SEGMENTATION

TARGETING
POSITIONING
Specifically designed for IBS students
 The STP process

MARKET SEGMENTATION TARGETING

POSITIONING
 SEGMENTATION

Segmenting or dividing a market

into distinctive groups of buyers on
the basis of needs, characteristics or
behaviour who might require
separate products or marketing
mixes.
Market is nothing but aggregate of consumers for a
product.

With different needs, motives, characteristics and

buying behavior market is heterogeneous.

The act of disaggregating a market into a number of

sub-markets with homogenous characters is market
segmentation
“
The consumers in the various segments will
vary “across” segments, But be homogeneous

”
“within”
“
It is the consumer who gets segmented,
neither product, nor the price…

”
 Why Segmentation ?

Companies cannot connect with all customers in large, broad, or

diverse markets.
Segmentation is done for benefits of marketers in several ways –
 Facilitates Right Choice of Target Market
 Facilitates Effective Tapping of the Chosen Market
 Makes the marketing effort more efficient and economic
 Helps Identify the less satisfied segments and concentrate
on them.
Segmentation benefits the consumer as well…
 What about Unsegmented markets ?

Unsegmented marketing is low on rewards, high on risks

Unsegmented marketing is a gift ! Single offer, single strategy
/ positioning / advertising programme. But managers turn to
segmented marketing instead of unsegmented marketing

Unsegmented marketing misses out the advantage of STP

STP works as a composite tool in marketing, greatly

benefiting the marketer.
BASES FOR SEGMENTING CONSUMER
MARKETS
 Major Segmentation Variables

Geographic Segmentation
Division of markets into different
geographical units such as nations,
states, regions, countries, cities or
neighbourhoods.

 Regions – South India, Western region, North-East

 City – Metros, Class-I cities
 Rural, Urban and Semi Urban – Rural with a population of over 10,000,
small towns with a population 20,000 to 50,000
 Rural Markets

Rural markets differ on number of important

parameters such as literacy levels, income,
spending power, and availability of infrastructure
such as electricity, telephone network, and roads,
social and cultural orientation and buying patterns
and habits.
 Rural Markets

India has more than 5,000

towns, and over
638,000 villages. Nearly
87% of villages in India
have a population of less
than 2,000 people.
 Major Segmentation Variables

Demographic Segmentation
Division of markets into groups basis of
variables such as age, gender, family
size, income, occupation etc.
 Age and Life Cycle ~ 15-24 youth
 Lifestage ~ Person’s major concern, key stages in life.
 Gender ~ Female oriented or Male oriented.
 Marital Status ~ Married, Unmarried.
 Income ~ The ability to participate in market exchange. Social
Class ~ Education and Occupation.
The SEC Classification
 Major Segmentation Variables
Psychographic Segmentation
Science of using psychology and
demographics. Buying behavior of
buyers depends upon psychographics.
Psychographic segmentation facilitates
grouping of consumers having a similar
buying behavior . It divides the audience
on the basis of personality, lifestyle,
attitude.
 Lifestyle is a major psychographic variable. Religion and Values form a major aspect in this lifestyle in India.
 Work done by SRI Consulting Business Intelligence – VALS framework .
 Psychographic Segmentation

• Personality is the combination of characteristics that form an individual’s

distinctive character and includes habits, traits, attitude, temperament,
etc.

• Lifestyle is how a person lives his life. Personality and lifestyle influence
the buying decision and habits of a person to a great extent.

• A person having a lavish lifestyle may consider having an air conditioner

in every room as a need, whereas a person living in the same city but
having a conservative lifestyle may consider it as a luxury.
 Psychographic Segmentation

• When the segmentation is based on personality or life style characteristics.

• Every consumer has a self image & this describes their personality.
• There are different types of people such as :

ambitious
 confident
 aggressive
 impulsive
 modern

Example:

Some motorcycle manufacturers segment the market on the basis of personality such as macho image,
independent & impulsive.

Some producers of liquor, cigarettes & apparel segment the market on the basis personality & self image
 Psychographic Segmentation - Examples

“
McDonald’s changed their menu in India to adapt to consumer
preferences which is largely vegetarian. Most of the Non Vegetarian

”
avoid beef.

“
TITAN has wide range of sub brands within its range – Edge,
Regalia, Nebula and Raga to appeal different lifestyle segments. Fast
track appeals to youth. Sonata is a good looking watch at an

”
affordable price

“
Maruti is venturing into new segments with new launches

”
 Major Segmentation Variables
Behavioral Segmentation
Division of market is done on the
basis of their knowledge of, attitude
towards, use of or response to
product.
 Decision Roles ~ There are five roles in decision making – Initiator, Influencer, Decider,
Buyer and User. These form the basis of marketing communications and further strategy.

