Market Segmentation, Targeting & Positioning

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Chapter

Market Segmentation, Targeting & Positioning

Market Segmentation, Targeting & Positioning

Market segmentation is the process of dividing the total market into relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics that lead them to respond in similar ways to a particular marketing programme. A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs.

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Market Segmentation, Targeting & Positioning

Requirements for Effective Segmentation

Five conditions must exist for segmentation to be meaningful: 1. A marketer must determine whether the market is heterogeneous. If the consumers product needs are homogeneous, then it is senseless to segment the market. 2. There must be some logical basis to identify and divide the population into relatively distinct homogeneous groups, having common needs or characteristics and which will respond to a marketing programme. Differences in one market segment should be small compared to differences across various segments. 3. The total market should be divided in such a manner that comparison of estimated sales potential, costs, and profits of each segment can be done. 4. One or more segments must have enough profit potential that would justify developing and maintaining a marketing programme. 5. It must be possible to reach the target segment effectively. For instance, in some rural areas in India, there are no media that can be used to reach the targeted groups. It is also possible that paucity of funds prohibits the development required for a promotional campaign.
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Market Segmentation, Targeting & Positioning

How Segmentation Helps

Segmentation studies are used to uncover needs and wants of specific groups of consumers for whom the marketer develops especially suitable products and services to satisfy their needs.

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Market Segmentation, Targeting & Positioning

Bases for Segmentation

A segmentation variable is a characteristic of individuals, groups or organisations that marketers use to divide and create segments of the total market. Segmentation descriptors fall under four major categories and include geographic variables, demographic variables, psychographic variables, and behaviouristic variables. Geographic variables focus on where the customers are located. Demographic variables identify who the target customers are. Psychographic variables refer to lifestyle and values. Behaviouristic variables identify benefits customers seek, and product usage rates.
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Market Segmentation, Targeting & Positioning

Geographic variables Region Urban, Rural City size Climate Terrain Personality attributes Motives Lifestyle Market density Psychographic variables Nation State

Demographic variables Gender Age Race Religion Social class Family size Occupation Family life cycle Income Education

Behaviouristic variables Usage volume, Occasion End use Benefits sought Brand loyalty Price sensitivity

Segmentation Variables

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Market Segmentation, Targeting & Positioning

Geographic Segmentation
Geographic segmentation focuses on dividing markets into different geographic units, such as regions, nations, states, urban, rural, etc.

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Market Segmentation, Targeting & Positioning

Demographic Segmentation
Demographic characteristics are commonly used to segment the market. Factors such as age, sex, education, income, marital status, household life cycle, family size, social class, etc., are used singly, or in a combination, to segment a market.

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Market Segmentation, Targeting & Positioning

Psychographics Segmentation
When segmentation is based on personality or lifestyle characteristics, it is called psychographic segmentation.

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Market Segmentation, Targeting & Positioning

Behaviouristic Segmentation
Dividing the market on the basis of such variables as use occasion, benefits sought, user status, usage rate, loyalty status, buyer readiness stage and attitude is termed as behaviouristic segmentation.

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Market Segmentation, Targeting & Positioning

Demographic-Psychographics Segmentation (Hybrid Approach)

Demographic and psychographic profiles work best when combined together because combined characteristics reveal very important information about target markets.

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Market Segmentation, Targeting & Positioning

Segmentation Variables for Organisational Markets

Main approaches to segment organisational markets can be grouped under four heads:
Geographic Location Customer Size Product Use Type of Organisation Buying Behaviour and Situation

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Market Segmentation, Targeting & Positioning

Targeting Market Segments

Instead of aiming a single product and marketing programme at the mass market, most companies identify relatively homogeneous segments and accordingly develop suitable products and marketing programmes matching the wants and preferences of each segment.

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Market Segmentation, Targeting & Positioning

Segment Attractiveness and Business Strength Factors

The attractiveness of a market segment can be evaluated based on the companys current business strength and market potential assessment.

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Market Segmentation, Targeting & Positioning

Product Positioning
Product positioning is a decision reached by a marketer to try to achieve a defined brand image relative to competition within a market segment. Product positioning decisions are strategic decisions and have an impact on long-term success of the brand.

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Market Segmentation, Targeting & Positioning

Common bases used for positioning include: Features Benefits Usage Parentage Manufacturing process

Ingredients
Endorsements Comparison Pro-environment

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Product class
Price/quality Country or geographic area
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Market Segmentation, Targeting & Positioning

The Process of Determining the Positioning Strategy

Steps Need to be Taken to Reach a Decision about Positioning Identify Competitors Assessment of Consumers Perceptions of Competition

Determining Competitors Position

Analysing the Consumers Preferences Making the Positioning Decision

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Market Segmentation, Targeting & Positioning

Writing a Positioning Statement or a Value Proposition

It is a statement expressed clearly and in few words that identifies the target market for which the product is intended. It also specifies the product category in which it competes and highlights the unique benefit it offers.

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How Many Differences to Promote?

Successful positioning depends on effectively communicating the brands differential advantage. A USP is an outstanding advantage and the best strategy to create a products position, provided it is not only persuasive for the consumers but also sustainable.

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Positioning Errors
Underpositioning Overpositioning Confused positioning Doubtful positioning

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Some popular positioning approaches are: Positioning by Corporate Identity

Positioning by Brand Endorsement

Positioning by Product Attributes and/or Benefits Positioning by Use Occasion and Time Positioning by Price-Quality Positioning by Product Category Positioning by Product User Positioning by Competitor

Repositioning

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