Market Segmentation, Targeting and Posit

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Information about Market Segmentation, Targeting and Posit

Published on April 16, 2009

Author: asfastasitgets


Market Segmentation, Targeting and Positioning : 1 Market Segmentation, Targeting and Positioning Benefits of Segmentation : 2 Effective use of resources Gain a focus Create Value for a target market Positioning Benefits of Segmentation Steps in Market Segmentation, Targeting, and Positioning : 3 Steps in Market Segmentation, Targeting, and Positioning Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market Positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment Levels of Market Segmentation : 4 Levels of Market Segmentation Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs. Mass Marketing Same product to all consumers (no segmentation, i. e. a commodity) Segment Marketing Different products to one or more segments (some segmentation, i.e. Marriott) Slide 5: 5 Most cos. Are turning to micromarketing at 1 of the 4 levels – 1.Segments2.Niches 3.Locals4.Individuals Step 1. Market Segmentation 1. Segment marketing… : 6 1. Segment marketing… ~ consists of a group of customers who share a similar set of needs & wants Flexible market offering – even in segments 100% needs are not same. ~ consists of 2 parts - Naked solution – products and services that all members of the segment values Discretionary options – that some segment members value. E.g.- automobile industry – basic model is same but for A.C., power steering, power window buyer has to pay extra price. Airline industry – economy class & business class (better facility, better menu) Cont…Segment marketing : 7 Cont…Segment marketing 1 way is to identify preference segments Homogeneous preference – all consumers have roughly the same preference Diffused preference – consumers vary greatly in their preferences Clustered preference – natural market segments emerge from groups of consumers with shared preferences 2. Niche marketing : 8 2. Niche marketing Group of customers seeking a distinctive mix of benefits who are ready to pay extra premium Niche = segment ÷ * sub-segments E.g.- washing detergents ÷ * hard & gentle washers. Surf excel for tough stains (hard on clothes) & Ezee from godrej for delicate clothes. Itchgaurd – for itching sensation Crack (Paras Pharmaceuticals) cream – for prevention and treatment of cracks. Astha, sanskar, QTV – focus on religion & spiritualism Magazines on sports, automobiles, architecture, home decoration 3. Local marketing : 9 3. Local marketing Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods, etc. This trend is called grassroots marketing. Nationalized marketing as wasteful marketing as it fails to address local needs. E.g.- Kerala have banks that have NRI branches. Spiderman 3 was released in 5 different languages in India including Bhojpuri. 4.Individual marketing : 10 4.Individual marketing Ultimate segmentation – segments of 1 or customized marketing or one-to-one marketing. Customerization – empowers the consumers to design the product or service offering of their choice. Customization raises the cost of goods. Customer cannot cancel the product once the company has started working on the product. Paint companies have started doing this – Asian Paints, Nerolac, Berger Paints. E.g. – Arvind mills launched Ruff ‘n Tuff Jeans, branded ready-to-stitch Geographic Segmentation : 11 Geographic Segmentation Divides the market Into Different Groups Based on: Region – south India, North, Western Region, East City – metro cities, cities with population more than 1 million Rural & Semi urban areas – villages, towns with population more than 5000 or 10,000, semi urban areas Demographic Segmentation : 12 Demographic Segmentation Dividing the market into groups based on variables such as: Age – under 6 years, 6-11 yrs, 12-19 yrs, 20-34 yrs….. Gender – male, female Family size – young-single; young-married-no children; young-married-youngest child under 6;older-married-with children; single…… Income – low income group (upto 40,000 p.a.), middle income group (80,000 – 1,20,000 p.a.), high income group (>1,60,000 p.a.) Occupation – unskilled worker, skilled worker, shop owner, businessman/industrialist, junior/ senior officer, junior/ senior executive. Education – illiterate, upto 5 class, SSC/HSC, non-graduate, graduate/postgraduate (general), graduate/postgraduate (professional) Psychographic Segmentation : 13 Psychographic Segmentation Divides Buyers Into Different Groups Based on: Socioeconomic Classification – a combination of education & occupation of the chief wage earner of the household to classify buyers in the urban area. This divides market into 8 categories – A1,A2,B1,B2,C,D,E1,E2. (A1 – highest purchasing potential, E2 – the lowest) Lifestyle – culture oriented, sports oriented Personality – compulsive (habitual, irrational), gregarious (social, outgoing), authoritarian (demanding, rigid), ambitious (striving) Behavioral Segmentation : 14 Behavioral Segmentation Dividing the market into groups based on variables such as: Occasions – Archies and hallmark cards, Monaco at tea