SEGMENTING, TARGETING, POSITIONING AND CONSUMER BEHAVIOR

Introduction
Why market segmentation?
Culture and buying habits vary from country to country and region to region

Advantages:
It helps distinguish one customer profile from another within a given market It facilitates the proper choice of target markets and helps in understanding the needs of target buyers It benefits customers and helps retailers gain a larger market

Introduction
Segmenting, targeting and positioning comprise a three-stage process
Identifying the different kinds of customers Selecting the group of customers that you wish to serve Implementing the market segmentation method by optimizing your products and/or services for that segment and communicating to the market that you have chosen to distinguish yourself by specializing in this manner.

Introduction
Segmenting is the process of identifying sets of consumers with similar needs. Exe: some consumers demand low price and acceptable quality, while others are more concerned about superior quality and not so much about price These sets must be homogeneous, distinct, and reachable and have the purchasing to buy your products or services. Demographic, geographic and psychographic information is used to describe and classify customers into group.

Introduction
Targeting a specific segment/s requires the evaluation of multiple segments. To aid the marketer, metrics of the most important criteria should be associated with each potential segment.

Introduction
Positioning is the process of creating a perception of your brand in the mind of your target consumers. A working knowledge of your environment of your environment is required to position your service or product correctly. The marketer should define what your product or service means to your customers,

STP Framework
Segmentation Identify Segment variables Segment the market Targeting Evaluate the segment Evaluate the attractiveness Positioning

Identify the positioning concept

Select the concept Develop the concept Communicate the concept

Develop the Profile

Select the target segment

Offer Products Post-sales Feedback After-sales Service

Segmentation
Identifying Segment Variables:
Geographic segmentation: region, state, zone, etc. Demographic segmentation: age, sex, marital status, occupation, caste, education, family size, income/purchasing power, etc. Psychographic segmentation: psychological, sociological and anthropological factors. It is also based on the personality traits, attitudes, lifestyles and value systems of customers. Buyer behavior segmentation: purchasing occasions, benefits, users status, rate of product usage, loyalty rate, attitudes towards the product, etc.

Segmentation
Segment the Market: after identifying the variables, marketer has to decide on the ones that are most suitable.
The different variables should be used in suitable order for the market concerned (Multi-level segmentation)

Develop the profile: a marketer can use a combination of variables to segment the market
Statistical tools are advised to be use: cluster, discriminant, etc.

Targeting
The next step of the multi-level segmentation is to select the target. A target market signifies only those segments that a company wants to adopt as its market Next, evaluate the target markets with reference to their relevance, accessibility, size and profitability and assess the sales and profit potential of each segment

Targeting
The marketer also needs to evaluate the resources and accordingly choose the most appropriate market Next, evaluate whether the segment selected is sizeable, growing, profitable, accessible and compatible with the retailers resources and capabilities After a thorough evaluation of the selected segment, the marketer has to choose the target market and then formulate a marketing strategy which is further linked to the positioning formula

Positioning
Implementing the targeting strategy A product cannot be everything to everyone but has to be something for someone (segment) Positioning can be carried out by taking into considerations some unique features (USP) of the retail store

Positioning
Identifying the positioning concept
Identify possible buying motives of the consumers Determine how to appeal to them

Select the concept

Since there are several parameters for positioning a store (product, price, place, promotion), the marketer has to select the best and effective alternatives

Positioning
Develop the concept
Once the positioning strategy is selected, the marketer need to develop the concept in an effective manner such that it can be properly communicated to the target market. Find the most appropriate media that has the maximum impact on the target market. A positioning strategy should consider the competitors plans as well

Positioning
Communicate the Concept
The advertising agency needs to effectively communicate the positioning that the marketer seeks to convey to the target market The ad agency also has to come up with appropriate media, messages, sources, headlines and displays so as to effectively communicate the stores positioning to consumers

Sales and After Sales Service

Offer the product
Open the store so the consumers can purchase

Post-sales feedback
Assess the company after 6 months.
If it is successful, the company can choose to expand in the same market or venture into another market or Minor changes should be made to try to ensure success

After-sales service
Is a key differentiator of a store that is trying to rival competition Able to provide excellent after-sales service will be a winner in the long run

Importance of STP in Retail

Category Management: segmentation helps to move away from the one-size-fits-all approach to providing a more targeted solution Merchandize Mix: by segmentation, retailers can understand the composition of households surrounding their area of trade in order to understand the market potential of consumers

