Market segmentation, targeting, and positioning

1. Market Segmentation
Dr. Gopal Thapa
Tribhuvan University

2. Fundamentals of New Marketing
Concept
Target market focus,
 Customer orientation,
 Integrated marketing and
 Profitability/ objective achievement
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3. Market Segmentation
 Market segmentation is the subdividing of a
market into homogeneous subsets of customers,
where any subset may conceivable be selected as a
market target to be reached with a distinct
marketing mix. - Kotler
 Market segmentation is the process of taking the
total heterogeneous market for a product and
dividing it into several sub-markets or segments,
each of which tends to be homogeneous in all
significant aspects. - Stanton
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4. Requirements for Effective Market
Segmentation
Requirements for Effective Market Segmentation
Requirements for
Effective Market
Segmentation
Accessibilit
y
Differentiabl
e
Actionable
Substantial
Measurability
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5. SADAM Criteria for
Segmentation
 Substantial:Thesegmenthastobelargeandprofitableenough
 A Accessible:Itmustbepossibletoreachitefficiently
 D Differential:Itmustresponddifferentlytoadifferentmarketingmix
 A Actionable:Youmusthaveaproductforthissegment
 M Measurable:Sizeandpurchasingpowercanbemeasured
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6. Market Segmentation Process
 Market survey
 Segment identification
 Segment profiling
 Segment selection
 Product positioning
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7. Bases for Consumer Markets
 Geographic variables
 Demographic variables
 Psychographic variables
 Behavioral variables
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8. Bases for Consumer Market
Segmentation
Bases for Consumer Market Segmentation
CONSUMER MARKET SEGMENTATION
DEMOGRAPHICGEOGRAPHIC
BEHAVIOURALPSYCHOGRAPHIC
 Area
 Topography and climate
 Population density
 Age group  Gender
 Education  Family size
 Family life cycle  Occupation
 Social class  Income
 Religion  Ethnicity
 Personality
 Life style
 Buying motives
 Benefits desired
 Usage occasion
 Usage rate
 Users' status
 Loyalty status
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9. Geographic Variables
 Area
 Development region, zone, district
 Topography/climate
 Mountain, hills, terai
 Temperate, alpine, tropical
 Population density
 Urban, sub-urban, rural market
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10. Demographic Variables
 Age group
 Gender
 Family size
 Family lifecycle
 Education
 Occupation
 Income
 Social class
 Religion
 Ethnicity
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11. Psychographic Variables
 Buying motives
 Rational, emotional or patronage
 Personality
 Introvert, extrovert, emotional stability, tip top,
rough top
 Lifestyle
 Activities, interest, opinion
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12. Behavioral Variables
 Benefits desired
 Usage Occasions
 Users’ status
 Usage rate
 Loyalty status
 Hardcore/undivided loyal
 Split/divided loyal
 Shifting loyal
 No loyal /switchers
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13. Variables for Business Market
Segmentation
 Geographic variables
 Location, topography, climate
 Demographic variables
 Type of industry, size of customer
 Operating variables
 Technology, usage rate, service needed
 Purchase related
 Purchase organization, documentation, negotiation
period
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14. Process of Market Segmentation
ProcessofMarketSegmentation
Marketsurvey Segment
identification
Segment
profiling
Segment
selection
Positioning
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15. Market Segmentation Process
 Market survey
 Segment identification
 Segment profiling
 Segment selection
 Product positioning
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16. Evaluation of Market Segments
 Segment attractiveness
 Size and growth, profitability ,competition
,technology, customer loyalty, risks
 Organizational objectives and resources
 Government rules and regulations
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17. Segment Attractiveness (Michael Porter’s Five
Factor Model)
 Threat of intense segment rivalry
 Threat of new entrants
 Threat of substitute products
 Threat of buyers’ growing bargaining power
 Threat of suppliers’ growing bargaining power
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18. Selection of Target Market
 Single segment concentration
 Selective specialization (Multi-segment coverage)
 Product specialization
 Market specialization
 Full market coverage
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20. Positioning
 Act of designing the company’s offer and image
so that it occupies a distinct and value place in the
target customer’s mind
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21. Bajaj’s Positioning
Table:ExampleofValuePropositions
