Module 2

Segmentation
Positioning
targeting
Market Segmentation
Market segmentation is defined as the
process of dividing the market into distinct
groups that share common characteristics,
needs ,purchasing behaviour, or
consumption patterns.
Market segmentation is a strategy that
recognizes the need of specialization to
suit the needs of a segment of the market
rather then trying to be all things to all
people.
Segmentation
Market segmentation is the process
of dividing a broad consumer or
business market, normally consisting
of existing and potential customers,
into sub-groups of consumers
Important
It leads to efficient and effective
utilization of resources.
Improves manageability of the
market by dividing the markets into
smaller parts.
Helps to improve the companys
ability to satisfy customers.
Objective
Identify the similarity of needs of potential buyers
within a segment and persue them with tailored
products.
Identify the difference between needs of buyers
among segments and try to cater to these different
needs.
Once the specific segment has been chosen for the
marketing efforts ,the organization is more focused in its
efforts and there is a potential for increased return on
investment.
It is cost effective for the marketers to assign the buyers
to different segment on the basis of a number of
parameters.
Geographic segmentation

Geographic segmentation divides markets according to

geographic criteria. In practice, markets can be segmented
as broadly as continents and as narrowly as neighborhoods
or postal codes. Typical geographic variables include:
Country e.g. USA, UK, China, Japan, South Korea, Malaysia,
Singapore, Australia, New Zealand
Region e.g. North, North-west, Mid-west, South, Central
Population density: e.g. central business district (CBD),
urban, suburban, rural, regional
City or town size: e.g. under 1,000; 1,000- 5,000; 5,000
10,000... 1,000,000 3,000,000 and over 3,000,000
Climatic zone: e.g. Mediterranean, Temperate, Sub-
Tropical, Tropical, Polar,
Demography
Typical demographic variables and their
descriptors are as follows:
Age: e.g. Under 5, 58 years, 912 years, 1317
years, 18-24, 25-29, 30-39, 40-49, 50-59, 60+
Gender: Male, Female
Occupation: Professional, self-employed, semi-
professional, clerical/ admin, sales, trades,
mining, primary producer, student, home duties,
unemployed, retired
Social class (or socio-economic status): A, B, C,
D, E, or I, II, III, IV or V (normally divided into
quintiles)
Marital Status: Single, married, divorced,
widowed
 Family Life-stage: Young single; Young married
with no children; Young family with children under
5 years; Older married with children; Older
married with no children living at home, Older
living alone
Family size/ number of dependants: 0, 1-2, 3-
4, 5+
Income: Under $10,000; 10,000- 20,000; 20,001-
30,000; 30,001-40,000, 40,001- 50,000 etc
Educational attainment: Primary school; Some
secondary, Completed secondary, Some
university, Degree; Post graduate or higher
degree
Home ownership: Renting, Own home with
mortgage, Home owned outright
Ethnicity: Asian, African, Aboriginal,
Psychographic segmentation

Psychographic segmentation, which

is sometimes called lifestyle
segmentation.
One of the most well-known
psychographic segmentation
analyses is Values And Lifestyles
Segments (VALS).
Achievers , Strivers, Experiencers
(21%), Innovators, Thinkers,
Believers, Makers and Survivors
Behavioral segmentation

Purchase/Usage Occasion: e.g. regular occasion,

special occasion, festive occasion, gift-giving
Benefit-Sought: e.g. economy, quality, service level,
convenience, access
User Status: e.g. First-time user, Regular user, Non-user
Usage Rate/ Purchase Frequency: e.g. Light user,
heavy user, moderate user
Loyalty Status: e.g. Loyal, switcher, non-loyal, lapsed
Buyer Readiness: e.g. Unaware, aware, intention to buy
Attitude to Product or Service: e.g. Enthusiast,
Indifferent, Hostile; Price Conscious, Quality Conscious
Adopter Status: e.g. Early adopter, late adopter, laggard
 Homogenous : Mumbai Dabba Wala
Diffused : KV
Clustered : health air alliance
Level
Mass : BSNL SBI (no segmentation)
Segment : particular level
shaadi.com Naukri, NREGA
Niche with in the segment, Palace
wheel
Micro Marketing : Suit the taste of
individual and location. (Mobile),AC
Express,FedX
Local: particular salary account,
Suvidha account.

