A key marketing strategy decision making : How to divide up markets into meaningful customer groups (Market Segmentation), choose

which customer groups to serve (Target Marketing), and create marketing offers that best serve targeted customers (Positioning)

Segmentation Identifying meaningfully different groups of customers

Positioning Targeting Selecting which segment(s) to serve Implementing chosen image and appeal to the chosen segment

Dividing a Market into distinct groups of buyers, according to similar needs, characteristics or behaviors, who might require separate products or marketing mixes.
The objective of Market Segmentation is to determine the differences between buyers or buyer groups. A heterogeneous Market may be subdivided into a number of more or less homogeneous Market segments.

Not all buyers are alike the days of one size fits all are over ! Sub-groups are smaller and more homogeneous in nature It is easier to satisfy the needs and demands of smaller groups

1. Undifferentiated or Mass Marketing -> One Product , One Marketing Mix

2. Differentiated (Segment) Marketing -> Different segments, Different Marketing Mixes

3. Niche or Concentrated Marketing

A niche is a subset of the Market Segment on which a specific product is focusing. The marketers focus is on one segment, although the product could appeal to others as well. In an attractive niche, the customers have a distinct set of needs; they will pay a premium to the firm that best satisfies them. The niche is fairly small, but has size, profit and growth potential and is unlikely to attract many other competitors in the short run.

3. Niche or Concentrated Marketing

4. Micro Marketing -> Newest, narrowest approach of segmentation

Local Marketing

4. Micro Marketing -> Newest, narrowest approach of segmentation

Individual Marketing

1. Geographic Segmentation : Region-wise

1. Geographic Segmentation : City-wise

Class I Class II Class III Class IV Population: 1,00,000 and above Population : 50,000 to 99,999 Population : 20,000 to 49,999 Population : 10,000 to 19,999
Source:
Census Data 2011 City Classification as recommended by Sixth Central Pay Commission in 2008 (X, Y and Z)

Class V
Class VI

Population : 5,000 to 9,999

Population : Less than 5,000

50,00,000 : Megacity 10.00,000 to 4,999,999 : Metropolis 5,00,000 to 9,99,999 : Sub-Metropolis

6 Cities classified as X 53 cities classified as Y Other cities classified as Z

53 urban agglomerations in India with population of 1 million or more

1. Geographic Segmentation : Rural, Urban and Semi-urban

2. Demographic Segmentation :

Age

Income

Occupation

Generation

Gender

Family Size

Education

3. Psychographic Segmentation : SEC Classification

Occupation Illiterate School upto 4 years or Literate but no formal schooling E2 E1 D D C B2 B1 School (5-9 years) Education HSC/SSC Some college, but not graduate Graduate or PostGraduate (Gen) D B2 B2 A2 A2 A1 A1 Graduate or PostGraduate (Prof) D B2 B2 A2 A1 A1 A1

Unskilled Workers Skilled Workers Petty Traders Shop Owners Businessmen/ Industrialist No. of Employees None 1-9 10 plus

E2 E2 E2 D D C B1

E1 D D C B2 B2 A2

D C C B2 B1 B1 A2

D C C B1 A2 A2 A1

3. Psychographic Segmentation : SEC Classification (Contd)

Occupation Illiterate School upto 4 years or Literate but no formal schooling D D School (5-9 years) Education HSC/SSC Some college, but not graduate Graduate or PostGraduate (Gen) Graduate or PostGraduate (Prof)

Self-employed Professionals Clerical/Sales men

D D

D D

B2 C

B1 B2

A2 B1

A1 B1

Supervisory level
Officers/Execut ives (Junior) Officers/Execut ives (Senior)

D
C B1

D
C B1

C
C B1

C
B2 B1

B2
B1 A2

B1
A2 A1

A2
A2 A1

3. Psychographic Segmentation : SEC Classification (Contd.)

Education Pucca Illiterate Below SSC SSC/HSC Some College Education, Not Graduate Graduate/Post-graduate (General) R4A R3A R2 R1 R1 Type of House Semipucca R4A R3B R3A R2 R2 Kuccha R4B R4A R3B R3B R3A

Graduate/Post-graduate (Professional)

R1

R2

R3A

3. Psychographic Segmentation : SEC Classification (Contd.)

Urban A1 A2 B1 B2 C D E1 E2 % of Households 1% 1.8% 2.5% 2.4% 6.1% 6.6% 3% 5% Rural R1 R2 R3 % of Households 2.6% 1.8% 26.7%

R4
Urban : 28.4 % Rural : 71.6%

34.%

Source : Marketing Whitebook, 2005, based on IRS 2003-2004

3. Psychographic Segmentation : VALS Framework

3. Psychographic Segmentation : VALS Framework Value and Lifestyle Survey (VALS) is one of the most popularly used systems for psychographic measurements. Adults are classified into different groups based on their responses to a questionnaire containing questions based on demographics and attitude. In the USA, adults are classified into eight primary groups and the main dimensions of the segmentation framework are consumer motivation (X-axis) and consumer resources (Y-axis). Similarly, in Japan, society is divided into 10 consumer segments based on two key concepts : life orientation and attitudes to social change.