CompanyandProduct TargetCustomers ValueProposition
BajajPulsar Youth /teenage
customers
Style
BajajAvenger Middle aged
customers
Comfort
BajajPlatina Price sensitive
customers
Economy
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22. Positioning Process
 choosing a frame of reference by identifying the
target market and relevant competition
 identifying the optimal points-of-parity and
points-of- difference brand associations given that
frame of reference, including emotional branding,
and
 creating a brand mantra summarizing the brand’s
positioning and essence.
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23. Choosing a Competitive Frame of
Reference
 The competitive frame of reference defines which
other brands a brand competes with and which
should thus be the focus of competitive analysis.
 A good starting point in defining a competitive
frame of reference for brand positioning is
category membership, the products or sets of
products with which a brand competes and that
function as close substitutes.
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24. Choosing a Competitive Frame of
Reference
 It would seem a simple task for a company to
identify its competitors.
 Pepsi knows Coca-Cola is a major competitor for
its non-alcoholic carbonated beverage ;
 NABIL bank knows Standard Chartered Bank
is a major competitor.
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25. Kotler’s view while monitoring
Competitors
 Share of market: The competitor’s share of
the target market.
 Share of mind: The percentage of customers who
named the competitor in responding to the
statement “Name the first company that comes to
mind in this industry.”
 Share of heart: The percentage of customers who
named the competitor in responding to the
statement “Name the company from which you
would prefer to buy the product.”
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26. Identifying PODs and POPs
Point of Parity
Point of Difference
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27. PODs
 Points-of-difference (PODs) are attributes or
benefits that consumers strongly associate with a
brand, positively evaluate, and believe they could
not find to the same extent with a competitive
brand.
 Strong brands often have multiple points-of-
difference.
 Two examples are Nike (performance, innovative
technology, and winning) and Southwest Airlines
(value, reliability, and fun personality
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28. PODs
 In the view of Keller, three criteria determine
whether a brand association can truly function as a
point-of-difference: desirability, deliverability,
and differentiability.
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29. PODs
 Desirable to consumer. Consumers must see the brand
association as personally relevant to them.
 Deliverable by the company. The company must have the
resources and commitment to feasibly and profitably create
and maintain the brand association in the minds of
consumers. The ideal brand association is pre-emptive,
defensible, and difficult to attack.
 Differentiating from competitors. Consumers must see
the brand association as distinctive and superior to relevant
competitors
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30. POPs
 Points-of-parity (POPs) are attribute or benefit
associations that are not necessarily unique to the
brand but may in fact be shared with other brands.
 These types of associations come in three basic
forms: category, correlational, and competitive.
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31. Category points-of-parity
 Category points-of-parity are attributes or
benefits that consumers view as essential to a
legitimate and credible offering within a certain
category, although not necessarily sufficient
conditions for brand choice.
 Category points-of-parity may change over time
due to technological advances, legal
developments, or consumer trends.
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32. Correlational points-of-parity
 Correlational points-of-parity are potentially
negative associations that arise from the existence
of positive associations for the brand.
 One challenge for marketers is that many
attributes or benefits that make up their POPs or
PODs are inversely related.
 In other words, if your brand is good at one thing,
such as being inexpensive, consumers can’t see it
as also good at something else, like being “of the
highest quality.”
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33. Competitive points-of-parity
 Competitive points-of-parity are associations designed to
overcome perceived weaknesses of the brand considering
competitors’ points-of-difference.
 One good way to uncover key competitive points-of-parity
is to role-play competitors’ positioning and infer their
intended points-of- difference.
 Competitor’s PODs will, in turn, suggest the brand’s
POPs.
 For an offering to achieve a point-of-parity on a particular
attribute or benefit, a sufficient number of consumers must
