U III SEGMENTATION TARGETING AND OSITIONING Part 1: …

UNIT III SEGMENTATION,

TARGETING AND POSITIONING

Part 1: Market Segmentation

1

CASE STUDY: PORSCHE

Porsche is a German automobile

manufacturer specializing in high-

performance sports cars, SUVs and sedans.

Porsche is a global market leader in the premium

segment of the automotive industry currently

the most profitable automotive brand in the world.

2

PORSCHE’S BACKGROUND

The company was founded in 1931 by Professor

Ferdinand Porsche in Germany building motors,

designing vehicles, and consulting. Porsche designs,

manufactures, and markets sports cars, crossover

utility vehicles, and automobile parts worldwide.

Porsche also offers services through its operating

divisions and subsidiaries, including Porsche Design

Group, Porsche Engineering, and Porsche Consulting.

3

TARGET MARKETING

Identifying and profiling different consumer groups with

differing wants and needs -market segmentation.

Choosing one or multiple segments to target-targeting.

Communicate and establish the unique product/service

offerings of the organization in the mind of the

consumer- positioning.

4

CASE STUDY: PORSCHE

Porsche markets to an elite and upscale target

audience effectively using market segmentation,

market targeting, and positioning continuing to build

on its strong brand focused on products

exclusively in the premium (luxury) automotive

segment.

5

“If markets are to be segmented

and cultivated, they must meet

certain requirements. Segments

must be Measurable,

Substantial, Accessible,

Differentiable, and Actionable.”

– Philip Kotler

CASE STUDY: PORSCHE

Automotive Industry Segmentation

The automotive industry segments consumers based on

demographic data, geographic information, and a

psychographic profile of consumer behaviors with

marketing messages targeted to these groups.

6

CASE STUDY: PORSCHE

The product lineup for Porsche includes:

911 in the midsize premium sporty car segment.

718 Boxster in the compact premium sporty car segment.

7

CASE STUDY: PORSCHE

718 Cayman in the premium sport coupe segment.

Cayenne in the midsize crossover utility vehicle

(CUV) segment.

8

CASE STUDY: PORSCHE

Macan in the compact CUV segment.

918 Spyder in the open-top super sport car segment.

9

CASE STUDY: PORSCHE

The price of a Porsche ranges from approximately

$50,000 to $8,45,000 with segmented price points based

on the model selected.

The basis of market segmentation for Porsche involves

dividing a market according to defined smaller easily

defined group of consumers with the same wants and

needs.

Porsche identifies segments to target using two

variables including, descriptive elements and behavioral

elements.

✓ Descriptive elements include demographic,

psychographic, and geographic.

✓ Behavioral elements include individual responses to

brands, usage, and benefits. 10

CASE STUDY: PORSCHE

Demographic Segmentation

❖ Demographic segmentation is based primarily on

income, age, gender, education, occupation, and social

class.

❖ The demographics of the Porsche owner, includes a

college graduate, household income over $100,000,

85% male, and 15% female.

❖ The typical Porsche owner is 40 years old and up with

Porsche targeting the 25-54 age demographic seeking

a slightly younger audience with the “Engineered for

magic, every day” campaign.

11

CASE STUDY: PORSCHE

The age demographic rose from an average age of 48

in 2007 to an average age of 51 in 2012. Porsche’s

targeted marketing efforts focus on reducing the

average age of the Porsche owner and increasing the

number of female owners.

Porsche provides an example of an automotive icon

focusing on demographics using age and gender. The

“Engineered for magic, every day” campaign, in part,

targets women with an image of a mother in a

Porsche 911 in front of a school with the text reading

school bus.

12

CASE STUDY: PORSCHE

Psychographic Segmentation

❖ Psychographic segmentation uses psychology to

increase understanding of consumers’ wants and

needs.

❖ Porsche uses a psychographic segmentation

approach dividing the segment based on behavioral

elements, such as psychology, lifestyle, personality

traits, and values to gain deeper insight of the

consumer.

❖ The same demographic can possess different

behavioral elements.

13

CASE STUDY: PORSCHE

Psychographic profiling provides Porsche with the ability

to customize the messaging to target the specific

psychographic profiles developed by Porsche.