 Demographic segments: Cartoon

Network, Naukri.com, HDFC.
Psychograph segment : DLF Goal and
country club, Luxury Flight.
Behavioral segment :
 Many marketers use the S-T-P
approach; Segmentation Targeting
Positioning to provide the framework
for marketing planning objectives.
That is, a market is segmented, one or
more segments are selected for
targeting, and products or services are
positioned in a way that resonates with
the selected target market or markets.
Positioning
Positioning strategy is concerned with creating, communicating and Maintaining
distinctive differences valued by those customer with whom the firm aims to
develop long-term relationships.
Price and product attribute.(Terms and condition of Mortgage product).
Customer service processes (their convenience and ease to use0
Service distribution and delivery systems and service schedule and
Location(Coverage and density of branch and ATM networks).
Service Environment (Its Functionality and level of service).
Service Personnel(Their competence and customer service orientation

Taking the two variables of service offered and the market served, organization can be
grouped into four types:-
I. Unfocused
II. Service focused
III. Market focused
IV. Fully focused
Focus strategy
Fully Focused: provide a limited
range of services to a narrow and
specific market segment.
Market Focused: concentrates on a
narrow market segment, but has a
wide range of services.
Service Focused: concentrates
narrow range of services to fairly
broad market.
Unfocused: broad markets with
wide range of services. Many
Service Attributes and Levels
Use research to identify and prioritize
which attributes of a given service
are important to specific market
segments
Individuals may set different
priorities according to:
Purpose of using the service.
Who makes decision.
Timing of use.
Whether service is used alone or with a
group.
Composition of that group.
 Important versus
Determinant Attribute
Important
safety may be considered a very important attribute in the
choice of an airline, but it is not the attribute that buyers base
their final decision on because typically all airlines the buyer
considers are likely to be perceived as performing equally well on
safety.
Determinant attributes in marketing are those aspects about
products and services that determine why consumers buy
products.
 Determinant Attribute
These attributes may vary among different types
of products, depending on which industry a small
company is in.
However, most determinant attributes usually fall
under specific categories, such as quality and
service.
All determinant attributes are measurable within
an organization. Small-business owners then use
these data to make business decisions and
develop marketing strategies

fast food are most interested in taste, texture,

speed of service, value and cleanliness. Taste and
 Importance of Determinant
Attributes
Consumers choose between alternative
service offerings based on perceived
differences between them.
Attributes that distinguish competing
services from one another are not
necessarily the most important ones.
Determinant attributes determine buyers
choices between competing alternatives
Service characteristics that are
important to purchasers
Customers see significant differences
between competing alternatives on
these attributes
 Establishing Service Levels
Need to make decisions on service
levelslevel of performance firm
plans to offer on each attribute
Segment customers according to
willingness to trade off price versus
service level
Service tiering: Positioning strategy
based on offering several price-based
classes of service concept
Examples of Service Tiering
in
Different Industries
 Positioning Distinguishes a
Brand from Its Competitors
Must establish position for firm or
product in minds of customers
Position should be distinctive,
providing one simple, consistent
message
Position must set firm/product apart
from competitors
A company cannot be all things to all
peoplemust focus its efforts
 Principles of Positioning
What does our firm currently stand
for in the minds of current and
prospective customers?
What customers do we serve now,
and which ones would we like to
target in the future?
What is value proposition and target
segment for each of our current
service offerings?
How do our service offerings differ
from competitors?
What changes must we make to our
 Developing an Effective
positioning strategy
Positioning links market analysis and
competitive analysis to internal
corporate analysis
Understand relationships between
products and markets
Compare to competition on specific
attributes
Evaluate products ability to meet
consumer needs/expectations
Predict demand at specific
prices/performance levels
 Developing a Market
Positioning Strategy
(Fig 7.4)
- Size Define, Analyze
MARKET - Market Segments
ANALYSIS Composition
- Location
- Trends Select
Target Segments
To Serve
- Resources
INTERNAL - Reputation Articulate Marketing
ANALYSIS - Constraints Desired Position Action
in Market Plan
- Values
Select Benefits
to Emphasize
to Customers
- Strengths
COMPETITOR - Weaknesses Analyze
ANALYSIS - Current Possibilities for
Positioning Differentiation