STP

Segmentation target positioning

Market & Target Market

MARKET
Group of people / organizations with:
Wants to satisfy,

Money to spend & Willingness to spend.

TARGET MARKET
Is homogeneous group of customers at whom the seller specifically aims its marketing efforts.
Next our focus will be TM Strategies.

MARKET AGGRIGATION

2 Broad Alternatives of TM Strategies:

MARKET SEGMENTATION
Is a process of dividing the total heterogeneous market for a product into several homogenous segments.
Total market is seen as many smaller homogenous segments.

Treat the whole market as a single unit

Short gun approach.
Assumption There is one demand curve.

Rifle Approach
Assumption Seller views the market as a series of Demand Curves.
Benefits & Limitations are Next..

Objectives
Identifying Market Segments Choosing Target Markets Positioning

Steps in Market Segmentation, Targeting,and Positioning

Market Segmentation
1. Identify segmentation variables and segment the market
2. Develop profiles of resulting segments

Market Targeting
3. Evaluate attractiveness of each segment

Market Positioning
5. Identify possible positioning concepts for each target segment
6. Select, develop, and communicate the chosen positioning concept

4. Select the target segment(s)

Evaluation of segments
Evaluating market segments
segment size & growth segments structural analysis
competition within the segment existing or potential substitute products relative power of buyers / suppliers

companys objectives & resources

environment, social responsibility, if it is core business, can employ skills & resources superior to those of competition

3 basic questions
Who is buying? What do they buy? When do they buy?

Market Segment
A subgroup within the market who share certain relevant characteristics A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix

What is a Market Segment? Definition of target market segment:

A target segment is an internally homogeneous group of consumers which is heterogeneous with respect to the mass market. Example: Probability that teens (13-19 year olds) will consume a fizzy drink in a given week is 0.56. For all consumers (13-65) it is 0.25. Teens are two-times more likely to consume a fizzy drinks like coca-cola than the mass market.

Market segmentation - Definitions

The analytical division of the market into discrete groups of customers that share common attributes. The identification of subsets of buyers within a market who share similarities, needs and who have similar buying processes.

Market segmentation
A market segment is a large, identifiable group of customers within a market, which shows a predictable pattern of behavior in buying situations and can be profitably reached by means of distribution and communication.

What is a Market Segment?

A schematic representation

Mass Market

Target Market

What is Segmentation Analysis?

Segmentation Strategies Compared
A Ford 1920s Supplier C GM 1930s Supplier
A B C

Mass Marketing

Multiple Segment

Ferrari Supplier
B

NicheMarketing

What is Segmentation Analysis?

General Techniques Socio-demographic (age structure profiles) part c of the lecture. Benefit (economy segment (price); durability(quality); symbolic (Hiranandani). Lifestyle (Rolex) Behavioural (Cigarette smokers & Bungie Jumpers)

What is Segmentation Analysis?

Segmentation Techniques Based on Usefulness and Measurability
High

Age

Usefulness

Ethnicity

Gender Income

Lifestyle Attitudes Generic need sought

socio-demographic segmentation

Low

Low

Measurable

High

Market-Segmentation Procedure
1. Survey stage
Motivations Attitudes Behavior

2. Analysis stage
Factors Clusters

3. Profiling stage

Steps in Segmenting a Market

Select Market or Product Category Choose Segmentation Bases

Select Segmentation Descriptors

Steps in Segmenting a Market

Profile/Analyze Segments

Select Target Markets

Design, Implement, Maintain Marketing Mix

Subsequent Marketing Activities

Segmenting the Market

Bases for 1st Division

Reason to Purchase

Consumer Market
(Ultimate Consumption)

Business Market
(Business Selling)

Reselling
Remaking Material Operating Supplies

Bases for Segmenting Consumer Markets

Geographic Region, City or Metro Size, Density, Climate Demographic Age, Gender, Family size and life cycle, Race, Occupation, or Income ...

Psychographic Lifestyle or Personality, social class Behavioral Occasions, Benefits, Uses, or Attitudes, amount of usage, usage occasions

Segmenting Consumer Market

Geographic
Region, City / Metro area size Climate, Urban-rural

Demographic

Bases for Segmenting Consumer Markets

Income, Age, Family LC, Social Class Education, Occupation, Ethnicity.

