Market Segmentation and Positioning Strategies

Market Segmentation
and Positioning
Market Segmentation
and Positioning
Presented By:-
Babasab Patil
2/13/2014 Babasabpatilfreepptmba.com

Babasabpatilfreepptmba.com
What is market segmentation?What is market segmentation?
 Market Segmentation
Process of dividing a large market into
smaller target markets, or customer
groups with similar needs and/or
desires

According to Philip kotler :
“ Market segmentation is sub-dividing a
market into distinct and homogeneous
subgroups of customers, where any group
can conceivably be selected as a target
market to be met with distinct marketing
mix.”

Market SegmentationMarket Segmentation
MS is a method of “dividing a market
(Large) into smaller groupings of
consumers or organizations in which each
segment has a common characteristic such
as needs or behaviour.”

CONCEPT AND DEFINITIONCONCEPT AND DEFINITION
 The concept of market segment is based on
the fact that the market of commodities are
not homogeneous but they are
heterogeneous. Market represent a group
of customer having common
characteristics but two customer are never
common in their nature, habits, hobbies
income and purchasing techniques.

Target MarketingTarget Marketing
 Advantages
 Easier analysis of potential and actual
consumers
 Tailoring of products to market
 Assessment of demand potential
 Identify competing products
 Increased sales effectiveness and cost
efficiencies
 Product positioning and easy identification
of opportunities
2/13/2014

Target MarketingTarget Marketing
 Disadvantages
 Increased marketing costs
 Personalization can become
burdensome to manage
 Faux segmentation may be viewed
cynically
 Narrow segmentation can impact
brand loyalty
 Ethics and stereotyping issues
2/13/2014

Target Market SelectionTarget Market Selection
Identify Total Market
Determine Need for
Segmentation
Determine Bases for
Segmentation
Profile Each Selected
Segment
Assess Potential
Profitability of Segment
and Select Target Segment
Select Positioning
Strategy
Develop and Implement
Appropriate Marketing Mix
Monitor, Evaluate and
Control2/13/2014

External FactorsExternal Factors
 Stage in product life cycle
 Competition
 Product specific issues
 Market for the product
2/13/2014

Levels of Market SegmentationLevels of Market Segmentation
Mass
Market
Niche Micro-
marketing The
Individual
Personal-
izationMicro-
marketingNicheStandardized
Marketing
Mix2/13/2014

1. Mass Market1. Mass Market
Consists of a group of customers
who share a similar set of needs
and wants.
Identifiable Group with in a
Market with Similar
• Wants
• Purchasing Power
• Geographical Location
• Buying Attitudes

2. NICHE MARKETING2. NICHE MARKETING
 Group of customers seeking a distinctive mix of benefits who are ready to
pay extra premium.
 Niche = segment sub – segments
Eg. Washing detergents hard & gentle washes . Surf excel for tough stains (
hard on clothes) & Ezee from Godrej for delicate clothes.
--- Astha , Sanskar , Q TV – focus on religion & spiritualism.
 DISTINCT NEEDS
 PAY PREMIUM
 SPECIALIZATION
 LESS COMPETITION
 POTENTIAL

ROLLS ROYCEROLLS ROYCE

3. Micro Market3. Micro Market
 Marketing programs tailored to the needs & wants of
local customer groups in trading areas, neighborhoods ,
etc.
 this trend is called grass roots marketing.
Ex. – Spiderman 3 was released in 5 different language in
India including bhojpuri.

4. INDIVIDUAL MARKETING4. INDIVIDUAL MARKETING
 Ultimate segmentation – segments of 1 or customized
marketing or one to one marketing.
 Customerization – empower the consumers to design the
product or service offering of their choice.
 Dell- Customerization (Computers)
 Ex. Paint companies have started doing this- Asian Paint ,
Nerolac , Berger Paints
 Arvind mills launched Ruff’n Tuff Jeans, branded ready – to –
stitch2/13/2014 Babasabpatilfreepptmba.com

Basis For Segmenting Consumer MarketBasis For Segmenting Consumer Market
Psychographic
Segmentation
Geographic
Segmentation
Behavior/Usage
Segmentation
Demographic
Segmentation
2/13/2014

Family Size GenderFamily Size Gender
Income LevelIncome Level
OccupationOccupationEducationEducation
AgeAge
Demographic SegmentationDemographic Segmentation
2/13/2014

