UNIT-3 MARKET SEGMENTATION, TARGETING AND POSITIONING

Concept of Market: The word market was derived in English from Latin word Marcatus. Its meaning is trading place of transaction. As the word marketing has been formed from the word market it is necessary to be clear about the concept of market in the marketing subject. The following concepts can be studied to be clear about the meaning of the term market.

1. Place concept: Generally, the word market refers to the place where buying and selling of goods is performed. The comfortable place where sellers and customers meet together and exchange goods or service is called market. Although the word market was evolved from the place of transactions, it is used for a broad meaning in economics. Now a days , the term market does not represent only a certain place.

2. Commodity concept: The commodity concept of market places emphasis on buying and selling of goods or services. The process of buying and selling of goods or services that takes place between a buyer and a seller is called market. The economist Chapman has said, Economically interpreted the term market refers not to place but to a commodity or commodities and buyers and sellers and they should be in direct competition with one another. In this way, the place is not important in economics for market. CTD

It needs commodities or services, buyers and sellers and relations or interaction among them. 3. Exchange concept: Exchange concept of market puts emphasis on mutual meeting between the buyer and the seller and their free relationship. To be market, this concept lays emphasis on free relationship between buyers and sellers and on equality of price of the same goods from competition. But in practice, competition of the same price for the same type of goods cannot always be found in all goods. In some products, monopoly of sellers can be found.

4. Area concept: The area concept of market is related with exchange concept. According to area concept of market, the meaning of market is the whole area where sellers and buyers make exchange directly or indirectly without direct contact or using modern means of communication in free and open manner. So in area where seller sell and buyers buy goods or services in free and frank ways is called market. Market area may be limited or vast.

5. Demand or customer concept: According to demand concept of market, the total demand of actual and potential buyers for goods or services is market concept. As it is fulfill the unlimited human needs and wants through limited means, buyers buy only necessary goods or services. Todays very popular thing may be unpopular tomorrow. Its demand may decrease to zero. So market depends on consumers demand. So, according to this concept, the total or aggregate demand of consumers for goods or services is called market.

6. Space or Digital concept: Space concept is near concept of market. It is based on internet. Producers or sellers put valuable information about their goods and services. Customers can select needed goods and services searching internet. The digital communication media like telephone, telex, computer, Internet etc have made the direct contact between the customer and the seller a minor matter. According to this concept mentioned above there should be buying and selling between buyers and sellers to be market, but it is not compulsory to have a direct meeting them.

Concept of Market Segmentation:

The process of exchanging goods or services is called market. There may be different kinds of customers in market. Only one type of firm cannot fulfill /meet all the needs of all customers. So, a firm should classify the market on different basis and identify target market, in same is called market segmentation. Consumer market can be segmented on geographic and demographic levels, population, psychographic and behavioral basis. Similarly, industrial market can be segmented on the basis of geographic, demographic , operation and purchasing system. ctd.

Customers may be of different types according to their needs, want, interest, buying purpose, buying habit, age, gender, education, religion, income level and place. So, market segmentation should be made deeply studying and analyzing such factors. According to Prof. Philip Kotler, Market Segmentation is the act of identifying, profiling distinct group of buyers who might require separate product and /or marketing mixes. According to Ronald W. Hasty and W.R. Ted, Segmenting markets simply divides the heterogeneous mass market into groups each of which has one or more homogeneous characteristics.

While segmenting market, very practical strategy should be formed. The characteristics of the customers of segmented market should be similar while segmenting the total market. For instance, on the basis of income level, middle income level and high income level. On the basis of age, market can be segmented in 4 categories such as childrens market, teenagers market, youths market, elders market. Similarly on the basis of gender, market can be segmented in 2 categories like females market and males market. Generally, the character of same income level customers becomes same. Similarly, the character of same aged customers becomes the same. Generally, the character of the customers of the same segmentation becomes same even segmented on other basis.

In conclusion, the process of dividing total market into several small parts on the basis of customers need want, buying purpose, buying habit, age, education, gender, religion, income, place etc is called market segmentation. Market segmentation is made in a way that generally, the characteristics of all the customers within same segmentation are similar. As it is difficult to satisfy all types of customer by a firm, it should identify target markets byt making market segmentation and should develop proper marketing mix. Market segmentation is customer oriented mission in which total market is divided into several parts of same characteristics by identifying customers needs or wants to supply them with their demands.

