DISCLAIMER

These notes are for the sole purpose of understanding the concepts of marketing and are to be used for class room purposes only. The logos of certain manufactures used are owned by their respective owners and unauthorized use of them may lead to legal persecution. This presentation also may contain copyrighted material which on no account should be reproduced / reprinted in any form without permission.

Identifying Market Segments and Targets

Procter & Gamble

Sells multiple brands within the same product category for a variety of products Brands feature a different mix of benefits and appeal to different segments Has also identified different niches within certain segments Tide offers seven different product formulations to serve different niches needs

Bounce Sheets can breathe a fresh scent into almost anything, from your favorite sweatshirt to Dad's old recliner. Bounce Sheets come in four great scents, and an unscented variety. Cheer helps protect against fading, color transfer and fabric wear in powder or liquid, with or without bleach. Downy offers a line of advanced fabric care conditioning products that keep clothes feeling soft and smelling fresh. Dreft is a specially formulated detergent that rinses out thoroughly, leaving clothes soft next to a baby's skin. Dreft has been the No. 1 choice of pediatricians for years.

Era is a powerful laundry detergent that is tough on stains. Gain laundry detergent and fabric softener provide excellent cleaning power and a smell that says clean. Mild cleansing benefits for a gentle, pure and simple clean.

Fabric cleaning and care at its best Febreze Air Fresheners utilize a unique odoreliminating technology to clean away odors from the air.

Definition
Market Segmentation: Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Four levels of Micromarketing

Segments

Niches

Local areas

Individuals

Flexible Marketing Offerings

Naked solution: Product and service elements that all segment members value Discretionary options: Some segment members value options but not all

Segmentation Strategies

The company ignores market segment differences & Targets the whole market with one offer Focuses on what is common rather than different Generally it is difficult to develop a product or brand that will satisfy all customers.

Several market segments with separate offers for each Companies hope for higher sales and stronger position within each segment Stronger positions within several segments creates more total sales Combined brands give much higher market share

Preference Segments
Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences reveal natural segments from groups with shared preferences A strategy for a large share of one or few segments Through concentration, the firm achieves stronger market position because of its greater knowledge of the customers,

What is Customerization?
Tailoring products & marketing programs to the needs of specific individuals & local customer groups
Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

Segmenting Consumer Markets

Geographic Demographic Psychographic Behavioral

Geographic Segmentation Variables

World Region or Country Indian Region State City City or Metro Size Neighborhood Density Climate

Demographic Segmentation
Age and Life Cycle Life Stage Gender Income Generation Social Class

Age & Lifecycle Stages

Gender Segmentation Bank Al Habib targets senior citizens

Women make 90% of home improvement decisions. Women influence 80% of all household consumer purchases.

Income Segmentation

Market Segmentation
Psychographic segmentation
Lifestyle, social class, and personality-based segmentation

The VALS Segmentation System

Psychographic Segmentation
When Honda markets its Reflex and Elite scooters, it appeals to the rebellious, independent kid in all of us.

Behavioral Segmentation
Dividing a market into groups based on consumer knowledge, attitude, use or response to a product

Behavioral Segmentation Variables

Occasions Benefits User Status User Rates Loyalty Status Readiness Stage Attitude Toward the Product

Market Segmentation

Loyalty Status
Loyalty Status:
Brands Stores Companies

User Status:
Nonusers, ex-users Potential users First-time users Regular users

Usage Rate:
Light Medium Heavy

Hard-core

Split loyals Shifting loyals Switchers

Occasion Segmentation
Occasion Valentines Day, Fathers Day
Special products for special occasions.
(e.g., Kodak disposable cameras)

Geodemographic Segmentation
Claritas, Inc. Potential Rating Index for Zip Markets (PRIZM) Based on U.S. Census data Profiles on 260,000 U.S. neighborhoods 62 clusters or types

Variations in the Buyer-Readiness Stage

Aware Ever tried Recent trial Occasional user Regular user Most often used

Behavioral Segmentation Breakdown

The Conversion Model

Convertible Shallow Average Entrenched

Cross Classification
Segment Variables

Age 5 - 15 Occupation Working Men 15 - 25 25 - 35 Above 35

Age Qualification Income Lifestyle Location Occasion

Location Occasion East Delhi West Delhi North Delhi South Delhi

Students

Others

Users
Strongly unavailable Weakly unavailable

Nonusers
Ambivalent Available

Income Lifestyle 10k 15k 15k 25k 25k 35k Above 35k

Formal

Progressive

Party

Modern

Casual

Conservative

Segmenting for Business Markets

Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics

Segmenting Business Markets

Demographic segmentation
Industry, company size, location

Operating variables
Technology, usage status, customer capabilities

Purchasing approaches Situational factors

Urgency, specific application, size of order

Personal characteristics
Buyer-seller similarity, attitudes toward risk, loyalty

Political & Legal Factors

Geographical Pacific Rim, Latin America, Middle East, Far East Political NAFTA (North American Free Trade Association), ASEAN (Association of South East Asian Nations)

Inter-market Segmentation
Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries

Steps in Segmentation Process

Needs-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Marketing-Mix Strategy

Target Marketing
Evaluating Market Segments
Segment size and growth Analyze current segment sales, growth rates, and expected profitability. Segment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliers Company objectives and resources Examine company skills & resources needed to succeed in that segment. Offer superior value and gain advantages over competitors.

