20-Nov-19

Unit-4
Segmentation |Targeting |Positioning |Differentiation

What does market segmentation mean?

• Segmentation is the act of disaggregating a market into submarket in
such a manner that needs, motives, characteristics, and buying
behaviour would be homogeneous within each of the segments.

• Market segmentation is the process of sub dividing a heterogeneous

market into various homogeneous sub-sections of customers where
marketer can select any sub section as a target market and try to serve
them with specific marketing mix.

What does segmentation do?

Segmentation divides Heterogeneous

market (containing consumers with

different wants and behaviour) into the

homogeneous market which is made up

of the customers with similar wants and

behavioural tendencies.

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What does segmentation do?

Segment-1
Segment-2
• Segmentation confirms that the
marketer is engaged in “customer Care
About
focus marketing”
• If marketer like to give exactly what
you want , marketer needs to
segment the market.
• If as a marketer I offers durable tiles Don’t
Care
to segment-1, the consumers in this About Low Design Durability
segment would prefer to buy. Price

Product Segmentation and Market Segmentation

Product
Segmentation

Market
Segmentation

Market Segmentation

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Advantages of Segmentation
(Purpose of market segmentation)
• Segmentation improve company’s competitive position and
provide direction for new product development
• Example
– Coca-Cola introduced developed and launched new product COKE ZERO
for sugar conscious customers
• Segmentation helps to identify new customers or new uses of existing
product
• Segmentation promises better returns on the marketing investment
by ensuring effective use of company’s resources to serve most
viable segment.

Summary of Advantages of Segmentation

(Purpose of market segmentation)

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Disadvantages of Segmentation
1. Cost of marketing increase.
2. Segmentation need research based information
3. Segmentation forced to produce different products to meet
the need of two or more market
4. Wrong segment selection increase the risk of failure
5. Segmentation increase the competitive rivalry within segment

Bases for Market Segmentation

Bases for Market Segmentation

(Demographic Segmentation)
• Demographic segmentation group consumers based on
– Age / Life Cycle Stage
– Gender
– Income
– Religion
• Demographic basis indicate profile of consumer
– These are directly associated with consumer need
• Demographic basis are easy to measure
• Variables used for demographic segmentation are useful in media
planning because media selection is affected by all these variable

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Bases for Market Segmentation

(Demographic Segmentation)
• Age and Life Cycle Stage
– Marketers of books, toys, magazine, digital games, candies, chocolates, biscuits,
fruit juice, packaged foods use age and lifestyle to segment the market.
– These marketers are specifically targeted at children and Young age people.
– Example: Titan Zoop was first entry into children’s watch category

• Gender
– Men and women differ substantially in their choices and wants
– Market for products like Apparel, cosmetics, foot-wears, fashion
accessories, magazines are segmented using gender as a base

Bases for Market Segmentation

(Demographic Segmentation)
• Income
– Low income
– Average income
– High income or HNIs (High Net Income) Individuals
• Many companies target affluent consumers or HNIs with expensive or luxury
products or services
– Chanel, Bentley, etc.
• Occupation
– Life Insurance Policies and
– Students Investment Plans
– Homemakers
– Retirement plans
– Employed
– Software for professionals and for
– Retirees/ Pensioners learners (Basic) or Student version

Bases for Market Segmentation

(Demographic Segmentation)
• Level of Education
– The complexity of some products makes them more suitable for proper
evaluation and usage by individuals with higher education
• Education based Segments
– Pre-school
– Primary School
– Higher Education

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Bases for Market Segmentation

(Geographic Segmentation)
• Geographic Segmentation
– Divide the market into different geographical units such as Cities,
States, Regions
– Rural and Urban geographic segmentation are most popular market
segments
• Both of these significantly differ from each other on various parameters like
literacy, income, infrastructure.
– Topography (landscape) is also used for market segmentation
• Hill area, Valley, plane area, Rainy areas etc.

Psychographic Segmentation

• Psychographic segmentation is based on the data related to

lifestyle based latent motives of consumption
• Psychographic segmentation used the variables such as
Attitude, Values, Interest, etc. to segment the market.
• Example of Psychographic Segmentation
– Titan watches have a wide range of sub brands like Edge, Regalia,
Raga, Fast track etc. to appeal to different lifestyle segments.

Psychographics = IAO variables

• Psychographics segmentation use IAO variables (or AIO).
• IAO stands for interest, activities, and opinions
• Interest refers to the ways a person interacts with the world
around him. For example
– Someone who has children is probably interested in raising them, caring
for them, and providing a good upbringing. They probably look for
products or services that will help them to become better parent.
• Activities are the tasks that a person perform during work
timings and free time. For example
– Internet surfing, reading, travelling, online gaming etc. are the examples of
activities. The choice of activities are influenced by the interest levels.

