Marketing segmentation, targeting and positioning
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This document discusses market segmentation and targeting. It begins by explaining the traditional view of marketing as making and selling products, and how the new view is that marketing begins with planning. It then discusses approaches to marketing like LBS Kumar's "3 Vs" of value segment, value proposition, and value network. Another approach discussed is viewing marketing as a value chain and identifying ways to create more customer value. The document emphasizes that value creation involves choosing a value for customers, providing that value through product and distribution choices, and communicating the value through promotional tools. It provides examples of market segmentation based on demographic, psychographic and behavioral factors. Finally, it discusses strategies for targeting markets, including undifferentiated, differentiated and concentrated approaches
Marketing segmentation, targeting and positioning
- 2. • Rs. 2000 (Manufacturing) • Rs. 1000 (Marketing & endorsers) • Rs. 2000 (Distribution) • Rs. 2000 (Retailer’s profit) • Rs. 7000 (Customer) MIBM MBA-I 2
- 3. • The traditional view of marketing is that the firm makes something and then sells it. • Will not work in economies where people face abundant choice. • New belief: marketing begins with the planning process.
- 4. LBS’s Nirmalya Kumar’s 3 “Vs” approach to marketing: • Define the value segment (customer needs) • Define the value proposition • Define the value network Dartmouth's Frederick Webster views marketing in terms of: • Value defining process: Market research & company self analysis • Value developing processes: Product development • Value delivering processes: Advertising & Distribution
- 5. The value chain is a tool for identifying ways to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product. 5MIBM MBA-I
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- 7. Value creation and delivery consists of three parts: • Choosing the value (segment the market, define target market, develop “offering”). • Providing the value (product features, prices, and distribution channels). • Communicating the value (sales force, advertising, and promotional tools).
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- 9. • General – Horlicks (Classic Malt, Chocolate Delight, Kesar Badam, Elaichi), – Lite Horlicks (Original, Badam), – Horlicks Oats • Toddlers – Junior Horlicks (stage-1, stage-2, Chocolate, Original) – Horlicks Growth (Chocolate, Vanilla) • Women – Women’s Horlicks (Caramel, Chocolate), – Mother’s Horlicks (Vanilla, Kesar) • Horlicks Protein + (Chocolate, Vanilla) • Horlicks Cardia +, MIBM MBA-I 9
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- 11. 4-11 The breaking down or building up of potential buyers into groups called Market Segments Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process. MIBM MBA-I
- 12. 4-12 • Market Segmentation – Process of dividing a large market into smaller target markets, or customer groups with similar needs and/or desires – A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. – Market Segmentation is the sub-dividing of customers into homogenous sub-set of customers where any sub-set may conceivably selected as market target to be reached with distinct Marketing Mix – Philip Kotler MIBM MBA-I
- 14. • To leverage scarce resources; in other words, to ensure that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customer groups. • To provide selected offerings for selected groups of people, most of the time. • To focus on specific customers’ needs, in the most efficient and effective way. • Product Differentiation. MIBM MBA-I 14
- 15. • Focus of the Company • Increase in competitiveness • Market expansion • Customer retention • Have better communication • Increases profitability MIBM MBA-I 15
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- 20. • Nations, states, regions, countries, cities, or neighbourhoods etc. • Grass root marketing – banks, in city courier companies • Region – South, West, East, North. • City – Class-I, Class-II, metro cities, mini metros etc. • Rural, Semi-urban & Urban – literacy level, income, spending power & availability of infrastructure such as electricity, telephone network, & roads. Social & cultural operation differs which affect market potential, buying pattern & habit. • India more than 5000 towns & over 638000 villages. • Difference in preferences, purchase pattern, & behaviour. MIBM MBA-I 20
- 21. • Size of geographical market. • Logistics issues – use of sophisticated & software for physical distribution. • Geographical market vary in their product requirements. – Dry summer season, desert coolers. – Hot & humid areas, air conditioners. – Food habits, In south – freshly brewed coffee while other areas mostly prefer tea. – Some part - strong tea, other Nilgiri tea. – Ashirvad & MTR – Curry powder, pickles etc MIBM MBA-I 21
