Market Segmentation, Targeting & Positioning

Rabeia Arshad

Fariha Naveed (GL)

Muhammed Samie Ayesha Khalid

Usman Bukhari

Roll # 29 Roll #10 Roll # 04 Roll # 23 Roll #

Learning Objectives
Market Segmentation
Target Marketing Market Positioning Major bases for segmenting consumer &

business markets.

Learning Objectives
How companies identify attractive

market segment & choose a target marketing strategies.

How companies position their products

for maximum competitive advantage in the market place.

Market Segmentation

Rabeia Arshad BBA 2006-29

Market Segmentation

Dividing a market into smaller groups of buyers with distinct needs , characteristics ,or behavior who might require separate products or marketing mixes.

Target Marketing

The process of evaluating each market segments attractiveness and selecting one or more segments to enter.

Market Positioning

Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers.

Segmenting Consumer Markets

The major variables that might be used

in segmenting consumer market are Geographic Demographic Psychographic Behavioral

Geographic Segmentation

Dividing a market into different geographical units such as nations , states, regions, cities or neighborhoods.

Geographic Segmentation
World region or Country:-

etc. Country Regions: Cities: Density:Urban, suburban, rural. Climate:Northern, southern.

Pakistan, India, America

Demographic Segmentation

Dividing a market into group based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race & nationality.

Demographic Segmentation
The consumer needs, wants & usage rates often vary closely with demographic variables. Easier to measure Even when market segments are defined on some other bases their demographic characteristics must be known.

Age & life-cycle segmentation

Dividing a market into different age & life-cycle groups.

Different age groups are under 6 6-11 12-19 20-34 35-49 50-64 65+

Family Life-cycle Groups

Bachelors Married with no children Married with children Older couples

Gender Segmentation

Dividing a market into different groups based on gender.

Income segmentation Dividing a market into different income groups

Lower income group

Middle income group

Upper class

Segmenting Variables

Psychographic Segmentation
Behavioral Segmentation Using Multiple Segmentation Basis
Fariha Naveed BBA 2006-10

Psychographic Segmentation

Dividing the market into groups according to social class, life style or personality characteristics.

Lifestyle A persons pattern of living as expressed in his or her activities, opinions, and interest. It involves measurement of AIO dimensions.

Social Class

Lower lowers Working class Upper middles

Upper lowers Middle class Lower uppers

Upper uppers

Personality

Adventurous

Authoritarian
Risk Taking

Ambitious

Behavioral Segmentation

Dividing the market into groups on the basis of consumer knowledge, attitude, use or response to a product.

Behavioral Segmentation
Occasion

Segmentation User Status Loyalty Status Benefit Segmentation Usage Rates

Occasion Segmentation

Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchases, or use the purchased item.

Benefit Segmentation Dividing the market into groups according to the different benefits that consumers seek from the product.
Procter &Gamble has identified different detergent

segments.

User Status Dividing the market into the groups according to user status .
Non-users Ex-users

Potential users
First time users Regular users

Usage Rates

Market can be segmented according to usage rate.

Light Medium Heavy
Fast food industry has only 20% heavy users but

eat up about 60% of all food served.

Loyalty Status Market can be segmented according to consumer loyalty.

Consumers can be loyal to Brands Stores Companies

Loyalty Status
Consumer can be grouped on the basis of loyalty as
Somewhat loyal

Completely loyal
Non loyal

Multiple Segmentation Basis

Using multiple variables for segmentation analysis to identify smaller, better defined target groups.

Using Multiple Segmentation Bases

One good example of multi-variable

segmentation is Geodemographic segmentation. One of the leading life style segmentation systems is the PRIZM.

PRIZM System

The PRIZM system combines demographic factors with buying transaction data and lifestyle information taken from consumer surveys, to paint a precise picture of the consumer.

