22841597 stp segmentation targeting positioning
DESCRIPTION
STPTRANSCRIPT
STP
Segmentation target positioning
Market & Target Market
Group of people / organizations with:
Wants to satisfy,
Money to spend &
Willingness to spend.
Group of people / organizations with:
Wants to satisfy,
Money to spend &
Willingness to spend.
Is homogeneous group of customers at whom the seller specifically aims its marketing efforts.
Next our focus will be TM Strategies.
Is homogeneous group of customers at whom the seller specifically aims its marketing efforts.
Next our focus will be TM Strategies.
TARGET MARKETTARGET MARKET
MARKETMARKET
2 Broad Alternatives of TM Strategies:
Treat the whole market as a single unitTreat the whole market as a single unit
Is a process of dividing the total heterogeneous market for a product into several homogenous segments. Total market is seen as many smaller homogenous segments.
Is a process of dividing the total heterogeneous market for a product into several homogenous segments. Total market is seen as many smaller homogenous segments.
MARKET AGGRIGATIONMARKET AGGRIGATION
MARKET SEGMENTATIONMARKET SEGMENTATION
AssumptionSeller views the market as a series of Demand Curves.
Benefits & Limitations are Next..
AssumptionSeller views the market as a series of Demand Curves.
Benefits & Limitations are Next..
Rifle ApproachRifle Approach
Short gun approach.Short gun approach.
AssumptionThere is one demand curve.AssumptionThere is one demand curve.
Objectives
• Identifying Market Segments• Choosing Target Markets• Positioning
Steps in Market Segmentation, Targeting,and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
MarketMarketSegmentationSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketMarketTargetingTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketMarketPositioningPositioning
Evaluation of segments
• Evaluating market segments– segment size & growth– segment’s structural analysis
• competition within the segment• existing or potential substitute products• relative power of buyers / suppliers
– company’s objectives & resources• environment, social responsibility, if it is core business, can
employ skills & resources superior to those of competition
3 basic questions
• Who is buying?• What do they buy?• When do they buy?
Market Segment
• A subgroup within the market who share certain relevant characteristics
• A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix
What is a Market Segment?
Definition of target market segment:– A target segment is an internally homogeneous
group of consumers which is heterogeneous with respect to the mass market.
– Example: Probability that teens (13-19 year olds) will consume a ‘fizzy drink’ in a given week is 0.56. For all consumers (13-65) it is 0.25.
– Teens are two-times more likely to consume a fizzy drinks like coca-cola than the mass market.
Market segmentation - Definitions
• The analytical division of the market into discrete groups of customers that share common attributes.
• The identification of subsets of buyers within a market who share similarities, needs and who have similar buying processes.
Market segmentation
• A market segment is a large, identifiable group of customers within a market, which shows a predictable pattern of behavior in buying situations and can be profitably reached by means of distribution and communication.
What is a Market Segment?
• A schematic representation
Mass Market
Target Market
What is Segmentation Analysis?
Segmentation Strategies Compared
Supplier
Supplier
Supplier
A
B
C
A
B
C
B
Mass Marketing
Multiple Segment
Niche-Marketing
Ford 1920s
GM 1930s
Ferrari
What is Segmentation Analysis?
General Techniques• Socio-demographic (age structure profiles) –
part c of the lecture.• Benefit (economy segment (price);
durability(quality); symbolic (Hiranandani).• Lifestyle (Rolex)• Behavioural (Cigarette smokers & Bungie
Jumpers)
What is Segmentation Analysis?
