Management Science II

Dr. S.Bharadwaj

MODULE 1 Segmentation,Targeting and Positioning

Segmentation, Targeting and Positioning Definitions Segmentation Variables Evaluation of Segments Summary

What is segmentation, anyone?

What about targeting and positioning? Segmentation is the process of grouping people or organizations within a market according to similar needs, characteristics, or behaviors

Dividing the market into groups

an entire market rarely has the same tastes and preferences it is difficult to handle all preferences too Mercedes Benz, for example (only high-end)

Targeting is the actual selection of the segment you want to serve the target market is the group of people or organizations whose needs a product is specifically designed to satisfy Positioning is the use of marketing to enable people to form a mental image of your product in their minds (relative to other products)

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Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

STP Marketing is the name of the game

The days of one size fits all are over No longer can one say You can have any colour as long as it is black Need to follow the horses for courses policy - no more mass marketing Moving towards mass customization in fact Levis Personal Pants National Bicycle Company

How to segment a market? On what basis/bases? What are some criteria/variables?

Segmentation - Variables
Demographic Segmentation
Age, Gender, Income Age Bicycles Disneys Cartoons Pension Plans, Retirement Funds e.g. LIC Gender Hasbro Toys Cindy for girls, GI Joe for boys Gillette Razors for men, women most cosmetics, perfumes etc

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Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

Revlon, Ralph Lauren

Income
Toyota Lexus for high end Camry for the middle of the roaders Corolla for low end HLL soaps - Dove for high end, Hamam for low And so on Income is possibly the most common basis for segmentation Other Demographic Variables Include Religion, Ethnicity, Occupation, Generation (Baby Boomers, Generation Next, Yuppies) and so on

Geographic Segmentation
snow boots in the Northern part of USA Of course, all International Marketing is done on a regional(geographic basis) The Same Honda Accord is different in different countries ! Most MNCs vary their products according to country special tires in the Middle East Taj: AP - hot food, Kerala - more coconut and so on

Behavioral Segmentation
On the basis of occasions, product usage, benefits sought, brand loyalty

Occasions
Y2K Cruises Hallmark Cards a greeting card for every occasion - Valentines Day Card, Deepavali card

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Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

Benefits Sought
there are certain specific benefits sought - example would be Colgate Tartar Control for Tartar

User Status
Non-Users Vs Current Users Credit Card Companies new card vs another card Blood Banks, entry level cars/bikes

Usage Rate
Heavy Users Vs. Light Users The Beer Market is a classic example Miller Lite, BudWeiser all target the heavy Bajaj M80 could be another candidate Psychographic Segmentation Lifestyle products like Raymond user

Evaluation of Segments
Having segmented the market, which one to choose? What are the criteria? Is there potential sales, growth and profit ? Big Emerging Markets (BEMs) China, India, Brazil etc

Potential Competition and Cost is it too much ? Imagine going against Microsoft in the PC OS market for someone like Unix

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Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

Tata Indica was smart in battle Vs. Maruti

Potential Risk
environmental doing business in Iraq now Or even Kashmir

Is it compatible with my current business ?

Mercedes going downscale with E-Class will it hurt the Mercedes brand ? will it cannibalize my existing brand ? Air India starting a budget airline?

Summary
STP Marketing is highly important Consumers are very finicky and want to feel special From mass marketing to mass customisation Segmenting is important let Bajaj Chetak, Ambassador, Fiat, Maruti 800 even be examples

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Indian Institute of Technology Madras