Marketing

Management
Dr Swati Singh
 Unit 2
SEGMENTATION
 Concept
 Basis of segmentation
 Importance in marketing
 Targeting: Concept Types,
Importance;
 Positioning: Concept,
Importance,
 Brand positioning,
Repositioning
What is
Segmentation??
Segmentation refers to a process of
bifurcating or dividing a large
unit into various small units
which have more or less similar
or related characteristics.
 Market segmentation is a marketing concept which divides the complete market set up
into smaller subsets comprising of consumers with a similar taste, demand and
preference.
 A market segment is a small unit within a large market comprising of like minded
individuals.
 One market segment is totally distinct from the other segment.
 A market segment comprises of individuals who think on the same lines and have similar
interests.
 The individuals from the same segment respond in a similar way to the fluctuations in the
market.
 Substantiality
 Measurability
 Accessibility
 Differential
 Actionable
Substantial
 The segment should be substantial. It should be large enough in terms of
customers and profit potential.
 It should justify the costs of developing a separate marketing mix.
 The market segments are large or profitable enough to serve.
 It would not pay, for example, for an automobile manufacturer to develop cars
especially for people whose height is greater than seven feet.
Measurability
 The Segments should be easily measurable after targeting.
 The size, profiles and purchasing power of the segments can be measured.
Sometimes, segmentation variables are difficult to measure.
 For example, if any company wants to launch any product which is useful for
left-handed people. if they target their market towards left-handed segment, then
the major problem may be that it will be difficult to identify and measure.
Accessibility
 The Markets segments should be effectively reached and served to the targeted
market.
 Marketers have to make their products accessible for customers.
Differential
 The segments are conceptually visible and respond differently to different
marketing mix elements and plan.
 For example, if two categories react similarly to a sale of particular brand of
perfume, they do not count as separate segment.
Actionable
 Effective plans can be designed for serving and attracting the segments.
 For example, even though, one small airline identifies seven market segments,
airlines’ staff is too small to design separate marketing plan for each segment.
Basis of Segmentation
▸ Gender
▹ The marketers divide the market into smaller segments based
on gender.
▹ Both men and women have different interests and
preferences, and thus the need for segmentation.
▹ Organizations need to have different marketing strategies for
men which would obviously not work in case of females.
▹ Generally A woman would not purchase a product meant for
males and vice a versa.
▹ The segmentation of the market as per the gender is
important in many industries like cosmetics, footwear,
jewellery and apparel industries.
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▸ Age Group
▹ Division on the basis of age group of the target audience is
also one of the ways of market segmentation.
▹ The products and marketing strategies for teenagers would
obviously be different than kids.
▹ Age group (0 - 10 years) - Toys, Baby Food, Prams
Age Group (10 - 20 years) - Toys, Apparels, Books, School
Bags
Age group (50 years and above) - Cosmetics, Anti-Ageing
Products, Magazines, and so on

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▸ Income
▹ Marketers divide the consumers into small segments as per their income.
Individuals are classified into segments according to their monthly
earnings.
▹ The three categories are:
■ High income Group
Mid Income Group
Low Income Group
▹ Stores catering to the higher income group would have different range of
products and strategies as compared to stores which target the lower
income group.
▹ Pantaloons, Carrefour, Shopper’s stop target the mid income group as
compared to Vishal Retail, Reliance Retail who cater to the individuals
belonging to the lower income segment. 12
▸ Marital Status
▹ Market segmentation can also be as per the marital status of the
individuals. Travel agencies would not have similar holiday
packages for bachelors and married couples.
▸ Occupation
▹ Office goers would have different needs as compared to school /
college students.
▹ A beach house shirt or a funky T Shirt would have no takers in a
Store which caters specifically to the professionals.