Importance of STP in Retail

Format Design: retailers can choose appropriate store formats in order to appeal to the target segment.
A discount store can opt for a straight or racetrack layout A lifestyle store can choose an angular layout to give it an exclusive look

Importance of STP in Retail

Visual Merchandising:
A discount store should stack the maximum merchandise so that when the customers enter the store, they find it full of products For niche customers, visual merchandising could involve the use of antique furniture or wood in different locations inside the store

Importance of STP in Retail

Pricing Policy: segmentation enables retailers to determine whether the customer is value or premium customer Differentiation: effective segmentation, precise targeting and powerful positioning will help the retailer in differentiating his offerings from that of the competition

Retail Consumer Behavior

:the act of designing a retail experience for the end user (consumer) and the buyer (customer or institution) in order to identify and understand their needs and wants by researching their perceptions, learning, motivation, attitudes, culture and other such variables

Factor Affecting Consumer Behavior

Retail Experience
Is the result of all of the touch points a retailer has with its customers, which includes staff interaction, merchandise, product selection, signage, in-store marketing, branding, music, store smells and other elements. Is the key to create a point of differentiation Is the key to loyal customer

Factor Affecting Consumer Behavior

Perception: the process of selecting, organizing and interpreting or attaching meaning to events that occur in the environment Learning: a change in the content or organization of long term memory and/or behavior.
Exe. The sales people in one store may be nicer to a customer than those in the other, he/she may thus develop a preference for one store over the other

Factor Affecting Consumer Behavior

Motivation: is an inner drive that reflects goaldirected arousal, in this case is a desire for a product, service or experience.
It is the drive to satisfy needs and wants, both physiological and psychological, through the purchase and use of products and services

Factor Affecting Consumer Behavior

Attitude: inner expressions of feelings that reflect whether a person is favorably or unfavorably predisposed towards the subject.
Customer attitudes are a composite of a consumers beliefs, feelings and behavioral intentions towards some object

Strategic Framework for Retail Consumer Behavior

Need Recognition

Pre-Purchase Decision

Evaluation of Alternatives

Purchase Decision

Post-purchase Behavior

Factor Affecting Consumer Behavior

Need Recognition
Consumers perceive a need that arises out of the differences between a persons actual and ideal situation It can be as simple as noticing an empty milk carton or it can be activated by marketing efforts Retailers need to identify consumers needs and wants that they can fulfill since it is difficult to fulfill all

Factor Affecting Consumer Behavior

Pre-purchase
Consumer decides based on:
Quality of the product Service or loyalty levels Large-store format and wide selection Pricing and value for money Store accessibility

Retailer has to select the store format: supermarkets, hypermarkets, departmental stores, convenience stores, specialty stores, etc.

Factor Affecting Consumer Behavior

Evaluation of Alternatives
Consumers evaluative criteria represent both the objective of a brand and subjective factors (prestige) Retailer has to arrange and plan his assortment and range meticulously
Range planning includes deciding on the total product offering expressed in terms of width and depth Assortment planning includes the stock keeping unit (SKU) within a category (brands, colors, sizes, etc)

Factor Affecting Consumer Behavior

Purchase Decision
Once the customer has made up their decision of what to buy, the retailer needs to examine what the customer is buying.
He can appoint a category captain to increase the performance of the whole category. The retailer also needs to understand that a product may be purchased because of the ongoing discounts and freebies offered.

Factor Affecting Consumer Behavior

Post-purchase Behavior
The customer will give a positive response if the product meets his/her perception and he/she is satisfied with it. On the other hand, if he/she is not satisfied he will respond negatively and discourage others from buying the product

Customer Relationship Management

Satisfaction or dissatisfaction of the consumer affects the following:
Consumer value perception Consumer communication Repeat-purchase behavior

Retailers work to produce positive post-purchase communication among consumers. They may use customer loyalty or reward programs as a tool of customer relationship management

Questions for Practice

Define segmentation, targeting, and positioning. Describe the strategic framework for these three activities. Explain their importance in retailing Define consumer behavior. Describe the strategic framework for consumer behavior. Illustrate an example of consumer behavior in retailing Take the case of a retailer who has failed in your neighborhood and prepare a strategy for the relaunch of the store by developing an STP analysis and by studying and analyzing the consumer behavior in your locality (Group Presentation)