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Market Segmentation, Targeting, and Positioning

Learn about the importance of market segmentation, targeting, and positioning in marketing. Understand the steps involved in identifying target segments and developing effective positioning strategies.

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Market Segmentation, Targeting, and Positioning

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  1. Market Segmentation, Targeting and PositioningBy : Prof Sameer Kulkarni

  2. The Starting Point • Mass Marketing: • The Seller engages in – • Mass marketing>mass production>mass distribution>and mass promotion ONE PRODUCT FO ALL BUYERS. It creates the largest potential market>leads to lower costs>lower prices>higher margins

  3. Segment Marketing • Role of Marketer • The marketer does not create the segments • The marketer identifies the segments and decide which one to target • The company can better design>price>disclose& deliver the product to satisfy the target market.

  4. Benefits of Segmentation • Effective use of resources • Gain a focus • Create Value for a target market • Positioning

  5. 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

  6. Mass Marketing Same product to all consumers (no segmentation, i. e. a commodity) Step 1. Market SegmentationLevels of Market Segmentation Segment Marketing Different products to one or more segments (some segmentation, i.e. Thumsup) 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.

  7. Market Segmentation Market Targeting Market Positioning 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments 3. Evaluate attractiveness of each segment 4. Select the target segment(s) 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept Steps in Market Segmentation, Targeting, and Positioning

  8. (a) Homogeneous preferences (b) Diffused preferences (c) Clustered preferences Creaminess Creaminess Creaminess Sweetness Sweetness Sweetness Basic Market-Preference Patterns

  9. Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Step 2. Market SegmentationLevels of Market Segmentation Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers

  10. Geographic Region, City or Metro Size, Density, Climate Demographic Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ... Psychographic Lifestyle or Personality Behavioral Occasions, Benefits, Uses, or Attitudes Bases for Segmenting Consumer Markets

  11. International National Regional/City Step 3. Market SegmentationGeographic Segmentation

  12. Geographic Bases • Region • Density • Climate • Population

  13. Step 4. Market SegmentationBases for Segmenting Business Markets Personal Characteristics Demographics Bases for Segmenting Business Markets Operating Characteristics Situational Factors Purchasing Approaches

  14. Step 5. Market SegmentationDemographic Segmentation • Dividing the market into groups based on variables such as: • Age • Gender • Family size or life cycle • Income • Occupation • Education • Religion • Race • Generation • Nationality Most Popular Bases & Easiest to Measure

  15. Step 6. Market SegmentationPsychographic Segmentation Divides Buyers Into Different Groups Based on: Social Class Lifestyle Personality

  16. Step 7. Market SegmentationBehavioral Segmentation • Dividing the market into groups based on variables such as: • Occasions • Benefits • User status • Usage rate • Loyalty status • Readiness stage • Attitude toward product

  17. Behavioral Bases • User Status & Brand Loyalty • Personality/Lifestyle • Social Class • Occasion • Readiness to Buy • Benefits Sought • Usage Rate

  18. Step 8. Market SegmentationSegments must respond differently to different marketing mix elements & programs Requirements for effective segmentation Measurable Accessible Substantial • Size, purchasing power, profiles • of segments can be measured. Actionable • Segments can be effectively • reached and served. • Segments are large or profitable enough to serve. • Effective programs can be designed to attract and serve the segments.

  19. Evaluating Market Segments • Segment size and growth • Segment structural attractiveness • Company objectives and resources

  20. Step 9. Market TargetingMarket Coverage Strategies Company Marketing Mix Market A. Undifferentiated Marketing Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 B. Differentiated Marketing Segment 3 Company Marketing Mix 3 Segment 1 Segment 2 Company Marketing Mix Segment 3 C. Concentrated Marketing

  21. Step 10. Market TargetingEvaluating Market Segments Segment Size and Growth Analyze sales, growth rates and expected profitability for various segments. 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.

  22. Choosing a market-coverage strategy • Company resources • Degree of product homogeneity • Market homogeneity • Competitors’ strategies

  23. Single-segment concentration Product specialization Selective specialization M1 M2 M3 M1 M2 M3 M1 M2 M3 P1 P2 P3 P1 P2 P3 P1 P2 P3 Market specialization Full market coverage M1 M2 M3 M1 M2 M3 P1 P2 P3 P1 P2 P3 P = Product M = Market Five Patterns of Target Market Selection

  24. Step 11. Market TargetingChoosing a Market-Coverage Strategy Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies

  25. Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the the target market’s mind.

  26. Step 12: Positioning for Competitive Advantage • 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

  27. 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

  28. Steps to Choosing and Implementing a Positioning Strategy • 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.

  29. Number of Approaches to Achieve Advantage Few Many Large Size of the Advantage Small The BCG CompetitiveAdvantage Matrix Volume Specialized Stalemated Fragmented

  30. Product Differentiation • Physical attributes • Service differentiation • Personnel differentiation • Location • Image differentiation

  31. Product Differentiation Form Fea- tures Perfor- mance Quality Conform- ance Quality Dura- bility Relia- bility Repair- ability Style Design

  32. Miscellaneous Services Services Differentiation Ordering Ease Installation Customer Consulting Delivery Customer Training Maintenance & Repair

  33. Which differences to promote? • Important to customers • Distinctive • Superior • Communicable to customers • Preemptive • Affordable • Profitable

  34. Image Differentiation Media Symbols Atmosphere Events

  35. Important Profitable Distinctive Differences Worth Establishing Affordable Superior Preemptive

  36. Perceptual Map Positioning map of service level versus price. Source: MARG, 2007

  37. Positioning Strategies • Product Attributes • Benefits, Problem Solutions & Basic Needs • Cholesterol Free Oil:Dhara • Price & Quality • Specific Use : Gift for all Events Titan • Against Other Products: Tata salt Vs. Captain Cook • Product User :Fashion loving , Well to do Consumers :Vimal fabrics • Against a Competitor

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