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Segmenting, Targeting and Positioning (main parts are red color 1 to 8)

1. Defining the Market to be segmented:

Define How to Segment the market


Estimate the Variation in Buyers’ Needs at the Different Product-Market Levels
Identify the Types of Buyers Included in the market

Companies are recognizing that they cannot serve all buyers in the marketplace.
There are various types of customers with different needs and buying behavior.
Rather than competing in the entire market (mass marketing) companies identify
parts of the market that they can serve well and profitably (market segmentation
and targeting).

Let’s Define the Terms

Market Segmentation – dividing a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate products or marketing
mixes

Target Marketing – the process of evaluating each market segment’s


attractiveness and selecting one or more segments to enter

Market Positioning – arranging for a product to occupy a clear, distinctive, and


desirable place relative to competing products in the minds of target consumers.

Market Target Marketing Market


Segmentation Positioning
3. Develop
1. Identify bases for measure of 5. Develop
segmenting the segment positioning for
market attractiveness target segments

2. Develop 4. Select target 6. Develop a


Levels of Market Segmentation
2. 3 types of level of market segmentation. Strategy these are:

1. Strategic Segmentation:
2. Managerial Segmentation:
3. Operational Segmentation:

1. Strategic Segmentation:
It refers the Tactic Links Product Benefits with the Mgmt Vision & Strategic
Tactics
Strategic segmentation depends on the maturity of the market, competitive
structure and organization experiences and capabilities. Deploying 100%
available knowledge in important finding from existing customer base. In order to
determine segmentation, 5 criteria are suggested in strategic market
segmentation –
a) Response differences
b) Identifiable segments
c) Actionable segments
d) Cost/benefit of segmentation
e) Stability over time.

a) Response differences: Response differences are indicated by the level


of income and it was separated in 4 groups - Income =
Low>>Medium>>high>>Affluent. If these 4 groups response in a same
manner, then they are considered as a same segment. Cocacola
separated these 4 groups and segment their market. Such as within the
same product / brand cocacola launched product based on different level
of income.
b) Identifiable segments: sometime finding a correct response group for a
particular product is difficult.
c) Actionable segments: Sometimes it is difficult to reach to a particular
segment. Cocacola creates database and internet that can reach this kind
of difficult segments. In order to achieve this segments, Cocacola uses
mass media in their marketing approach.
d) Cost/benefit of segmentation: Segments must be grow over time and
financially attractive. To reduce high reaching cost, Cocacola generates
more sales and higher margin.
e) Stability over time: if buyers needs change too fast then product needs,
segmentation strategy and position strategies must be updated and
change quickly, that’s why Cocacola changes and updates it’s strategy
over time to meet buyers needs.
2. Managerial Segmentation:
• The tactic Includes the target (s) in the marketing plan

• It Allocates Resources around the Targeted Segments

• It Aligns Organizational Process around the Target

3. Operational Segmentation:
• The tactic Concentrates on delivering revenant messages to Targets

• IT ENSURES That the segmentation strategies are being supported at the


store level / final contact

3.Bases for Segmenting Consumer Markets

1. Geographic – dividing a market into different geographical units such as


nations, states, regions, countries, cities, or neighborhoods.
2. Demographic – dividing the market into groups based on demographic
variables such as age, gender, family size, family size, family life cycle,
income, occupation, education, religion, race, generation, and nationality.
3. Psychographic – dividing a market into different groups based on social
class, lifestyle, or personality characteristics.

4. Behavioral – dividing a market into groups based on consumer


knowledge, attitude, use, or response to a product.
a. Occasion – dividing the market into groups according to occasions
when buyers get the idea to buy, actually make their purchase, or
use the purchased item.
b. Benefit – dividing the market into groups according to the different
benefits that consumers seek from the product.

Requirements for Effective Segmentation

1. Measurable – the size, purchasing power, and profiles of segments can be


measured
2. Accessible – can be effectively reached and served
3. Substantial – large or profitable enough to serve
4. Differentiable – conceptually distinguishable and respond differently to
different marketing mix elements and programs
5. Actionable – effective programs can be designed to attract and serve the
segments

Evaluating Market Segments

There are three factors that a firm can use in evaluating different market
segments. These are size and growth of the segment, segment structural
attractiveness, and company objectives and resources. Segments that should be
chosen are those with the right size and growth characteristics. However, the
largest and fastest growing segments are not always the most attractive. The
structural factors that affect attractiveness of a potential segment must also be
examined. For example if there are already many companies serving the same
segment then it becomes less attractive.

4. Targeting strategies:

• 1st Strategic issue is Deciding which Segments to Serve

• Targeting May Be Altered based on Priorities among Market Targets

• Targets that are Retained in the Portfolio can Guide……………………….