Segmentation VariablesSegmentation Variables
Psychographic
Segmentation
Geographic
Segmentation
Behavior/Usage
Segmentation
Demographic
Segmentation
2/13/2014

Geographic SegmentationGeographic Segmentation
 When an organization localizes its
marketing efforts to accommodate the
unique needs of specific geographic
regions
 World Region or country
 Country Region
 City or Metro
2/13/2014

Segmenting Consumer MarketsSegmenting Consumer Markets
Psychographic
Segmentation
Geographic
Segmentation
Behavior/Usage
Segmentation
Demographic
Segmentation
2/13/2014

Psychographic SegmentationPsychographic Segmentation
 Grouping customers together based on
social class, lifestyles (Achievers,
Strivers, Survivors) and psychological
characteristics (attitudes, interests and
opinions)
2/13/2014

Light Users
80%
Light Users
80%
Heavy Users
20%
Heavy Users
20%
Behavior/Usage SegmentationBehavior/Usage Segmentation
 Markets can be segmented by how often or how
heavily consumers use a specific product
 80/20 Principle - 80% of revenue generated by 20%
of customers
2/13/2014

Conti…Conti…
 Occasions: Special Occasions, Holiday, Seasonal
 Benefits: Quality, Service, Economy, Convenience,
Speed
 User Status: Nonuser, ex-user, potential user, first-
time user, regular user
Babasabpatilfreepptmba.com2/13/2014

Segmenting Business MarketsSegmenting Business Markets
 Demographic:
1. Industry: Which industries should we
serve?
2. Company size: What size companies
should we serve?
3. Location: What geographical area
should we serve.
2/13/2014

Conti…Conti…
 Operating Variable:
1.Technology:What customer technologies
should we focus on?
2. User or nonuser status: Should we serve
heavy users, medium users, light users, or
non-users
3. Customer Capabilities: Should we serve
customers needing many or few services

Conti…Conti…
 Purchasing Approaches
1. Purchasing-function organization: Should we serve
companies with highly centralized or decentralized
purchasing organization?
2. Power Structure: Should we serve companies that
are engineering dominated, financially dominated and
so on?
3. Nature of Existing Relationship: Should we serve
companies with which we have strong relationships or
simply go after the most desirable companies

4. General Purchase Policies: Should we serve companies that
prefer leasing? Service contract? Systems purchase? Sealed
Bidding?
5. Purchasing Criteria: Should we serve companies that are
seeking quality? Service Price?

 Situational Factors:
1. Urgency: Should we serve companies that need
quick and sudden delivery or service?
2. Specific Applications: Should we focus on certain
applications of our products rather than all
applications?
3. Size of Order: Should we focus on large or small
orders?2/13/2014 Babasabpatilfreepptmba.com

 Personal Characteristics
1. Buyer-seller Similarity: Should we serve
companies whose people and values are similar to
ours?
2. Attitude Towards Risk: Should we serve risk-
taking or risk-avoiding customers?
3. Loyalty: Should we serve companies that show high
loyalty to their suppliers?

Segmenting Global MarketsSegmenting Global Markets
 Economic
 Stage of development in a host country
 Political/Legal
 Regulations and laws
 Cultural
 Language barriers, differences in
consumer customs
2/13/2014

Requirements for Effective SegmentationRequirements for Effective Segmentation
MeasurableMeasurable
SubstantialSubstantial
AccessibleAccessible
DifferentiableDifferentiable
ActionableActionable

1. Measurable
 Size, purchasing power, and profile of segment
2. Accessible
 Can be reached and served
3. Substantial
 Large and profitable enough to serve
4. Differentiable
 Respond differently
5. Actionable
 Effective programs can be developed

Evaluating and Selecting the Market SegmentsEvaluating and Selecting the Market Segments
Through concentrated
marketing, the firm gains a
strong knowledge of the
segment’s needs and achieves a
strong market presence.
Firms enjoys operating
economies through a strong
Specializing its production,
distribution and promotion

Conti…Conti…
A firm selects a number of
segments, each objectively
attractive and appropriate.
There may be little or no
synergy among the segments,
but each promises to be a
moneymaker. This multi
segment strategy has the
advantage of diversifying the
firm’s risk

The firm makes a certain
product that it sells to several
different segments. Ex: A
microscope manufacturer who
sells to university,
government, and commercial
laboratories. The firms makes
different microscopes for the
different customers groups &
build a strong reputation in the
specific product area

The firm concentrates on
serving many needs of a
particular group. Ex: A
firm that sells an
assortment of products
only to university
laboratories.