time. Benefits – shampoo for hair conditioning, cleaning, hair fall defense, dandruff control User status – customers are either – nonusers, ex-users, potential users, first-time users & regular users Slide 15: 15 Usage rate – into light, medium or heavy users. E.g. cell phone service providers provide low tariff for entry level users to attract them. Loyalty status – either – hard core loyals - loyal to 1 brand split loyals – loyal to 2-3 brands shifting loyals – shift loyalty from 1 brand to another Switchers – no loyalty to any brand Slide 16: 16 Buyer Readiness stage Unaware about the product Some are Aware Some are Informed Some are Interested Some Desire the product Some intend to buy the product Step 2. Market TargetingSegments must respond differently to different marketing mix elements & programs Requirements for effective segmentation : 17 Step 2. Market TargetingSegments must respond differently to different marketing mix elements & programs Requirements for effective segmentation Size, purchasing power, profiles of segments can be measured. Segments can be effectively reached and served. Segments are large or profitable enough to serve. Measurable Accessible Substantial Actionable Effective programs can be designed to attract and serve the segments. Evaluating & Selecting Market Segments : 18 Evaluating & Selecting Market Segments Slide 19: 19 Single segment concentration Slide 20: 20 Single segment concentration – M&M farm equipment division concentrates on tractors; Zodiac concentrates on formal shirts; hospitals for cancer care, heart specialty, etc. Firm gains a strong knowledge of the segments needs. Firm enjoys operating economies through specializing its production, distribution, & promotion. Risks – competitor may attack the segment. E.g. – Polaroid cameras and Digital cameras. Slide 21: 21 Selective specialization Slide 22: 22 Product specialization Slide 23: 23 2. Selective specialization – cater to no. of segments. No synergy between segments but each promises, but each gives profit. This strategy diversifies the firm’s risk. 3. Product specialization – firm makes a product and sells it to many different segments. E.g. – micro scope to government, universities, commercial laboratories. Risk – the product may be replaced by entirely new technology Slide 24: 24 Market specialization Slide 25: 25 4. Market specialization – firm concentrates on serving many needs of a particular customer group. E.g. – computer manufacturer provides all the equipments for the computer lab. Gains strong reputation in serving the customer group. Risk – customer group may suffer from budget cuts. Slide 26: 26 Full market coverage Slide 27: 27 5. Full market coverage – firm attempts to serve all customer groups with all the products they might need. In two ways – Undifferentiated marketing – covers whole market with 1 offer Relies mass distribution and advertising. Narrow product lines keeps down the cost of R&D, production, inventory, transportation, marketing research, advertising and product management. Co. can turn lower cost into lower prices to win price sensitive segments. Slide 28: 28 2. Differentiated marketing – operates in several market segments and designs different products for each segment. Increases the cost of business. Smith Kline Beecham launched Aquafresh toothpaste Johnson & Johnson – baby shampoo + adults. Step 2. Market TargetingMarket Coverage Strategies : 29 Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Company Marketing Mix Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Market A. Undifferentiated Marketing B. Differentiated Marketing C. Concentrated Marketing Step 2. Market TargetingMarket Coverage Strategies Choosing a market-coverage strategy : 30 Choosing a market-coverage strategy Company resources Degree of product homogeneity Market homogeneity Competitors’ strategies Step 3: Positioning for Competitive Advantage : 31 Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products. Marketers must: Plan positions to give their products the greatest advantage in selected target markets Step 3: Positioning for Competitive Advantage Positioning Strategies : 32 Positioning Strategies Positioning by specific product attributes Positioning by benefits Positioning for user category Positioning for usage occasion Positioning against another competitors Positioning against another product class Slide 33: 33 Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation. Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP). Step 3. Communicating and Delivering the Chosen Position. Steps to Choosing and Implementing a Positioning Strategy Product Differentiation : 34 Product Differentiation Physical attributes Service differentiation Personnel differentiation Location Image differentiation Which differences to promote? : 35 Which differences to promote? Important to customers Distinctive Superior Communicable to customers Preemptive Affordable Profitable Perceptual Map : 36 Positioning map of service level versus price. Source: Lovelock, Services Marketing, Prentice Hall Perceptual Map Perceptual Map : 37 Perceptual Map

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