MODULE 3

MARKET SEGMENTATION
ARGETING AND POSITIONIN
 What is Market Segmentation

Market segmentation is the technique used to

enable a business to better target it products
at the right customers. It is about identifying
the specific needs and wants of customer
groups and then using those insights into
providing products and services which meet
customer needs.
 The process of defining and subdividing a large
homogenous market into clearly identifiable
segments having similar needs, wants, or demand
characteristics. Its objective is to design a marketing
mix that precisely matches the expectations of
customers in the targeted segment.
 Few companies are big enough to supply the needs
of an entire market; most must breakdown the total
demand into segments and choose those that the
company is best equipped to handle.
BASES FOR SEGMENTATING CONSUMER
MARKETS
 WHY SEGMENTATION
Because Customers differ in the:

Benefits they want.

Amount they are able to or willing to pay.
Media they see.
Quantities they buy.
Time and place that they buy.
FACTORS AFFECT SEGMENTATION

Clear identification of the segment.

Measurability of its effective size.
Its accessibility through promotional efforts,
and
Its appropriateness to the policies and
resources of the company.
Benefits of Segmentation:

Focus of the Company.

Increase in Competitiveness.
Market Expansion.
Customer Retention.
Have Better Communication.
Increase Profitability.
Focus of the Company: Segmentation is an effective
method to increase the focus of a firm on market
segments, if you have better focus, obviously you will
have better returns.
 Numerous automobile companies have started focusing
on small car segments.
 This is nothing else but a company changing its focus
for better returns.
 Thus companies base their strategy completely on a
new segment which increases its focus and profitability.
Increase in Competitiveness:

 If you are focusing on youngsters, your brand

recall and equity with youngsters will be very high.
 Market share might increase and the chances of a
new competitor entering might be low.
 The brand loyalty will definitely increase.
 Thus market segmentation also increases
competitiveness of a firm from a holistic view.
Market Expansion: Geographic segmentation is
one type of segmentation where expansion is
immediately possible.
 If you have your market strategy on the basis of
geography, then once you are catering to a
particular territory, you can immediately expand to
a nearby territory.
 In the same way, if you are targeting customers
based on their demography than you can expand in
similar products.
 Customer Retention: By using segmentation, customer retention
can be encouraged through the life cycle of a customer.

 The best example of this is the Automobile and the Airlines segment.
 You will find major example of customer life cycle segmentation in the
hospitality segment whether they be hotels, airlines or hospitals.
 In India, Titan is an example of products which are planned through the
life cycle of a customer, from fast track to Sonata and the high range
watches, Titan has them by price segment as well as life cycle segment.
 Thus a watch is available for any customer who enters a Titan
showroom, whatever be his age.
Have Better Communication: The
communication of a company needs to be spot
on for its target markets.
Communication cannot be possible without
knowing your target market.
If you don’t know your market segment, what
is their demography, what is their psychology,
where they are from, then how can you form a
communication process.
 Increase Profitability: Segmentation increases
competitiveness, brand recall, brand equity, customer
retention, communications.
 Thus its is affecting so many factors of your business then
definitely it affects the profitability of the firm.
 Do you ever see people negotiating in a Nike or BMW
showroom you wont.
 One of the USP’s of these brand is their segmentation.
 They are in fact targeting segments which have no need of
bargaining or negotiation.
 Thus their profitability is high.
REQUISITES OF EFFECTIVE SEGMENTATION

Measurable

Differentiable Substantial

Accessible

4-17
 Measurable: The size, needs, purchasing power
and characteristics of the customers in the
segment be measurable. Quantification should be
possible.
 Differentiation: There must be clear cut basis for
dividing customers into meaningful homogeneous
groups. They should respond differently to different
marketing mixes. There should be differences in
buyer’s needs, characteristics and behavior for
dividing in groups.
 Accessible: The segment should be reachable and
serviceable. It should be accessible through
existing marketing institutions, such as
distribution channels, advertising media and sales
force. There should be middlemen to distribute the
process.
 Substantial: The segment should be substantial. It
should be large enough in terms of customers and
profit potential. It should justify the costs
developing a separate marketing mix.
TARGET MARKETING
 A set of buyers sharing
common needs or
characteristics that the
company decides to serve.
 Such segmentation helps
marketers to design specific
strategies and techniques
to promote a product
amongst its target market.
A target market refers to a
group of individuals who are
inclined towards similar
products and respond to
similar marketing techniques
and promotional schemes.
 Kellogg’s K special mainly targets individuals who
want to cut down their calorie intake. The target
market in such a case would be individuals who are
obese. The strategies designed to promote K
special would not be the same in case of any other
brand say Complan and Boost which majorly cater
to teenagers and kids to help them in their overall
development. The target market for Kellogg’s K
special would be absolutely be different from Boost
and Complan.
 TARGET MARKETING - NEED
Organization can use similar kind of strategies
to promote their products within a target
market.
They can adopt a more focused approach in
case of target marketing. They know their
customers well and thus can reach out to their
target audience in the most effective way.
 TARGET MARKETING - BASIS

