Marketing Management

Module 2- Segmentation Targeting and Positioning

Marketing Process
Mass Marketing
• An attempt to appeal to an entire market with one
basic marketing strategy utilizing mass distribution
and mass media.
• Its also called undifferentiated marketing.
Niche Marketing
Niche marketing is a targeted marketing plan that
focuses on one particular section of the market that
has high potential to connect with a product or
service.
STP Process
Segmentation
• The process of splitting a market into smaller groups
with similar product needs or identifiable
characteristics, for the purpose of selecting appropriate
target markets.
Targeting
• An organization’s proactive selection of a suitable
market segment (or segments) with the intention of
heavily focusing the firm’s marketing offers and
activities towards this group of related consumers.
Positioning

• Positioning is the target market’s perception of the

product’s key benefits and features, relative to the
offerings of competitive products.
Why Segmentation
• Target markets

• Market understanding

• Marketing mix

• New opportunities

• More offerings

• Niche marketing Vs Mass Marketing

Segmentation Targeting &
Positioning Process
STP Process
Define the Market

Create Market Segments

Evaluate by Criterion

Construct Segment Profiles

Select Target Markets

Develop Positioning
Strategy
Defining the Market Eg:
Marketing Management
Module 2- Segmentation Targeting and Positioning
 Basis of Segmentation
SEGMENTATION
BASE
Geographic Segmenting by country, region, city or other geographic basis.
segmentation

Demographic Segmenting based on identifiable population characteristics, such as

segmentation age, occupation, marital status and so on.

Psychographic This segmentation approach involves an understanding of a consumer’s

segmentation lifestyle, interests, and opinions.

Behavioral Segmenting the market based on their relationship with the product or
segmentation the firm. Examples include: heavy or light users, brand loyal or brand
switchers, and so on.
 Basis of Segmentation
MAIN SEGMENTATION BASE EXAMPLES
CATEGORY

Geographic Country/continent England, UK, Europe

Region/area of the North India, West India, South

country India

City New York, Los Angeles, Dallas,

Chicago

Urban/rural Measured by the area’s

population density

Climate Tropical, arid, alpine

 Basis of Segmentation
Demographic Age group Pre-teens, teens, young adults, older
adults

Generation Baby boomers, Gen X, Gen Y

Gender Male, female

Family life cycle Young, married no kids, married young

kids

Family size Couple, small family, large family

Occupation Professional, trade, unskilled

Education High school, university, vocational

Religion
 Basis of Segmentation
Psychographic Lifestyle Family, social, sporty, travel, education

Values
Social class Upper class, middle class, lower class

Personality/self-concept Ongoing, creative, innovator, serious

Activities, interests, opinions Various hobbies, sports, interests

(AIO)
Behavioural Occasion Birthday, anniversary,

Benefits Sought Different segments desire different

benefits from the same products.
Buying stage Ready to buy, gathering information only

User status Regular, occasional, never

Usage rate Heavy, light
Loyalty status Loyal, occasional switcher, regular switcher

Brand knowledge Strong, some, none

Shopping style Enjoys shopping, functional, avoids

Involvement level High, medium, low

 Segmentation Base Mix
TYPE OF FIRM SUITABLE SEGMENTATION APPROACH

Cosmetics and perfumes firms Demographics (gender, age)

(such as L’Oreal) OR
Benefit

Car manufacturer Psychographic

(social class)
OR
Geographic
Segmentation Eg:

MAIN SEGMENTATI EXAMPLE/S

CATEGORY ON BASE

Demographic Age group Pre-teens, teens, young adults, older

adults

Behavioral Shopping Enjoys shopping, functional, avoids

style
 Criterion for Effective Segmentation
CRITERION NEED
Homogeneous This means that the consumers allocated to each segment
should be similar in some relevant way

Heterogeneous Each segment of consumers should be relatively unique,

as compared to the other segments that have been
constructed

Measurable Some form of data should be available to measure the size

of the market segment

Substantial The market segment should be large enough, in terms of

sales and profitability, to warrant the firm’s possible
attention

Accessible The market segment should be reachable, particularly in

terms of distribution and communication

Actionable/practical The firm needs to be able to implement a distinctive

marketing mix for each market segment

Responsive Each market segment should respond better to a distinct

marketing mix, rather than a generic offering
Steps in Segmentation Process
Need Based Segmentation

Segment Identification

Segment Attractiveness

Segment Profitability

Segment Positioning

Market- Mix Strategy

 Segment Profiles
KEY MEASURES
•Segment size measures
•Segment growth rate
•Proportion of the overall market
CONSUMER BEHAVIOR
•Main consumer needs
•Usage level
•Level of brand loyalty
•Price sensitivity
•Product involvement levels
•Retailer preferences
DESCRIPTION
•Geographic spread
•Demographic description
•Psychographic description
COMPETITION/COMMUNICATION
•Main competitive offerings
•Main media choices
Targeting
• The selection of potential customers to whom
a business wishes to sell products or services.
• The targeting strategy involves segmenting the
market, choosing which segments of the market are
appropriate, and determining the products that will be
offered in each segment.
Targeting Segments - Overview
Targeting Segments - Overview

• Undifferentiated marketing-
• The offering of a marketing mix that is designed for the general
needs of an overall market, without regard for the needs of the
different segments in that market.

