Segmentation, Targeting

& Positioning

Instructor:
Dr. Ravi Shanker

Course: Marketing
Management
 Objectives
 Define market
 Market segmentation


Marketing mixes to target markets
Marketing strategies !
 Market segment selection
considerations
 Segmentation variables
 Positioning strategy
STP ?
 Possible Strategies for Target Marketing

Custom Marketing: “To each his/her own.”

 Possible Strategies for Target Marketing

Differentiated marketing
Multiple market segmentation
 STP IS THE HEART OF MODERN
STRATEGIC MARKETING
EVOLUTION OF STP MARKETING
MASS : EMPHASIS ON MASS PRODUCTION
MARKETING MASS DISTRIBUTION & PROMOTION OF
ONE PRODUCT TO ALL BUYERS.

PRODUCT : PRODUCING SEVERAL PRODUCTS TO

VARIETY OFFER VARIETY RATHER THAN TO
MARKETING APPEAL TO DIFFERENT SEGMENTS

TARGET : PRODUCTS & MKTG. PROGRAMS

MARKETING TAILERED TO EACH SELECTED
SEGMENT.
Differentiated Markets

Individuals

Gps of Individuals

Niche

Segments

Mass market
 Custom Marketing

 One-to-one marketing
 Uses data based-marketing and
information technology
 For example...

FOR REPEAT HOTEL GUESTS

•Your name
•Room preferences
•Special requests
•Smoking or non smoking
•Credit card number
•Frequent hotel user discount
 Market Share and the Pareto
Effect
Market Share: Pareto Effect:
20%
20%
30%
30%

50%
50%

20%
20% 80%
80%
Percentage of sales A small number of
that a firm’s product customers (20%)
has in a particular may represent a
market. large percentage of
sales (80%).
 What is a Market?
 All the potential customers sharing particular
needs and wants who might be willing to engage
in exchange to satisfy their needs or wants.
What is a Market?

Ability

Willingness
Resources
 Market Boundaries

Customers Who are your own

Customers
customers?
Who uses the category
Users
Users of products?

Individuals in the
Prospects
Prospects
market who are not
your customers.
 MARKET SEGMENTATION
DIVIDING A MARKET INTO DISTINCT GROUPS
OF BUYERS WHO MIGHT REQUIRE SEPARATE
PRODUCTS OR MARKETING MIXES

THE OBJECTIVE OF MARKET SEGMENTATION IS

TO DETERMINE DIFFERENCES BETWEEN
BUYERS OR BUYER GROUPS.

A HETEROGENOUS MARKET MAY BE SUB-

DIVIDED INTO A NUMBER OF MORE OR LESS
HOMOGENEOUS MARKET SEGMENTS.
 Segmentation Works Because ...

 Not all buyers alike

 Subgroups may be identified
 Subgroups smaller and more
homogeneous
 Easier to satisfy smaller
groups
 NICHE

A niche is more narrowly defined group that may

seek a special combination of benefits.

The customers in the niche have a distinct and

somewhat complex set of needs; they will pay a
premium to the brand that best satisfy their needs.

The niche marketer would need to specialize its

operations to be successful; and the niche leader is
not easily attacked by competitors.
 MARKET SEGMENT V/S NICHES

Every market can be knocked down into

SEGMENTS, NICHES & INDIVIDUALS.

Market segments are large identifiable groups

within a market, such as Insurances for savings,
for investment, for escaping from paying income
tax.
 MARKET SEGMENTATION
DIVIDING A MARKET INTO DISTINCT GROUPS OF
BUYERS WHO MIGHT REQUIRE SEPARATE
PRODUCTS OR MARKETING MIXES

THE OBJECTIVE OF MARKET SEGMENTATION IS

TO DETERMINE DIFFERENCES BETWEEN BUYERS
OR BUYER GROUPS.

A HETEROGENOUS MARKET MAY BE SUB-

DIVIDED INTO A NUMBER OF MORE OR LESS
HOMOGENEOUS MARKET SEGMENTS.
 STEPS IN MARKET SEGMENTATION, TARGETING,
AND POSITIONING

1. Identify 3. Evaluate the 5. Identify possible

segmentation attractive- positioning
variables and ness of each concepts for each
segment the segment. target segment.
market.
4. Select the
6. Select, develop,
2. Develop target
and signal the
profiles of segment(s).
chosen
resulting
positioning
segments.
concept.
 Two Major Approaches to
Segmentation

Consumer characteristics Consumer responses

Geographic Demographic Psychographic Occassion Benefits Usage Attitudes

 Bases for Segmenting Consumer Markets

Geographic
Demographic
Sociographic
Lifestyle
Behavior
Consumption
Consumer Characteristics for Segmentation:
Geographic Factors

REGION
CITY SIZE
RURAL / URBAN
DENSITY
CLIMATE
Consumer Characteristics for Segmentation:
Demographic Factors