Age.
Gender.
Interests.
Geographic Location.
Need.
Occupation.
TARGET MARKETING STRATEGIES
Undifferentiated:
Occasionally, a market analysis will show no
differences in customer characteristics that
have implications for marketing.
Alternatively, the cost of developing a
separate marketing mix for separate segments
may outweigh the potential gains of meeting
customers needs more exactly.
The business may decide to operate with a
single mix and is thus undifferentiated.
Differentiated:
In comparison when a business has identifies a
range of customer or B2B segments they
might use a differentiated marketing mix
strategy.
For example, BMW promote their cars to
range of identified segments moving from the
I series as an entry level model to the X6.
Focused:

The identification of several segments in a

market does not imply that a company should
serve them all. Some may be unattractive or
out of line with business strengths.
Perhaps the most sensible route would be to
serve just one of the market segments.
Customized:

In some market the requirements of

individual customers are unique and their
purchasing power sufficient to make
designing a separate marketing mix for each
of the customer needs.

Customer 1

Company Customer 2

Customer 3
 POSITIONING
 It is the act of designing the company’s offering and image to
occupy a distinctive place in the mind of the target market.
 The goal is to locate the brand in the minds of consumer to
maximize the potential benefit to the firm.
Examples:
 BMW - Luxury
 Maruti - Family
 TATA Nano - Cheap
 Suguna Chicken - Fresh/Quality
 VOLVO Cars – Safety
 Domino’s - Convenience
 PRODUCT DIFFERENTITATION
 Is a marketing strategy
businesses use to gain an
edge over their
competitors.
 In industries where
multiple competitors
produce similar products,
managers will try to make
their product unique in
some way so that it stands
out from the pack.
Product differentiation means that some
feature, physical attribute, or substantive
difference exists between a product and all
other possible alternatives.
BRANDING
 Name, term, sign,
symbol or design, or a
combination of them
intended to identify the
goods and services of
one seller or group of
sellers and to
differentiate them
from those of other
sellers.
The process involved in
creating a unique name
and image for a product in
the consumers mind,
mainly through advertising
campaigns with a
consistent theme.
Branding aims to establish
a significant and
differentiated presence in
the market that attracts
and retains loyal
customers.
Types of Branding:

Product
Personal
Corporate
Geographic
Cultural
Product:

 Walking through supermarket or retail store aisles is

an easy way to understand product branding.
 Certain labels will jump off the shelves because that
have achieved their marketing goals.
 Successful product branding is what nudges a
consumer to choose one brand over another.
 The brand has established a reputation as the best or
most popular in its class.
 Think of soft drinks, athletic shoes, computers or jeans
and see what brand names pop into your head first.
Personal:

 Personal branding is a popular marketing tool among

athletes, musicians, politicians and other celebrities.
 A politician will attempt to brand himself into the
type of person the voters want to put in office.
 A celebrity often becomes self-branded based on his
own personality, while others are made by public
relations firms and agents.
 In addition to a personal brand, a celebrity might
become associated with products bearing his name.
Corporate:

 Corporate branding is essential for any business that

wants to develop a reputation in the marketplace.
 Everything the company does has an effect on its image.
 A corporation markets its product or service, its corporate
culture, its employees and its contributions to the
community.
 A corporation’s branding can become tarnished overnight
because of an industrial disaster or a poor decision by
management.
 If the damage is severe, a corporation might start over
with an entirely new strategy for branding a completely
new image.
Geographic:

 Geographic or regional branding conjures images of

certain products or services when the name is
mentioned.
 Kerala might be known for spicy foods, Andhra known
for Biriyani.
 The tourism industry uses branding to lure travelers to
the area.
 Southern states boast their sunshine and beaches,
 While northern mountains areas become known for
winter sports such as mountain climbing.
 Cultural:
 Cultural branding develops a reputation about the
environment and people of a particular location or
nationality.
 Japanese are thought to be hard-working, and perhaps too
serious,
 While Indians are viewed as people always on the go and
moving at a rapid-fire pace and experts in doing things
reversely.
 Cultural branding is another tool in tourism such as inviting
travelers to experience the Amish country.
 BRAND EQUITY
Brand equity is a phrase used in the marketing
industry which describes the value of having a
well known brand name, based on the idea that
the owner of a well known brand name can
generate more money from products with that
brand name than from products with a less well
known name, as consumers believe that a
product with a well known name is better than
products with less well known names.
Companies can create brand equity for their
products by making them memorable, easily
recognizable and superior in quality and
reliability.
Mass marketing campaigns can also help to
create brand equity
The value premium that a company realizes
from a product with a recognizable name as
compared to its generic equivalent.
If consumers are willing to pay more for a
generic product than for a branded one,
however, the brand is said to have negative
brand equity.
This might happen if a company has a major
product recall or caused a widely publicized
environmental disaster.
Manufacturers Branding:
Multiproduct Branding Strategy:
Products of Samsung
Manufacturers Branding:
Multi Branding Strategy
Products under p&g(procter and gamble)
Private Branding:
Mixed Branding:
Generic Branding:

A no-brand product that competes on price.

Low cost.
Popular in late 1970.
30%-40% cheaper than national brands.
Good market share in some categories.