• Concentrated marketing
• Concentrating the firm’s market offering solely on the needs of
one defined target market.

• Differentiated marketing
• The targeting of two or more market segments, with separate
and distinct market offerings, which have been designed to
closely meet the needs of those particular segments.
Target Market Selection
Characteristics
Assessment Factor What to consider?

Segment size What is the size of the segment (mainly in terms of unit
and revenue sales)? And is this substantial enough for
the firm to consider entering?

Segment growth rate At what rate is the segment growing (or perhaps
declining)? What is its future outlook?

Profit margins Is this a high profit margin segment or one that is price
competitive?
Competitors How dominant are the established competitors? What
degree of competitive rivalry exists? Are there significant
indirect competitors (or close substitute products)?

Distribution channels How easy would it be to gain access to the appropriate

distribution channels? What level of new investment
would be required in this regard?

Strategy How well does the proposed target market fit with the
firm’s strategic direction and growth goals?
 Target Market Selection
Characteristics
Goals What does the firm have high or low growth expectations

Resources Does the firm have the financial position and staff resources
to successfully enter in this segment?

Capability Does the firm have the capability to develop appropriate

products in a supportive marketing mix

Role of brand Would the firm be required to create a new brand, or could
an existing brand be leveraged into the new target market,
or is brand relatively unimportant?

Growth options What is a range of other opportunities available for growth to

the firm
 Market Segmentation
ACTIVITY/TASK

• A small chain of coffee stores has identified four main target markets. They have identified
the segments and prepared segment profiles and have modified their marketing mix with
these target markets in mind. They have also named each segment. This is the only
information that you will be provided with and let’s see how helpful and descriptive that
name is in giving some sense of their target markets. Their defined segment names are:
• Loves to chat
• On the way to work
• Here on business
• Time to kill

QUESTIONS

• Simply using the name, how would you describe the needs and characteristics of each
segment?

• In what ways could the firm alter its products to better appeal to each of the segments?

• How helpful to you find the use of a segment nickname?

• Suggest a name for your Coffee Shop

Patterns of Target Market Selection:
Product x Market Matrices
Patterns of Target Market
Selection:
Product x Market Matrices
Target Market Selection
Characteristics
Assessment Factor What to consider?

Segment size What is the size of the segment (mainly in terms of unit
and revenue sales)? And is this substantial enough for
the firm to consider entering?

Segment growth rate At what rate is the segment growing (or perhaps
declining)? What is its future outlook?

Profit margins Is this a high profit margin segment or one that is price
competitive?
Competitors How dominant are the established competitors? What
degree of competitive rivalry exists? Are there significant
indirect competitors (or close substitute products)?

Distribution channels How easy would it be to gain access to the appropriate

distribution channels? What level of new investment
would be required in this regard?

Strategy How well does the proposed target market fit with the
firm’s strategic direction and growth goals?
 Target Market Selection
Characteristics
Goals What does the firm have high or low growth expectations

Resources Does the firm have the financial position and staff resources
to successfully enter in this segment?

Capability Does the firm have the capability to develop appropriate

products in a supportive marketing mix

Role of brand Would the firm be required to create a new brand, or could
an existing brand be leveraged into the new target market,
or is brand relatively unimportant?

