Market Segmentation and targeting.pptx

Market Segmentation and
Targeting
7/18/2017 1

After this session, you will be able to:
• Understand how marketers use the
concept of Divide & Conquer
(Segmentation) to create value.
• Decide which bases of segmentation to
be used for segmenting the market for
different kind of products.
• Understand how companies decide which
segments to target for marketing efforts.
Learning Outcomes

Learning Outcomes
 Analyzing the concept of consumer market
segmentation
 Evaluate the process of segmenting the market
and requirements for effective segmentation.
 Evaluating the concept of market targeting and
positioning
 Analyzing the aspects of differentiation for
effective product positioning.

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What is Market?
• In narrow view, market is the place where buying and selling for
needs and wants for getting satisfaction is performed.
• According to American Marketing Association “A market is the
aggregate demand of the potential and existing buyers of a
product.”
• In broad sense market is a group of customers with need to
satisfy, money to spend and willingness or desire to spend
money to create exchange relationship.
• Market is the number of people who have some need and
want, have resources, and are also willing to participate in
a mutually satisfying transaction.

Background
• Companies cannot connect with all customers in large,
broad, or diverse markets.
• But they can divide such markets into groups of
consumers or segments with distinct needs and wants.
• This decision requires a keen understanding of
consumer behavior and careful strategic thinking.
• To compete more effectively, many companies are now
embracing target marketing.
• Instead of scattering their marketing efforts, they’re
focusing on those consumers they have the greatest
chance of satisfying.

• Effective target marketing requires that
marketers:
1. Identify and profile distinct groups of buyers
who differ in their needs and wants (market
segmentation).
2. Select one or more market segments to enter
(market targeting).
3. For each target segment, establish and
communicate the distinctive benefit(s) of the
company’s market offering (market positioning).

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Concept
of
Market segmentation

MARKET SEGMENTATION
➢Market segmentation is based on fact that
markets are heterogeneous & not homogeneous.
➢Homogeneous market refer to a market
situation where the prospective buyers of any
product are found to be uniform in their needs,
habits, choices, nature, etc.
➢Heterogeneous market refer to a market
situation where the prospective buyers of any
product are not found homogeneous in their
needs, habits, choices, nature, etc.

DEFINITION
Acc to William J. Stanton
➢“ Market Segmentation consist of taking the
total heterogeneous market for a product &
dividing it into several sub markets or segments
each of which tends to be homogeneous in all
significant aspects.
Acc to Philip Kotler
➢Market segmentation is the sub-dividing of a
market into homogeneous subset of consumers ,
where any subset may conceivably be selected
as a market target to be reached with a distinct
marketing mix.

OBJECTIVES OF M.S
➢To make grouping of customers on the basis
of their homogeneous characteristics.
➢To identify the needs, tastes, buying-motives
of target customers.
➢To determine marketing strategies, targets &
goals of the firm.
➢To make the activities of the firm
consumer oriented.
➢To identify the areas where the customers may be
created and market area can be expanded.
The main aim of market segmentation is to prepare
separate marketing programmes or strategies for each
segment so that maximum satisfaction to consumers
of different segments may be provided.

Requirement/ Criteria For
Effective Segmentation
➢Identifiable ➢Responsive
➢Measureable ➢Significant
➢Accessible ➢Substantial

• Above figure shows three major steps in target
marketing. The first is market segmentation- dividing
a market into smaller groups of buyers with distinct
needs, characteristics, or behaviors who might require
separate products or marketing mixes.
• Second step is target marketing- evaluation each
market segments' attractiveness and selecting on or
more of the segments to serve on.
• The last on is market positioning- setting the
competitive positioning for the product and creating a
detailed marketing mix.
Market
Segmentation
 Identify bases for
segmenting market.
 Develop segment
profiles.
Market Targeting
 Developmeasure of
segment
attractiveness.
 Select target segments.
Market Positioning
 Developpositioningfor
target segments.
 Developa marketing mix
for each segment
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Objectives Of market segmentation
• Market segmentation divides a big heterogeneous
market. It helps to collect a detailed information of
every set of customer.
• Firm can do the comparative analysis of market
segment and decides which segment is more profitable
and effective.
• Firm can leave unprofitable market
market segment helps to marketing
segment. So
manager to
identify the possible market opportunities.
1. Identification of market opportunities