❖ The top gun profile consists of an ambitious and driven

individual who cares about power and control expecting

to be noticed.

❖ The elitist profile, includes an individual from old

money (blue blood), has the attitude a car is just a

vehicle and not an expression of a person’s personality.

❖ The proud patrons owner profile sees a Porsche as a

trophy considering it a reward for hard work with

ownership as the main goal not being noticed.14

CASE STUDY: PORSCHE

❖ The bon vivants profile consists of thrill seekers and

jet setters with the Porsche as a means of excitement.

❖ The fantasist profile sees the Porsche as a form of

escape and does not care about impressing others.

❖ Porsche has added another profile consisting of

individuals enjoying a sporty vehicle for daily use by

women and younger drivers with the latest marketing

campaign, “Engineered for magic, every day”.

15

CASE STUDY: PORSCHE

Geographic Segmentation

❖ Porsche uses a traditional geographic segmentation approach grouping markets based on countries, continents, regions, states similar to other worldwide automotive brands. Porsche is a global brand with dealerships located on every continent in major cities.

❖ In the United States, dealerships are located in major cities with the manufacturer dividing the market into four regions (north, south, southwest, northwest).

❖ Porsche varies the product mix offered by dealerships within each region. As an example, the dealers in the warmer south and southwest regions offer a higher percentage of convertibles in the product mix versus the north and northwest regions in the United States with marketing following suit. 16

CASE STUDY: PORSCHE

Creating new Segments

❖ In 2003, Porsche launched the Cayenne creating the first

sports utility vehicle with luxury and high performance.

❖ Porsche’s introduction of the Cayenne created a new

market segment in an attempt to expand the brand. The

introduction of the Cayenne has resulted in a vehicle that

accounts for half of Porsche’s profits.

In 2009, Porsche launched the 2010 Panamera a four-

door sports coupe based on the market research

department identifying a need for a sporty four-door that

drives like a sports car. The Panamera is the first of its

kind creating a new segment of the four-door luxury

sports car.17

CASE STUDY: PORSCHE

Market Targeting

❖ It involves Porsche evaluating the viability of each market

segment and deciding which segment or segments to pursue

(target).

❖ Porsche uses a hybrid market targeting strategy focused on a

large share of the premium sport car and sport CUV segment

using a finely tuned marketing mix based on marketing

messages tailored to Porsche’s psychographic segmentation.

❖ The “Engineered for magic, every day” campaign uses a

niche concentrated marketing approach tailored to change

position slightly. Porsche is trying to change the perception

that a Porsche is an everyday vehicle appealing to a larger

audience to increase sales. Porsche targets consumers at

differing performance and price levels in the premium sport

car and CUV market segment. 18

CASE STUDY: PORSCHE

Positioning

❖ Porsche offers high-quality products for a premium

price with various price points for the products in their

lineup.

❖ The Porsche brand is a lifestyle brand because of its

legendary status and attributes associated with

their products.

Porsche achieves the ultimate goal of locating a brand in

the consumers’ mind differentiating it in terms of

attributes or benefits, quality, price, and use or user to

maximize the brand.

Porsche positions itself as a high priced, high quality,

exclusive sports car.19

CASE STUDY: PORSCHE

Attributes and Benefits

❖ Attributes The Porsche brand evokes primarily consists of exciting, sporty, beautifully designed, performance, and German engineering. Other attributes include quality, powerful, highly sophisticated, style, purity, very exclusive, exotic, racing heritage, and elegant.

The benefits associated with Porsche, include excitement, performance, achievement, success, status, and high income.

The Porsche product lineup offers products that are more fun to drive and faster than any competitor in the segment providing the latest technology with a historic culture making the brand impossible to imitate.

20

CASE STUDY: PORSCHE

Repositioning the Brand

❖ In an effort to reposition the Porsche brand to expand

into different, but similar markets the company has

introduced the “Engineered for magic, every day”

campaign. The campaign primarily uses the 911 to

reposition the brand for everyday use.

❖ The essence of peak performance designed to excite

your everyday driving and lifestyle provides an

appropriate positioning statement considering the

repositioning of the brand.