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▸ Demographic segmentation: The who
▹ Demographic segmentation consists of dividing the market through
different variables such as age, gender, education level, family size,
occupation, income, etc.
▹ This is one of the most widely used forms of market segmentation, since it
is based on knowing how customers use your products and services and
how much they are willing to pay for them.
▹ For example, companies that sell soft drinks, like Coca-cola, often target
young adults between the age of 15 to 25 by depicting young men or
women in their marketing campaigns

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▸ Psychographic segmentation: The why
▹ Psychographic segmentation consists of grouping the target audience
based on their behavior, lifestyle, attitudes and interests.
▹ To understand the target audience, market research methods such as
focus groups, surveys, interviews and case studies can be successful in
compiling this type of conclusion.
▹ Nike uses psychographic segmentation to target individuals with
specific lifestyles and personalities. To use this variable effectively
Nike target individuals who enjoy sports.

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▸ Personality
▹ Customer personality can divide audiences based on similar personality traits, such
as creative, friendly, introverted, and extroverted individuals, to help you group
your customers based on how their personalities may impact buying decisions. A
psychographic segmentation example based on personality would be grouping
customers based on creativity. If you run a hobby shop, you might group
individuals this way to help you determine who your target market is for specific
products.
▸ Lifestyle
▹ How a person lives and their daily habits will also help you predict consumer
behavior. For example, if you sell home office furniture and supplies, you can
determine what types of products to sell to certain individuals. In this case, you can
identify which customers are most active or health-conscious and send them a
targeted marketing campaign about standing desks.
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▸ Social status
▹ Social class can help determine the types of people who use the products
and their preferences. Of course, social status can’t predict everything,
but you can assume middle-class and upper-class individuals have
different preferences. Upper-class individuals typically shop for higher-
end or luxury items.
▹ Social class psychographic segmentation can help brands understand
how to price their products and market to certain groups of people based
on spending power.

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▸ Activities, interests, and opinions (AIO)
AIO is a type of psychographic segmentation based on the activities and interests of the target
audience–ultimately, the things they care most about. For example, some individuals prefer horror
movies to comedies, and some strongly oppose sports. A good example of AIO is grouping
individuals based on the activities they enjoy. For example, a shoe company may make shoes for
several different types of individuals, ranging from running enthusiasts to basketball players.
▸ Attitudes
▹ Backgrounds influence attitudes and values, and every customer has a different perspective
you can use for psychographic segmentation. For example, customers might have different
attitudes toward pets, work, industries, and so forth. A good psychographic segmentation
example of how attitudes impact buying decisions is someone who loves pets would be more
likely to purchase premium pet beds.

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▸ Geographic segmentation: The where
▹ It is often one of the easiest to identify, grouping customers with
regards to their physical location. This can be defined in any number
of ways – Country,Region,City
▹ it’s possible to group customers within a set radius of a certain
location – an excellent option for marketers of live events looking to
reach local audiences. Being aware of your customers’ location
allows for all sorts of considerations when advertising to consumers.
▹ McDonalds divides its market into geographic segments, for
example, different countries, states, regions and cities. McDonalds
sells burgers and target local markets and with customized menus.

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▸ Behavioral segmentation: The how
▹ Behavioral segmentation refers to a process in marketing which
divides customers into segments depending on their behavior patterns
when interacting with a particular business or website.
▹ It is possibly the most useful of all for e-commerce businesses. Here
we group customers with regards to their:
• Spending habits
• Browsing habits
• Loyalty to brand
• Previous product feedback

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Benefits of Segmentation
▸ Increases clarity
▹ Well, developing clarity is the first yet one of the most important benefits
of market segmentation. After cleansing and mining your market data,
you will be able to get the most accurate and relevant information about
the market. Market segmentation’s major objective is removing clutter of
information. This will automatically enhance clarity.
▸ Develops consumer insights
▹ Knowing potential customers is always challenging for every business.
However, with contact profile and customer segmentation customers can
be known.