Process of Market Segmentation

It is not possible to develop the marketing strategies for every consumer. Rather the marketer attempts to identify broad classes of buyers who have the same needs and wants and will respond similarly to a marketing action. Market segmentation is dividing up a market into distinct groups that a) have common wants b)will respond similarly to a marketing action. The segmentation process involves following distinct steps:1. Survey stage: The researcher conducts interviews with the consumer to take the responses from them relating to their motivation, attitudes and behavior. ctd.

For conducting the survey, the researcher prepares the questionnaire and applies it to some of potential customers. 2. Analysis Stage: After collecting the responses from the respondents the next stage is to turn them into meaningful form through analysis using factor analysis. After that the researcher applies cluster analysis to make division of homogeneous responses.

3. Profiling stage: Each homogeneous cluster is now profiled in terms of its distinguishing attitudes, psychographic, geographic and demographic and consumption habits. Each segment can be given a differentiating name. 4. Segment Selection: The last step of the segmentation process involves segment selection. Once the market segments are evaluated, marketer has to select the market segments to enter. Segment selection involves strategic decisions on segment analysis, market coverage patterns, inter segment relationships and segment invasion plan.

Objectives of Market Segmentation: 1. Identification of market opportunities: It is also important objective/aspect of market segmentation to identify market opportunities. Size, development and wants of each segment can be analyzed by dividing total market in several segments. Besides, characters of the customers of each segment and possible profit also can be analyzed by segmenting the market. Market opportunities can be identified from such analysis. More profitable market segment can be chosen leaving aside the less profitable one. As a result, the business firm becomes able to achieve its goal.

2. Effective use of marketing resources: The other important aspect/objective of market segmentation is to able to use marketing resources effectively. Marketing resources can be effectively used by using separate marketing mixes for each segment. Goods or services can be produced according to the demand of market segment. Price of goods and services can be fixed according to the purchasing power of the customers of each segment. Promotional activities also can be conducted according to the market segment. Proper distribution channel can be selected according to the demand and wants of the segment. If market is not segmented, it becomes difficult to produce suitable goods or services to all segments, fix price, conduct promotional activities and select distribution channel.

3. Evaluation of competitors: The other important objective of market segmentation is successful evaluation of competitors. It is necessary to get all information about competitors situation of each segment from market segmentation. Their weak and strong aspects can be identified through their evaluation. True information about competitors strategy and marketing mix can be obtained. 4. Strategic planning: The other important aspects/objectives of market segmentation is to help in making effective strategic plans. Strategic plans can be made for each market segment by segmenting market. ctd

Information about number of customers, purchasing behavior of customers, their purchasing power and purchasing purpose should be obtained for making strategic plans. If a detail study is carried out of market segment by segmenting market, information about all these matters can be acquired. 5. Effective marketing mix: The other important objective of market segmentation is to be possible for effective marketing mix. True information about customers interests, their habit, custom, purchasing power, purchasing behavior, buying motives etc can be acquired form market segmentation. Proper marketing mix can be prepared for each market segment on the basis of such information and can be implemented effectively.

6. Environment adaptation: Environment is an important component to affect any business organization. If environment is made favorable to the organization, business success can be easily achieved. Environmental components of small segments can also be identified through market segmentation. The quick changing environment can be anticipated. As a result, business organization can be made adaptable to the environment by marketing mix.

Need of market segmentation:

1. Divisible: Market should be made divisible for market segmentation. Market should be divided on the basis of purchasing power, purchasing purpose, purchasing habit, lifestyle, living style, gender, religion, place etc. While dividing market, the customer having same wants and character should be grouped. Doing so, it becomes easy to form marketing mix strategy. If the total market is not easy to divide and has no characters, adopting market segmentation policy becomes possible.

2. Measurable: Customers wants, purchasing power and characteristics should be measurable. Besides, the information necessary for market segmentation also should be easily available. Customers income, age, gender, etc can be easily obtained and measured. But beliefs, perception and attitude of the customers cannot be measured. So, market segmentation should not be made on the basis of the components which cannot be measured because true information cannot be obtained. From it. As a result, it becomes difficult to make marketing mix.

3. Accessible: Market segmentation should be made in a way that it becomes easy to reach there and provide effective services. Market segmentation should be made in a way that marketing activities such as distribution, advertisement media, selling efforts etc can reach there easily. If market segmentation is made beyond the access, it becomes difficult to reach there, provide goods or services and market segmentation becomes ineffective. So, these factors should be well thought and considered while segmenting market.