❖ The slogan captures the essence of the Porsche brand

remaining consistent with its heritage and conveys the

revised position of the company.21

CASE STUDY: PORSCHE

The target market segment strategy of Porsche provides

an example of an iconic brand and its ability to reinvent

itself creating new markets extending the Porsche brand

in a meaningful manner while remaining true to its

heritage.

The Porsche strategy of targeting female consumers

to optimize the demographic profile by expanding

the product lineup and repositioning the brand as an

everyday vehicle has resulted in great success.

The repositioning of the brand has started to change

perceptions of Porsche as a weekend vehicle resulting in

additional sales. 22

SEGMENTATION

23

Market Segmentation is the process of dividing the

total market into distinct groups each having its

unique needs and characteristics and requires a

separate marketing mix.

SEGMENTATION

24

It is the technique of recognizing effectively the

differences among customers.

PROCESS OF SEGMENTATION

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1. Identify the total market (those who buy or are

induced to buy the product/service).

2. Divide the total market into major sub-market or

segments.

3. Estimate the sales potential and profit potential for

each sub-market.

4. Determine the unique characteristics &

requirements of each sub-market.

5. Select one or more segments on which the firm will

focus on serving.

IMPORTANCE OF SEGMENTATION

26

1. Marketer can spot & compare marketing opportunities.

2. Marketer can better allocate marketing budget.

3. Marketer can modify product/services and marketing appeals to suit target segment.

4. Marketer can set realistic selling targets & priorities.

5. Marketer can deal with the competition effectively by using resources efficiently.

6. Marketer can identify profitable segments which deserve special attention.

DISADVANTAGES OF SEGMENTATION

27

1. Segmentation increases the costs.

2. Promotion & distribution expenses when separate

programs for are used for different segments.

3. When characteristics of market segment change,

investments already made become useless.

4. Larger inventory has to be maintained by both

distributors & manufacturers.

LEVELS OF SEGMENTATION

Mass Marketing

Micro Marketing

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MASS-MARKETING

The seller engages in:

Mass production,

Mass distribution, and

Mass promotion

of one product, for all buyers.

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MASS-MARKETING BENEFITS

30

Largest potential market

Lowest costsLower

prices/Higher margins

MASS-MARKETING EXAMPLE

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Segments

Local areas Individuals

Niches

LEVELS OF MICRO-MARKETING

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1. SEGMENT MARKETING

A market segment consists of a group of customers

who share a similar set of needs and wants.

Does a marketer create these segments?

A marketer does not create segments.

The marketer’s task is to identify segments and decide

which ones to target.

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1. SEGMENT MARKETING (2)

Market Segmentation is a marketing strategy which

involves dividing a broad target market into subsets

of consumers, businesses, or countries who have, or are

perceived to have, common needs, interests, and

priorities, and then designing and implementing

strategies to target them.

34

2. NICHE MARKETING

A niche is narrowly defined group seeking a

distinctive set of benefits.

For example: the segment of heavy smokers has

two niches:

Those who are trying to quit smoking.

Those who do not care to.

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CHARACTERISTICS OF AN ATTRACTIVE

NICHE

Customers have a distinct set of needs.

Willing to pay premium to the firm that best satisfies

their needs.

The niche is not likely to attract other competitors.

The niche gains certain economies through

specialization.

The niche has size, profit and growth potentials.

Example:

PVR Gold Class

36

3. LOCAL MARKETING

Marketing programs tailored o the needs and

wants of local customer groups (ex: trading areas,

neighbourhoods).

Example: Citibank provides different mixes of

banking services in its branches, depending on

the neighbourhood.

Those favouring localization see national

advertising as wasteful, and vice-versa.

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4. INDIVIDUAL CUSTOMER MARKETING

Every individual has a unique set of wants and

preferences.

In the past centuries, producers customized

offerings to individual customers: tailors fitted a

suit and cobblers made shoes for individual

customers.

Then, we went from built-to-order to built-to-

stock.

38

4. INDIVIDUAL CUSTOMER MARKETING (2)

Today, the Information Revolution has enabled

companies to mass-customize their offerings.

Mass customization refers to a company's ability

to efficiently mass produce products that meet

individual consumer wants and needs.

Today, customers are taking more individual

initiative in determining what and how to buy.