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▸ Improves brand loyalty and customer engagement
▹ Customer engagement is one of the most important advantages of market
segmentation, because it is critical to influence needs and interest of
customers.
▹ Customer’s behavioral data from social platforms, or any other source and
can be used to address their needs more effectively.
▹ Market segmentation has improved the way to engage customers with
motivational efforts and communication.

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▸ Streamlines mass customization
▹ This is another one of the best benefits of market segmentation. Market
segmentation has made it easier for businesses to provide tailored services
or products to customers as per specific needs of customers in a certain
segment.
▸ Optimizes for cost efficiency and resource management
▹ Well, market segmentation has also become an essential tool to maintain
competitive advantage and develop business intelligence. It can give
businesses a deeper insight into the market and help them know the
customers segment with greater profit potential.

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Limitations of Segmentation
▸ Segmentation does not ensure that those within a segment buy only in that
segment. The same buyer may buy products in different segments for
different family members or for different occasions
▸ It is incorrect to believe that a brand can be positioned to appeal exclusive to
one segment. Buyers of one brand buy other brands as well
▸ It is an expensive process for a firm has to develop different market mixes for
different segments. Moreover it is more costly to produce a variety of
products than mass production of one variety

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Basis of Market Segmentation
▸ Company Resources
▹ Segmentation involves heavy expenditure in implementing it. Unless
the company has got enough resources, market segmentation cannot
be undertaken at all
▸ Product Characteristics
▹ Most products are heterogeneous in character but certain products
show homogeneity. In the case of former type, market segmentation
is necessary but in the latter case the necessity of segmentation is
disputed

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▸ Product Positioning in Product Life Cycle
▹ The various stages of a product cycle are : introduction, Growth,
Maturity, Saturation and Decline In the first and last stages market
segmentation is meaningless. During Introduction stages the
necessary data cannot be collected and in the last phase the necessity
for market segmentation does not arise at all.
▸ Homogeneous Nature of Market
▹ When the market is of homogeneous nature, there is not much use of
segmentation . Proper segmentation of market is required only when
the customer preferences vary from group to group

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▸ Competitive Marketing Strategies
▹ Sometimes it might become necessary to fall in line with the
competitor activity of market segmentation. Arrangements similar to
those undertaken by the competitors have to be made to meet the
competition effectively. Experience shows that it is difficult for an
organization to be successful through undifferentiated marketing,
when competitors are practicing active segmentation.

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Marketing Mix
▸ The marketing mix refers to the set of actions, or tactics,
that a company uses to promote its brand or product in the
market. The 4Ps make up a typical marketing mix - Price,
Product, Promotion and Place. However, nowadays, the
marketing mix increasingly includes several other Ps like
Packaging, Positioning, People
▸ The 4 Ps of marketing are place, price, product, and
promotion. By carefully integrating all of these marketing
strategies into a marketing mix, companies can ensure
they have a visible, in-demand product or service that is
competitively priced and promoted to their customers.

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▸ Price: refers to the value that is put for a product. It depends on costs of
production, segment targeted, ability of the market to pay, supply - demand
and a host of other direct and indirect factors. There can be several types of
pricing strategies, each tied in with an overall business plan. Pricing can
also be used, to differentiate and enhance the image of a product
▸ Product: refers to the item actually being sold. The product must deliver a
minimum level of performance; otherwise even the best work on the other
elements of the marketing mix won't do any good.
▸ Place: refers to the point of sale. In every industry, catching the eye of the
consumer and making it easy for them to buy it is the main aim of a good
distribution or 'place' strategy. Retailers pay a premium for the right
location.

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▸ Promotion: this refers to all the activities undertaken to make the product
or service known to the user and trade. This can include advertising, word
of mouth, press reports, incentives, commissions and awards to the trade. It
can also include consumer schemes, direct marketing, contests and prizes.