Psychographics
Personality, Life style, Values.

Behavioral - I
(Benefits Desired) Quality, cost, Toothpaste.

Behavioral - II
(Usage Rate) Nonusers, Light users, Heavy users.

Case Study
Procter & Gamble
Has also identified Sells multiple brands different niches within within the same certain segments product category for a Product modifications variety of products are useful: Tide offers Brands feature a seven different different mix of product formulations benefits and appeal to to serve different niches needs different segments

The Family Life Cycle

Middle-aged divorced without children

Young divorced without children

Middle-aged married without children

Young single*

Young married without children*

Young married with children*

Middle-aged married with children*

Middle-aged married without dependent children

Older married*

Older unmarried*

Young divorced with children

Middle-aged divorced with children

Middle-aged divorced without dependent children

Usual flow Recycled flow Traditional flow

Bases for Segmenting Business Markets

Type of organization Size of organization Location Structure

Segmenting Business Market

Segmentation Basis Customer Location DESCRIPTION Region & Location Industry Size (Sales Volume, Employees, Production Facility, & Sales Offices). Organizational Structure (Centralized vs Decentralization, Group vs Individual Decision). Purchase Criteria (Quality, Price, Durability, Time) Buying Situation 1. New buy- 1st time buying 2. Modified rebuy modified from old 3. Straight rebuy - 2nd or 3rd time buying Usage Rate Non users, Light users, heavy users Purchase procedures Bidding, lease. Order size Small, medium, large. Service requirements Large, Moderate, Heavy

Customer Type

Transaction Conditions

Segmenting Business Markets

Geographic Customer Type Macrosegmentation Customer Size Product Use

Business to Business

Purchasing Criteria Purchasing Strategy Microsegmentation Importance Personal Characteristics

Strategies for Selecting Target Markets

Undifferentiated Strategy

Concentrated Strategy

Multisegment Strategy

Segmentation strategies
Undifferentiated: Ignore segments Concentrated or focused: Concentrate on a single segment (Small firms) Differentiated: Different marketing mix for each segment (Large firms)

Segmentation strategies
Undifferentiated Marketing Segment A Differentiated Marketing Firm Segment B Segment C Segment D Segment A Concentrated/Focused Marketing Firm Market

Firm

Segment B
Segment C Segment D

Undifferentiated Strategy
Also known as market aggregation Targets entire market with the same marketing mix segments ignored Used when segments cannot be identified or where aggregation proves more profitable than segmentation Fords Model T car were sold as the universal car any car as long as it is black

Concentrated strategy
Marketing effort directed at a single highly defined segment Niche marketing Rolex watches Used when one group is especially attractive for the organization to target A useful strategy for smaller firms avoids a head on collision with major players Provides scope for competitive advantage in a small niche in the market

Differentiation Strategy
Multi segment approach Separate mix for each segment Expensive In terms of product & marketing cost Only possible for large firms

Levels of Market Segmentation

LEVELS Mass Marketing DESCRIPTION One product for all buyers. Economies of Scale possible. Mid point between Mass MKTG & Individual MKTG. Better satisfaction of wants. Market segment consist of large identifiable group within a market. Loyal buyers. A Niche is narrowly defined group, a small market whose needs are not being well served. Banks, Restaurants localize their operations to cater the needs of locals. Last stage in Market Segmentation: Segments of one or Customized marketing). New technologies (email, internet, fax are allowing organizations to deal individually.

Segment Marketing

Niche Marketing

Local Marketing

Individual Marketing

Effective Segmentation
Measurable Substantial Accessible Differential Actionable
Size, purchasing power, profiles of segments can be measured. Segments must be large or profitable enough to serve. Segments can be effectively reached and served. Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Conditions For Effective Segmentation

Substantiality
Plus Actionable for MKTG Program.

Criteria for Successful Segmentation

Measurability
Dimensions of Segmentation.

Accessibility
Through MKTG Institutions.

Differentiable
Homogeneous Within, & Heterogeneous Between the segments.