Segmentation Techniques
Based on Usefulness and Measurability
Low
U
sefu
lnes
s
Hig
h
Low Measurable High
Attitudes
Lifestyle
Ethnicity
Age
Generic need
sought
Income
Gender
socio-demographic segmentation
Market-Segmentation Procedure
1. Survey stage– Motivations– Attitudes– Behavior
2. Analysis stage– Factors– Clusters
3. Profiling stage
Steps in Segmenting a Market
Select Market or Product Category
Choose Segmentation Bases
Select Segmentation Descriptors
Profile/Analyze Segments
Select Target Markets
Design, Implement, Maintain Marketing Mix
Steps inSegmenting aMarket
SubsequentMarketingActivities
Segmenting the Market
Bases for 1st Division
Reason to PurchaseBases for 1st Division
Reason to Purchase
Consumer Market (Ultimate Consumption)
Consumer Market (Ultimate Consumption)
Business Market (Business Selling)
Business Market (Business Selling)
OperatingSupplies
OperatingSupplies
RemakingMaterial
RemakingMaterial
ResellingReselling
Bases for Segmenting Consumer Markets
Occasions, Benefits, Uses, or Attitudes, amount of usage, usage occasions
Behavioral
Geographic
Region, City or MetroSize, Density, Climate Demographic
Age, Gender, Family size and life cycle, Race, Occupation, or Income ...
Lifestyle or Personality, social class
Psychographic
Segmenting Consumer Market
Behavioral - II (Usage Rate)Nonusers, Light users, Heavy users.
Behavioral - I (Benefits Desired)Quality, cost, Toothpaste.
PsychographicsPersonality, Life style, Values.
Demographic Income, Age, Family LC, Social ClassEducation, Occupation, Ethnicity.
Geographic Region, City / Metro area sizeClimate, Urban-rural
Bases for SegmentingConsumerMarkets
Bases for SegmentingConsumerMarkets
• Sells multiple brands within the same product category for a variety of products
• Brands feature a different mix of benefits and appeal to different segments
• Has also identified different niches within certain segments
• Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs
Procter & GambleProcter & Gamble
Case Study
The Family Life Cycle
Middle-aged divorcedwithoutchildren
Youngdivorcedwithoutchildren
Youngsingle*
Youngmarriedwithoutchildren*
Middle-aged marriedwithoutchildren
Youngmarriedwithchildren*
Youngdivorcedwithchildren
Middle-aged marriedwithchildren*
Middle-ageddivorcedwithchildren
Middle-agedmarried withoutdependentchildren
Middle-ageddivorcedwithoutdependentchildren
Oldermarried*
Olderunmarried*
Usual flowRecycled flowTraditional flow*
Bases for Segmenting Business Markets
• Type of organization• Size of organization• Location• Structure
Segmenting Business Market
Customer LocationCustomer Location Region & LocationRegion & Location
Customer TypeCustomer Type
Transaction ConditionsTransaction Conditions
Industry Size (Sales Volume, Employees, Production Facility,
& Sales Offices).Organizational Structure (Centralized vs Decentralization, Group vs Individual Decision). Purchase Criteria (Quality, Price, Durability, Time)
Industry Size (Sales Volume, Employees, Production Facility,
& Sales Offices).Organizational Structure (Centralized vs Decentralization, Group vs Individual Decision). Purchase Criteria (Quality, Price, Durability, Time)
Buying Situation 1. New buy- 1st time buying 2. Modified rebuy – modified from old3. Straight rebuy - 2nd or 3rd time buyingUsage Rate Non users, Light users, heavy usersPurchase procedures Bidding, lease.Order size Small, medium, large.Service requirements Large, Moderate, Heavy
Buying Situation 1. New buy- 1st time buying 2. Modified rebuy – modified from old3. Straight rebuy - 2nd or 3rd time buyingUsage Rate Non users, Light users, heavy usersPurchase procedures Bidding, lease.Order size Small, medium, large.Service requirements Large, Moderate, Heavy
Segmentation BasisSegmentation Basis DESCRIPTIONDESCRIPTION
Geographic
Customer Type
Customer Size
Product Use
Segmenting Business Markets
BusinesstoBusiness
BusinesstoBusiness
Purchasing Criteria
Purchasing Strategy
Importance
Personal Characteristics
Micro- segmentation
Macro- segmentation
Strategies for Selecting Target Markets
ConcentratedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
Segmentation strategies
• Undifferentiated: Ignore segments
• Concentrated or focused: Concentrate on a single segment (Small firms)
• Differentiated: Different marketing mix for each segment (Large firms)
Segmentation strategies
MarketFirm
Segment A
Segment B
Segment C
Segment D
Segment A
Segment B
Segment C
Segment D
Firm
Firm
Undifferentiated
Marketing
Differentiated
Marketing
Concentrated/Focused
Marketing
Undifferentiated Strategy
• Also known as market aggregation• Targets entire market with the same
marketing mix – segments ignored• Used when segments cannot be identified or
where aggregation proves more profitable than segmentation
• Ford’s Model T car were sold as the universal car – “any car as long as it is black”
Concentrated strategy
• Marketing effort directed at a single highly defined segment
• Niche marketing – Rolex watches• Used when one group is especially attractive
for the organization to target• A useful strategy for smaller firms – avoids a
head on collision with major players• Provides scope for competitive advantage in a
small niche in the market
Differentiation Strategy
• Multi segment approach• Separate mix for each segment• Expensive In terms of product & marketing
cost• Only possible for large firms
Levels of Market Segmentation
Mass MarketingMass Marketing One product for all buyers. Economies of Scale possible.One product for all buyers. Economies of Scale possible.
