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Segmentation, Targeting

and Positioning
Learning Objectives
1. Learn the three steps of target marketing,
market segmentation, target marketing, and
market positioning
2. Understand the major bases for segmenting
consumer and business marketing strategy
3. Know how companies identify attractive market
segments and choose target marketing
strategy
4. Realize how companies position their products
for maximum competitive advantage in the
marketplace
Steps in market segmentation,
targeting and positioning
 Market Segmentation
 Identify bases for segmenting the market
 Develop segment profiles
 Target Marketing
 Develop measure of segment attractiveness
 Select target segments
 Market Positioning
 Develop positioning for target segments
 Develop a marketing mix for each segment
Market Segmentation
 Dividing a market into distinct groups with
distinct needs, characteristics, or behavior
who might require separate products or
marketing mixes.
Markets differ in their degree of heterogeneity . At one
extreme they are homogeneous (Similar) and at the
other extreme they are heterogeneous (Substantially
different).
Market Segmentation is the process of identifying
group of buyers with different buying desires or
requirements.
There may be three basic market preferences:
1.Homogeneous, 2. Diffused, and 3. Clustered
BASIC MARKET PREFERENCE
PATTERNS

::::::::::::::
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Attribute
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Attribute :::::::::::::: Attri.
Y
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:::::::::::::
Y ::
::::::::::::::::
:::::::::::: Y
::::::::::::::
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Attribute X Attribute X Attribute X

A.Homogeneous B.Diffused C.Clustered


Preferences Preferences Preferences
Niche, Local, Customerisation
 A niche is more narrowly defined customer
group seeking a distinctive mix of benefits.
 Local marketing is tailored to the needs
and wants of local customer groups.
 Customised marketing is one-to-one
marketing.s
ADVANTAGES OF MARKET
SEGMENTATION
 It improves a company’s understanding of
why consumers do or do not buy certain
products. Therefore prepares a company to
meet changing market demands.
 Information gained from segmentation allows
the organization to plan a systematic and
effective marketing programme to satisfy the
consumer needs.
 Better assessment of the strengths and
weaknesses of the competition.
 Better allocation of marketing resources.
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
SEGMENTATION ANALYSIS
(BASIS OF SEGMENTATION)
 CONSUMER CHARACTERISTICS
(1) Geographic ( Region, city, rural and semi-urban
areas )
(2) Demographic ( age, life cycle stage, generation,
family size, gender, income, occupation, education,
socio-economic classification )
(3) Psychographic ( life style, psychological/personality
traits, values)
 CONSUMER RESPONSES
(4) Behavioral Segments (Buyer readiness stage, Benefits
sought, Usage rate, Attitude, Loyalty, Occasions, User status)
Segmenting Business Markets
 Demographic segmentation
 Industry, company size, location
 Operating variables
 Technology, usage status, customer capabilities
 Purchasing approaches
 Situational factors
 Urgency, specific application, size of order
 Personal characteristics
 Buyer-seller similarity, attitudes toward risk, loyalty
Segmenting International Markets

 Geographic segmentation
 Location or region
 Economic factors
 Population income or level of economic development
 Political and legal factors
 Type / stability of government, monetary regulations,
amount of bureaucracy, etc.
 Cultural factors
 Language, religion, values, attitudes, customs,
behavioral patterns
Target Marketing
 Target Market
 Consists of a set of buyers who share
common needs or characteristics that the
company decides to serve
Target Marketing
 Evaluating Market Segments
 Segment size and growth
 Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
 Company objectives and resources
Target Marketing
 Selecting Target Market Segments
 Undifferentiated (mass) marketing
 Differentiated (segmented) marketing
 Concentrated (niche) marketing

Micromarketing (local or individual)
FIVE PATTERNS OF TARGET
MARKET SELECTION
 Single Market Concentration
 Market Specialization
 Product Specialization
 Selective Specialization
 Full Coverage
FACTORS CONSIDERED IMPORTANT IN
THE SELECTION OF TARGET MARKET
STRATEGY
 1. Company’s Resources
 2. Product Homogeneity
 3. Product Stage in the Life Cycle
 4. Market Homogeneity
 5. Competitive Marketing Strategy
Positioning
 Positioning:
 The place the product occupies in consumers’
minds relative to competing products.

Typically defined by consumers on the basis
of important attributes.

Involves implanting the brand’s unique
benefits and differentiation in the customer’s
mind.
 Positioning maps that plot perceptions of
brands are commonly used.
POSITIONING STRATEGIES
 Identifying possible competitive
advantages

Differentiation can be based on


Products
Services
Channels
People
Image
Product Differentiation
 Form- size, shape or physical structure
 Features- supplement to basic function.
 Performance Quality-the level at which the product’s
primary characteristics operates.
 Conformance Quality- the degree to which all the produced
units are identical and meet the promised specifications.
 Durability- a measure of the product’s expected operating life
under natural or stressful conditions.
 Reliability- a measure of the probability that a product will not
malfunction within a specified time period.
 Reparability- a measure of the ease of fixing a product when it
fails
Style
Quality can be communicated by choosing
physical signs and cues
Services Differentiation
 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
Personnel Differentiation
 Competence
 Courtesy
 Credibility
 Reliability
 Responsiveness
 Communication
Channel Differentiation
 Coverage
 Expertise
 Performance
Image Differentiation
 Image is the way the public perceives the
company or its products.
 Identity is the way a company aims to
identify or position itself or its products.
 Symbols, colours, slogans, atmosphere,
 Events and employee behaviour
Choosing the right competitive
advantage
How many differences to promote?
•Unique selling proposition
•Several benefits
Which differences to promote? Criteria include:
•Important
•Distinctive
•Superior
•Communicable
•Preemptive
•Affordable
•Profitable
Developing and communicating a
positioning strategy
All products can be differentiated to some
extent. But not all differences are meaningful
or worthwhile. A difference is worth
establishing to the extent that it satisfies the
following criteria :
 Important : The difference delivers a highly
valued benefit to a sufficient numbers of
buyers.
 Distinctive : The difference is delivered in a
distinctive way.
Developing and communicating a
positioning strategy
 Superior : The difference is superior to
other ways of obtaining the benefit.
 Preemptive : The difference cannot be
easily copied by competitors.
 Affordable : The buyer can afford to
pay for the difference.
 Profitable : The company will find it
profitable to introduce the difference.
Choosing a positioning strategy

 Value propositions ( the whole cluster of benefits


the company promises to deliver )represent the
full positioning of the brand
 Possible value propositions:
 More for More

 More for the Same


More for Less
 The Same for Less

 Less for Much Less


Some examples
Lays
Dove
Amul : The taste of India
Hindustan Unilever Limited
HDFC Standard Life Insurance