Unit : 7

Subject Code : MB0046

Segmentation, targeting and positioning

1

Contents
Introduction Concept of market segmentation Benefits of market segmentation Requisites of effective segmentation The process of market segmentation Bases for segmenting consumer markets Targeting Market positioning

Introduction
Market segmentation is the first step in applying the marketing strategy. Segmentation means dividing the market into similar submarkets by understanding the needs and expectations of customers. Companies follow different marketing programs for different segments to maintain better relationship with customers.

!earning "bjecti#es
After studying this unit you will be to able to !plain the concepts and benefits of market segmentation Mention the requisites" of effective segmentation !plain the bases of market segmentation# $escribe the process of evaluating market segments Identify appropriate target market for given segment 4

Concept o$ Mar%et Segmentation $efinition

Market segmentation is the process of dividing a potential market into distinct sub markets of consumers with common needs and characteristics# 'or e!ample( Cadbury India functions in three different markets namely( malted foods( cocoa powder and drinking chocolates and chocolates and sugar confectionary#

&

Bene$its o$ Mar%et Segmentation

The benefits of market segmentation are
)# +# ,# .# 0# 1# 2# 3# 4# )5# *nderstanding the needs of Consumers To adopt better positioning strategies# -roper allocation of marketing budget# /elps in preparing a better competitive strategy# -rovides guidelines in preparing media plan of the company# $ifferent offerings in different segments enhance the sales# Customer gets more customi%ed product# /elps Company to identify niches# -rovides opportunities to e!pand market ncourages innovations

'e(uisites o$ )$$ecti#e Segmentation

Segmentation is success$u* i$ it +as t+e $o**o,ing c+aracteristics: )#Measurable and obtainable - .+e si/e, pro$i*e and ot+er c+aracteristics o$ t+e segment must be measurab*e and s+ou*d be obtained in t+e $orm o$ data0 +#6ubstantial - .+e si/e o$ t+e segment s+ou*d be suc+ t+at it is pro$itab*e0 1or sma** segments t+e cost is +ig+ and +ence t+e products are priced #er2 +ig+0 ,#Accessible - 3e s+ou*d be ab*e to reac+ t+e segment t+roug+ e4isting net,or% at a$$ordab*e cost0

.# $ifferentiable - .+e segments are di$$erent $rom eac+ ot+er and +ence re(uire di$$erent 45s and programs0 0# Actionable - .+e segments ,+ic+ a compan2 ,ants to target must be actionab*e, i0e0, t+ere s+ou*d be su$$icient $inance, personne*, and capabi*it2 to target t+e segment0

Segmentation
.+e process o$ mar%et segmentation0

)# Identify e!isting and future wants in the current market Mar%eters must understand t+e c+anging needs o$ customers0 .+is process +e*ps to %no, ,+et+er t+e customer is satis$ied ,it+ t+e e4isting products or not0 It a*so +e*ps to test t+e compan28s ne, and inno#ati#e concepts0

10

+# !amine the attributes distinguish among segments#

that

In t+is process, mar%eters separate di$$erent t2pes o$ ,ants into simi*ar categories0 .+e separation ma2 be done on t+e basis o$ product $eatures, *i$est2*e or be+a#ior0

11

,#

valuate the proposed segment attractiveness on the basis of measurability( accessibility and si%e
Segments se*ected in second step s+ou*d be ana*2/ed $or measurabi*it2, accessibi*it2, substantia*, actionab*e and di$$erentiabi*it20 .+e $urt+er p*ans o$ t+e compan2 depend on t+e resu*t o$ t+is process0

12

Bases for 6egmenting Consumer Markets

)# 7eographic segmentation8
9i#iding t+e mar%et into di$$erent geograp+ica* units suc+ as nations, states, regions, cities or neig+bor+oods In t+is segmentation t+e mar%et is di#ided into groups on t+e basis o$ #ariab*e suc+ as age, $ami*2 si/e, $ami*2 *i$e:c2c*e, gender, income, occupation, education, re*igion, race, generation, nationa*it2 and socia* c*ass0

+# $emographic 6egmentation8

Some $actors used $or

 Age and life cycle stage - .+e needs and ,ants o$ consumers c+ange ,it+ age0 "n t+e basis o$ age, a mar%et can be di#ided into $our c*asses, c+i*dren, 2oung, adu*ts and o*d0 ; good mar%eting manager s+ou*d understand t+e age group $or ,+ic+ t+e product is most suitab*e and t+en p*an +is mar%eting, pricing and ad#ertising po*ic2 according*20 1or e4amp*e, <industan Uni*e#er *aunc+ed 5epsodent =ids $or sma** c+i*dren0 7ender - Segmentation on t+e basis o$ gender is use$u* in c*ot+ing, +air:st2*ing, cosmetics and maga/ines0 Income - Segmentation on t+e basis o$ income is use$u* $or products and ser#ices *i%e automobi*es, c*ot+ing, cosmetics and tra#e*0