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▸ Three more P’s have been added to the marketing mix. They
are as follows:
▹ People - The individuals involved in the sale and
purchase of products or services come under people.
▹ Process - Process includes the various mechanisms and
procedures which help the product to finally reach its
target market
▹ Physical Environment - With the help of physical
evnvironment, a marketer tries to communicate the USP’s
and benefits of a product to the end users

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Four C’s of Marketing Mix
▸ Now a days, organizations treat their customers like kings. In
the current scenario, the four C’s has thus replaced the four
P’s of marketing making it a more customer oriented model.
Koichi Shimizu in the year 1973 proposed a four C’s
classification.
▹ Commodity - (Replaces Products)
▹ Cost - (Replaces Price) involves manufacturing cost,
buying cost and selling cost
▹ Channel - The various channels which help the product
reach the target market.
▹ Communication - (Replaces Promotion)
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• Consumer. The wants and needs of the consumer. A business should be focused on solving
problems for consumers rather than creating products. This requires studying consumer
behavior and needs, along with interacting with potential customers to find out what they want.
• Cost. The total cost of acquiring a product or service, which goes beyond the price tag. Cost
includes the time it takes to research a product and make a purchase. It also may include the
cost of trade-offs that consumers must make, such as forgoing another purchase, or the cost of
guilt they experience for buying or not buying a product.
• Convenience. How easy or difficult it is for consumers to find and purchase a product. The rise
of Internet marketing and purchasing has made convenience more important in customer
decisions than physical place.
• Communication. A dialogue that depends as much on the consumer as on the seller. This
includes advertising, marketing, and media appearances. In the digital world, however, it also
includes emails that customers either opt into or initiate, brand ambassadors, blog posts,
websites, sponsored product placement, and social media channels.

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Determining the Marketing Mix
The process of determining the marketing-mix (or marketing decision-
making) consists of the following steps:
▸ Identification:
▹ First of all, the marketing department must identify the target
customers to whom the sales are to be made.
▸ Analysis:
▹ Once the target market is identified, the next step is to discover and
understand the needs and desires of the customers. Marketing research
is used in locating and analysing the target market. It is necessary to
know the number, location, buying power and motives of customers.
In addition, the nature of competition, dealers’ behaviour and
government regulations must be analysed. 37
▸ Design:
▹ On the basis of the knowledge obtained through identification and analysis, an
appropriate mix of product, price, promotion and channel is designed. Design
involves not only the determination of each component but the proper
integration of individual variables so that they reinforce one another.
▸ Testing:
▹ It is desirable to make a test run of the marketing-mix designed by the
marketing department. The designed mix may be used in a small group of
customers. The reaction of customers will indicate the adjustments required in
the mix.
▸ Adoption:
▹ After the necessary modifications, the marketing-mix is adopted and put into
use. The adopted mix should be evaluated from time-to-time and it must be
adapted to changes in the environment of business.
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Factors Determining the Marketing Mix
▸ Nature of the Product
▹ Consumer goods require a different marketing mix as compared to
industrial goods.
▸ Stage of Product Life Cycle
▹ During the introduction stage heavy expenditure on promotion is
necessary to attract customers but in the decline stage very little
promotion is required rather than improvement in product quality and
introduction of new product features are needed during decline stage
▸ Degree of Competition
▹ In a highly competitive market prices have to be kept low and greater
investment in advertising is necessary
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▸ Efficiency of Channel
▹ When the firm uses direct selling, large investment has to be made in
storage and advertising of goods. But if efficient distribution channel are
available the firm can curtail promotion
▸ Availability of Funds
▹ In case the firm has adequate funds, it can improve product quality and
features and spend heavily on advertising. But when there is shortage of
funds use of established trade channels and limited advertising become
necessary

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Importance of Marketing Mix
▸ Link
▹ Marketing Mix serves as the link between a business firm and its
customers. It focuses attention on the satisfaction of consumers
and thereby helps in pursuing the marketing concept.
▸ Guide
▹ Marketing Mix stresses that different elements are interrelated
and interdependent. Decision in any one element affect other
elements. It helps in integrated decision making.

