Management Science II Dr. S.

Bharadwaj

MODULE 1

Segmentation,Targeting and Positioning

• Segmentation, Targeting and Positioning Definitions

• Segmentation Variables

• Evaluation of Segments

• Summary

What is segmentation, anyone?

• What about targeting and positioning?

• Segmentation is the process of grouping people or organizations within a
market according to similar needs, characteristics, or behaviors

Dividing the market into groups

• an entire market rarely has the same tastes and preferences

• it is difficult to handle all preferences too
• Mercedes Benz, for example (only high-end)

Targeting is the actual selection of the segment you want to serve

the target market is the group of people or organizations whose needs a
product is specifically designed to satisfy

Positioning is the use of marketing to enable people to form a mental image

of your product in their minds (relative to other products)

Indian Institute of Technology Madras

Management Science II Dr. S.Bharadwaj

STP Marketing is the name of the game

• The days of “one size fits all” are over

• No longer can one say “You can have any colour as long as it is black”
• Need to follow the “horses for courses” policy - no more mass marketing
• Moving towards mass customization in fact
• Levi’s Personal Pants
• National Bicycle Company

How to segment a market?

• On what basis/bases?

• What are some criteria/variables?

Segmentation - Variables

Demographic Segmentation

Age, Gender, Income

Age

• Bicycles

• Disney’s Cartoons

• Pension Plans, Retirement Funds e.g.

• LIC

Gender

• Hasbro Toys
• Cindy for girls, GI Joe for boys
• Gillette
• Razors for men, women
• most cosmetics, perfumes etc

Indian Institute of Technology Madras

Management Science II Dr. S.Bharadwaj

• Revlon, Ralph Lauren

Income
Toyota
• Lexus for high end
• Camry for the middle of the roaders
• Corolla for low end HLL soaps - Dove for high end, Hamam for low
And so on

• Income is possibly the most common basis for segmentation

• Other Demographic Variables Include Religion, Ethnicity, Occupation,
Generation (Baby Boomers, Generation Next, Yuppies) and so on

Geographic Segmentation

• snow boots in the Northern part of USA

• Of course, all International Marketing is done on a regional(geographic
basis)
• The “Same” Honda Accord is different in different countries !
• Most MNCs vary their products according to country
• special tires in the Middle East
• Taj: AP - hot food, Kerala - more coconut and so on

Behavioral Segmentation

• On the basis of occasions, product usage, benefits sought, brand loyalty

Occasions

• Y2K Cruises
• Hallmark Cards
• a greeting card for every occasion - Valentine’s Day Card, Deepavali
card

Indian Institute of Technology Madras

Management Science II Dr. S.Bharadwaj

Benefits Sought

• there are certain specific benefits sought - example would be Colgate

Tartar Control for Tartar

User Status

• Non-Users Vs Current Users

• Credit Card Companies
• new card vs another card
• Blood Banks, entry level cars/bikes

Usage Rate
• Heavy Users Vs. Light Users
• The Beer Market is a classic example
• Miller Lite, BudWeiser all target the heavy user
• Bajaj M80 could be another candidate
Psychographic Segmentation
• Lifestyle products like Raymond

Evaluation of Segments
Having segmented the market, which one to choose?
What are the criteria?
Is there potential sales, growth and profit ?

• Big Emerging Markets (BEMs)

• China, India, Brazil etc

Potential Competition and Cost

• is it too much ?
• Imagine going against Microsoft in the PC OS market for someone like
Unix

Indian Institute of Technology Madras

Management Science II Dr. S.Bharadwaj

• Tata Indica was smart in battle Vs. Maruti

Potential Risk
• environmental
• doing business in Iraq now
• Or even Kashmir

Is it compatible with my current business ?

• Mercedes going “downscale” with E-Class
• will it hurt the “Mercedes” brand ?
• will it cannibalize my existing brand ?
• Air India starting a budget airline?

Summary
• STP Marketing is highly important
• Consumers are very finicky and want to feel special
• From mass marketing to mass customisation
• Segmenting is important
• let Bajaj Chetak, Ambassador, Fiat, Maruti 800 even be examples

Indian Institute of Technology Madras