Segmenting, Targeting, and Positioning

Marketing Process Involves Market segmentation Targeting market Positioning Marketing mix

Students
(Market Size 30 %)

Conversion Possibility 40%

Target

Job seekers
(Market Size 20 %)

Conversion Possibility 70%

Foreign Travelers
(Market Size 5 %)

Conversion Possibility 50%

Middle Class Population

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation
1. Identify segmentation variables and segment the market
2. Develop profiles of resulting segments

Market Targeting
3. Evaluate attractiveness of each segment 4. Select the target segment(s)

Market Positioning
5. Identify possible positioning concepts for each target segment
6. Select, develop, and communicate the chosen positioning concept

Basic Market-Preference Patterns

(a) Homogeneous (b) Diffused (c) Clustered

Market

Costumer / Consumer

Market

Costumer / Consumer

Market Costumer / Consumer

A market in which distinctive and different customer needs can be identified and which can then be used as a basis for segmentation; opposite of homogeneous.

Homogeneous Heterogeneous Market

Homogeneous Heterogeneous Market

Diffused

Clustered

Step 1. Market Segmentation

Levels of Market Segmentation
Same product to all consumers (no segmentation)

Mass Marketing

Pdt./ service to one or more segments (some segmentation)

Segment Marketing

Pdt./service to subgroups within segments (more segmentation)

Niche Marketing

Products / service to suit the tastes of individuals and locations (complete segmentation)

Micromarketing

Local Marketing
Tailoring brands / promotions to local customer groups

Individual Marketing
Tailoring products / programs to individual customers

Target the Mass Market versus the Individual Consumer

Mass Market
Segment Marketing

Niche

Micromarketing

The Individual

Standardized Marketing Mix

Segment Marketing

Niche

Micromarketing

Personalization

12

Same product /service to all consumers (no segmentation)

Mass Marketing

Segment Marketing
Products / service to one or more segments (some segmentation)

Niche Marketing
Products / service to subgroups within segments (more segmentation)

Products / service to suit the tastes of individuals and locations (complete segmentation)

Micromarketing

Tailoring brands / promotions to local customer groups

Local Marketing

Salary Account Suvidha Account Privileged Account Training Center

Individual Marketing
Tailoring products/ programs to individual customers

Computer Institution Designer Outfits

Steps in the Market Segmentation Process

Determine Market Boundaries Decide Which Segmentation Variables to Use Collect and Analyze Segmentation Data Develop a Profile of Each Segment Target Segments to be Served Design a Marketing Plan

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

Bases of Market Segmentation

Geographi c Demographic Psychograph ic Behavioral Occasion BenefitsSought

Region / Country Density Climate

Age Gender Family Size Income Occupatio n Education Religion Race Nationality

Social Class Lifestyle Personality

Benefits User Status Usage rate Loyalty Status Readiness Attitude

Segmentin g market based on occasion when buyers get the idea to buy or actually make their purchase, or use the purchased item.

Markets can be segmented based on the benefits that consumers desire from using a specific product

Geographic Segmentation

Demographic Segmentation

Psychograph Segmentation

Behavioral Segmentation

Occasion Segmentation

Benefits-Sought Segmentation

Step 2 Market Targeting Evaluating Market Segment

Segment Structural Attractiveness Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers. Segment Size and Growth
Analyze sales, growth rates and expected profitability for various segments.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Target Market
A set of buyer sharing common needs or characteristics that the company decide to serve

Five Patterns of Target Market Selection

Single-segment concentration Selective specialization Product specialization

M1 M2 M3 P1 P2 P1 P2

M1 M2 M3
P1 P2

M1 M2 M3

P3

P3
Market specialization

P3
Full market coverage

M1 M2 M3 P = Product M = Market P1 P1

M1 M2 M3

P2
P3

P2
P3

Single-segment concentration

M1 M2 M3

Selective specialization

P1
P2 P3

M1 M2 M3

Selective specialization

P1
P2 P3

Product specialization

M1 M2 M3 P1 P2 P3

Market specialization

M1 M2 M3 P1

P2
P3

M1 M2 M3 P1 P2 P3

Full market coverage

Step 2. Market Targeting

Market Coverage Strategies
Market
Company Marketing Mix

A. Undifferentiated Marketing
Company Marketing Mix 1
Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3

B. Differentiated Marketing

Company Marketing Mix

Segment 1 Segment 2
Segment 3

C. Concentrated Marketing

Company Marketing Mix

Market

B. Differentiated Marketing
Company Marketing Mix 1

Segment 1 Segment 2 Segment 3

Company Marketing Mix 2

Company Marketing Mix 3

Company Marketing Mix

Segment 1 Segment 2

Segment 3
C. Concentrated Marketing

Choosing a Market-Coverage Strategy

Company Resources Product Variability

Step 2. Market Targeting

Products Life-Cycle Stage Market Variability

Competitors Marketing Strategies

Positioning the Offering

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

The BCG Competitive Advantage Matrix

Number of Approaches to Achieve Advantage
Few Many Specialized

Size of the Advantage

Large

Volume

Small

Stalemated

Fragmented

Product Differentiation

Form

Features

Performance

Quality

Conformance Quality

Durability

Reliability

Repairability

Style

Design

Performance of a Product

Consistency (Conformance of a Product)