4. Substantial: Profit components should not be missed while segmenting market. If profit cannot be earned form providing goods or services to the customers, a business firm cannot make sustainable development. The main purpose of market segmentation by target market is to each profit. So, market should be segmented so that profit can be clearly seen. For this, market segments should be sufficient and satisfactory. If the market segment is small, it becomes difficult to earn profit.

Target Marketing: Concept: A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards.[1] A welldefined target market is the first element to a marketing strategy. The marketing mix variables of product, place (distribution), promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace. Under target marketing, customer groups or market segments having similar needs and characteristics are identified and appropriate marketing mixes are developed for each market segment. ctd.

Here, the organization does not try to meet the specific needs of individual buyers; rather its efforts are concentrated on meeting the general needs of the customer groups. Target marketing is the most popular form of segmentation. After evaluating different segments, the company must now decide which and how many segments it will target. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Because buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market.

Ideally, then, a seller might design a separate marketing program for each buyer. However, although some companies do attempt to serve buyers individually, most face larger number of smaller buyers and do not find individual targeting worth while . Instead, they look for broader segments of buyers.

Types of Target Market: 1. Age Target Marketing Targeting a product to a particular age group or generational cohort is a way to concentrate your marketing efforts and generate product interest within that particular group. According to "Entrepreneur's website, extensive research is necessary for age or generational marketing to determine the status and living situations of consumers in your potential target group.

For example, a middle-aged woman in the modern era may still be on the dating circuit and not looking to settle down any time soon just as easily as a woman in the same age group could have a family. 2. Income-Sensitive Marketing Income-sensitive marketing seeks to target your small business's services or products to consumers of particular income and economic status. This strategy also shapes the prices you charge for your goods and services as well as the marketing campaign itself. For example, products marketed to consumers with higher incomes will usually have higher prices while those products marketed to consumers with lower incomes will usually have correspondingly lower prices. This allows more consumers in your target market group to afford your products.

3. Gender-Specific Marketing Gender-specific marketing shapes an advertising campaign toward one gender or specific group within that gender. For example, target marketing toward pregnant women seeks to generate more interest in your small business's goods and services within that particular group. How your small business accomplishes this task depends on the outcome of your market research and gender needs within your local marketplace. This research may influence the types of images, colors and language you use in your marketing campaign to attract your target gender or gender group to your company's products or services.

4. Geographic Target Marketing Geographic areas across the country have different product needs. Targeting a marketing campaign to meet the signature geographic demands of consumers in your marketplace can boost your company's importance and necessity in the minds of consumers. This strategy also works with seasonal marketing campaigns to take advantage of shifting consumer moods as the weather turns hot or cold. For example, many beverage companies roll out pumpkin-flavored hot drinks during the fall to catch consumers turning attention toward Thanksgiving and colder weather.

Introduction to Market Positioning Market positioning is the manipulation of a brand or family of brands to create a positive perception in the eyes of the public. If a product is well positioned, it will have strong sales, and it may become the go-to brand for people who need that particular product. Poor positioning, on the other hand, can lead to bad sales and a dubious reputation. A number of things are involved in market positioning, with entire firms specializing in this activity and working with clients to position their products effectively.

When a product is released, the company needs to think beyond what the product is for when it comes to positioning. It also thinks about the kinds of people it wants to buy the product. For example, a luxury car manufacturer might be less interested in promoting reliability, and more interested in promoting drivability, appealing to people who are looking for high-end cars which are enjoyable and exciting to drive. Conversely, a company making mouthwash might want to go for the bottom end of the market with an appealing low price, accompanied by claims asking consumers to compare to the leading brand so that they can see that the product contains the same active ingredients as a famous brand, at a much lower price.

Market positioning is a tricky process. Companies need to see how consumers perceive their product, and how differences in presentation can impact perception. Periodically, companies may reposition, trying to adjust their perception among the public. For example, a company might redesign product packaging, start a new ad campaign, or engage in similar activities to capture a new share of the market.
Companies also engage in depositioning, in which they attempt to alter the perception of other brands.

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While outright attacks on rival brands are frowned upon and may be illegal unless they are framed very carefully, companies can use language like compared to the leading brand or we're not like those other brands. A television ad, for example, might contrast two paper towels: the brand being advertised, and a generic with a package which looks suspiciously similar to a popular brand of paper towels, but isn't quite identical. Developing a market positioning strategy is an important part of the research and development process. ctd

The marketing department may provide notes during product development which are designed to enhance the product's position, and they also determine the price, where the product should be sold, and how it should be advertised. Every aspect of the product's presentation will be carefully calculated to maximize its position, with the goal of market positioning being domination.