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MARKETING SEGMENTATION

PROCEDURE

40

EFFECTIVE SEGMENTATION

Is all segmentation useful?

No.

For example: Salt buyers can be divided into tall

people and short people. But height isn’t relevant to

the purchase of salt.

42

TO BE EFFECTIVE, MARKET

SEGMENTATION MUST BE:

1. Measurable: Size, purchasing power can be

measured.

2. Substantial: Segments are large and

profitable to serve.

3. Accessible: Segments can be effectively

reached and served.

4. Differentiable: Segments are distinguishable

and respond differently.

5. Actionable: Effective programs can be made

for attracting and serving segments.

43

BASES FOR SEGMENTING CONSUMER

MARKETS

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavioural Segmentation

44

1. GEOGRAPHIC SEGMENTATION

Involves dividing the market into different

geographical units such as: neighbourhoods,

cities, states, countries.

A company can operate in:

one or few geographic regions, or

operate in all, but pay attention to local variations

Example: Hotel chains

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GEOGRAPHIC SEGMENTATION VARIABLES:

EXAMPLES

RegionNorth, South,

East, West

By continent, country,

state, city

Size of city Under 5,000 5,000-20,000 20,000-50,000

Population density

Urban Suburban Rural

Climate Hot Rainy Cold

46

2. DEMOGRAPHIC SEGMENTATION

Market is divided into groups on the basis of

variables such as:

Age, family size, gender, income, occupation,

education, religion, race, generation,

nationality, and social class.

Most popular basis for distinguishing customer

groups.

Demographic variables are easy to measure.

47

DEMOGRAPHIC SEGMENTATION

VARIABLES: EXAMPLES

1. Age

2. Family size

3. Family lifecycle

4. Gender

5. Income

6. Occupation

48

DEMOGRAPHIC SEGMENTATION

VARIABLES: EXAMPLES

7. Education

8. Religion

9. Race

10. Generation

11. Nationality

12. Social Class

49

3. PSYCHOGRAPHIC SEGMENTATION

This takes the psychological aspects of consumer

buying behaviour into account.

Here, the buyers are divided into different groups

on the basis of lifestyle, personalities or values.

It is based on the assumption that the types of

products and brands an individual purchases,

will reflect that person’s characteristics and

patterns of living.

People within the same demographic group can

exhibit very psychographic profiles.

50

PSYCHOGRAPHIC SEGMENTS

Lifestyle

Personality

Values

51

A. LIFESTYLE

Lifestyles are shaped by partly by whether

consumers are time-constrained or money-

constrained.

Companies making cosmetics and alcoholic

beverages seek opportunities for lifestyle

segmentation.

52

B. PERSONALITY

Marketers use personality variables to segment

markets.

They endow their product with a brand personality

that corresponds to a target consumer personality.

A brand may wish to appear:

Exciting: Nike

Competent: HP

Sophisticated: Lexus

Rugged: Woodland

A company uses product features, services, and image

making to transmit the product’s personality.53

C. VALUES

Some marketers segment by core values- the

belief systems that underlie consumer attitudes

and behaviours.

They go much deeper than behaviour or attitude.

At a basic level, they determine people’s choices

and desires over the long term.

54

VALUE SEGMENTS

•They place high emphasis on material and

professional goals.Strivers

• Tradition and duty are important to themDevouts

• Interested in social issues, welfare of society

• Median age is 44.Altruists

• Value close personal relationships with family over all else.Intimates

• Youngest group.Fun Seekers

• Strong interest in education, knowledge and technology.Creatives

55

4. BEHAVIOURAL SEGMENTATION

Buyers are divided into groups on the basis of

their knowledge of, attitude toward, use of, or

response to, a product.

Many marketers believe that behavioural

variables are the best starting points for

constructing market segments.

56

BEHAVIOURAL SEGMENTS

1. Occasions

2. Benefits

3. User Status

4. Usage Rate

5. Loyalty Status

6. Buyer Readiness

Stage

7. Attitude

57

I. OCCASIONS

Buyers can be distinguished according to the

occasions when they develop a need, purchase a

product, or use a product.

For example

Airline travel is triggered by occasions related to

business, vacation, or family.

