Segmentation, Targeting and Positioning of Products in Telecom Industry ***************************************************************

A marketing strategy is based on expected customer behaviour in a certain market. In order to know the customer and its expected buying process of segmenting , positioning and targeting is needed. These processes are chronological steps which are dependent on each other.

The process-data model

Below a generic process-data model is given for the whole process of segmenting , positioning and Targeting as a basis of deciding on the most effective marketing strategy and marketing mix .

This model consists of the three main activities: segmenting, targeting and positioning. It shows the chronological dependency of the different activities. On the right side of the model the concepts resulting from the activities are showed. The arrows show that one concept results from one or more previous concepts; the concept cannot be made when the previous activities have not taken place. Below the three main activities are shortly described as well as their role as a basis for the next step or their dependency on the previous step.

Segmenting

Segmenting is the process of dividing the market into segments based on customer characteristics and needs. The main activity segmenting consists of four sub activities. These are: 1. determining who the actual and potential customers are 2. identifying segments 3. analyzing the intensity of competitors in the market 4. selecting the attractive customer segments. The first, second and fourth steps are described as market segmentation. The third step of analyzing the intensity of the competitors is added to the process of segmenting in this process description. When different segments are identified, it is not necessary that these segments are attractive to target. A company is almost never alone in a market -- competitors have a great influence on the attractiveness of entering a certain market. When there is a high intensity of competitors, it is hard to obtain a profitable market share and a company may decide not to enter a certain market. The need for segmenting a market is based on the fact that no market is homogeneous. For one product the market can be divided in different customer groups. . Eg. in case of telecom scenario the entire customer base or the probable customer base is segmented on basis of circles in India, age, income, Average Revenue Per User(ARPU), Age On Network( AON) etc .This results in segments which are homogeneous within and heterogeneous between each other. When these segments are known, it is important to decide on which market to target. Not every market is an attractive market to enter. A little filtering has been done in this activity, but there are more factors to take in account before targeting a certain market segment. This process is called targeting.

Targeting
After the most attractive segments are selected, a company should not directly start targeting all these segments -- other important factors come into play in defining a target market. Four sub activities form the basis for deciding on which segments will actually be targeted. The four sub activities within targeting are: 1. defining the abilities of the company and resources needed to enter a market 2. analyzing competitors on their resources and skills 3. considering the companys abilities compared to the competitors' abilities

4. deciding on the actual target markets. The first three sub activities are described as the competitor analysis. The last sub activity of deciding on the actual target market is an analysis of the company's abilities to those of its competitors. The results of this analysis leads to a list of segments which are most attractive to target and have a good chance of leading to a profitable market share. Obviously, targeting can only be done when segments have been defined, as these segments allow firms to analyze the competitors in this market. In Telecom sector there is severe competition due to multiple players in the market and price wars intitiated by new entrants in the sector, hence the competitor analysis and targeting plays an important part before any new product is launched and for making a product sell in the hugely competitive scenario . When the process of targeting is ended, the markets to target are selected, but the way to use marketing in these markets is not yet defined. To decide on the actual marketing strategy, knowledge of the differential advantages of each segment is needed.

Positioning
When the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But an important step before developing the marketing mix is deciding on how to create an identity or image of the product in the mind of the customer. Every segment is different from the others, so different customers with different ideas of what they expect from the product. In the process of positioning the company: 1. identifies the differential advantages in each segment 2. decides on a different positioning concept for each of these segments. The process-data model shows the concepts resulting from the different activities before and within positioning. The model shows how the predefined concepts are the basis for the positioning statement. The analyses done of the market, competitors and abilities of the company are necessary to create a good positioning statement.. Positioning a product in minds of the prospective or present customers plays an important part in Telecom business as it is the perception and word of mouth which plays the most important part. Eg when Reliance Communication was launched in 2002 it positioned itself to be the pioneer in telecom for the masses against the players like Airtel , Hutch Essar present in the market. This position still plays an important part while developing the rate plans with lowest tariff rates or any Prepaid recharge. In my course work the emphasis will be how STP have modified and continues to play an important role in telecom business with changing scenario in Indian market and that STP can be effectively used to bring about the revenue growth with the growing competition and shrinking market in telecom sector .