 Behavioral Variables ~
 Occasions – Helps in expanding product usage.
 Benefits – Seeking different benefits.
 User Status – First time user, potential user or non user
 Usage Rate – Light, Medium or heavy
 Buyer Readiness Stage – Consumers disposition to brand.
 Behavioral Segmentation

• The market is segmented based on audience’s behaviour, usage,

preference, choices and decision making. The segments are usually
divided based on their knowledge of the product, attitude towards the
product and usage of the product. It is believed that the knowledge of the
product and its use affects the buying decision of an individual. The
audience can be segmented into –
•  Those who know about the product,
•  Those who don’t know about the product,
•  Ex-users
•  Potential users
•  Current Users
•  First time users, etc.
 Conversion Model
Consumers are classified into one of the following 8
segments:
USERS NON-USERS

Entrenched Average Shallow Convertible Available Ambivalent Weakly Strongly

Unavailable

Committed Uncommitted Open Unavailable

Users Users Non-users Non-users
 Segmenting Business Markets

Wind and Cardozo (1974) suggest that segmenting a B2B market can
involve two stages:
– Identify subgroups within the whole market that share common
general characteristics. These are called MACRO SEGMENTS.
– Select target segments from within the macro segments based on
differences in specific buying characteristics. These are called MICRO
SEGMENTS.
 Segmenting Business Markets

MACRO SEGMENTATION BASES

Organizations that exhibit similar patterns and needs make up macro
segments. There are two main categories :
• Organizational Characteristics
– Size : The size of the organization will indicate the number of people
involved in the decision making.
– Location: The location did play earlier a major role in terms of logistics.
– Usage rate : Heavy, Medium, Light also forms one determinant.
• Product or Service Application
– Categorization of industries on the basis of the product usage.
 Segmenting Business Markets
MICRO SEGMENTATION BASES
Within a macro segment, a number of smaller micro segments may exit.
There are various bases for micro segmentation in B2B markets.
• Product
• Applications
• Technology
• Purchasing policies
• Decision making process
• Buyer – Seller relationships.
MARKET TARGETING
Target
Marketing

 Identifying Markets with Unfulfilled Needs

 Determining Market Segmentation
 Selecting a market to target
 Positioning through marketing strategies
 EVALUATION OF SEGMENTS PRE TARGETING

Market segments must rate favorably on five key criteria:

 Measurable – The size, purchasing power, and characteristics of the

segments can be measured.
 Substantial – The segments are large and profitable enough to serve.
There should be maximum homogeneity. Should suit the objectives n
resources of the company
 Accessible – The segments can be effectively reached and served.
 Differentiable – The segments are conceptually distinguishable and
respond differently to the marketing mix elements and programs.
 Actionable – Effective programs can be formulated for attracting and
serving the segments.
 Levels of Market Segmentation
1. Undifferentiated Marketing - This is also known as a mass market
strategy which involves ignoring any differences among segments and
targeting the whole market with the offer. This can address the COMMON
needs of those segments. Seller engages in mass production, mass
distribution and mass promotion of one product to all buyers...Coke…

2. Differentiated Marketing – Targeting several market segments and

designing separate offers for each. This manner companies make their
presence in each of the segments, but with somewhat customized and
differentiated offerings. Eg: Nike Shoes: for running/golf/cycling. Maruti-
cars for all pockets, purpose and personality.

3. Niche Marketing – Very specific segment ( niche ) wherein company

targets its marketing mix only to them to serve them best and most
profitably. Niche market seeks a distinctive mix of benefits. Eg: Shahnaz
Herbals
 Levels of Market Segmentation
4. Micromarketing – Customisation is the key for micromarketing. Here the
company tries to address the micro elements of the market. This includes
local marketing and individual marketing.

• Local marketing – Tailored brands and promotions to the needs and

wants of local customer groups – cities, neighborhoods. However,
such approach of companies can upscale the manufacturing and
marketing expenses. Further, there will be no clear brand imagery in
this process. “Spiderman was released in India in five different
languages including Bhojpuri”
Before choosing a targeting strategy,
company needs to assess its resources
and offerings.
DIFFERENTIATION AND POSITIONING
 Differentiation and Positioning
Differentiation in a way is a prelude to Positioning.
In Differentiation, the attempt is to endow the
product offer with certain distinctive attributes,
which in turn offer some special value to the
consumer.

In Product Positioning, the attempt is to lodge /

place the differentiated offer, in a particular
locus, in the minds of the target consumers.
 Product Differentiation
Augmentation of Product is nothing but adding values … in a way
differentiation.

Product differentiation can be done on its – tangible or intangible

attributes / emotional associations.
Differentiation can be done on following tangible attributes –
1. Ingredients / Formula
2. Functional Features
3. Additional Features – Size etc.
4. Packaging
5. Product Design and Styling
6. Product Quality / Technology
 Ingredients / Formula
HUL’s Close-up with Gel.. In a market where other toothpastes available used calcium
carbonate, Close-Up used glycerin.