Days like Mother’s Day, Father’s Day lead to

increased sales for greeting cards and flowers.

58

II. BENEFITS

Buyers can be classified to according to the

benefits they seek.

People vary considerably in the benefits they

seek from the same product

Examples:

Sensodyne targets people who have sensitive teeth.

Hair shampoos are targeted towards split ends, anti

dandruff or others.

59

III. USER STATUS

Markets can be segmented into non-users, ex-

users, first-time users, and regular users of

a product.

Examples: For baby care products, mothers-to-be

are potential users who will become heavy users.

Market-share leaders tend to focus on attracting

potential users.

Smaller firms focus on trying to attract current

users away from the market leader.

60

IV. USAGE RATE

Markets can be segmented light, medium and

heavy product users.

Heavy users are often a small percentage of the

market, but account for a high percentage of total

consumption.

For example

Heavy beer drinkers account for 87% of the total beer

consumed.

61

V. LOYALTY STATUS

Consumers have varying degree of loyalty to specific

brands, stores, and companies.

A company can learn a lot by analyzing degrees of

brand loyalty

Buyers can be divided into 4 groups according to brand

loyalty status:

62

• Who buy 1 brand all the timeHard-core loyals

• Who are loyal to 2-3 brandsSplit loyals

• Who shift from one brand to anotherShifting loyals

• Who show no loyalty to any brandSwitchers

VI. BUYER-READINESS STAGE

A market consists of people in different stages of

readiness to buy a product.

Some are unaware, some are aware, some are

informed, some are interested, some desire the

product, and some intend to buy.

Example: health tests

63

VII. ATTITUDE

Five attitude groups are found in a market:

Enthusiastic, positive, indifferent, negative,

and hostile

Door to door sellers use the person’s attitude to

determine how much time to spend with that

person.

64

VALS SEGMENTATION

Popular, commercially available classification

system based on psychographic measurements

Given by SRI Consulting Business Intelligence

Values, Attitude and Lifestyle are used to

perform psychographic segmentation.

65

VALS SEGMENTATION (2)

All three terms are intangible in nature and

therefore give an idea of the inert nature of the

consumer.

If you know what your consumer is thinking, you

would know what kind of promotions or

communications will attract him most.

VALS classifies adults into 8 primary groups.

66

MAJOR TENDENCIES OF THE 4 GROUPS

WITH HIGH RESOURCES

1. Actualizers

Successful, sophisticated, active, ‘take-charge’

people

Purchases often reflect cultivated tastes for

relatively upscale, niche-oriented products

2. Fulfilleds

Mature, satisfied, comfortable, reflective

Favour durability, functionality, and value in

products

68


WITH HIGH RESOURCES (2)

3. Achievers

Successful, career- and work-oriented

Favour established, prestige products that

demonstrate success to their peers

4. Experiencers

Young, vital, enthusiastic, impulsive and rebellious

Spend a comparatively high proportion of income

on clothing, fast food, music, movies and videos

69


WITH LOWER RESOURCES

1. Believers

Conservative, conventional and traditional

Favour familiar products and established brands

2. Strivers

Uncertain, insecure, approval seeking, resource

constrained

Favour stylish products that emulate the

purchases of those with greater material wealth

70


WITH LOWER RESOURCES (2)

3. Makers

Practical self-sufficient, traditional, family-oriented

Favour only products with a practical or functional

purpose such as tools, utility vehicles, fishing

equipment

4. Strugglers

Elderly, resigned, passive, concerned, resource-

constrained

Cautious consumers who are loyal to favourite

brands

71



Part 2: Market Targeting

72

WHAT IS MARKET TARGETING

Once a firm has identified its market-segment

opportunities, it has to decide how many, and which

ones to target.

73

EVALUATING AND SELECTING MARKET

SEGMENTS

While evaluating, the firm must look at 2 factors:

Overall attractiveness

Company’s objectives and resources

A company can consider 5 patterns of target

market selection.

74

1. SINGLE-SEGMENT CONCENTRATION

Through concentration:

a firm gains a strong knowledge of the

segment’s needs, and

achieves a strong market presence

Firm enjoys operating economies through

specializing its production, distribution,

promotion.

Involves risk.