Firms engage in segmentation to

Develop different strategies for different parts of the market Increase sales & profit from each segment Identify marketing opportunities Dominate certain niche segments Reflect differences in customer tastes Prioritize on those segments most likely to provide a higher return

Market Segmentation
Benefits

Customer oriented approach Effective resources utilization Easy to handle competition Effective promotion Rapid growth for small firms Less resources required Cost/unit is high Carry large assortment Maintain big Inventory Greater Inventory cost Higher Administrative cost Extra cost of multi-Advs.

Limitation

Effective Segmentation & Conditions. (Next)

3 Steps of Target Marketing

1. Market Segmentation Identify & profile distinct groups of buyers who require separate products &/or Marketing Mix 2. Market Targeting

Target Marketing

Select one or more Market Segments 3. Market Positioning Establish & communicate the products key distinct benefits in the market

Steps in target marketing

1. 2.

Define the relevant market Analyze characteristics and wants of potential customers
(geographic location, demographics, psychographics and product related variables)

3. 4. 5. 6. 7. 8.

Identify bases for segmenting the market Define and describe market segments Analyse competitors positions Evaluate market segments Select the market segments Finalize the marketing mix

Target Market Strategies

MARKET AGGREGATION FULL MARKET COVERAGE

Target Market Strategies

SINGLE SEGMENT

STRATEGY

MULTIPLE / COMBINED SEGMENT STRATEGY

Strategic approaches to segmentation Target Marketing

Single-segment Concentration (niching)
M1 M2 M3 P1 P2 P3 P1 P2 P3

Selective specialization
M1 M2 M3 P1 P2 P3

Product specialization
M1 M2 M3

Market specialization
M1 M2 M3
P1 P = Product M = Market P2 P3 P1 P2 P3

Full market coverage

M1 M2 M3

Continuum of targeting strategies

Undifferentiated Differentiated Concentrated Single marketing mix for all customers Different mix for each segment Targets single large segment

Niche
Customized

Targets a single small segment

Different mix for each customer

Additional Criteria
Ethical Choice of Market Targets Segment Interrelationships & Supersegments Segment-by-Segment Invasion Plans Intersegment Cooperation

Positioning and Differentiation

The BCG Competitive Advantage Matrix

Number of Approaches to Achieve Advantage
Few Many Specialized

Size of the Advantage

Large

Volume

Small

Stalemated

Fragmented

Product Differentiation

Form

Features

Performance

Quality

Conformance Quality

Durability

Reliability

Repairability

Style

Design

Services Differentiation

Ordering Ease

Installation

Customer Consulting

Miscellaneous Services

Delivery

Customer Training

Maintenance & Repair

Differentiation
Personnel Channel

Image Differentiation
Media Atmosphere

Symbols

Events

Important

Profitable

Distinctive

Differences Worth Establishing

Affordable Superior

Preemptive

designing the companys offering and image to occupy a distinctive place in the the target markets mind. P 298

Positioning is the act of

Bases for positioning

Product attributes Product benefits Company image Product class User category Positioning against competition Usage occasion Cultural symbol Price-quality association Positioning by packaging Positioning by endorsement

Perceptual Map
Live shows Easy to reach Good food Fantasy Exercise Fun rides Disneyland Knotts Berry Farm
1.0

Little waiting
0.8

Educational, animals Marineland 0.4 of the Japanese Pacific 0.2 Deer Park
0.6 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -0.2

Magic Mountain

-0.4 -0.6 -0.8

Busch Gardens

Lion Country Safari

Economical

Sales & Profit Life Cycles

Sales & profits ($)

Introduction

Growth

Maturity

Decline

Time

Four Introductory Marketing Strategies

Promotion
High Low Slowskimming strategy Rapidskimming strategy

High

Price
Low Rapidpenetration strategy Slowpenetration strategy

Maturity Stage
Market Modification Product Modification Marketing-Mix Modification

Decline Stage
Increase investment Resolve uncertainties - stable investment Selective niches Harvesting Divesting

Market Evolution
Emergence Growth Maturity Decline

Market-Fragmentation and Market-Consolidation Strategies

(a) Market-fragmentation stage (b) Market-consolidation stage

C H J K M L XYZ DE

AB JK

H DE

C AB

X FG M L

YZ

FG