda Four Stroke, fuel efficiency Claimed as the leader in fuel efficiency Fill it, shut it, forget it Livon After hair wash oil Smooth and silky hair Positioning in the market place

34. 34 7. QUALITY OR PRICE POSITIONING Positioning as offering the best scooters Bajaj Scooters Lowest prices You just cannot beat a Bajaj Repositioned as ‘Hamara Bajaj’ Positioning in the market place

35. Four major positioning errors Under positioning Over positioning Confused positioning Doubtful positioning Errors in positioning

36. Positioning in the market place What to avoid Under positioning Seen as just another entry in a crowded market Pepsi introduces its clear crystal Pepsi 1993 Customer not impressed “Clarity” not seen as an important benefit

37. Positioning in the market place Over positioning Narrow image of the brand Trying to widen Customer do not accept this Maruti Baleno Customers think Maruti can make cars up to 5 lacs Not higher end Image issue Poor sales

38. Positioning in the market place Confused Positioning Company making too many claims Dettol Soap Started as Beauty soap Did not click Repositioned as Anti bacterial soap Finally clicked

39. Positioning in the market place Doubtful Positioning Find it to difficult believe in what company claims Maruti 1000 Launches in ’89 Positioned as ‘ultimate in luxury’ Only luxury car Launch of Esteem in ’94 More luxurious than Maruti 1000 Is it now ‘Ultimate in luxury Sales dipped Customer confused Repositioned as ‘Affordable luxury’

40. Tasks involved in positioning

41. brand A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

42. Role of brands

43. branding Branding is endowing products and services with the power of the brand.

44. Brand equity Brand equity is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand.

45. Brand advantages Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to crises Larger margins More inelastic consumer response Greater trade cooperation Increased marketing communications effectiveness Possible licensing opportunities

46. Brand promise A brand promise is the marketer’s vision of what the brand must be and do for consumers.

47. Brand elements

48. Brand Element Choice Criteria Memorable Meaningful Likeability Transferable Adaptable Protectable