believe the brand is “good enough” on that dimension
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34. Choosing Specific POPs and
PODs
 Marketers typically focus on brand benefits in
choosing the points-of-parity and points- of-
difference that make up their brand positioning.
 Brand attributes generally play more of a
supporting role by providing “reasons to believe”
or “proof points” as to why a brand can credibly
claim it offers certain benefits.
 Multiple attributes may support a certain benefit,
and they may change over time.
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35. Emotional Branding
 Many marketing experts believe a brand positioning
should have both rational and emotional components.
 It should contain points-of-difference and points-of-parity
that appeal to both the head and the heart.
 A person’s emotional response to a brand and its
marketing will depend on many factors.
 An increasingly important one is the brand’s authenticity.
 Brands such as Wai wai, Mayos, Rara, Rumpum, and Jo jo
that are seen as authentic and genuine can evoke trust,
affection, and strong loyalty.
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36. Emotional Branding
 Authenticity also has functional value.
 Lifebouy is seen by consumers as “wholesome,
authentic, and real.”
 The brand reinforces those credentials by focusing
on its ingredients, increasingly important for
consumers who want healthy life.
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37. Brand Mantra
 To further focus brand positioning and guide the way their
marketers help consumers think about the brand, firms can
define a brand mantra.
 A brand mantra is a three- to five-word articulation of the
brand’s heart and soul, closely related to other branding
concepts like “brand essence” and “core brand promise.”
 Brand mantras must economically communicate what the
brand is and what it is not.
 What makes a good brand mantra?
 Dabur Glucose’s “Instant energy” captures its brand
essence and core brand promise.
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38. Brand Mantra
 A good brand mantra should communicate the category
and clarify what is unique about the brand.
 It should also be vivid and memorable and stake out
ground that is personally meaningful and relevant.
 For brands anticipating rapid growth, it is helpful to define
the product or benefit space in which the brand would like
to compete,
 as Nike did with “athletic performance” and Disney with
“family entertainment.” But for it to be effective, no other
brand should singularly excel on all dimensions.
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39. Types of Positioning
 Attribute positioning
 Benefit positioning
 Image positioning
 Usage occasion positioning
 User positioning
 Competitive positioning
 Product class positioning
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40. Positioning and Branding a Small
Business
 Find a compelling Product or service performance
advantage
 Focus on building one or two strong brands based
on one or two key associations
 Encourage product or service trail in any way
possible
 Develop cohesive digital strategy to make the
brand “bigger and better”
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41. Positioning and Branding a Small
Business
 Create buzz and a loyal brand community
 Employ a well-integrated set of brand elements
 Leverage as many secondary associations as
possible
 Creatively conduct low cost marketing research
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42. Product Differentiation
 Differentiation is the act of designing a set of
meaningful differences to distinguish the
company’s offering from competitor’s offerings.
 - Philip Kotler
 Product differentiation is a strategy which
attempts (through innovative design, packaging,
positioning etc.) to make a clear distinction
between products serving the same market
segments.
 Dictionary of Marketing

43. Product Differentiation Variables
 Physical parameter differentiation
 Service differentiation
 Personnel differentiation
 Channel differentiation
 Promotion differentiation
 Image differentiation

44. Physical Parameter Differentiation
 Form
 Features
 Quality
 Durability
 Reliability
 Design

45. Service Differentiation
 Ordering ease
 Delivery
 Installation
 Customer training
 Repairability

46. Personnel Differentiation
 Competence
 Courtesy
 Credibility
 Reliability
 Responsive
 Communicative

47. Channel Differentiation
 Design
 Coverage
 Expertise
 Performance

48. Promotion Differentiation
 Advertising
 Sales promotion
 Public relations

49. Image Differentiation
 Symbols
 Media
 Atmosphere
 Event sponsorship

50. Criteria for Effective
Differentiation
 Important
 Distinctive
 Communicable
 Superior
 Preemptive
 Affordable
 Profitable
 Consistent

51. Promotion Differentiation
 Advertising
 Sales promotion
 Public relations

52. Image Differentiation
 Symbols
 Media
 Atmosphere
 Event sponsorship

53. Any Queries?
Thank You
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