Market Segmentation, Targeting, and Positioning

Market Segmentation, Targeting and Positioning

• Outlines the concepts, benefits, and strategies related to market segmentation, targeting, and product positioning.
• Also, the concept of branding, its types, brand equity, and branding strategies.

Segmentation

• Classification of customers into groups sharing common characteristics.
• A marketing strategy breaks down a large, heterogeneous market into small, more homogeneous segments.
• A separate marketing program is developed for each segment.
• Philip Kotler defines market segmentation as subdividing a market into distinct and homogeneous subgroups of customers.
• These subgroups can be selected as target markets to be met with a distinct marketing mix.

Stages of Marketing

• Mass marketing is a strategy without segmentation.
• Product-variety marketing offers different product variations.
• Target marketing focuses on specific customer segments.
• Micromarketing tailors products to suit individuals' tastes and locations.
• Customized marketing involves adapting products/programs to individual customer needs.

Advantages of Segmentation

• Breaking up a homogeneous market into heterogeneous segments forces marketers to analyze market needs and competently serve those needs.
• Analyzing competitor offerings and marketing positioning clarifies the company's own positioning strategy.
• Limited resources are used efficiently by targeting the best potential segments.

Levels of Market Segmentation

• Mass marketing offers the same product to all consumers without segmentation.
• Segment marketing offers different products to one or more segments.
• Niche marketing offers different products to subgroups within segments.
• Micromarketing offers products tailored to individual tastes and locations, representing complete segmentation
• Local marketing tailors brands or promotions to local customer groups.
• Individual marketing tailors products or programs to individual customers.

Factors Influencing Segmentation

• Size, objectives, and resources of the company impact segmentation decisions.
• The type of product and market influence segmentation strategies.
• The competitive structure of the industry influences segementation strategies.
• The life cycle stage of the product affects segmentation approaches.
• The firm's competitive strategy shapes how it segments the market.

Segmentation Variables

• Geographic segmentation divides the market by location.
• Demographic segmentation divides the market by factors like age, gender, and income.
• Behavioral segmentation divides buyers based on knowledge, attitude, use, or response to a product.
• Psychographic segmentation divides buyers based on social class, lifestyle, values, beliefs, and personality.

Geographic Segmentation

• Involves dividing the market based on the location of the target market.
• People in the same area often have similar needs and wants, differing from those in other areas.
• Considers climate, population density, and taste variations.
• Micromarketing strategies is often used.

Demographic Segmentation

• Market partitioning based on factors such as age, gender, marital status, and income.
• Also considers social class, family size, occupation, education, and ethnicity.

Psychographic Segmentation

• Divides buyers into different groups based on social class, lifestyle, values, beliefs, and personality characteristics.
• Marketers refine a target market using psychographic segmentation.
• Provides vivid and practical profiles of consumer segments.
• Utilizes Activities, Interests, and Opinions (AIO) inventories and research for consumer responses.

Behaviour Segmentation

• Buyers are divided into groups based on their knowledge, attitude, and use or response to a product.
• Considered the best starting point for building market segments.
• Includes occasions and special occasion segmentation.
• Considers benefits sought by consumers.
• Segmentation by user status, usage rate, loyalty status, and the buyer's readiness stage.

Requirements for Effective Segmentation

• Measurable segments, where size, purchasing power, and profiles can be measured.
• Accessible segments that can be effectively reached and served.
• Substantial segments that are large or profitable enough to serve.
• Differential segments that respond differently to different marketing mix elements and actions.
• Actionable segments that the company is able to attract and serve.

Steps in the Segmentation Process

• Determine market boundaries.
• Decide on which segmentation bases to use.
• Analyze segmentation data.
• Develop a profile of each segment.
• Select segments to be served
• Design a marketing plan.

Basis for Segmentation of Industrial Products

• Size of the industry: small, medium, and large scale.
• Geographical location.
• End use.
• Buyer behavior/motivation or purchase criteria.
• Benefits sought.

Target Market

• A market is defined as a set of all actual and potential buyers.
• A target market refers to a group of individuals toward whom a firm directs its marketing efforts.
• Target market strategies are designed to satisfy specific needs and preferences.
• A detailed description is a marketing strategy.

Advantages of Target Marketing

• Easier analysis of potential and actual consumers.
• Allows for the tailoring of products to meet market demand.
• Enables more effective assessment of demand potential.
• Helps in identifying competing products within the target market.
• Increased sales effectiveness and cost efficiencies.
• Facilitates product positioning and the identification of market opportunities.

Disadvantages of Target Marketing

• Increased marketing costs.
• Personalization can become burdensome to manage.
• Faux segmentation may be viewed cynically by consumers.
• Narrow segmentation can negatively impact brand loyalty.
• Ethical concerns and stereotyping issues.

Basis for Identifying Target Customers

• Assessing market attractiveness based on segment size, growth rate, and price sensitivity.
• Considering customer and supplier bargaining power and entry/exit barriers.
• Analyzing company factors like nature of competitiveness, new entrants, and competitive differentiation.
• Analyzing macro factors like political issues, social trends, and environmental issues.
• Evaluating firm capabilities like exploitable marketing assets, cost advantage, and technological edge.
• Assessing managerial capabilities and commitment.

Target Market Strategies

• Limited market coverage strategies include single segment concentration, selective specialization, product specialization, and market specialization.
• Full market coverage strategies include undifferentiated marketing, concentrated marketing, and differentiated marketing.