TTK group launched Prestige range of frying pans as non stick cookware. It claimed
having being coated with DuPoint’s Teflon, the best material for a non stick cookware.

Dabur Vatika launched herbal hair oil with traditional hair care ingredients – coconut oil,
brahmi, lime, mehandi etc.

P&G introduced New Ariel Microshine, a new technology detergent incorporating

Carezyme and OD Base
 Functional Differentiation
Indecor paints Vinycide came with a clear differentiation of a paint which contained
insecticide claiming insect free interiors.

Videocon computer controlled fridge had its differentiation on certain functional features…
6 door refrigerator, computer controlled, quick freezing corner….

3M scotch magic tape is an adhesive tape marketed by 3M of the US. The company
highlights some features…. Transparent adhesive tape, stays invisible etc.
 Differentiation through additional features
Size became a key differentiatior with TV and refrigerator industries giving the concept of
“mega” products. Philips started the trend with 29 “ model. In refridgerators, Godrej started
the trend with 300 litre Sumo model

Aristocrat molded luggage introduced first time in India suitcase with wheels.
 Differentiation on Packaging

Kurkure engages consumers through packaging. Earlier Kurkure pack just mentioned
something about the product inside. Then, it said snack which goes well with tea. Today
we have an ongoing recipe contest care of the pack and the winning family can go on
the pack cover !
 Differentiation through Product Design / Styling
In the first half of 1990’s the two wheeler industry witnessed a recession. Countering the
effect of recession and scoring over competition was a challenge. Market research
revealed that starting a scooter was a problem. Kinetic Honda brought a new wave with
electronic ignition start. The users especially women found this improvement a blessing.
There were other salient features too – automiatic gear shifting, choke, build-in indicators.

TITAN introduced more than 500 models, incorporating latest world trends in watch
design. Its classic range combined the elegance of gold and leather, the Royal range was
all gold and Aurum range was 18 carat gold, studded with gems and coloured stones.

Launching Bajaj Pulsar, Bajaj auto said – “The differentiating factor in the case of Pulsar is
the design. It is a power bike with elongated petrol tank, Zapper tyres and solid dude kind
feel.
 Differentiation through Customer Care and Services

LG uses after sales service as a differentiator. They claim “no waiting” service policy. LG
says – “give us a call, within 2 hours, we fix an appointment, within a day, our engineer will
call on you at the appointed time”

FORD MOTORS in the midst of heavy competition in the global car market is trying to use
service as a differentiator. It has gone in for a new norm in customer service : “fis it right
the first time on time”

Domino’s Pizza build up the home delivery promise – “We deliver in 30 minutes or else it
is free”
 Surf Ki Kharidari Mein Hi Samajdari Hai

• https://www.youtube.com/watch?v=ALxiXkHxqCc
 Product Differentiation

And the following intangible attributes –

1. Prestige / Status
2. Sentiments
3. Beliefs
 Key Thoughts

“
Differentiation should be perceptible to the users and be perceived

”
as intended

“
Differentiation should add value to the users

“
The promise should be delivered ”
“
Costs should also be taken care of ”
“
Differentiation is what that builds brands ”
 Positioning
Positioning is the act of fixing the locus of the
product offer in the minds of target
consumers.

Positioning connects the product offer to the

target market.
 Key Tasks in Positioning
1. Deciding the Locus – Where to lodge the brand in the consumer’s mind? By doing
the industry and competition analysis

(Hyundai santro, Patanjali Dantkanti,Jio, Nano, PNB, HDFC(sar utha ke jio),

LIC(jeewan ke saath bhi..Yogashemam Vyamyaham-Trust, I preserve )

Analysing competitors positioning – Is there a gap somewhere ?

 Key Tasks in Positioning
1. Fixing the positioning plank –
1. Positioning viz-a-viz competition its performance gaps..Govt vs pvt banks
2. Positioning on the consumers expectations and desires….Nano, Maruti Dezire
3. Positioning on the plank of quality…SONY, Spectranet
4. Positioning on the plank of price…Alto- Lets go
5. Positioning on the plank of service…ICICI
6. Positioning on the product’s conformity with societal requirements

2. Ensuring the infrastructure/competitive advantage for delivering the promise

Developing the value proposition.

1. Claim on the particular value
2. Explanation on how the firm will deliver it.
3. For whom it is meant
 Key Tasks in Positioning

6. Communicating the value proposition to the target consumers.

7. Monitoring how the positioning is faring in the market.
8. Repositioning the offer, if required.
End of Session on :
SEGMENTATION
TARGETING
POSITIONING