PRIZM System (contd)

PRIZM classifies people into 62 unique

types or clusters. Like Blue Blood Estates (suburban areas populated by elite families) Shotguns and pickups (populated by rural blue collar workers and families) Hispanic Mix (highly brand conscious, quality conscious, and brand loyal)

PRIZM System (contd)

With the availability of data and computer power, geodemographic marketers are continually refining their techniques by tracking and adding new segments and adjusting the older ones.

Market Segmentation (contd) Target Marketing (partially)

By

Muhammad Samie

04

Market Segmentation

Segmenting Business Markets

Segmenting Business Markets

1. 2. 3.

Major variables used for segmenting business markets are: Demographic Industry: Which industries should we serve? Company size: What size companies should we serve? Location: What geographical location should we serve?

Segmenting Business markets (contd)

Operating Variables

4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services?

Segmenting Business markets (contd)

Purchasing Approaches

7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: should we serve companies that? Service contacts? Systems purchases? Sealed bidding?

Segmenting business Markets (contd)

Situational Factors

12. Urgency: Should we serve companies that need quick sudden delivery or service? 13. Specific application: Should we focus on certain applications of our product rather than all applications? 14. Size of order: Should we focus on large or small orders?

Segmenting Business Markets (contd)

Personal Characteristics

15. Buyer-seller similarity: should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk-taking or risk-avoiding customers? 17. Loyalty: Should we serve companies that shoe high loyalty to their suppliers?

Segmenting Business Markets

Additional Variables Used by Business

Markets
Serving More Then One Markets
American Express

Separate system for dealing with larger or

multiple location customers.

Market Segmentation

Segmenting International Markets

Segmenting International Markets

Usage of common variables (as described

before) The concept of Inter market Segmentation

Examples

Market Segmentation

Requirement for effective segmentation

Requirement for effective segmentation

Measurable Accessible Substantial Differentiable

Actionable

Target Marketing

Target Marketing
The process of evaluating each market segments attractiveness & selecting one or more segments to enter

Evaluating Marketing Segments

Involvement of 3 factors
Segment size and growth
Segment structural attractiveness Company objectives and resources

Selecting Target Market Segments

Defining Target Market Levels of Target Marketing Undifferentiated Marketing (very broadly) Differentiated Marketing (somewhere in between) Concentrated Marketing (somewhere in between) Micromarketing (very narrowly)

Undifferentiated Marketing
A market-coverage strategy in which a firm decides to ignore market segment differences & go after the whole market with one offer.

Differentiated Marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Target Marketing (contd)

By Zubair Ahmed Nagra

50

Concentrated Marketing
A market coverage strategy in which a firm goes after a

large share of one or a few segments or niches.

Normally used when company resources are limited Company gains a better understanding of the niches it

caters & special reputation may be gained.

Products can be Fine-Tuned to assure effective

marketing focused upon specific customers.

Can be highly profitable but also involves higher risk

levels.

Examples: Tetra Sea Food, Oshkosh Trucks

Micro Marketing
The practice of tailoring products and marketing programs to the needs of specific individuals and local customer groups. Rather then seeing a customer in every individual, micro-marketers see INDVIDUALS in every customer

Types of Micromarketing
Local Marketing
Tailoring brands and promotion to the needs and wants of local customer groups cities, neighborhoods, and specific stores.

Local Marketing
Drawbacks
Can drive up manufacturing and marketing cost by

reducing economies of scale.

Create logistics problems as companies try to meet the

varied requirements of different regional and local market.

Brands overall image my be diluted if the product and

message vary at different localities.

Local Marketing
Benefits
Helps a company to market more effectively in

the face of pronounced regional and local differences in demographics and style.
Meets the needs of company's first-line

customer.

Individual Marketing
Tailoring products

and marketing programs to needs and preference of individual customer also labeled as markets of-one, customized marketing and oneto-one marketing.

At the LEGO factory website, fans can design there own ultimate LEGO model, show it off, and bring it to life.

Mass Customization
Mass customization is the process through which firms interact oneto-one with masses of customers to create customer-unique value by designing products and services tailor-made to individual needs.