- New Product Planning
- Pricing Strategy
- Promotion Strategy
- Value Chain Strategy
- Expenditures

• Pursuing Extensive Targeting may Decide to Exit from Certain Segments

Target market - a set of buyers sharing common needs or characteristics that


the company decides to serve. Target strategy basically when segments are
clearly defined and base on product differentiation.
The following are different levels of target marketing:

1. Undifferentiated Marketing or Mass Marketing – ignore different market


segments and target the whole market with one offer
2. Differentiated Marketing or Segmented Marketing – a firm decides to enter
different market segments and designs separate offers for each.
3. Concentrated Marketing or Niche Marketing – smaller than segments and
may attract only one or few competitors
4. Micromarketing – tailoring products and marketing programs to suit the
tastes of specific individuals and locations.

5. Targeting in different marketing environment

PLC illustrates that the range of product market structure are denoted as :

- Emerging Market

- Growth Market

- Mature Market

- Declining Market
Emerging market: Targeting strategy depends on whether a totally new product
market and new technology is involved.

Growth market: there are three possible targeting strategies are –

- Extensive Market Coverage by Firms With Establish Businesses in Related


Markets

- Selective Targeting By Firms with Diversified Product Portfolios

- Very Focused Targeting Strategies by small organizations serving one or few


market segments

Mature market:

6. Positioning Strategy

After deciding which segment/s to serve, the company must decide what
positions it wants to occupy in the minds of those segments. Positioning involves
implanting the brand’s unique benefits and differentiation in consumers’ minds.

Positioning concept:
Functional: Applies to Solve External Generated Consumption-Related Needs.
e.g. Cleaner

Symbolic: Applies to Solve Internally Generated Needs for Self-Enhancement.


e.g. Rolex

Experimental: Applied to Solve the needs of Sensory Pleasure. e.g. BMW


driving experiment

Positioning Decision:

Marketing Research is Necessary in Identifying Positioning Strategies

Then Choose Positioning that Matches Firm’s Distinctive Capabilities

According to Al Ries and Jack Trout, positioning starts with a product. It is a


piece of merchandise, a service, a company, an institution, or even a person.
Positioning is not what you do to a product. It is what you do to the mind of the
prospect. It is how you want your prospect to perceive your brand.

According to Philip Kotler there are seven positioning strategies which are
as follows:

1. On the specific product attributes. For example Toyota Corolla’s


positioning strategy is “superior performance”, while Mitsubishi Lancer is
“advance engineering”, and Nissan Sentra has “all power options
2. On the benefits offered. For example Colgate has “germ-killing action that
fights gingivitis, Crest “reduces cavity”
3. According to usage occasions. Example: Motolite battery “good for the
wet and dry season”, “tough and durable to long trips”, “pangmatagalan”
4. For certain classes. Example: J & J Baby shampoo “as one for adults
makes your hair soft and gentle like a baby”
5. Directly against a competitor. Example: AVIS to Hertz – We’re no. 2 but
we try harder
6. Directly away from competitors. Example: 7up the uncola
7. For different product class. Example: Margarine against butter and
cooking oil
Some cases of successful positioning strategies are Coca-Cola’s the Real Thing
and Marlboro’s masculine position.

Communicating the Positioning Strategy

After you have decided on the positioning strategy for your brand you should
communicate this to your target audiences: internal and external. The following
are the important elements of communication:

1. The Message – must be in touch with reality. Nowadays advertisers use


reality-based advertising. For instance never before were the words kili-
kili, mabaho were used in TV commercials. It must be appealing to your
target. If your target is teen don’t use kundiman jingles.
2. The Communicator – must be credible, must have a good reputation with
no involvement in any scandal. Must not necessarily be a celebrity
because oftentimes the focus is not centered on the product but on the
celebrity
3. The Media – traditional such as TV, print, radio, are no longer the only
options available. Non-traditional media such as billboards, transit,
internet, etc. which are less expensive can be alternatives.
4. The Budget – should be proportionate to your expected sales

7. Developing the Positioning Strategy

Developing the Positioning Strategy Includes determining the activities and


results of the 4Ps

Choosing the amount to spend on Program Component (4Ps)

Positioning Strategy May Be Guided by a Combination of ……

• Management Judgment &Experience


• Analysis of Prior Activities &Results
• Test Marketing
• Field Research
8. Positioning Effectiveness:

Customer & Competition Research:

- The Research Provides Info that Helps Designing Positioning Strategy &
Evaluating Results
- Multivariate Testing (MVT) may be Used to Find the Causal Factors Affecting
Market Response
- MVT Examines the Effects of Several Factors at the Same Time
- The Effect of each Factor Can Be Measured using Field Tests To Vary the
Level The Factor Exposed to Targeted Buyers

Test Marketing:

- Test Marketing Generate Info about the Commercial Feasibility of New


Products or Positioning

- Test Reduces the Risks, Forecast Demand & Fine-Tune the Marketing
Program

- Conventional Test Marketing is Conducted in Multiple Homogenous Cities


where data are collected to determine probable Price/Sales/Profitability. This
Test is Very Costly

- Other Types of Tests are Controlled, Electronics, Simulated, and Virtual

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