Growth options What is a range of other opportunities available for growth to

the firm
Brand Positioning
Generic Market Segments
Positioning

Act of designing the company’s

offering and image to occupy
a distinctive place in the mind of
the target market.
• There are four key components to a superior competitive
positioning:
1. A competitive frame of reference in terms of the target
market and nature of competition;
2. The points-of-difference in terms of strong, favorable, and
unique brand associations;
3. The points-of-parity in terms of brand associations that
negate any existing or potential points-of-difference by
competitors; and
4. A brand mantra that summarizes the essence of the brand
and key points-of-difference in 3-5 words.
 1. Competitive Frame of Reference
• The competitive frame of reference defines which other
brands a brand competes with and therefore which brands
should be the focus of analysis and study.
• Points-of-difference (PODs) are attributes or benefits
consumers strongly associate with a brand, positively
evaluate, and believe they could not find to the same extent
with a competitive brand.
• Examples in the automobile market are Volvo (safety), Toyota
(quality and dependability), and Mercedes-Benz (quality and
prestige).
• There are three key criteria that determine whether or
not a brand association can truly function as a point-
of-difference:
1. Desirable to consumer
2. Deliverable by the company
3. Differentiating from competitors
• Points-of-parity (POPs), on the other hand, are
associations that are not necessarily unique to the
brand but may in fact be shared with other brands.
• Competitive points-of-parity are associations
designed to negate competitors’ points-of
difference.
• If, in the eyes of consumers, a brand can “break
even” in those areas where the competitors are
trying to find an advantage and achieve advantages
in other areas, the brand should be in a strong—and
perhaps unbeatable—competitive position.
2. Creating POPs and PODs
• One common difficulty in creating a strong,
competitive brand positioning is that many of
the attributes or benefits that make up the
points-of-parity and points-of-difference are
negatively correlated.
• For example, it might be difficult to position a
brand as “inexpensive” and at the same time
assert that it is “of the highest quality.”
Defining Associations
2. Points-of-difference 3. Points-of-parity
(PODs) (POPs)
• Attributes or benefits • Associations that are
consumers strongly not necessarily unique
associate with a brand, to the brand but may be
positively evaluate, and shared with other
believe they could not brands
find to the same extent
with a competitive
brand
Examples of Negatively Correlated
Attributes and Benefits
• Low-price vs. High • Powerful vs. Safe
quality
• Strong vs. Refined
• Taste vs. Low calories
• Ubiquitous vs. Exclusive
• Nutritious vs. Good
tasting • Varied vs. Simple

• Efficacious vs. Mild

Writing a Positioning Statement
Mountain Dew: To young, active
soft-drink consumers who have
little time for sleep, Mountain Dew
is the soft drink that gives you
more energy than any other brand
because it has the
highest level of caffeine.
Positioning possibilities
• Attribute

• Benefit

• Use or application

• User

• Competitor

• Product category ( leader)

• Quality or price
Differentiation Strategies
• Product

• Personnel

• Channel

• Image
Product Differentiation
• Form: size shape, physical structure
• Features :That supplement basic functions
• Performance quality : Level at which product’s primary
characteristics operate
• Conformance : Degree to which all the produced units are identical
and meet promised specifications
• Durability : Measure of the product’s expected operating life under
natural conditions
• Reliability : Measure of the probability that a product will not
malfunction with in a specified time period
• Reparability : Ease of fixing a product when it malfunctions
• Style : How a product looks and feels
• Design is the totality of features
 Product Differentiation
• Product form ( Doy) • Style ( Hidesign)

• Features (Golden Eye) • Design ( Apple)

• Performance ( Verna,BMW)

• Conformance (McDonald)

• Durability (vehicles)

• Reliability (V-guard)

• Reparability (Maruti)
Service differentiation
• Ordering ease

• Delivery

• Installation

• Customer training

• Customer consulting

• Maintenance and repair

Service Differentiation
• Ordering ease (pizza,)

• Delivery (Fedex)

• Installation (

• Customer training (GE)

• Customer consulting ( Accenture, IBM)

• Maintenance ( HP)
Personnel differentiation
• Competence
• Courtesy
• Credibility
• Reliability
• Responsiveness
• Communication
• HDFC Bank, Bajaj Allianz Super Agent, Eureka Forbes,Taj
Hotels
Channel differentiation
• Coverage

• Expertise

• Performance

• Eureka Forbes, Amway,Avon, HUL, ICICI Bank, Maruti service,

Positioning errors
• Under positioning : vague idea

• Over positioning : narrow

• Confused positioning : too many

• Doubtful positioning : consumer doesn’t believe

 4. Brand mantras
• A brand mantra is highly related to branding concepts such as “brand
essence” or “core brand promise.”
• A brand mantra is an articulation of the “heart and soul” of the brand.

• Brand mantras are short, three- to five-word phrases that capture the
irrefutable essence or spirit of the brand positioning.
• Brand mantra for Nike would be “authentic, athletic performance”.
 DESIGNING A BRAND MANTRA
• The three key criteria for a brand mantra.

1. Communicate: A good brand mantra should define the category (or

categories) of business for the brand and set the brand boundaries. It
should also clarify what is unique about the brand.
2. Simplify: An effective brand mantra should be memorable. As a result, it
should be short, crisp, and vivid in meaning.
3. Inspire: Ideally, the brand mantra would also stake out ground that is
personally meaningful and relevant to as many employees as possible.
Marketing Management
Marketing Mix- Product
 Product

 It includes the functions and features of a good

or service
 Should satisfy the needs of the customer
 May have a Unique Selling Proposition (USP)
Product Decisions
PRODUCT LEVELS
TYPES OF PRODUCTS