- 22. • Age - > 6yrs, 6-11, 12-19, 20-34, 35-49, 50-60, 60+ yrs. • Family size – Young-single, Young-married-no children, young- married-youngest child under 6, young-married-youngest child above 6, older-married-with children, older-married-no children under 18, older-single, other. • Gender – Male, Female • Income – up to Rs. 40000 pa, 40001-80000 pa, 80001-120000 pa, 120001-160000 pa, above 160000 pa • Occupation – Unskilled, Skilled, Semi skilled, traders, businessman, clerical, Jr. executives, Sr. Executives. • Education – Illiterate, school upto 4 yrs, between 5 to 9yrs. Graduate, postgraduate. • Religion, race, generation, nationality, & social class etc. • Demographic variables are associated with consumer needs & wants and are easy to measure. MIBM MBA-I 22
- 23. • Age & Life-cycle stage – Toys, books, magazines, digital games, candies, chocolates, biscuits, fruit juices, packaged foods – targeted towards_________ – J & J’s Baby soap, talcum powder, oil. – Pears in pink colour. – Disney’s books. – Aastha, Sanskar for _______ generation. – Cartoon network, Disney, Jetix, , Hungama, Pogo, Nickelodeon for _______ generation. – MTV, Channel V, Bindass etc for ________ – Discovery, National Geographic for people who are interested in nature, science, geography & similar subjects. – Clearasil_____, Glucose D________, Jewelry______ MIBM MBA-I 23
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- 25. • Life Stage – Getting married, deciding to buy home, sending child to school, taking care of older family members, marrying off their children, planning for retirement etc. – Furniture, kitchen appliances, cooking gas connection becomes necessary when ____. – Saving cum insurance schemes for young parents to plan for children’s education or for retirement. MIBM MBA-I 25
- 26. • Gender – Women – more communal minded, focus on immediate environment etc. – Men – more self expressive & goal directed, focus on environment which helps them to achieve a goal. – Clothing, hairstyle, cosmetics, & magazines. – Park Avenue – masculine or feminine. – Men prefer motorcycles, women prefer scooters. – Van Huesen, Allen Solly, Emami etc. – Household-use product & groceries. – Dove & Axe. – Television programs & channels (Food Food), Automobile industry. MIBM MBA-I 26
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- 28. • Income – Determine ability of consumer to participate in the market exchange. – Automobiles, clothing, cosmetics, financial services & travel – Rolex, Omega, Tag Heuer, Xylys etc. – Nirma targeted at middle income segment. – Detergent, shampoo, hair oil available in small sachets for one time consumption. – Aravind Eye care system to offer world class eye care to poor people in urban & rural area. – Big Bazaar, D-Mart MIBM MBA-I 28
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- 30. • Generation – Generation is influenced by times in which it grows up – music, movies, politics, & defining events of the period. – Cohorts, members share same major cultural, political, & economic experiences & have similar outlooks & values. – Younger generation – Generation X, Y, Z (millennial) MIBM MBA-I 30
- 31. • Science of using psychology & demographics to better understand consumers. • Psychological/personality traits, lifestyle, values. • Vegetarian & non vegetarian (many avoid beef). MacDonald’s. • Halal & Jhatka chicken. • Titan – edge, regalia, nebula, raga, Fastrack, Sonata etc. • Maggie, Top Ramen, Aashirvaad – ready to eat or fast to cook. • Femina • Hidesign. MIBM MBA-I 31
- 32. • VALS segmentation – Horizontal • Primary Motivation – Ideals » The segment guided by knowledge and principles – Achievement » Looking for products and services that demonstrate success to their peers – Self-Expression » Desire social or physical activity, variety and risk – Vertical • Resources (education, income, health) MIBM MBA-I 32
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- 34. • Higher resources – Innovators • Successful, sophisticated, active, people with high self esteem. Niche oriented products & services (Luxury products) – Thinkers • Mature, satisfied & reflective people who are motivated by ideals & who value order. Knowledge, & responsibility. Seek durability, functionality & value in purchase. (Branded shoes, Renowned books) – Achievers • Successful, goal oriented people who focus on career & family. Favour premium products. (Honda, i-pad) – Experiencers • Young, Enthusiastic, impulsive who seek variety & excitement. High spending on fashion, entertainment & socializing. (Designer cloths, stylish footwear) MIBM MBA-I 34
- 35. • Lower resource – Believers • Conservative, conventional, & traditional with concrete beliefs. Prefer familiar products & are loyal to established brands. (prefer old established brands, local news channels) – Strivers • Trendy & Fun loving who are resource constrained. Favour stylish products & try to emulate. (Coke classic, lottery) – Makers • Practical, down to earth, self sufficient people, like to work with hands. Seek product with practical or functional purpose. (Basic shirt, comfortable chair) – Survivors • Elderly, passive, concerned about change. Loyal to their favorite brands. (Medicines, milk and bread) MIBM MBA-I 35
- 36. • Social Class – Cars, clothing, home furnishing, leisure activities, reading habits, retailers & many companies design products & services for specific social classes. – Caste system – SEC (Socio Economic Classification) MIBM MBA-I 36