Effective Segmentation Criteria

Measurable Substantial Accessible Differentiable Actionable

Patterns of Target Market Selection

Patterns of Target Market Selection

Patterns of Target Market Selection

Segment-by-Segment Invasion Plan

Positioning
Positioning:
The place the product occupies in consumers minds relative to competing products. Typically defined by consumers on the basis of important attributes.

What is Positioning?
Positioning is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market.

Positioning of Caf Coffee Day

A hangout place for youngsters where a lot can happen over coffee.

Positioning of Barista
Positioned in the lines of traditional European cafes Targeted executive class of coffee-loving customers

Competitive Frame of Reference

Category Membership: The products or sets of products with which a brand competes and which function as close substitutes.

Value Propositions
Scorpio, Mahindra and Mahindra
A vehicle that provides the luxury and comfort of a car, and the adventure and thrills of an SUV

Dominos
A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price

Defining Associations
Points-of-parity Points-of-difference (POPs) (PODs) Associations that are Attributes or benefits not necessarily consumers strongly unique to the brand associate with a brand, but may be shared positively evaluate, and believe they could not find with other brands to the same extent with a competitive brand

Establishing Category Membership

This four-in-one entertainment solution from Konica failed to establish category membership

Competitive advantage
Extent to which a company can position itself as providing superior value.

Choosing a Positioning Strategy

#1 Identify a set of possible competitive advantages on which to build a position #2 Choose the right competitive advantages

#3 Select an overall positioning strategy

Identifying Possible Competitive Advantages

Product Differentiation
(e.g., consistency, durability, reliability, repairability)

Perceptual Mapping
EXPENSIVE

Services Differentiation
(e.g., speed, convenience, careful delivery)
Bacon and eggs

Cold Cereals

SLOW

Image Differentiation

Channel Differentiation

QUICK

People Differentiation

Pancakes

(e.g., convey benefits and positioning)

(e.g., hiring, training better people than competitors)

Hot Cereal Instant Breakfast INEXPENSIVE

Positioning Map

Positioning Errors
Underpositioning: Failing to really position the company at all. Overpositioning: Giving buyers too narrow a picture of the company. Confused Positioning: Leaving buyers with a confused image of a company.

Positioning map for large luxury SUVs

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Possible Value Propositions

Possible Value Propositions

MORE FOR MORE: The most upscale product MORE FOR SAME: Brands offering (more) comparable quality at a lower price SAME FOR LESS: Equivalent quality at a lower price LESS FOR MUCH LESS: Offers less, therefore costs less. MORE FOR LESS: Better products and lower prices for a given level of performance

Examples of Negatively Correlated Attributes and Benefits

Low-price vs. High quality Taste vs. Low calories Nutritious vs. Good tasting Efficacious vs. Mild Powerful vs. Safe Strong vs. Refined Ubiquitous vs. Exclusive Varied vs. Simple

Addressing negatively correlated PODs and POPs

Present separately Leverage equity of another entity Redefine the relationship

Differentiation Strategies

Product Differentiation
Product form Features Performance Conformance Durability Reliability Reparability Style Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance

Product

Personnel

Channel

Image

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Claims of Product Life Cycles

Products have a limited life Product sales pass through distinct stages each with different challenges and opportunities Profits rise and fall at different stages Products require different strategies in each life cycle stage

Product Life Cycle

Introduction
The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution

Growth
Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize

Strategies for Sustaining Rapid Market Growth

Improve product quality, add new features, and improve styling Add new models and flanker products Enter new market segments Increase distribution coverage Shift from product-awareness advertising to productpreference advertising Lower prices to attract the next layer of pricesensitive buyers

Maturity
Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

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Marketing Program Modifications

Prices Distribution Advertising Sales promotion Services

Ways to Increase Sales Volume

Convert nonusers Enter new market segments Attract competitors customers Have consumers use the product on more occasions Have consumers use more of the product on each occasion Have consumers use the product in new ways

Decline
At this point there is a downturn in the market. Innovative products are introduced or consumer tastes have changed. Intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Characteristics & Responses

Stage Characteristics
Market growth rate Changes in product design Segments Competitors Profitability Cash flow Moderate Hight Few Few Negative Highly negative High Moderate Few to many Many High Negative Insignificant Limited Few to many Limited High for mkt share leaders Low to moderate Negative Limited Few Few Low Moderate

Firm's Responses
Strategic mktg objectives Product Product line Price Distribution Communications Stimulate primary demand Build share Quality improvements Broad Reduce Intensive High Hold share Concentrate on features Rationalize Hold Intensive High Harvest No change Reduce length of line Reduce Selective Reduce

Quality

Narrow Skimming or penetration Selective High

Adapted from Walker and Boyd, Marketing Strategy, Mcgraw-Hill, 4th edition.

PLC

PLC & Adoption Curve

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Common Product Life-Cycle Patterns

Style, Fashion, and Fad Life Cycles

Market Evolution Stages

Emerging Markets
Latent

Emergence

Growth Single-niche Multiple-niche

Maturity

Decline Mass-market

References
Marketing Management A South Asian Perspective 13the By Kotler, Keller, Koshy, Jha Principles of Marketing 11the Kotler & Armstrong SRI Consulting Economic Times Mint Times of India Multiple Resources on the internet Rediffussion DYR

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