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• Targeting the market provides details of the customers and
their needs. It helps marketers in production.
• To serve profitable market segment firms should utilize
resource properly. If market is segmented, marketers can
produce the product according to the desire of consumers.
• So the product will meet the demand of the consumers and
there will not be the waste of resource.
2. Optimum utilization of resources

7/18/2017 16
• The objective of market segmentation is to reduce
negative effect of such competition.
• Firm can easily evaluate the market strategies of
competitors if it is segmented.
• Marketers can make better marketing strategies than
competitors in segmented market.
3. Evaluation of competitors

APPROACHES OF Market Segmentation
The marketeers adopt several app. To segment a
market.
App. To market segmentation
Mass
Marketing
Product
Differentiation
Marketing
Target
Marketing

MASS MARKETING
➢In this total market is considered as one
segment.
➢Under mass marketing only one product is
produced & sold in the market for all customers
with help of common marketing programme.
➢It assumes that there is no significant
difference amongst Consumers in terms of their
need & wants
e.g. coca-cola

PRODUCT DIFFERENTIATION
MARKETING
➢In this marketing, marketeers uses product
differentiation app.
➢Once marketeers learnt that consumers would
not accept one quality product, the marketeers
try to provide different size, colours, shapes,
features & qualities in his product for the
public.
➢It provide different product to different
segment
➢E.g. maruti udyog ltd.

TARGET MARKETING
➢It defined as a set of actual potential buyers of
a product, service or idea .
➢Target marketing help the marketeer to correctly
identify the market- the groups of consumers for
whom the product is designed.
➢It has 3 steps :-
1.Market segmentation
2.Market targeting
3.Product positioning

The Himalaya Drug
Company serves a
growing niche market by
focusing on ayurvedic
medicines and health
supplements

The Revolution
brand of ready-
made women’s
apparel successfully
focuses on the niche
segment of plus-size
clothes.

7/18/2017 24
Bases for Segmentation in Consumer
Markets

Bases for Market Segmentation
On the basis of consumer’s
descriptive characteristics (non-
behavioral correlates)
On the basis of consumer responses
(behavioral correlates)
Geographic
Demographic
Psychographic
Socio-economic
Loyal
status
Usage
based
Benefits
Bases of Market Segmentation

There is no single way to segment a market.
Marketers has try different segmentation
variables, alone and in combination, to find the
best way to view market structure
Some of the segmentation variable are:
Geographic
Demographic
Psychographi
Behavioralist
c
ic
7/18/2017 26

1. Geographic Segmentation
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Geographic segmentation calls for dividing the market
into different geographical units. A company may
decide to operate in one or few geographical areas, or
operate in all areas but pay attention to geographical
differences in needs and wants.
The following are some examples of geographic
variables often used in segmentation.
• Region: by continent, country, state, or even neighborhood
• Size of metropolitan area: segmented according to size of
population
• Population density: often classified as urban, suburban,
or rural
• Climate: according to weather patterns common to certain
geographic regions

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2. Demographic Segmentation
• It divides the market in to groups based on variables
such as age, gender, family size and lifecycle, income,
occupation, education religion race generation and
nationality.
• Demographic segmentation is mots popular base for
segmenting customer market groups. Because-
Consumer needs, wants and usage rates often vary closely
with demographic variables.
Demographic variables are easier to measure then most
other types of variables.
Even when marketers first define segments using other
bases, such as benefits sought or behavior, they must know
segment demographic characteristics in order to assess the
size of the target market and to reach it efficiently.