The firm attempts to serve all
customers groups with all the
products they might need. Only very
large firms such as IBM (Computer
Market), GM (Vehicle Market),
Coco-Cola can undertake a full
market coverage strategy.
Can cover whole market in to two broad
ways:
1. Un-differentiated Marketing (coco
cola )
2. Differentiated Marketing (HUL
soaps)2/13/2014 Babasabpatilfreepptmba.com

Choosing and implementing Positioning
Strategy
Choosing and implementing Positioning
Strategy
 Differentiation through:
 Product attributes - characteristics as a
positioning base
 Product usage - positioning based on a
products typical use
Product Position: The way the products is
defined by consumers on important attributes-the
place the product occupies in consumer’s minds
relative to competing products

Identifying Possible Value Differences and
Competitive Advantage
Competitive Advantage: An advantage over
competitors gained by offering greater customer
value, either through lower prices or by
providing more benefits that justify higher
prices

Choosing the Right Competitive AdvantagesChoosing the Right Competitive Advantages
1. How Many Differences to Promote (USP)
2. Which Difference to Promote
 Important: The difference delivers a highly valued
benefit to target buyers
 Distinctive: Competitors do not offer the differences
 Superior: Superior to other ways that customers
might obtain the same benefit.
 Communicable: The Difference is communicable
and visible to buyers
 Preemptive: Competitors cannot easily copy the
differences2/13/2014 Babasabpatilfreepptmba.com

Conti….Conti….
 Affordable: Buyers can afford to pay for the
differences
 Profitable: The company can introduce the
difference profitability

Selecting an overall Positioning StrategySelecting an overall Positioning Strategy
 Value Proposition:
A Value Proposition statement must contain
 Describe "What" we provide
 Answer "So what?"
 Quantify "How much"
 Provide Proof
2/13/2014

Possible Value Propositions

More for MoreMore for More
“More for More” positioning involves providing
the most upscale product or service and
charging a higher price to cover the higher
costs.
Ex: Mercedes Automobile
IIMB

More for the SameMore for the Same
Companies can attack competitor’s more-
for-more positioning by introducing a
brand offering comparable quality but at a
lower price.
Ex: Toyota introduced its Lexus line with
a “more-for-more” value proposition
versus Mercedes and BMW

The Same for LessThe Same for Less
Offering the Same for less can be a powerful
value proposition.
Ex: Wal Mart, Big Bazar, Croma, E-Zone

Less For MuchLess For Much
A Market almost always exists for products that
offer less and therefore cost less. Few people
need, want, or can offered “the very best” in
everything they buy.
Ex: TATA NANO offers very few features and
less requirements at a much lower price

More For LessMore For Less
Of course, the winning value proposition would be
to offer “More for less”.
(only for short term)
Ex: TATA Indica Offers “More Car per car”
(more space and better fuel economy at a lower
price)

Positioning StrategyPositioning Strategy
 Differentiation
through:
 Product attributes -
characteristics as a
positioning base
 Product usage -
positioning based
on a products
typical use
 Differentiation
through:
 Symbol - use of a
symbol or icon to
position a product
in the consumer
consciousness
2/13/2014

 Differentiation
through:
 Product user - the
typical user of a
product
2/13/2014

 Differentiation
through:
 Product class -
positioning against
another type of
product or product
class
2/13/2014

 Differentiation
through:
 Competition -
comparisons to a
product’s
competition
(directly or
indirectly)
2/13/2014

Market SegmentationMarket Segmentation
Differentiated
Concentrated
Undifferentiated
2/13/2014

Differentiated MarketingDifferentiated Marketing
 Differentiated
Marketing
 An organization
targets multiple
market
segments and
develops
segment
specific mixes
2/13/2014

Concentrated MarketingConcentrated Marketing
 Concentrated
Marketing
 When an
organization
concentrates its
marketing
efforts on a
smaller segment
of a larger
market
2/13/2014

Undifferentiated MarketingUndifferentiated Marketing
 Undifferentiated
Marketing
 An organization
develops one
strategy
appropriate for
all members of
the total market
2/13/2014

Thank You

Market Segmentation and Positioning Strategies

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