14

,#-sychographic 6egmentation8 In t+is segmentation, bu2ers are c*assi$ied into di$$erent groups on t+e basis o$ *i$e:st2*e or persona*it2 and #a*ues0 5eop*e be*onging to t+e same demograp+ic group ma2 s+o, #er2 di$$erent ps2c+ograp+ic c+aracteristics0 Some $actors used $or ps2c+ograp+ic segmentation are a9:ife;style8 9i$$erent peop*e +a#e di$$erent *i$e: st2*es and t+e products t+e2 use s+o,s t+eir *i$e: st2*e0
"ne o$ t+e most common ps2c+ograp+ic pro$i*ing sc+eme is t+e >;!S, de#e*oped b2 S'I Internationa*, I?C0 >;!S de$ined adu*t consumers into eig+t segments0 .+e2 are )# Innovators: .+e2 are success$u*, sop+isticated, acti#e, ta%e 1& c+arge0 .+e2 are peop*e ,it+ +ig+ se*$:esteem and ric+

,# Achievers: .+e2 are success$u* career and ,or% oriented peop*e ,+o ,ant a contro**ed *i$e0 .+e2 pre$er predictabi*it2 and stabi*it2 o#er ris%0 .+e2 are committed to ,or% and $ami*20 .# !periencers: .+e2 are 2oung, ent+usiastic, impu*si#e, dis*o2a*, disobedient0 .+e2 ,ant #ariet2 and e4citement0 .+e2 *i%e #ariet2 and enjo2 ne, t+ings0 .+e2 *i%e e4ercise, sports, outdoor recreation and socia* acti#ities0 0# Believers: .+e2 are traditiona* peop*e ,it+ +ig+ commitment to $ami*2, communit2 and nation0 .+e2 +a#e a mora* code0 .+e2 pre$er ;merican products and estab*is+ed brands0 1# 6trivers: .+e2 *oo% $or moti#ation and appro#a* $rom ot+ers0 .+e2 are unsure o$ t+emse*#es and +a#e *ess economic, socia* and ps2c+o*ogica* resources0 2# Makers: .+e2 are practica* peop*e ,+o +a#e constructi#e s%i**s and #a*ue se*$:su$$icienc20 .+e2 are +app2 ,it+ t+eir $ami*ies and +a#e *itt*e interest outside t+eir $ami*20 3# 6urvivors: .+e2 are poor*2 educated, *o, s%i**ed and 16 concerned about t+eir +ea*t+0 .+e2 satis$2 urgent needs o$

b9 -ersonality8

Mar%eters use persona*it2 #ariab*es to segment t+e mar%et0 .+e2 promote t+eir products ,it+ brand persona*it2 t+at resemb*es consumer persona*ities0 It +as a strong in$*uence on pre$erence in cars, c*ot+ing, +ome $urnis+ings, *eisure acti#ities, reading +abits, etc0 Man2 companies design products and ser#ices $or speci$ic socia* c*asses0
17

c9 6ocial class8

40 In behavioral segmentation, bu2ers are di#ided into groups on t+e basis o$ t+eir %no,*edge or attitude to,ards t+e use o$, or response to a product0 Some $actors used $or be+a#iora* segmentation are 10 "ccasions 20 Bene$its 0 User status 40 Usage rate &0 !o2a* status 60 Bu2er readiness stage
16

1. . ". $.

Occasions: Buyers develop a need, purchase or use a product according to occasion. For example, Tanishq offer schemes and promotions for purchasing on Akshaya Truthiya. !enefits: Buyers can be classified according to the benefits they are looking for. #ser status: arkets can be segmented into non!users, potential users, first time users and regular users of a product. arketing strategy for each segment is different. #sage rate: arkets can be segmented into light, medium and heavy product users. "eavy users are less in number but responsible for a large part of total consumption. arketers like to attract one heavy user rather than many light users. For example, textile brand Allan #aine offered $ cotton trousers for %s. &&&. 't (anted to earn profits from sales volume.

17

0# :oyal status: Consumers +a#e di$$erent *e#e*s o$

*o2a*t2 $or di$$erent brands and stores0 ;ccording to brand *o2a*t2 status, bu2ers can be di#ided into $our groups: a@ <ard core *o2a*: Suc+ consumers bu2 on*2 one brand a** t+e time0 b@ Sp*it *o2a*: Suc+ consumers are *o2a* to t,o or t+ree brands0 c@ S+i$ting *o2a*: Suc+ consumers s+i$t $rom one brand to anot+er0 d@ S,itc+ers: Suc+ consumers s+o, no *o2a*t2 to an2 brand0

0# Buyer readiness stage:

; mar%et consists o$ bu2ers ,+o are at di$$erent stages o$ ,i**ingness to bu2 a product0 Some are una,are o$ t+e product, some are a,are, some are in$ormed, some are interested, some desire t+e product and some p*an to bu20
20