• Use Differences in age, gender,
family size, family life cycle, income,
occupation, education, race, and
religion
• Most frequently used segmentation
variable because of ease of
measurement.
• Pampers divides its market into
prenatal, newborn (0-1 month),
infant (2-5 months), cruiser (6-12
months), toddler (13-18 months),
explorer (19-23 months), and
preschooler (24 months +).
2. Demographic Segmentation

Demographic Segmentation
Some demographic segmentation variables include:
• Age
• Gender
• Family size
• Family lifecycle
• Generation: baby-boomers, Generation X, etc.
• Income
• Occupation
• Education
• Ethnicity
• Nationality
• Religion
• Social class
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3. Psychographic Segmentation
Psychographic segmentation of market consist of following
variables:
•Social class:- lower lowers,
upper lowers, working class,
middle class,
•Lifestyle: achievers, strivers,
strugglers.
•Personality: authoritarian,
ambitious, gregarious
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Titan
Titan studied the lifestyle of outdoor loving
urban youth.
Titan felt there was an opportunity for a casual
watch thus Titan created a sub-brand Fastrack.
Titan went in for new positioning: Fastrack – cool
watches by Titan.
Advertising, packaging and merchandising were
all different- Young, vibrant and cool- reflecting the
lifestyle based segmentation.

2c. Income
Same income consumer
may own different brands
depending upon lifestyle,
attitude and values.

4. Behavioral Segmentation
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Behavioral segmentation is based on actual
customer behavior toward products. The
behavioral variables include:
Occasion: regular, occasion, special
occasion.
Benefits: quality, service, economy, convenience.
User status: nonuser, ex-user, potential user, first time user,
regular user.
User rate: light user, medium user, heavy user.
Loyalty status: none, medium, strong, absolute.
Attitude towards product: enthusiastic, positive, indifferent,
negative, hostile.

Segmentation, targeting, positioning in the Market
ing strategy of Adidas
Biggest sportswear manufacturer of Europe and one of the Biggest in
the world.
Adidas is segmented based on demographic, psychographic, behavioural factors.
The Adidas group has four brands in its strong portfolio Reebok, Adidas, Rockport
and taylor made meant for different segment customer groups.
Adidas uses differentiated targeting strategy to target young adults, adults as well
as children who have passion for fitness / sports.
Although it targets customers in the age group of 13-40 years but majority
of its customers are of 15-30 years of age who hail from upper middle class or
the luxury class of customers.
User and benefit based positioning are the strategies Adidas uses to create
distinctive image in the mind of the prospective consumer. By emphasizing
the value of quality products from a trusted brand Adidas is able to maintain its
brand essence. The portfolio is divided as follows:
 They have Adidas performance in Competitive sports
 Reebok and Reebok classics in Active sports & casual sports
 Adidas originals, Adidas fun, Rockport in Sports fashion

Step 1. Market Segmentation
Requirements for Effective Segmentation
• Size, purchasing power, profiles
of segments can be measured.
• Segments must be effectively
reached and served.
• Segments must be large or
profitable enough to serve.
Measurable
Accessible
Substantial
Differential
Actionable
• Segments must respond
differently to different marketing
mix elements & actions.
• Must be able to attract and serve
the segments.

Step 2. Market Targeting
Evaluating Market Segments
Segment attractiveness (Size, Growth, Profitability,
economies scale, low risk)
Company Objectives and Resources
Company skills & resources relative to the segment(s).
Look for Competitive Advantages.
Possible levels of Segmentation

Targeting
A target market consist of a set of buyers who share common needs
or characteristics that the company decides to serve.

Which type of target market evaluation?
Coke’s freestyle vending machine allows users to choose
more than 100 coke brands or custom flavours or to
create their own.?
Porsche concentrates on sports car segment and volks
wagon on sports car segment ?

Hallmark’s personal expression products are sold in more than 41,500 retail
outlets nationwide and account for almost one of every two greeting cards
purchased in the United States. Each year Hallmark produces 19,000 new and
redesigned greeting cards and related products including party goods, gift wrap,
and ornaments. Its success is due in part to its vigorous segmentation of the
greeting card business. In addition to popular sub-branded card lines such as the
humorous Shoebox Greetings, Hallmark has introduced lines targeting specific
market segments. Fresh Ink targets 18- to 39-year-old women. Hallmark Warm
Wishes offers hundreds of 99-cent cards. Hallmark’s three ethnic lines—
Mahogany, Sinceramente Hallmark, and Tree of Life—target African American,
Hispanic, and Jewish consumers, respectively. Hallmark’s newer Journeys line of
encouragement cards focused on such challenges as fighting cancer, coming out,
and battling depression. Specific greeting cards also benefit charities such as
(PRODUCT) RED™, UNICEF, and the Susan G. Komen Race for the Cure. Hallmark
has also embraced technology. Musical greeting cards incorporate sound clips
from popular movies, TV shows, and songs. Online, Hallmark offers e-cards as well
as personalized printed greeting cards that it mails for consumers. For business
needs, Hallmark Business Expressions offers personalized corporate holiday cards
and greeting cards for all occasions and event
Case Discussion (Differentiated marketing)