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▸ Dynamism
▹ Marketing Mix is modified whenever the needs and
preferences of consumer change. It helps to introduce
flexibility in marketing.
▸ Higher Earnings
▹ By meeting the requirements of different types of
customers marketing mix helps to increase sales turnover
and profits of business

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Targeting
▸ Targeting is the process through which an advertiser
identifies its target audience and then advertises to
them through a variety of channels. By constructing
the right user persona, understanding user habits and
finding the right platforms to reach them, an advertiser
uses targeting to improve the performance of their
campaigns.
▸ Targeting in marketing is important because it’s a part
of a holistic marketing strategy. It impacts advertising,
as well as customer experience, branding, and
business operations.

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▸ A target audience is a particular group at which an advertising campaign is aimed. This
can be defined by a wide range of criteria from demographics or behavior to the type of
devices used.
▸ Targeted ads are advertisements aimed at a specific group (or groups) based on shared
traits or demographics
▸ Kellogg’s K Special mainly targets individuals who want to cut down on their calorie
intake. The target market in such a case would be individuals who are obese. The
strategies designed to promote K Special would not be the same in case of any other
brand say Complan or Boost which majorly cater to teenagers and kids to help them in
their overall development. The target market for Kellogg’s K Special would absolutely be
different from Boost or Complan.
▸ Target market consists of like-minded individuals for whom an organization can afford to
have similar strategies, promotional schemes and advertisements to entice them and
prompt them to purchase the product. Once a company decides on its target audience, it
implements various promotional strategies to make a brand popular amongst them.

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Jordan, a college student went to a nearby retail store to
purchase a shirt for himself. The retailer tried hard to sell a
nice formal shirt to him, but somehow could not convince
Jordan. Jordan left the store sad and empty handed.
Where do you think is the problem ???

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▸ The problem is neither with Jordon nor the shirt. The retailer in this case
failed to understand that Jordan, being a college student, was not the
target audience for the formal shirt. No amount of convincing helped as
the retailer was targeting the wrong audience. The target market for a
formal shirt would be office goers or professionals. Funky T shirts, casual
shirts would have worked better for Jordon. The target market for Zodiac
Clothing Company Limited or Louis Philippe would be the office goers
whereas the target market for Levi’s would be the school and college
kids. The target market for Cat moss or Giny and Jony would be kids.

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What Are the 4 Target Markets?
Marketing professionals divide consumers into four major segments:
▸ Demographic: These are the main characteristics that define your target
market. Everyone can be identified as belonging to a specific age group,
income level, gender, occupation, and education level.
▸ Geographic: This segment is increasingly relevant in the era of globalization.
Regional preferences need to be taken into account.
▸ Psychographic: This segment goes beyond the basics of demographics to
consider lifestyle, attitudes, interests, and values.
▸ Behavioral: This is the one segment that relies on research into the decisions
of a company's current customers. New products may be introduced based on
research into the proven appeal of past products
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Basis of Target Marketing
▸ Age
▸ Gender
▸ Interests
▸ Geographic location
▸ Need
▸ Occupation

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Need of Targeting
▸ Organizations can use similar kind of strategies to
promote their products within a target market.
▸ They can adopt a more focused approach in case of
target marketing. They know their customers well and
thus can reach out to their target audience in the most
effective way.

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How to create target market
▸ The organization must first decide who all individuals
would fit into a particular segment. A male and a female
can’t be kept in the same segment. The first and the
foremost step is to decide on the target market.
▸ The next step is to identify need and preference of the target
market. It is essential to find out what the target market
expects from the product.
▸ Once the target market is decided, organizations can decide
on the various strategies helpful to promote their product.

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▸ Market positioning is a strategy that helps companies differentiate
themselves from competitors.
▸ It is the process of establishing a unique identity for your business
in the minds of your target audience. It’s about creating a
perception of your brand that sets you apart from the competition.