Segment MarketingSegment Marketing
Niche MarketingNiche Marketing
Local MarketingLocal Marketing
Individual MarketingIndividual Marketing
Mid point between Mass MKTG & Individual MKTG. Better satisfaction of wants. Market segment consist of large identifiable group within a market.
Mid point between Mass MKTG & Individual MKTG. Better satisfaction of wants. Market segment consist of large identifiable group within a market.
Loyal buyers. A Niche is narrowly defined group, a small market whose needs are not being well served.Loyal buyers. A Niche is narrowly defined group, a small market whose needs are not being well served.
Banks, Restaurants localize their operations to cater the needs of locals.Banks, Restaurants localize their operations to cater the needs of locals.
Last stage in Market Segmentation: “Segments of one” or “Customized marketing”). New technologies (email, internet, fax are allowing organizations to deal individually.
Last stage in Market Segmentation: “Segments of one” or “Customized marketing”). New technologies (email, internet, fax are allowing organizations to deal individually.
LEVELSLEVELS DESCRIPTIONDESCRIPTION
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
ActionableActionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to
different marketing mix elements & actions.
• Must be able to attract and serve
the segments.
Effective Segmentation
Conditions For Effective Segmentation
SubstantialityPlus Actionable for MKTG Program.
SubstantialityPlus Actionable for MKTG Program.
MeasurabilityDimensions of Segmentation.
MeasurabilityDimensions of Segmentation.
DifferentiableHomogeneous Within, & Heterogeneous Between the segments.
DifferentiableHomogeneous Within, & Heterogeneous Between the segments.
AccessibilityThrough MKTG Institutions.
AccessibilityThrough MKTG Institutions.
Criteria for Successful Segmentation
Criteria for Successful Segmentation
Firms engage in segmentation to…
• Develop different strategies for different parts of the market
• Increase sales & profit from each segment• Identify marketing opportunities• Dominate certain niche segments• Reflect differences in customer tastes• Prioritize on those segments most likely to
provide a higher return
Market Segmentation
• Cost/unit is high• Carry large assortment• Maintain big Inventory• Greater Inventory cost• Higher Administrative cost• Extra cost of multi-Advs.
• Cost/unit is high• Carry large assortment• Maintain big Inventory• Greater Inventory cost• Higher Administrative cost• Extra cost of multi-Advs.