Step 2. Market Targeting
Choosing a Market-Coverage Strategy
Company
Resources
Product
Variability
Product’s Stage
in the Product Life Cycle
Market
Variability
Competitors’
Marketing Strategies

Bank Marketing
Statistics about the identity of bank depositors
Questions:
1.Who do you think the banks should be targeting and why?
2.What can the banks do to appeal to their chosen market or
markets? How do the segments differ in their needs?
Age Group Percent of Households Percent of Deposits
15-24 6 Less than 1
25-34 23 6
35-44 21 14
45-54 15 14
55 and over 35 66

Differentiation and
Positioning

Learning Outcomes
 In this lecture, we will evaluate the process by
which marketers can uncover the most powerful
brand positioning
 Create suitable differentiation strategies.

Background
• No company can win if its products and services
resemble every other product and offering.
• A company can reap the benefits of carving out a unique
position in the marketplace.
• Creating a compelling, well-differentiated brand position
requires a keen understanding of consumer needs and
wants, company capabilities, and competitive actions.

Step 3. Positioning for Competitive
Advantage
Product’s Position - the place the product occupies
in consumers’ minds relative to competing
products; i.e. Volvo positions on “safety”.
Marketers must:
Plan positions to give products the greatest advantage
Develop marketing mixes to create planned positions

Steps to Choosing and Implementing
a Positioning Strategy
All marketing strategy is built on
segmentation, targeting, and positioning
(STP).
A company discovers different needs and
groups in the marketplace, targets those it
can satisfy in a superior way, and then
positions its offerings so the target market
recognizes the company’s distinctive
offerings and images.

Positioning Connects Product Offering
with Target Market
• Positioning is the act of designing a company’s offering and image to occupy
a distinctive place in the minds of the target market.
• The goal is to locate the brand in the minds of consumers to maximize the
potential benefit to the firm
• Positioning is the act of fixing the locus of the product in the minds of the
target consumers.
‘Positioning is what you do to the mind of the prospect; you position the
product in the prospect’s mind’ —Al Ries and Jack Trout
 Scorpio, Horlicks, Maggi, Asian Paints Colour World
Differentiation and positioning are related. Differentiation is the prelude to
positioning.

Steps to Choosing and Implementing
a Positioning Strategy
Positioning requires that marketers define and
communicate similarities and differences between their
brand and its competitors. Specifically, deciding on a
positioning requires:
(1) determining a frame of reference by
identifying the target market and relevant
competition
(2) identifying the optimal points of parity and
points of difference brand associations given that
frame of reference
(3) creating a brand mantra to summarize the
positioning and essence of the brand.

Positioning Connects Product Offering
with Target Market
• Positioning is the act of designing a company’s offering and image to occupy
a distinctive place in the minds of the target market.
• The goal is to locate the brand in the minds of consumers to maximize the
potential benefit to the firm
• Positioning is the act of fixing the locus of the product in the minds of the
target consumers.
‘Positioning is what you do to the mind of the prospect; you position the
product in the prospect’s mind’ —Al Ries and Jack Trout
 Scorpio, Horlicks, Maggi, Asian Paints Colour World
Differentiation and positioning are related. Differentiation is the prelude to
positioning.
‘Differentiation and Positioning: Google Cloud

What Is Differentiation?
• It simply means making the product offer ‘different’ from the rest.
• It is about defining your difference from the rest.
• It builds distinction to the product offering by adding value to it.
 There are only two basic routes to marketing strategy: the price
route and the differentiation route.
 Differentiation remains the more versatile route.
• It helps the firm fight on a non-price plank.