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▸ Market Positioning refers to the ability to influence
consumer perception regarding a brand or product relative to
competitors. The objective of market positioning is to establish the
image or identity of a brand or product so that consumers perceive it
in a certain way
▸ For example:
▹ A handbag maker may position itself as a luxury status symbol
▹ A TV maker may position its TV as the most innovative and
cutting-edge
▹ A fast-food restaurant chain may position itself as the provider of
cheap meals

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▸ Positioning helps organizations to create a perception of the products in the
minds of target audience.
▸ Ray Ban cater to the premium segment while Vintage or Fastrack sunglasses
target the middle income group. Initially Ray Ban sunglasses have no takers
amongst the lower income group.
▸ Garnier offers wide range of merchandise for both men and women.
▸ Each of their brands has been targeted well amongst the specific market
segments. (Men, women, teenagers as well as older generation)
▸ Men - Sunscreen lotions, Deodorant
Women - Daily skin care products, hair care products
Teenagers - Hair colour products, Garnier Light (Fairness cream)
Older Generation - Cream to fight signs of ageing, wrinkles

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Types of Positioning Strategies
There are several types of positioning strategies. A few
examples are positioning by:
▸ Product features: Associating the brand/product with certain
characteristics or with certain beneficial value
▸ Product price: Associating the brand/product with competitive pricing
▸ Product quality: Associating the brand/product with high quality
▸ Product use and application: Associating the brand/product with a
specific use
▸ Competitors: Making consumers think that brand/product is better than
that competitors

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How to Create an Effective Market Positioning Strategy?
▸ Create a positioning statement will serve to identify the business and how
the brand would be perceived by consumers.
▸ For example, the positioning statement of Volvo: “For upscale American
families, Volvo is the family automobile that offers maximum safety.”
▸ At Nike, we're committed to creating a better, more sustainable future for
our people, planet, and communities through the power of sport
1. Determine company uniqueness by comparing to competitors
Compare and contrast differences between your company and competitors to
identify opportunities. Focus on your strengths and how they can exploit these
opportunities.
2. Identify current market position
Identify your existing market position and how the new positioning will be
beneficial in setting you apart from competitors. 58
3. Competitor positioning analysis
Identify the conditions of the marketplace and the amount of influence
each competitor can have on each other.
4. Develop a positioning strategy
Through the preceding steps, you should achieve an understanding of
what your company is, how your company is different from competitors,
the conditions of the marketplace, opportunities in the marketplace, and
how your company can position itself.

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 Importance of Market positioning
▸ Positioning as the interface between brand identity and brand image
▹ Brand identity in the marketplace depends on positioning. Customer’s perception of the brand develops
only when the Market Positioning is proper.
▸ Positioning as a source of competitive advantage
▹ Better marketing positioning will give the company a competitive advantage over other firms on the
market.
▸ Market Differentiation with Positioning – Positioning breaks the clutter of noise
▹ The are plenty of products, and the number of firms delivering them is several. Positioning will help a
firm to stand out in the crowd of sellers.
▹ A clear Brand Position enables you to efficiently and effectively communicate and reach your target
audience. Clear market positioning makes the brand and its product visible and attractive to the
customers.
▸ Positioning Makes buying easy for Customers
▹ Consumers want easy solutions and options to make purchase decisions. And positioning triggers an
emotional response from your target audiences, giving them a quick way to trust you and increase the
interest level of customers and increase sales numbers. 60
▸ It increases customer loyalty. Once consumers trust your brand name
and your products, they're likely to become repeat customers. In addition,
strong market positioning incentivizes customers to skip the product
research process and go directly to your brand to fulfill their needs
▸ It prioritizes value over price. Price becomes less of an obstacle when
brands can show why they have a higher value than their competitors.
Consumers willingly pay more for items they know provide a better value
than a cheaper alternative.