.argeting
.argeting is de$ined as a group o$ peop*e or organi/ations $or ,+ic+ an organi/ation designs, imp*ements and maintains t+e mar%eting mi40 ;$ter segmentation, it is important to identi$2 t+e peop*e or organi/ation $or ,+ic+ t+e product is meant0 Se*ecting target mar%et segments ; compan2 c+ooses its mar%et segmentation strateg2 on t+e basis o$ $o**o,ing $actors
<omogeneous pre$erence s+o,ing no natura* segments as in case o$ co*d drin%s0 9i$$used pre$erence s+o,ing c*ear pre$erences as in case o$ automobi*es0 C*ustered pre$erence, mar%et s+o,ing natura* segments as in case o$ occupation +a#ing impact on t+e t2pes o$ c*ot+es ,orn0
21

*ndifferentiated marketing: In t+is strateg2, t+e ,+o*e

target mar%et is treated as one and it is considered t+at t+ere are no mar%et segments t+at s+o, uncommon needs0 .+e compan2 be*ie#es on Aone product:a** segments strateg28 and +as one mar%eting mi4 $or t+e target mar%et0 1or e4amp*e, Coca Co*a se**s Co%e, !imca, .+ums:up, etc0 and does not di$$erentiate bet,een t+e target audience0

$ifferentiated marketing: In t+is mar%eting strateg2 t+e

compan2 di#ides t+e mar%et into segments and uses di$$erent mar%eting mi4 $or eac+ segment0 .+is strateg2 is used b2 <industan Uni*e#er ,+ic+ se**s soaps *i%e !i$ebuo2, !u4, 'e4ona, !iri*, 5ears, etc0 and eac+ +as its o,n mar%et0

Concentrated marketing: In t+is mar%eting strateg2 t+e

compan2 $o**o,s Aone product one segment po*ic280 1or e4amp*e ;s+o% !e2*and produces *arge c+assis o$ mac+ines $or buses and truc%s0

22

Comparison o$ Mar%et Co#erage Strategies

'ocus *ndifferentiated Marketing "neB1e, $ifferentiated Marketing Man2 Concentrated Marketing "neB1e,

5roduct

Segment

;**

Man2

"neB1e,

Mar%eting Mi4 "ne

Man2

"neB1e,

C+oosing a Mar%et Co#erage Strateg2

*ndifferentiat ed Marketing Constrained 1irm 'esources Common Usage 5roducts 9i$$erent need satis$2ing products More suitab*e Most suitab*e !east suitab*e

$ifferentiated Marketing !east suitab*e More suitab*e Most suitab*e

Concentrated Marketing Most suitab*e !ease suitab*e More suitab*e

24

Mar%et 5ositioning
5ositioning is de$ined as t+e process o$ designing t+e compan28s products and image to occup2 a uni(ue p*ace in t+e target mar%et8s mind0 Man2 mar%eters $a#or promoting on*2 one major bene$it and 'osser 'ee#es ca**ed it as Ca uni(ue se**ing propositionD0 Some uni(ue se**ing propositions EUS5s@ companies use are best (ua*it2, best ser#ice, *o,est price, best #a*ue, sa$est, more ad#anced tec+no*og2, etc0

2&

The four ma<or positioning errors that a company must avoid are *nder positioning: Some companies $ind t+at bu2ers +a#e on*2 an unc*ear idea o$ t+e brand0 =ver positioning: Bu2ers +a#e #er2 narro, image o$ t+e brand0 Confused positioning: Bu2ers +a#e con$used image o$ t+e brand because t+e compan2 +as made too man2 c*aims or c+anged t+e brand positioning too $re(uent*20 $oubtful positioning: Bu2ers do not easi*2 be*ie#e t+e c*aims made b2 brands about t+e product8s $eatures, price or manu$acturer0

26

Bases of positioning the product

)# Attribute positioning: .+e compan2 positions itse*$ on t+e basis o$ attribute *i%e si/e or number o$ 2ears in e4istence0 Sun$east positions its snac%2 brand as bigger, *ig+ter and c+eaper0 +# Benefit positioning: .+e compan2 positions its product as *eader in pro#iding a certain bene$it0 1or e4amp*e Santro positioned itse*$ as India8s simp*est car to dri#e0 ,# *se or application positioning: .+e compan2 positions its products as best $or certain use or app*ication0 1or e4amp*e, =enstar positioned its products as une4pected*2 co*d0 .# *ser positioning: .+e compan2 positions its product as best $or some user group0 1or e4amp*e, 5ar*e:F positions t+e bo2 in t+e ad#ertisement as roc% star targeting t+e %ids and bo2s0

27

0# Competitor positioning: .+e compan2 c*aims its products as better t+an a named competitor0 1# -roduct category positioning: .+e compan2 positions its product as *eader in certain product categor20 1or e4amp*e, Bajaj C. 100 ,as positioned as *eader in t+e entr2 segment bi%es0 2# >uality or price positioning: .+e product is positioned as o$$ering t+e best #a*ue0 1or e4amp*e, t+e #egetab*e oi* brand 9+ara positions itse*$ as Aano%+i s+uddata, ano%+a asar80 .+is means t+e compan2 o$$ers uni(ue purit2 and uni(ue e$$ect0

26

27