Gaining Distinction Is the Purpose of
Differentiation
Gaining distinction through value addition: The purpose
• Competitive battle is decided by the distinction of an offer.
• Distinction comes from the value provided in the offer.
• Differentiation is a major strategic route for gaining distinction
through value addition.
‘Differentiation and Positioning: Patanjali Walks into India’s FMCG Den’

Firms Need Strong Brands;
Differentiation Builds Them
• The fight in the marketplace is between brand and brand.
• Continuous differentiation and value addition create strong brands.
• In the long term, these brands become major assets of companies.
• A brand is the outcome of all the differentiators infused into the basic
offer.
• Elevating the product from generic to higher levels means adding
differentiation.

2. Analyzing Competitors
 Conduct a SWOT analysis that includes a competitive
analysis.
 A company needs to gather information about each
competitor’s real and perceived strengths and
weaknesses
 Finally, based on all this analysis, marketers must
formally define the competitive frame of reference to
guide positioning.

POINTS-OF-DIFFERENCE
 Points-of-difference (PODs) are attributes or benefits that
consumers strongly associate with a brand, positively evaluate,
and believe they could not find to the same extent with a
competitive brand.
 Associations that make up points-of-difference may be based on
virtually any type of attribute or benefit. Strong brands may have
multiple points-of difference.
 Some examples are Apple (design, ease-of-use, and irreverent
attitude), Nike (performance, innovative technology, and
winning), and Southwest Airlines (value, reliability, and fun
personality).

POINTS-OF-PARITY
 Points-of-parity (POPs), on the other hand, are attribute or
benefit associations that are not necessarily unique to the brand
but may in fact be shared with other brands.

Brand Mantras
 ” Brand mantras are short, three- to five-word phrases that
capture the irrefutable essence or spirit of the brand positioning.
 Their purpose is to ensure that all employees within the
organization and all external marketing partners understand what
the brand is most fundamentally to represent with consumers so
they can adjust their actions accordingly
 McDonald’s brand philosophy of “Food, Folks, and Fun” captures
its brand essence and core brand promise. Two high-profile and
successful examples—Nike and Disney—show the power and
utility of a well-designed brand mantra.

Successful implementation of Brand Mantras
 Nike has a rich set of associations with consumers, based on its innovative
product designs, its sponsorships of top athletes, its award-winning
advertising, its competitive drive, and its irreverent attitude. Internally, Nike
marketers adopted the three-word brand mantra, “authentic athletic
performance,” to guide their marketing efforts. Thus, in Nike’s eyes, its entire
marketing program—its products and how they are sold—must reflect those
key brand values. Over the years, Nike has expanded its brand meaning from
“running shoes” to “athletic shoes” to “athletic shoes and apparel” to “all
things associated with athletics (including equipment).” Each step of the way,
however, it has been guided by its “authentic athletic performance” brand
mantra. For example, as Nike rolled out its successful apparel line, one
important hurdle for the products was that they could be made innovative
enough through material, cut, or design to truly benefit top athletes. At the
same time, the company has been careful to avoid using the Nike name to
brand products that do not fit with the brand mantra (like casual “brown”
shoes).

Developing Competitive
Differentiation
Product Service
Personnel Image
Areas for Competitive
Differentiation

Attributes on Which Marketers
Differentiate Products
Attributes on Which Marketers Differentiate Their Market
Offerings
Product-related
• Ingredients/formula/process: Red Label Natural Care Tea
• Functional features: Nokia, Gillette
• Design/styling/variety: Titan/Tanishq and Apple
• Customer experience associated with the product
Continued…

Attributes on Which Marketers
Differentiate Products
• Quality/technology: LG
• Packaging: Sunfeast Dark Fantasy
• Prestige/status: BMW
• Sentiments/beliefs: MacDonald’s vegetarian
Distribution as Differentiator
• Exclusive showrooms: Raymond Shops, World of Titan and Asian Paints
• Customer service: Dell computers
The task is to locate and provide attributes that will render the product
distinct
…Continued

The Conditions for Differentiation to
Succeed
Conditions Necessary for Differentiation to Become Effective
 Commitment to building the brand, avoiding easy alternative of sales
promotion deals
 The differentiation must be perceived by the customers as intended
 The differentiation should add value relevant to the user
 The promise must be delivered
 The differentiation should be rooted in the firm’s competitive advantage
 The differentiation must have the backup of innovation
 Check and contain the cost of creating the differentiation
‘Amazon Takes Home Appliances, ACs and TVs to Rural Markets’

Market Segmentation and targeting.pptx

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