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▸ Availability: Sometimes the most important product characteristic is sheer
availability. A product or service will have an inherent advantage when it is
available in a specific geographical area, on specific days of the week, or at
specific times of day that competitor products are not. By simply being
available when a customer needs it, a product can leapfrog over the hurdles
of marketing and price competitions.
▸ Durability: While consumers might gravitate toward the lowest-priced
items, you can use durability as a selling point. For example, if someone can
own your product for a longer time without having to replace it, your
company can make the case that your product is more cost-effective in the
long run because of its durability

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▸ Messaging: To stand out among nearly identical products, aim for clever
messaging and product positioning based on careful market research. A funny or
sentimental ad can connect your audience to your product and help them choose
you over competitors that offer items that are functionally the same.
▸ Novelty: Some customers see value in new products that represent something
different or innovative. A product that is functionally the same as many others
but designed in a fresh, innovative way may also attract new customers.
▸ Price point : Low prices can help win a wider market share as the product falls
into more potential customers' price range. Some consumers might automatically
think that a higher price means higher quality, so if you can also promote the
convenience and accessibility of your product, it can allow you to gain a
competitive market share.

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BCG matrix
▸ BCG matrix (also referred to as Growth-Share Matrix) is a portfolio planning
model used to analyse the products in the business’s portfolio according to
their growth and relative market share.
▸ The model is based on the observation that a company’s business units can
be classified into four categories:
▹ Cash Cows
▹ Stars
▹ Question Marks
▹ Dogs

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▸ It is based on the combination of market growth and market share relative to
the next best competitor.
▸ Stars
▹ High Growth, High Market Share
▹ Star units are leaders in the category. These products have –
▹ A significant market share, hence they bring most cash to the business.
▹ A high growth potential that can be used to increase further cash inflow.
▹ With time, when the market matures, these stars become cash cows that
hold huge market shares in a low growth market. Such cows are milked
to fund other innovative products to develop new stars.

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▸ Cash Cows
▹ Low Growth, High Market Share
▹ Cash cows are products with significant ROI but operating in a matured market which
lacks innovation and growth. These products generates more cash than it consumes.
▹ Usually, these products finance other activities in progress (including stars and
question marks).
▸ Dogs
▹ Low Growth, Low Market Share
▹ Dogs hold low market share and operate in a market with a low growth rate. Neither
do they generate cash nor do they require huge cash. In general, they are not worth
investing in because they generate low or negative cash returns and may require large
sums of money to support. Due to low market share, these products face cost
disadvantages.
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▸ Question Marks
▹ High Growth, Low Market Share
▹ Question marks have a high growth potential but a low market share which
makes their future potential to be doubtful.
▹ Since the growth rate is high here, with the right strategies and investments,
they can become cash cows and ultimately xstars. But they have low market
share so wrong investments can downgrade them to Dogs even after lots of
investment.

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▸ A perfect example to demonstrate BCG matrix could be the BCG matrix of Pepsico.
The company has perfected its product mix over the years according to what’s working
and what’s not.
▸ Here are the four quadrants of Pepsico’s growth-share matrix:
▸ Cash Cows – With a market share of 58.8% in the US, Frito Lay is the biggest cash
cow for Pepsico.
▸ Stars – Even though Pepsi’s share in the market has been reduced to 8.4%, it’s still the
star for Pepsico because of its brand equity. Other stars are Aquafina (
biggest selling mineral water brand in the USA), Tropicana, Gatorade, and Mountain
Dew.
▸ Question Marks – Since it’s a mystery whether the diet food and soda industry will
boom in the future and will Pepsico’s products will find their place or not, Diet Pepsi,
Pepsi Max, Quaker, etc. fall in the question marks section of the Pepsico’s BCG
matrix.
▸ Dogs – As of now, there isn’t any product line that falls in the dogs section of the
Pepsico’s BCG matrix. However, seasonal and experimental products like Pepsi Real 69
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▸ Advantages of BCG Matrix
▹ It is simple and easy to understand.
▹ It helps you to quickly and simply screen the opportunities
open to you, and helps you think about how you can make the
most of them.
▹ It is used to identify how corporate cash resources can best be
used to maximize a company’s future growth and profitability.
▹ The BCG Matrix produces a framework for allocating
resources among different products and makes it possible to
compare the product portfolio at a glance.