3. Psychographic Segmentation : VALS Framework (USA) The four groups with higher resources:

Innovators

Thinkers

Achievers

Experiencers

Successful, sophisticated, active, people with high selfesteem -> Buy upscale, nicheoriented products and services

Mature, satisfied, motivated by ideals, value knowledge and responsibility -> Look for durability, functionality and value in their products

Successful, Goaloriented people who focus on careers and family -> Buy premium products that demonstrate success to their peers

Young, enthusiastic, impulsive people who seek variety and excitement > Spend on fashion, entertainment and socializing

3. Psychographic Segmentation : VALS Framework (USA) The four groups with lower resources:

Believers

Strivers

Makers

Survivors

Conservative, conventional and traditional people -> Prefer familiar products and are loyal to established brands

Trendy, fun-loving people who are resource constrained -> Buy stylish products and try to emulate the purchases made by people with greater wealth

Practical, down-toearth, selfsufficient people -> Seek products with a practical or functional purpose

Elderly, passive people who are concerned about change -> Extremely loyal to their favourite brands !

3. Psychographic Segmentation : Gert Hoffstedes Cultural Model

Individualism Vs. Collectivism : The relationship between the individual and the group in society Power Distance: Expectations regarding equality among people

Masculinity: Gender Roles

Uncertainty Avoidance : Expectation and reaction to what is different and dangerous

Long- term orientation : Viewing of time

4. Behavioral Segmentation : Occasions

4. Behavioral Segmentation : Benefits

4. Behavioral Segmentation : User status

Ex-users

Potential Users

First-time Users

Regular Users

Non-users

4. Behavioral Segmentation : Usage Rate

Light

Medium

Heavy

4. Behavioral Segmentation : Loyalty Status

Hard-core loyals

Split loyals

Shifting loyals

Switchers

4. Behavioral Segmentation : Attitude towards product

Enthusiastic

Positive

Indifferent

Negative

Hostile

4. Behavioral Segmentation :Buyer Readiness

Aware

Interest

Desire

Action

Step 1: Needs-based Segmentation -> Group customers into segments based on similar needs and benefits for solving a particular customer problem. Step 2: Segment Identification -> For each needsbased segment, determine what makes the segment distinct and identifiable. Step 3: Segment Attractiveness -> Determine the overall attractiveness of the segment. Step 4 : Segment Profitability

Step 5 : Segment Positioning -> Create a value proposition for each segment and product-price positioning strategy based on the segment. Step 6: Segment Acid test -> Create a storyboard to test the segmentation positioning strategy. Step 7: Marketing- Mix Strategy : The 4 Ps !!!!

Identifiable

Substantial

Reachable

Segment Attractiveness

Profitable

Responsive

M1 P1 P2 P3

M2

M3

Single-segment Concentration

M1 P1 P2 P3

M2

M3

Selective Specialization

M1 P1 P2 P3

M2

M3

Product Specialization

M1 P1 P2 P3

M2

M3

Market Specialization

M1 P1 P2 P3

M2

M3

Full Market Coverage

 Positioning

is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market.

Key terms : Target Customers, Benefits, Value Proposition and the law of the Word !

 Attribute

Positioning -> Specific Product feature

Benefit Positioning :

Use/Application Positioning :

User Positioning :

Competitor Positioning :

Product Category Positioning :

Quality/Price Positioning :

Most People think I must drink at least 10 cups of coffee to be so perky in the morning. But the truth is, I like skim milk first thing. It has all the same nutrients as whole milk without all the fat. And besides, my husband got the coffee maker. MILK: What a Surprise

User Positioning

Most People think I must drink at least 10 cups of coffee Competitor Positioning to be so perky Benefit Positioning in the morning. But the truth is, I drink Use/applications Positioning skim milk first thing. It has all the same nutrients Attribute Positioning of whole milk without all the fat Product category Positioning. And besides, my husband got the coffee maker. MILK: What a Surprise

Points-of-Difference -> Attributes/Benefits associated with a brand which is unique to it, not found in the competitors (Recall the examples of Dominos, Apple and BMW) Points-of-Parity -> Attributes that are not necessarily unique to the brand, may be shared by others

(i) Category POP : Necessary, but not sufficient condition for brand choice (ii) Competitive POP : Designed to negate the competitors POD

Sometimes, it is important to inform the customer about the brands category membership. This becomes important, especially in case of new product launches. Sometimes, it becomes important because the brand image is too strongly associated with a particular category ! Example :

Brand Values
Brand Benefits Brand Attributes

More Attractive

Softer Skin One Quarter cleansing milk

Remember : A positioning statement is not a tagline !!!

The tagline is a "translation" of the position statement into words that will have maximum effect on the customer. Structure : To (target group and need), our (brand) is (the concept/category membership) that (what the point-of-difference is or does) because (reason).

Example :

To 16-25 year old males, who embrace excitement, adventure and fun, Mountain Dew is the great tasting carbonated soft drink that exhilarates like no other because it is energizing, thirst quenching, and has a one of a kind citrus flavor.