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Psychographics = IAO variables

• Opinion are descriptive beliefs (of oneself, social issues,
politics, business, economics, education, future, culture,
etc.) For Example:
– What is your opinion on the performance of Microsoft Window-10,
compared with Microsoft Window 8?
– What’s your opinion about the Tesla’s electric car?

• Three typical statements of ‘AIO’ could be:

– I often listen to popular music (activity);
– I am very interested in the latest fashion trends (interest);
– A woman’s place is in the home (opinion).

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Behavioural Segmentation
• Dividing customers into groups on the basis of “buying behaviour tendency”
is known as behavioural segmentation
• The criteria used during behavioural segmentation are about:
– What customer look for in a product or services?
– When consumer buy the product or services ?
– How much consumer buy etc.?
• Behavioural variables:
– Benefits: Segments created based on benefits ( benefits that
consumers look for)
• Soap : (Freshness seeking , Medical property seeking consumers)
– Liril and Dettol offers different benefits
– Usage based: Segments created based on usage of product (Consumption
based)
Heavy Users| Medium users |Light users

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Targeting : Definition
• The process of evaluating and prioritizing market
segments in terms of attractiveness to company and ability of
company to serve the market ( strength of company) in order to
select one or more segments for further marketing
activities is known as TARGETING

Requisites of Effective Segment

Targeting Approaches

Customized Marketing

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Target Marketing Strategies

Process of Targeting: 5 Stages

1.Develop factors for target

2.Assign weights to factors

3.Develop rating System

4.Calculate segment attractiveness score

5.Develop summary of Targeting Matrix

Positioning Definition
• Product positioning is what
comes to mind when your target
market thinks about your
product compared to your
competitor’s products.
• Positioning is arranging a space
for a product to occupy a clear,
distinctive and desirable place
relative to competing products
in the mind of the consumer

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Why is positioning important?

• With or without your input, customers
will position product; probably based on
information from various sources.
– Proactively address product image related
issues & prevent customers from being
misguided
• Clear, concise, meaningful product
positioning helps marketer to get
competitive advantage.
• Positioning provide the context within
which target customer evaluate any
information about marketer’s product.

Main objectives of product positioning

• The goal of product positioning is to keep

product on top of target customers’ mind
when they’re considering a purchase.
• Product positioning must achieve three
objectives:
i. Differentiate your product from the
competition’s
ii. Address important customer buying criteria
iii. Articulate key product (or company)
characteristics

Steps involved in Positioning

Positioning process includes
Defining “Competitive Frame of Reference”

Defining “Product or Service Associations”

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Defining :Competitive Frame of Reference

WHERE DOES YOUR product COMPETE? The competitive frame of reference

refers to the competitive context
…simple question with equally simple
of product.
answers...
It define the other brands against
If you run a furniture store, you probably which marketer’s brand competes
compete with other furniture stores. If you and therefore competitive frame
run a tattoo parlor, you are up against of reference describe which
other tattoo parlors vying to attract the brands should be the focus of
same customers as you. competitive analysis.

Point of difference (POD)

• The aspects of the brand or offering that are relatively distinct to

the offerings of other similar competitors’ brands are POD.
• Point of Difference (POD) are the attributes or benefits consumers
strongly associate with a brand, positively evaluate and believe
they could not find the same in the same extent from the
competing brands.
• PODs can be any attribute or benefit. For example
– For APPLE brand POD is technology and innovation
– For Nike brand POD is performance and design

Point of difference (POD)

• Three criteria determine whether a brand association can truly
function as a point-of-difference:
i. Desirability
• Relevant to customer
ii. Deliverability
• Company should be able to profitably create and maintain POD
iii. Differentiability
• Consumer must see the POD as distinctive and superior to competitors

• Example:
– NIVEA wrinkle control cream

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Point of Parity (POPs)

• The aspects of the brands or offering that are largely similar to

the offerings of other similar competitors’ brands are POP
• Point 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 two basic forms:
i. Category POPs
ii. Competitive POPs

Point of Parity (POPs)

• Category points-of-parity
– These are attributes or benefits that consumers view as essential to a
legitimate and credible offering within a certain product or service
category.
– Example
• Consumers might not consider a travel agency truly a travel agency unless it is
able to make air and hotel reservations, provide advice about leisure packages,
and offer various ticket payment and delivery options.

Point of Parity (POPs)

• Competitive points-of-parity
– These are associations designed to overcome perceived weaknesses
of the competing brand.
– A competitive point-of-parity is Competing POP plus ‘one more
feature’
• It helps to make consumers feel that if a brand is good at one thing (easy to
use), it must not be good at something else (having advanced features)
• Example
– Colgate : Toothpaste with Salt

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POP and POD trade-off

features
Similar

Differentiating
features

Product Differentiation Strategies

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