AGE
GENDER
FAMILY SIZE
FAMILY LIFE CYCLE
INCOME
OCCUPATION
EDUCATION
RELIGION
NATIONALITY / RACE
%AGE OF INDIVIDUALS BY INCOME
INCOME GROUP (MHI IN RS.) %age OF INDIVIDUALS

URBAN RURAL TOTAL

UPTO 1,000 13 43 35
1000-2000 25 33 31
2001-3000 23 13 16
3001-5000 21 6 10
5001-8000 11 2 4
8001+ 5 1 2
NOT DISCLOSED 2 2 2

TOTAL 100 100 100

SOURCE :IRS
Consumer Characteristics for Segmentation:
Psychographic Factors

SOCIAL CLASS
LIFE STYLE
PERSONALITY
Consumer Responses bases for Segmentation:
Occasion

Time of the Day/ Week/ Month

Regular, Occasional or Special use
(Single use Camera or as a durable)
Consumer Responses bases for Segmentation:
Benefits Sought

Quality
Service
Economy
Status
Consumer Responses bases for Segmentation:
Usage Rate

LIGHT
MEDIUM
HEAVY
Consumer Responses bases for
Segmentation: LOYALTY STATUS

NON USER
POTENTIAL USER
MEDIUM USER
STRONG USER
ABSOLUTE
(NON, EX, TIME, REGULAR)
Consumer Responses bases for Segmentation:
READINOUS STATUS

UNAWARE
AWARE
INFORMED
INTERESTED
DESIROUS
INTENDING TO BUY
Consumer Responses bases for Segmentation:
ATTITUDE TOWARD PRODUCT

ENTHUSIASTIC
+IVE
INDIFFERENT
NEGATIVE
HOSTILE
 Market Segmentation:
By Consumer Behavior (cont.)
 Consumer
responses:
 Occasions
 Benefits
 Usage frequency
 Attitudes
 Market Segmentation:
Other Types of Segmentation

 Benefit segmentation
 Segmentation by
consumption profile
 Segmentation by
national boundaries
MBA DEGREE BENEFIT SEG.

Quality Seeker
Specialty Seeker
Career Seeker
Knowledge Seeker
Status Seeker
Degree Seeker
Professional Advancers Seeker
Avoiders Seeker
Convenience Seeker
Essential Prerequisite for Market Segmentation:
PROFILING

For example:
 Pathfinders study on
Indian House Wife
 Roper Starch
Worldwide (RSW)
study
 Etc.
The archetypal provider:
Living overwhelmingly in
the south, she is as
satisfied being a
housewife as a cat who
has licked cream. She
sees TV much less than
the average viewer, and
is disinclined towards
fashion. But she is every
willing to try out new
food recipes, and loves
to spend on her children
guests.
The tight-fisted traditionalist :
Leading a sheltered life, she
prefers to follow the film stars
in her dress habits but is
particular about prices. She
restricts her circle of friends
to within her community and
believes that girls should be
educated especially to enable
them to get good husbands. A
majority live in north India
The Anxious rebel: Less likely
to be found in the south, she
would much rather be working
than staying at home. She is
anxious, thrifty but discerning
in her shopping, though quite
willing to try out new
products.
The affluent sophisticate: She
lives mainly in the west Zone,
and seems to live the by the
motto ”Have money, will
spend”. She is the highest
user of all kinds of consumer
products and indulges more
in activities-ever simple ones
like writing a cheque or using
a telephone – which are out of
reach of most housewives.
She is comfortable talking to
men outside her family circle,
and would not mind if her
The contended conservative:
She is extremely confident and
probably the most efficient
householder of all. She is a
great optimist. Is very
conscious of the family’s
health and is, by and large, the
advertising man’s dream as
she believes that ads are a
great source of Information.
The troubled home-body:
Neither a leader nor an
emulator, she is largely
illiterate and Is the least
exposed to the media. Her
three prized possessions
are watches, transistors and
bicycles. Fashion takes a
back seat and the future,
according to her, is written
in the stars.
The gregarious hedonist:
Found predominantly in the
east, she is most likely to
speak Bengali and is intensely
extroverted and liberal. She
does not believe in sacrificing
her life to keep her family
happy. Self-indulgent and
willing to spend money on
new products, she is a
marketing man’s dream.
The Contemporary housewife:
She is on the threshold of
change. While she has not
given up many traditional
values, she aspires for
modernity and is least likely to
be living in north India.
Though she is happier than
she was five years ago, she
feels the need to do
something more meaningful
besides house- keeping. She
is fashion-conscious, but still
uses fairness skin creams and
her idea of trendy clothes
does not go beyond the sari.
 RSW Six Global Consumer Segments
 Strivers: Place more emphasis on material & professional
goals
 Devouts: Tradition and duty are very important.
 Altruist: Interested in social issues & social welfare.
 Intimates: Value close personal & family relationships.
 Fun seekers: High consumptions of restaurants, bars
clubs, movies.
 Creatives: Strong interests in education, knowledge,
technology, information.
 Segment Viability
 Characteristics of segment viability:
 Size: Must be large enough to generate
volume for adequate profit.
 Identity: Should have unique characteristics
that can be identified.
 Relevance: Must be relevant to the
important characteristics of the product.
 Access: Must be able to be reached.
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
MEASURABLE The segment should lead themselves to some
form of estimation of Size, purchasing
power, profile
SUBSTANTIAL The segment should be substantial and
worthwhile (profitable) cultivating them.
ACCESSIBLE The segment should be within reach and to be
served (through distribution &
communication.
DIFFERENTIABL Conceptually distinguishable & respond
E differently to different Mktg. Mix elements.

