Chapter-5 Identifying Market Segments, Targeting & Positioning Chapter – 5. IDENTIFYING MARKET SEGMENTS, TARGETING & POSITIONING: Organizations operating in broad market cannot serve all customers in that market since customers are numerous/ diverse. - Instead of competing everywhere, organizations need to identify market segments that it can serve most effectively. - For this, they need to choose/select its markets & serve them well, i.e., instead of scattering the marketing effort (Shot Gun Approach), they can focus on buyers whom they have greatest chance of satisfying (Rifle Approach). This is called target marketing. - Target marketing consists of: Market Segmentation: • Identify/Profile distinct buyer group who may require separate products/marketing mix. Market Targeting: • Select one/more segments to enter. Market Positioning: • Establishing/Communicating product’s key distinctive benefits to markets Steps in STP (Segmentation, Targeting, Positioning): -
* Identify Segmentation variables & Segment the Market * Develop Profiles of Resulting Segments
* Evaluate Attractiveness of each Segment * Select the Target Segment
* Identify possible positioning concept For each Target Segment * Select / Develop/ Communicate Chosen Positioning Concept
Levels of Market Segmentation: - Segment o Effort to increase company’s targeting precision. - Levels of segmentation could be Mass Marketing. Segment Marketing. Niche Marketing Local/ Local area Marketing. Individual Marketing.
Chapter-5 Identifying Market Segments, Targeting & Positioning Mass Marketing: - Seller engages in Mass production. Mass distribution. Mass promotion. Of one product for all buyers. - Benefits could be Creates largest potential market. Leads to lowest cost of production. May lead to • Low price, or • High margin. - Mass market gets broken up due to Increased number of players in the market. Increased distribution. Increased advertising/promotion. - Hence, segments or micro-markets emerges. Segment Marketing: - Market segment consists of a large identifiable group within a market. - Arises due to company’s recognition of Buyer’s having different wants. Varying purchasing power. Different geographical locations. Different buying attitudes & habits. - At the same time, company is not willing to customize its product to each individual customer. - Hence, company tries to isolate some broad segments that make up a market. - Example: Two Wheeler (Hero Honda) (CD-Dawn). • Price conscious buyer • Fuel economy buyer (Splendor). • Power buyer (CBZ). • Style/Luxury (Karizma) - Segmentation is between mass marketing and individual marketing. Hence, not as precise as individual marketing but mush more precise than mass marketing. - Marketing mix elements better tuned to market as compared to mass marketing. - Competition limited to market segment. Niche Marketing: - Segment is a large identifiable group within a market. - Niche is a more narrowly defined group. Typically niche is a small market whose needs are not served well enough. - Niche identified by dividing a segment into sub segments or by dividing a group within a distinctive set of traits who seek special combo of benefits. - Attractive niche identified by Customers in niche have distinct and complete set of needs. Customers willing to pay premium to firm that best satisfies their needs. Nicher has required skills to serve niche in a superior manner. -2-
Chapter-5 Identifying Market Segments, Targeting & Positioning Nicher gains certain economics through specialization. Niche not likely to attract too much competition. Niche has adequate size/profit/growth potential. Small niches may become attractive as marketing efficiency increases. Examples: Mercedes, Lifebuoy multani mitti, Colgate herbal.
Local Marketing: - Localizing company’s marketing mix to cater to clear, regional differences in...
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