Identifying Market Segments and Target Market Positioning
A market segment consists of a group of customers who share similar needs, preferences and buying habits. Market segmentation is a process of dividing the total market for a good or service into several smaller groups such that the members of each group are similar with respect to the factors that influence demand. A major element in a company's
success is the ability to segment its market effectively.
A target market consists of a group of customers (people or organisation) whether large or small; for whom the seller designs a particular marketing mix.
Undifferentiated Marketing and Differentiated Marketing
There are three quite distinct approaches to marketing strategy:
- Undifferentiated or mass marketing
- Product-variety or differentiated marketing
- Target or concentrated marketing
Undifferentiated or Mass Marketing- Ex Bajaj Scooters
Differentiated Marketing: Ex Coca-Cola for many years produced only one type of drink for the entire market
but subsequently they came to the market with wider variety of taste, which are packaged
in a number of different sizes and types of containers.
Segment Marketing: The car market has several segments from entry level low cost car to luxury sedan (A, B, C, D, E - segments). Segment marketing offers several benefits over mass marketing. A company can create a more fine-tuned product or service offering and price it according to the target segment.
Niche Marketing: Ex IIM’s programme for Family Business Owners, Harley Davidson
Variables that can be used to segment consumer markets
Geographic: - region, climate, population density (nations, states, regions, countries, cities of metro size, neighbourhoods, density, climate, attitude ,etc
Demographic:- age, sex, education, occupation, religion, race, nationality, family size, family lifestyle.( age, sex, family size, family life cycle, income, occupation, education, religion, race, generation, social class and nationality)
· Psychographic: - personality, lifestyle, VALS, AIO
§ Self Respect
§ Self Fulfillment
§ Security
§ Sense of belonging
§ Excitement
§ Sense of Accomplishment
§ Fun & Enjoyment in Life
§ Being well respected
§ Having warm relationships
· Behavioural: - attitude, knowledge, benefits, user status, usage rate, loyalty status, readiness to buy, occasions
· Occasion Segmentation: Dividing the market into groups according to occasions when buyers activate their buying process and actually make the purchase. For example festival market, marriage market, anniversary market, etc.
· Benefit Segmentation: Dividing the market into groups according to the different benefitsthat consumers seek from the product. For example economy segment, cosmetic segment, segment for medicinal toothpaste
Targetting:
Single Segment
S1 | S2 | S3 | |
P1 | |||
P2 | X | ||
P3 |
EXAMPLE: McDonalds, McDonald's on fast-food, Volkswagen on small car, Porsche on sports car. |
Selective specialization
| <> | S1 | <>S2 | <>S3 | <>
P1 | <>X | <><> | <> |
P2 | <><> | <> | X | <>
P3 | <><> | X | <><> |
Ex: FM appeals to both younger and older listeners, Land Rover produce vehicle for agricultural and military market, Birla White Cement & putty |
Product Specialization
S1 | S2 | S3 | |
P1 | |||
P2 | X | X | X |
P3 |
Ex: Maruti on car
Market Specialization
S1 | S2 | S3 | |
P1 | X | ||
P2 | X | ||
P3 | X |
Ex Peerless in West Bengal,
Full Market Specialisation
Ex IBM , Coca Cola, Tata Motors(Nano to high end JLR)
What is Positioning?
According to Al Ries and Jack Trout, "Positioning starts with a product, a piece of merchandise, a service, a company, an institution or even a person… but positioning is not what you do to a product.
Positioning is what you do to the mind of a prospect.
That is, you position the product in the mind of the prospect".
Here the marketer does not stress much on changing the product but by changing the perception of the consumer.
The competitor may have three alternatives:
o To strengthen its own current position.
o To grab an unoccupied position.
o To deposition or reposition the consumers' brand.
Ries and Trout also argued that in an over advertised society, only the brands having top-of- the-mind (TOM) awareness with the customers will survive the competition. Therefore, the company should try to position themselves as product leader, largest firm, cheapest product, fastest delivery, etc.
A company must decide how many ideas (benefits, features etc.) to convey in its positioning to its target customers. Many marketers advocate promoting only one central benefit.
The brand should tout itself as "number one" on the benefit it selects. Number one positioning includes 'best quality', 'best performance', 'best service', 'lowest price', 'safest', 'fastest' etc.
For example, an automobile can be positioned as a
· most fuel efficient,
· cheapest in its category, and
· providing best service.
Nevertheless a company must be very careful to avoid the major positioning errors:
Under Positioning: When the brands disposition is so vague that it is seen as just another entry in a crowded marketplace.
Over Positioning: Buyers may have too narrow an image of the brand and they may think it to be unaffordable for them.
Confused Positioning: Buyers might have a confused image of a brand resulting from company's making too many claims or changing the brand's positioning too frequently e.g., Steve Jobs - Next desktop.
Doubtful Positioning: Buyers may find it hard to believe the brand claims in view of the product's features, price or manufacture. Solving the positioning problems enables the company to solve the marketing-mix problem.
Seizing the 'high-quality positioning' requires the firm to produce high-quality product, charge a high price, distribute to high-class dealers, and advertise in high quality magazines.
Broad Positioning can be done as
§ Product leader
§ Operational Excellence &
§ Customer intimacy
A company can also choose a unique brand positioning from several positioning possibilities such as:
· Source Positioning
o Attribute positioning
o Benefit positioning
o Application positioning
o User positioning
o Competition positioning
o Product category positioning
· Superlative Positioning
o Best
o Most
o Least
o Biggest
o First
o _____est
· Quality
· Price positioning
o More for More
o More for the Same
o The Same for Less
o Less for Much Less
o More for Less
After a company has identified a number of alternative positioning platforms : technology, cost, quality and service, the company has to compare its standing on each positioning platform against its major competitors and then choose those platforms where it will be able to improve substantially better than the competitors. So, a technical service provider
company can improve its service and position itself as 'technical service leader' rather than a 'technology leader'.
The company should communicate the brand's positioning through a positioning statement.
Once the company has developed the clear positioning statement, it must communicate that positioning through all the elements of the marketing mix.
Quality is also communicated through other marketing elements; e.g., a high price usually signals a premium quality product.
A manufacturer's reputation also contributes to the perception of quality. As important as positioning to a company's success, most ads fail to communicate the company or the brand positioning.
