STP

Segmentation, Targeting & Positioning

What Is Market Segmentation?

Market segmentation is the subdividing of a market into distinct subsets, where any subset may be selected as a marketing target to be reached with a distinct marketing mix.

Segmentation Dilemma

MASS MARKETING Economies of Scale

CUSTOMIZATION Everyone Wants Something Different

No Market Segmentation

Segmented by Sex

Segmented by Age

Market Segmentation
Market
People or organizations with needs or wants and the ability and willingness to buy A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

Market Segment

Market Segmentation

Requirements for Effective Segmentation

Measurable
Size, purchasing power, and profile of segment

Accessible
Can be reached and served

Substantial
Large and profitable enough to serve

Differentiable
Respond differently

Actionable
Effective programs can be developed
Goal 2: List and discuss major bases for segmentation

STP Process

Market segmentation
1) Carry out marketing research 2)Identify segment variables from analysis of MR data

Target Marketing
1) Evaluate resulting segments

Positioning
1) Identify target customers attributes for differentiation 2)Select right attributes or benefits 3)Communicate the chosen position to each target market

2)Select target segments

3)Prepare profiles of resulting segments

3)Decide target market strategy

Segmentation Variables for Consumer Markets

Segmentation Variables
Geographic Segmentation : People living in the same area have similar needs & wants. Rural customers are different from urban ones & urban customers of one region are different from their counterparts in some other region. Clothing, food habits, consumption pattern etc. differ drastically across regions.

Segmentation Variables
Demographic Segmentation : Age & stage of life cycle : People of different age groups and having different responsibilities differ vastly in their consumption pattern. Eg : Compare a person of 26 years as a bachelor & as a married person.. Gender : Shaving kits, automobiles etc are products pre dominantly purchased by males while cosmetics, jewelry etc are purchased by females. Income, education, occupation : Buying power is a function of income, education & occupation.

Segmentation Variables
Psychographic Segmentation : Also called as Lifestyle Segmentation. Psychographic profile reveals how consumers allocate their time, energy & money to activities & their interests & opinions about various issues. Marketers appeal to positive/favorable personal characteristics to influence the purchase decision.

Benefit Segmentation WHAT BENEFIT DO YOU WANT?

Rationale - The benefits people are seeking in consuming a given product are the true reasons for the existence of segments Example - Toothpaste
Cavity prevention Fresh breath White teeth

Behavioral Variables
1. 2. 3. 4. 5. 6. Occasions - Regular, special Benefits- Quality, Service, Economy, Speed User Status - Non- user, Regular, Potential Usage rate - Light, Medium, Heavy Loyalty Status- Non, Medium, Strong. Buyer readiness- Unaware, Aware, Interested 7. Attitude towards Product Enthusiastic, Positive, Indifferent, Negative

Market Targeting Strategies

Evaluating Market Segments Selecting Market Segments Market coverage (Targeting) strategies

Target Market
A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

Market Targeting
Evaluating Market Segments
Segment Size and Growth Analyze sales, growth rates and expected profitability.
Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.
Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Evaluating Market Segments

Sales Estimates
Market potential Company sales potential

Competitive Assessment
Who, how many, how large, and how strong?

Cost Estimates
The expense of developing a marketing mix Costs of reaching segment relative to competitors costs

Selecting Market Segments Five Patterns

1.Single segment Specialization 2.Selective Specialization 3.Product Specialization 4.Market Specialization 5.Full Market Coverage - Undifferentiated Marketing - Differentiated Marketing

Single segment concentration

M-1 P-1 P-2 P-3 M-2 M-3

Be a Big fish in a small Pond.. Resembles to the Focus strategy where the company focuses all its strengths to serve a small well defined segment.

Selective specialization
M-1 M-2
P-1

M-3

P-2
P-3

The risks get diverted if it selects a few promising segments. The firms Presence is more prominent with selective specialization.

Product specialization
M-1 M-2 M-3
P-1 P-2 P-3

A firm specializes in certain product & sells it in various segments. Eg. A firm specializing in water purifiers may decide to target households, Institutions, government establishments, retail malls etc.

Market specialization
M-1 M-2 M-3 P-1

P-2
P-3

A firm concentrates on serving many needs of a particular customer group. Eg. An online seller of books after building a good customer base, may start Selling music cds, cameras etc to the same customers.

Full Market Coverage

M-1 M-2 M-3

P-1
P-2 P-3

Full market coverage

Undifferentiated marketing : Cocacolas early marketing of only one drink in one bottle size in one taste to suit everyone.

Differentiated Marketing : Tata

Motors Ltd. Offers various cars to different segments of customers of the entire car market.

Market Targeting Market Coverage Strategies

Company Marketing Mix A. Undifferentiated Marketing Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3
B. Differentiated Marketing Company Marketing Mix Segment 1 Segment 2 Segment 3 C. Concentrated Marketing Segment 1 Segment 2 Segment 3 Market

Position & Positioning

Position : The place a product, brand, or group of products occupies in consumers minds relative to competing offerings. Positioning : Developing a specific marketing mix to influence potential customers overall perception of a brand, product line, or organization in general.

ABC of Positioning
Audience ( The target market ) Benefit Compelling reason Why ??

Effective Positioning
1. Assess the positions of competing products

2. Determine the dimensions of these positions

3. Choose an effective market position

Possible Competitive Differentiation

Product Service

Areas for Competitive Differentiation

Personnel

Image

Various Positioning Strategies

Positioning on specific product features : The coolest refrigerator. Keeps food fresh for a longer period etc. MasterCard is the worlds most widely accepted card.

Positioning on the Best in Class basis : Ferrari : Best sports car. Mc Donalds : Operational excellence in fast food industry.

Various Positioning Strategies

Positioning on the Pioneers Status : people only remember the First in a particular category. Fridge : Introduced refrigerators. Ford : Introduced the first car. Xerox : Introduced Photostat machines.

Various Positioning Strategies

Positioning by Benefit : Eg. Volvo, focuses on the safety of passengers. Positioning by application : Iodex, focuses on backache. Positioning by User Class : Manikchand, Unche Log Unchi Pasand. Positioning by Competition : Rin vs. Tide Positioning by Quality : Mercedes, German engineering.