Socially Responsible Target Marketing

Some segments are at

special risk :
Children Inner-city minorities
consumers Internet shoppers
Controversy occurs
Most targeting market benefits both the marketer and the consumer. Nacara Cosmetiques markets cosmetics for ethnic women who have a thirst for the exotic

when the methods used are questionable.

Choosing a Target- Marketing Strategy

requires consideration of :
Company resources The degree of product variability Products life-cycle stage Market variability Competitors marketing strategies

Positioning for Competitive Advantage

By Aisha Khalid

23

Positioning
The way the product is defind by consumers on important attributes ---- The place the product occupies in consumers minds relative to competing products.

Product Position
The way the product is defined by consumers on important attributes-the place the product occupies in consumers minds relative to competing products.

Positioning Maps Positioning maps are a useful tool for giving you a graphical idea of where your product stands vis--vis other products in the market at a given time.

Positioning Map: Large Luxury SUVs

Range rover

High

Lincoln Navigator Escalade Hummer H1 Hummer H2 Lexus LX470 Land Cruiser

Price

Low

Orientation
Luxury Performance

Choosing a Positioning Strategy The positioning task consist of three steps.

Identify Possible Competitive

Advantages Choosing the Right Competitive Advantages Selecting an overall Positioning Strategy

Identify Possible Competitive Advantages

An advantage over competitors gained by offering consumers greater value either through lower prices or by providing more benefits that justify higher prices.
A company or market offer can be differentiated along the lines of

Product, Services, Channels, People or Image

Identify Possible Competitive Advantages

Product Differentiation
i.e.
Features,
Performance, Style, Design or Attributes.

Service Differentiation
i.e.
Delivery,
Installation,

Repair Service,
Customer Training Services.

Image Differentiation
i.e.
Symbols, Atmospheres, Events.

Personnel Differentiation
i.e.
Hiring and training better people than others do.

Choosing the Right Competitive Advantages

By

Syed Usman Bukhari

16

Choosing the Right Competitive Advantages

How many differences to promote?

Unique Selling Proposition (USP)

USP is to promote only one benefit to the target market for each brand and stick to it.

e.g. Crest Toothpaste (Anticavity Protection) Wall-Mart (Always Low Prices)

Contd

Others think that company should position themselves on more than one differentiator.
e.g. Unilever (Three-in-one bar soap)

Positioning Errors to Avoid

Under positioning:-Buyers have only a

vague idea of the brand. Over Positioning:-Buyers may have too narrow an image of the brand. Confused Positioning:- Leaving buyers with a confused image of a company.

Which differences to promote?

A company should carefully select the way in which it will distinguish itself from competitors. A difference is worth establishing to the extent that it satisfies the following criteria

Contd
Important

Distinctive
Superior Communicable Preemptive Affordable

Profitable

Selecting An Overall Positioning Strategy

Value Proposition

The full Positioning of a brand. In simpler words, the full mix of benefits upon which a brand is positioned.

Major Value Propositions

More for more More for the same The same for less Less for much less More for less

More for More Proposition

Providing the most upscale product or service and charging a higher price to cover the higher costs. e.g. Mercedes-Benz auto mobiles

More for The Same Proposition

Providing a brand offering comparable or even better quality to that of competitor/s upscale one but at a Lower or The Same Price.

e.g. Toyotas Lexus line vs. Mercedes-Benz

The Same for Less Proposition

Providing equivalent quality products at a Lower Price. It can be a powerful value proposition. e.g. Wall-Mart

Less for Much Less Proposition

Providing lower performance or quality products as required by the consumers at a Much Lower Price.

More for Less Proposition

Providing even better or the best products or services compared to the competitor/s at Lower or the Lowest Prices.

e.g. Dell Computers Procter & Gamble

Developing a Positioning Statement

A Positioning Statement summarizes company or brand positioning by targeting the segment, developing a need, delivering the brand name and its concept, and pointing out the competitive advantage or difference.

Communicating and Delivering the Chosen Position

Keeping a permanent channel to Communicate the desired position to target consumers and taking actions in order to Deliver the position the company wants to build relative to competing products.