ACTIONABLE Effective programmes can be formulated for

attracting & serving the segments.
 Choosing Market Segments

We need a YES
Distinguishing/stable response to each
characteristic
of these!
Significant size
Accessible with
Distribution &
promotion
Responsive (similar needs)
Measurable potential
 SELECTION
Geo location and Scale
Size
Stage of industry Life Cycle
Buying history
Profitability
Risk
Aspirations
Rate of growth
Sensitivity / vulnerability
Capitalization
ROI
HOW SHOULD A FIRM SELECT ITS SEGMENTS
 Co. Thrust
 Size & Growth Potential
 Investment needs
 Profitability
 Risk
 Competition
 Segment durability
 Segment Mobility
 Segment Visibility
 Segment Reachability
 TARGETIN
G different market segments:
Factors in evaluating
I) Segment size & growth
II) Segment structural attractiveness:
(To study the impact on long term profitability
of: industry competitors, potential entrants,
substituttes, buyers, suppliers.)
Iii) co’s own objectives & resources:
Positioning
Segmentation:
grouping of people
by needs or wants

Positioning:
how a product is
geared to attract
this market segment
 Positioning

 The way consumers perceive the brand

relative to its competition
– Unique competitive advantage
– Stress salient characteristics
– Differentiate
 DEFINITION
Positioning is concerned with the identification,
development and communication of a
differentiated advantage which makes the brand
perceived as superior & distinctive to those of its
competitors in the mind of the Target segments.
 POSITIONING
1940’s USP (Product feature)

1960 IMAGE ERA (David Ogilvy)

(Arising out of Dilution of USP due to competitive

Irritation)
1970’s POSITIONING ERA (R&T)

“… Not what you do to a product but what you do

to the mind of the prospect.”
“YOU POSITION THE PRODUCT IN THE MIND OF
THE PROSPECT”
i.e., you communicate positioning but
IT CAN BE AFFECTED BY OTHER M. MIX ELEMENTS

G. LYNN PROCESSES HAVE CHARACTERISTICS WHICH

SHOSTACK AFFECT POSITIONING & CAN BE STRATEGICALLY
MANAGED FOR POSITIONING PURPOSES.
 SEVEN POSITIONING STRATEGIES
ATTRIBUTE Positioning on specific product
POSITIONING feature
BENEFIT Positioning on benefits, Problem
POSITIONING solution or needs
USE/APPLICATIONS Positioning for specific usage
POSITIONING occasions
USER Positioning for user category
POSITIONING
COMPETITOR Positioning against another
POSITIONING product
PRODUCT CATEGORY Product class dis-association
POSITIONING
QUALITY/PRICE
POSITIONING
 SEVEN POSITIONING STRATEGIES

ATTRIBUTE Gas Mileage

POSITIONING
BENEFIT Cotton: Cool in Summer
POSITIONING
USE/APPLICATIONS Office Wear
POSITIONING
USER Pepsi Generation
POSITIONING
COMPETITOR The Pepsi Challenge
POSITIONING
PRODUCT CATEGORY Cola-, Skimmed Milk
POSITIONING
QUALITY/PRICE Cheaper Detergents
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

 Selection of Position

 Importance
 Distinctiveness
 Communicability
 Superiority
 Affordability
 Profitability
 Positioning Errors

 Under Positioning
 Over Positioning
 Confused Positioning
 Doubtful Positioning
 POSITIONING STRATEGIES
CONSUMER FOCUS COMPETITION FOCUS

BOTH ASSOCIATE PRODUCT BENEFITS WITH

CONSUMER NEEDS

BY LINKING THE BY COMPARING THE

PRODUCT WITH THE PRODUCT AND THE
BENEFITS THE BENEFITS IT OFFERS,
CONSUMER WILL TO THE COMPETITIION
DERIVE
 Review
 Define market
 Market segmentation


Marketing mixes to target markets
Marketing strategies !
 Market segment selection
considerations
 Segmentation variables
 Positioning strategy