- 37. • On the basis of their knowledge of, attitude towards, use of, response to product. • Decision Roles – Initiator, Influencer, Decider, Buyer, & User. – Useful for communication strategy. – Pharma companies influence Doctors’ prescription behaviour by providing technical information about products. – Shaving products – Kitchen appliances. MIBM MBA-I 37
- 38. • Behavioral Variables – Occasions – Archies & Hallmark make cards for birthdays, weddings, Id, Diwali etc. • Cars heavily advertised in _______ times. • Chocolates, snacks, sweets on V-Day. • Orange Juice promoted as cool, healthful refresher at all the time. • When do you think people prefer to drink orange juice? • Diet Coke, Coca-Cola as family drink • Parle-G, Monaco. MIBM MBA-I 38
- 39. • Behavioral Variables – Benefits • Shampoos - basic cleaning of hair, conditioning effect, medicinal treatment, suitability to hair types. Clinic +, Chick, Pantene, Head & Shoulder & Sunsillk. • Bathing soap – Liril, Dettol, Cinthol. • Sports – Health drinks, sports shoes, cloths MIBM MBA-I 39
- 40. • Behavioral Variables – User Status • Nonusers, ex-users, potential users, first-time users & regular users. • Market leaders – attract potential users – Usage rate • Light, medium & heavy product users. • Mobile phone service providers depends upon heavy users (ARPU). • Low tariffs for new users. – Buyer Readiness Stage • Aware & Unaware, some are informed, some are interested, some desire the product, some intend to buy. • Marketing Funnel • E.g.. Life Cell baby cord – Umbilical cord stem cell banking. MIBM MBA-I 40
- 41. • Behavioral Variables – Loyalty Status • Hard core loyals, split loyals, shifting loyals, Switchers. • Habit, indifference, a low price, high switching cost, unavailability of other brand. • Loyalty programs. – Attitudes • Enthusiastic, Positive, Indifferent, Negative & Hostile. • Political campaign MIBM MBA-I 41 Enthusiastic Positive Indifferent Negative Hostile
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- 44. Demographic Operating Variables Purchasing Approach Situational Factors Personal Characteristics Industry, company size, location Technology, user status, customer capabilities Power structure, nature of existing relationship Urgency, specific application, size of order Buyer-seller similarity, loyalty, risk attitude 45MIBM MBA-I
- 45. • Refrigerators – Geographical – N W S E – Size – 65, 90, 165, 286, 300 liters – Nature of consumers – households & industrial • Washing Machines – Density – Urban & Suburban – Economy – middle & upper income group – Benefits – Automatic, Semi-automatic • Airline Services – Region – all regions – Density – Urban – Occupation – service & business class – Benefits – time & comfort – Usage – frequent, occasion • Banking Services – Density – Urban, Suburban & rural – Customers – service, business & self employed – Psychographic – Behaviour MIBM MBA-I 46
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- 47. • Size, purchasing power, profiles of segments can be measured. • Segments are large or profitable enough to serve. Measurable Substantial Accessible Differential Actionable • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. 48MIBM MBA-I • Segments can be effectively reached and served.
- 48. Full Market Coverage Multiple Segments Single Segments Individuals as segments MIBM MBA-I 49
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- 50. • Single-Segment Concentration – Farm equipment division of M&M – tractors. – Zodiac shirts, Specialty hospitals. – Specializing in production, distribution & promotion, high ROI. – Risk – Super segment • Selective Specialization – Multisegment strategy to diversify risk. P&G, HUL. MIBM MBA-I 51
- 51. • Product Specialization – Microscope sold to universities, governments, commercial laboratories. – Risk – New Technology • Market Specialization – A stationary provider to university. • Full market coverage – Microsoft, Coca-cola, TATA Motors. – Undifferentiated or Differentiated 52MIBM MBA-I
- 52. • Segment by segment invasion plan • Megamarketing • Ethical choice of market segment • Avoid consumer backlash, public controversy. • Coca-cola targeting children. 53MIBM MBA-I
- 53. 8- 55 • Evaluating Market Segments – Segment size and growth – Segment structural attractiveness • Level of competition • Substitute products • Power of buyers • Powerful suppliers – Company objectives and resources
- 54. • A market is a set of all actual and potential buyers • A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences. • Three strategies - • Undifferentiated Strategy • Differentiated • Concentrated 56MIBM MBA-I
- 55. Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Company Marketing Mix Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Market A. Undifferentiated Marketing B. Differentiated Marketing C. Concentrated Marketing
- 56. 8-58 • Undifferentiated marketing: when a firm produces only one product or product line and promotes it to all customers with a single marketing mix – Sometimes called mass marketing – Much more common in the past MIBM MBA-I
- 58. 8-60 • Differentiated marketing: when a firm produces numerous products and promotes them with a different marketing mix designed to satisfy smaller segments – Tends to raise costs – Firms may be forced to practice differentiated marketing to remain competitive MIBM MBA-I