Important Factors in Target Market

• Addressing ethical issues related to the target market.
• Considering segment interrelationships and potential super segments.
• Implementing mega marketing strategies.
• Managing gradual invasion tactics.
• Fostering inter-segment cooperation.

Positioning in the Marketplace

• Positioning involves designing the company’s offering and image to occupy a distinctive place in the target market’s mind.
• Positioning is what you do to the mind of the prospect.
• Crest toothpaste promotes its anti-cavity protection.
• Mercedes promotes its great engineering
• BMW promotes "ultimate driving machine"
• Attributes can be single or multiple.

Importance of Positioning

• Guides the product to a predetermined market position.
• Connects product offerings with specific target markets.
• Provides a competitive advantage in the market.
• Better serving and covering the market.
• Provides space to build the brand through strategic positioning.

Choosing and Implementing a Positioning Strategy

• Identifying possible competitive advantages.
• Selecting the right competitive advantages to leverage.
• Executing the chosen position to the target market through clear communication

Developing a Positioning Strategy

• Positioning possibilities include:
  • Attribute positioning
  • Benefit positioning
  • Use or application positioning
  • User positioning
  • Competitor positioning
  • Product category positioning
  • Quality or price positioning.
• Determining which positioning strategy to promote.

Attribute Positioning

– Positioning strategy emphasizing a specific attribute of the product or service. - Based on the size. - Based on the number of years in existence. - Based on culture.

• Disneyland positioned as largest manmade park in the world.
• Dove soap contains moisturizing cream.

Benefit Positioning

• Positioning as a leader in providing a certain benefit.
• McDonald's positioned as family restaurant.
• Honda provides economy and reliability
• BMW promotes ultimate driving machine.
• Volvo promotes safety and durability.

Use/Application Positioning

• Positioning a product for a specific use.
• Nestle 'Maggi Noodles' is positioned as a easy-to-cook snack item.
• Nestle Milkmaid: positioned as a base for dessert preparation.

User Positioning

• Positioning a product as the best choice for a specific user group.
• ‘Red and white’ cigarettes are positioned for bold and brave people.
• The product is supported by 'bravery' awards.

Competitor Positioning

• Product claims to have better performance than competitors.
• Brooke Bond Taj Mahal Tea:
  • Endorsed by Zakir Hussain.
  • Zakir Hussain said he will stop playing Tabla if you find a better tea than Taj Mahal
  • Directly or indirectly refer competitors.

Product Category Positioning

• Positioning as a leader in a certain category.
• Maruti launched the 1000 in 1990
• The Maruti 1000 was the only luxury car in India initially
• The Maruti 1000 was positioned as 'ultimate in luxury'
• Hero Honda: Four Stroke with great fuel efficiency
  • Claimed as the leader in fuel efficiency
  • Motto 'Fill it, shut it, forget it'
• Livon: after hair wash oil
  • Promotes smooth and silky hair

Quality or Price Positioning

• Bajaj Scooters have the lowest prices
• Bajaj Scooters Motto ‘You just cannot beat a Bajaj'
• Repositioned as ‘Hamara Bajaj'

Errors in Positioning

• Four major errors include:
  • Under positioning
  • Over positioning
  • Confused positioning
  • Doubtful positioning

Under Positioning

• Seen as just another entry in a market.
• Pepsi introduced its clear crystal Pepsi 1993.
• Customers were not impressed
• Clarity does not add value.

Over Positioning

• Having a narrow image of the brand.
• Trying to widen that image .
• The customer do not accepet this.
• Customers think Maruti can only make cars up to 5 lacs
• Not higher end.
• Poor sales.

Confused Positioning

• Company making too many claims.
• Dettol: Started as Beauty soap
• Did not click
• Later Repositioned as Anti bacterial soap.

Doubtful Positioning

– Claims that customers cannot believe in.

• The Maruti 1000 lunched in 89 as luxury.
• Later the Esteem was launched which hurt those claims
• Sales dipped.
• Customer confused
• Repositioned as ‘Affordable luxury'

Tasks Involved in Positioning

• Competitor identification.
• Determining how competitors are perceived and evaluated.
• Determining the competitor's position.
• Analyzing customer preferences.
• Making the positioning decision.
• Monitoring the position.

Brand

• A brand is a name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers.
• Brands function to differentiate products from those of competitors.

Role of Brands

• Brands identify the maker.
• They simplify product handling. Organize accounting. Offer legal protection. Signify quality. Create a barrier to entry. Serve as a competitive advantage. Secure a price premium.

Branding

• Branding is endowing products and services with the power of the brand.

Brand Equity

• Brand equity is the added value endowed on products and services influenced by how consumers think, feel, and act with respect to the brand.

Brand Advantages

• Improved perceptions of product performance.
• Greater loyalty.
• Less vulnerability to competitive marketing actions.
• Less vulnerability to crises.
• Larger margins.
• More inelastic consumer response.
• Greater trade cooperation.
• Increased marketing communications effectiveness.
• Possible licensing opportunities.

Brand Promise

• Vision of what the brand must be and do for consumers.

Brand Elements

• Slogans
• URL
• Logos
• Symbols
• Brand names
• Jingles
• Characters

Brand Element Choice Criteria

• Memorable
• Meaningful
• Likeability
• Transferrable
• Adaptable
• Protectable