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▸ Limitations of BCG Matrix
▹ BCG Matrix uses only two dimensions, relative market share and
market growth rate. These are not the only indicators of profitability,
attractiveness or success.
▹ Business with low market share can be profitable too.
▹ At times, dogs may help the business or other products in gaining
competitive advantage.
▹ The model neglects small competitors that have fast-growing market
shares.

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▸ Market repositioning is when a company changes its existing brand or
product status in the marketplace. Repositioning is usually done due to
declining performance or major shifts in the environment.
▸ Many companies, instead of repositioning, choose to launch a new product
or brand because of the high cost and effort required to successfully
reposition a brand or product.

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Why reposition a brand?
▸ Generally brand/products are repositioned due to a concerning
market situation, such as:
• Decline stage of the product life-cycle (PLC)
• Declining sales or profit margin due to being positioned to close
to a major competitor
• The introduction of a superior product by the company itself
• To support an overall strategic change by the firm
• To assist in entering new marketplaces or pursue new segments
• The brand/product has been classified as a dog in the BCG
matrix
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• In the decline stage of the product life-cycle, it may be possible to effectively reposition the brand or
products for a new use. An example here would be vinegar (a food product) also being used as an
effective and safe cleaner for household mold
• Being positioned too close to a major competitor means that the brand is constantly “sharing” sales from
consumers who are seeking that set of product benefits – and this often leads to increased sales
promotions are discounting. A new position will hopefully reduce direct competition and lead to more
sales and profit stability.
• Introducing a superior product will tend to happen in technology–driven markets, where a company is
bringing out improved products consistently. Therefore, repositioning the older product will assist in
reducing product cannibalization with the goal of generating higher overall sales and profits.
• Taking the brand in a new strategic direction, is a major decision by a company. They may wish for the
brand to be seen as more modern, innovative, convenient, helpful, and so on. In example here might be a
traditional bank repositioning to be seen as a modern online bank.
• Growth is often achieved by market development and a firm may find that their traditional positioning
limits their growth in new markets where that original positioning may not resonate as well.
• A brand/SBU that has been classified as a dog in the BCG matrix is typically considered to have limited
prospects – having a relatively weak market share in a stable low growth market. Therefore, possibly
repositioning will create opportunities for growth.

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Brand Positioning
▸ Brand positioning has been defined by Kotler as “the act
of designing the company’s offering and image to occupy
a distinctive place in the mind of the target market”.
▸ In other words, brand positioning describes how a brand
is different from its competitors and where, or how, it sits
in customers’ minds. A brand positioning strategy,
therefore, involves creating brand associations in
customers’ minds to make them perceive the brand in a
specific way.

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▸ A brand positioning statement is a description of your target market that also
includes a holistic picture of how you’d like your brand to be perceived by
customers (based on research and data).
▸ Simply put, this statement is the who, when, where, why, and how of your
brand’s identity.
▸ Brand positioning is important for business in these four ways:
▹ Market differentiation: Showing the uniqueness of your product in any
industry creates a major advantage. When you use your brand
positioning to celebrate how your product solves a particular problem
or need differently than your competitors, customers will take notice.
▹ Easy purchase decisions: By clearly defining your product and how it
can benefit your customer, you take the guesswork out of the purchase
process. When you give customers the answers to questions they are
looking for, they will be quicker to trust and buy. 78
▹ Value confirmation: A strong brand doesn’t have to rely on pricing
wars with competitors. Instead, great brand positions establish the high
value of their product, making customers want to buy it no matter what
(even if it isn’t the cheapest on the market),
▹ Magnified messaging: A clear brand positioning statement gives you a
springboard for compelling creative storytelling. By having a concrete
vision, you can elevate each additional piece of marketing to further
solidify your place among the competition.

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