- 59. Organization Marketing Mix 1 Target Market Marketing Mix 2 61MIBM MBA-I
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- 61. 8-63 • Concentrated marketing (niche marketing): when a firm commits all of its marketing resources to serve a single market segment – Attractive to small firms with limited resources and to firms offering highly specialized goods and services MIBM MBA-I
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- 64. MASS MARKETING SEGMENT MARKETING NICHE MARKETING LOCAL MARKETING INDIVIDUAL MARKETING 66MIBM MBA-I
- 65. • Mass Marketing – Mass production, mass distribution, & mass promotion of one product for all buyers. – Creates largest potential market, leads to lowest costs & higher margins. • Segment Marketing – Identify segments & decide which one to target – Better design, price, disclose, deliver product & services & fine tune marketing program. – Car top end & base models. – Domestic airlines – Preference Segments - Homogeneous, Diffused & Clustered - Diagram • Niche Marketing – Narrowly defined customer group seeking a distinctive mix of benefits. – Dividing segments into subsegments. – Ezee from Godrej, Crack ointment from Paras, Itchgaurd, Neem Active by Henkel, Vicco Vajrdanti, Meswak, Babool, Astha TV, Star Cricket by ESPN STAR, TEN Cricket, – Pay premium price for product which will best satisfy their need. – Himalaya Ayurvedic in India, plus size fashion by Revolution clothing pvt ltd. MIBM MBA-I 67
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- 67. • Local Marketing – Marketing programs are tailored to the need & wants of local customer group in trading areas, neighbourhoods, even individual stores. – Banks have branches to serve corporate customers. NRI branches in Kerala. – Spiderman 3 released in 5 different languages including Bhojpuri. – Bahubali 2 released in 8 languages. – Bharat Matrimony – Grassroots marketing – Nike does sponsorship of local school teams. • Individual Marketing – Customized, One-to-One marketing. – Customerization. – Asian Paints offer mix & match colours. – Ruff & Tuff ready to stitch jeans MIBM MBA-I 69
- 68. Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers 70MIBM MBA-I
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- 70. • 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. 72MIBM MBA-I
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- 75. • Identifying a set of possible competitive advantages to build a position • Choosing the right competitive advantages • Selecting an overall positioning strategy • Communicating and delivering the chosen position to the market Choosing a Differentiation and Positioning Strategy
- 76. Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices Identifying Possible Value Differences and Competitive Advantages
- 77. Identifying a set of possible competitive advantages to build a position by providing superior value from: Choosing a Differentiation and Positioning Strategy Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation
- 78. ‘How Many and which one’ Difference to promote should be: Choosing the Right Competitive Advantage Important Distinctive Superior Communicable Preemptive Affordable Profitable
- 79. Value proposition is the full mix of benefits upon which a brand is positioned Selecting an Overall Positioning Strategy
- 80. More for More More for Same Same for Less More for Less Less for Much Less
- 81. • Positioning statements summarize the company or brand positioning – EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of- difference) 83MIBM MBA-I
- 82. • Companies must be certain to DELIVER their value propositions. • Positions must be monitored and adapted over time. 84MIBM MBA-I
- 83. • A value proposition is generally a clear and succinct statement (e.g., 2-4 sentences) that outlines to potential clients and stakeholders a company's (or individual's or group's) unique value-creating features. • A value proposition is a clear statement of the tangible results a customer gets from using your products or services. 85MIBM MBA-I
- 84. • A value proposition is an offer to some entity or target in which they (the possessor) get more than they give up (merit or utility), as perceived by them. • A value proposition is the basic reasoning for why people should consider your product or service. • Describes what you do in terms of tangible business results. It draws interest and shares a success story within a few words. 86MIBM MBA-I
- 85. • It’s the most technologically advanced and robust system on the market • We improve communication and morale • We offer training classes in a wide variety of areas • My product was rated the best-in-class by leading authorities 87MIBM MBA-I
- 86. Value propositions should be: Clear Concise Credible Consistent over time 88MIBM MBA-I
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- 90. • Tata ‘Zest’ (Product brochure) – Design, Performance, Connectivity, Comfort, Safety • Fair & Lovely (fairness expert) • Amrutanjan – Aromatic balm message for headache (Kick out pain) • Linc Pens • ITC AIM matchboxes MIBM MBA-I 92
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