Reliability

Durability

Accuracy

User Friendly (Ease of Operation)

Repair

Other Value Added Services

Value of a feature and cost

Usefulness

Looks

Performance

Services Differentiation

Ordering Ease

Installation

Customer Consulting

Miscellaneous Services

Delivery

Customer Training

Maintenance & Repair

Ordering Ease

Installation

Delivery

Customer Consulting

Customer Training

Maintenance & Repair

Differentiation
Personnel Channel

Image Differentiation
Media Atmosphere

Symbols

Events

Media

Important Profitable Distinctive

Differences Worth Establishing

Affordable Preemptive Superior

Perceptual Map
Live shows Easy to reach Good food Fantasy Exercise Fun rides Disneyland Knotts Berry Farm
1.0 0.8

Little waiting

Educational, animals 0.6 Marineland 0.4 of the Japanese Pacific 0.2 Deer Park
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -0.2

Magic Mountain

-0.4 -0.6 -0.8

Busch Gardens

Lion Country Safari

Economical

Positioning Process
1. Market Positioning 2. Psychological Positioning
Objective Positioning Subjective Positioning

3. Positioning Approaches

Market Positioning
The market positioning process of identifying and selecting markets to determine the criteria for competitive success.

Psychological Positioning
Psychological Positioning enables marketers to create a unique product image with the objective of creating interest.

Psychological Positioning
Objective Positioning :- The objective positioning relates to the objective attributes of physical products or service.

Subjective Positioning :- inspiring customer with some intangible offering

Objective Positioning

Subjective Positioning

inspiring customer with some intangible offering

Positioning Strategies
Service / Product Attributes Benefits, Problem Solutions & Basic Needs Price & Quality Specific Use Against Other Products Product User Competitor Endorsement Empathy Service Evidence

Service / Product Attributes

Benefits, Problem Solutions & Basic Needs

Price & Quality

Specific Use

Against Other Products

Endorsement

Empathy

Service Evidence

Types of Mass Customization (1)

The Four Faces of Mass Customization
Joseph Pine and James Gilmore - Jan.-Feb. 1997 Harvard Business Review
1. Collaborative Customization:
Consumer and producer engage in a dialogue to determine customer requirements Computers, clothing and footwear, furniture, some services

2. Adaptive Customization:
Product is designed so that users can alter it themselves to fit unique requirements on different occasions High-end office chairs, R7 golf club, certain electronic devices

 3. Cosmetic Customization:
Product is unique in appearance only Customers chosen text or image on T-shirts, mouse mats, baseball caps, mugs etc. Also called Personalization

4. Transparent Customization:
Producer provides customized product without consumer being necessarily being aware that it has been customized Can be used when consumers needs are predictable or can be easily deduced, and when customers do not want their requirements repeated. Example- repeat orders for customized clothing, chemicals

Collaborative Customization

Adaptive Customization

Cosmetic Customization

Transparent Customization

True Mass Customization

True Mass Customization requires:
System for customer to specify requirements easily e.g. Costumer service department, online ordering, call centre. Advanced manufacturing & communication systems
Enable economies of scope (keep cost and price low)

Build-to-order approach
product is not made until order is received (Book: Build to Order and Mass Customization David M. Anderson)

Minimum order quantity of one

Advantages of MC
Customer has control over product Does not have to pay for features he/she does not want (computers etc.) Company does not have finished product inventory better use of working capital Easier for company to differentiate product Levels out economic fluctuations
When slowdown occurs, less backlog of inventory Prices do not have to be cut as much Therefore, less likelihood of recession

What Mass Customization Isnt

Massive Product Variety Customer has Choice but not Control;

E.g. Personalize your cellphone with any of our 2000 skins

Advanced ordering system linked to craft production Personalization or mass customization of Marketing:

Use of knowledge about customer to personalize marketing of standard products. Data gathered from loyalty schemes, etc.
Customized products with minimum quantities

Your design on a T-shirt, minimum order 100

Examples of Mass Customization

Dell
Build to order computers Assembly, not manufacture (modular components) MC sometimes associated with higher prices but Dell cheaper than most Why? Massive efficiency of supply chain management Living in Dell Time - Fast Company, Nov. 2004

 Clothing and Footwear

NikeID, MiAdidas, Otabo Shoes, Vans Bivolino (shirts), U-Jeans, Lands End, Target, Tommy Hilfiger Clothing and footwear very suited to MC due to each person being unique in size and shape

Sports Equipment
Nautilus (treadmills)

Industrial equipment, construction

Kingspan insulated roof and wall panels, made to order for size, colour, insulation type

Mass Customization of Services

Difficult to define when a service is mass customized rather than just customized Degree of automation required Examples
MyYahoo, MyMSN, Google Personalized Personalized songs Instasong.com I.T. providing services in similar way to object oriented software small pre-existing components of work combined to create overall service Requires increased efficiency and lower prices so as not to be just packaging of existing services