• Customer oriented approach• Effective resources utilization• Easy to handle competition• Effective promotion• Rapid growth for small firms• Less resources required
• Customer oriented approach• Effective resources utilization• Easy to handle competition• Effective promotion• Rapid growth for small firms• Less resources required
LimitationLimitation
BenefitsBenefits
Effective Segmentation & Conditions. (Next)
3 Steps of Target Marketing
3. Market Positioning
Select one or moreMarket Segments
2. Market Targeting
Identify & profile distinct groups of buyers who require separateproducts &/or Marketing Mix
1. Market Segmentation
TargetMarketingTargetMarketing
Establish & communicate theproduct’s key distinct benefitsin the market
Steps in target marketing
1. Define the relevant market2. Analyze characteristics and wants of potential
customers• (geographic location, demographics, psychographics and
product related variables)3. Identify bases for segmenting the market4. Define and describe market segments5. Analyse competitor’s positions6. Evaluate market segments7. Select the market segments8. Finalize the marketing mix
Target Market Strategies
MULTIPLE / COMBINED SEGMENT STRATEGY
SINGLE SEGMENT
STRATEGY
MARKET AGGREGATION FULL MARKET COVERAGE
TargetMarketStrategies
TargetMarketStrategies
Strategic approaches to segmentation – Target Marketing
Single-segmentSingle-segmentConcentration (niching)Concentration (niching)
ProductProductspecializationspecialization
M1 M2 M3 P1
P2
P3
SelectiveSelectivespecializationspecializationM1 M2 M3
P1
P2
P3
M1 M2 M3
Full marketFull marketcoveragecoverage
P1
P2
P3
MarketMarketspecializationspecializationM1 M2 M3
P1
P2
P3
P1
P2
P3
M1 M2 M3
P = ProductP = ProductM = MarketM = Market
Continuum of targeting strategies
Undifferentiated Single marketing mix for all customers
Differentiated Different mix for each segment
Concentrated Targets single large segment
Niche Targets a single small segment
Customized Different mix for each customer
Additional Criteria• Ethical Choice of Market Targets• Segment Interrelationships & Supersegments• Segment-by-Segment Invasion Plans• Intersegment Cooperation
Positioning and Differentiation
The BCG CompetitiveAdvantage Matrix
Volume
FragmentedStalemated
Specialized
Siz
e o
f th
eS
ize
of
the
Ad
van
tag
eA
dva
nta
ge
SmallSmall
LargeLarge
Number of ApproachesNumber of Approachesto Achieve Advantageto Achieve Advantage
FewFew ManyMany
Product Differentiation
FormFea-
turesPerfor-mance
QualityConform-
anceQuality
Dura-bility
Relia-bility
Repair-ability
Style Design
DeliveryDelivery
Services Differentiation
OrderingEase
OrderingEase
Maintenance& Repair
Maintenance& Repair
CustomerTraining
CustomerTraining
InstallationInstallation CustomerConsulting
CustomerConsulting M
iscellaneo
us
Services
Differentiation
• Personnel• Channel
Media Atmosphere
Symbols
Events
Image Differentiation
Differences WorthDifferences WorthEstablishingEstablishing
AffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
PositioningPositioning is the act of is the act of designing the company’s designing the company’s
offering and image to offering and image to occupy a distinctive occupy a distinctive
place in the the target place in the the target market’s mind. market’s mind. P 298 P 298
Bases for positioning• Product attributes• Product benefits• Company image• Product class• User category• Positioning against competition• Usage occasion• Cultural symbol• Price-quality association• Positioning by packaging• Positioning by endorsement
Perceptual Map
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 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 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2
1.01.0
0.80.8
0.60.6
0.40.4
0.20.2
-0.2-0.2
-0.4-0.4
-0.6-0.6
-0.8-0.8
MagicMagicMountainMountain
JapaneseDeer Park
BuschBuschGardensGardens
Knott’sKnott’sBerryBerryFarmFarm
LionLionCountryCountrySafariSafari
MarinelandMarinelandof theof thePacificPacific
DisneylandDisneyland
EconomicalEconomical
Fun ridesFun ridesExerciseExercise
FantasyFantasyGood foodGood food
Easy to reachEasy to reach
Educational,Educational,animalsanimals
Little waitingLittle waitingLive showsLive shows
Sales & Profit Life Cycles
IIntroductionntroduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTimeSal
esS
ales
&
& p
rofi
tsp
rofi
ts (
$)($)
Four IntroductoryMarketing Strategies
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
PricePrice
LowLow
HighHigh
PromotionPromotionHighHigh LowLow
Maturity Stage
• Market Modification• Product Modification• Marketing-Mix Modification
Decline Stage
• Increase investment• Resolve uncertainties - stable investment• Selective niches• Harvesting• Divesting
Market Evolution
• Emergence• Growth• Maturity• Decline
Market-Fragmentation andMarket-Consolidation Strategies
(a) Market-fragmentation(a) Market-fragmentation stagestage
M
C
J XYZ
K FGL
DE
AB
H
(b) Market-consolidation(b) Market-consolidation stagestage
X
M
C
ABDE
FG
JK
L
YZ
H