Example: Porsche- sports car market 76

2. SELECTIVE SPECIALIZATION

The firm selects a number of segments, each

objectively attractive and appropriate.

There may be little or no synergy among the

segments, but each promises to be a money

maker.

Advantage: Diversified risk

77

3. PRODUCT SPECIALIZATION

The firm makes a certain product that it sells to

several segments.

Builds a strong reputation in the specific product

area.

Risk: The product can be replaced by new

technology.

78

4. MARKET SPECIALIZATION

The firm concentrates on serving many needs of a

particular customer group.

The firm gains a strong reputation in serving this

customer group, and becomes a channel for

additional products the customer group can use.

Risk: customer group may suffer budget cuts.

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5. FULL MARKET COVERAGE

The firm attempts to serve all customer groups

with all the products they might need.

Only very large firms can undertake a full market

coverage strategy.

Large firms can cover a whole market in 2 ways:

Undifferentiated marketing: firm ignores

segment differences, goes after the whole

market with 1 offer.

Ex: Coca-cola

Differentiated marketing: firm operates in

several market segments and designs products

for each segment.

Ex: IBM, General Motors80



Part 3: Positioning

81

WHAT IS POSITIONING

Positioning is the act of designing the

company’s offering and image to occupy a

distinctive place in the mind of the target

market.

The end result of positioning is the successful -

creation of a customer-focused value

proposition.

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EXAMPLE: DOMINO’S PIZZA

Target customers

Convenience-minded pizza

lovers

Benefits Delivery speed and good quality

Price 15% premium

Value proposition

A good, hot pizza delivered to your door within 30

minutes of ordering, at a

moderate price

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POSITIONING STATEMENT

A positioning statement is an expression of how a

given product, service or brand fills a particular

consumer need in a way that its competitors

don’t.

A positioning statement is a one- or two-sentence

statement that articulates your product or

service's unique value to your customers.

84

DETERMINING WHICH

POSITIONING TO PROMOTE:

POSITIONING POSSIBILITIES

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1. ATTRIBUTE POSITIONING

Company positions itself on an attribute such as

size, or no. of years in existence.

For example, Disneyland can advertise itself as

the largest theme park in the world.

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2. USE/APPLICATION POSITIONING

88

• Positioning the

product as the best

for some

use/application.

For example:

ItchGuard

3. USER POSITIONING

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• Positioning the product

as the best for some user

group.

• For example: Mia by

Tanishq, relatively

affordable workwear

jewellery for women

4. COMPETITOR POSITIONING

90

Product claims to be

better in some way

than a named

competitor.

For example: The

Hindu

5. PRODUCT CATEGORY POSITIONING

Product is positioned as a leader in a certain

product category.

For example: Subway, Highlights their fresh

menu items, against the range of fast food

options available.

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6. QUALITY/PRICE POSITIONING

Product is positioned as offering the best value

For example: Big Bazaar

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POINTS-OF-DIFFERENCE AND POINTS-OF-

PARITY

93

94

The aspects of the

product offering that

are relatively distinct to

the offerings of like

competitors.

The aspects of the

product offering that

are largely similar to the

offerings of like

competitors.

Points-of-

DifferencePoints-of-Parity

POINTS-OF-PARITY

These are usually the attributes or functionalities or

benefits or any other marketing mix elements that

are not unique to the brand and might be shared by

some or all the competitors.

They mostly include the basic necessities for a brand

to be considered in a particular category.

Once a brand has established its Points of Parity, to

be considered in a specific category and negated its

competitors’ advantage, the next step is to develop

and highlight its own advantage in the category.

POINTS-OF-DIFFERENCE

These are the attributes or functionalities or

benefits or any other marketing mix elements

that a consumer strongly associates with a

brand, which he/she feels is not offered by and of

the competitors.

Points-of-difference are relatively distinct aspects

of a brand, as compared to its competitors.

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EXAMPLE: FAST FOOD

Let’s say a chain of fast food outlets wants to challenge

the market leader, for example, McDonald’s.

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EXAMPLE: FAST FOOD (2)

The centre circle in the diagram highlights the

points-of-parity that the rival chain wants to

duplicate.

However, the rival firm chain still needs to give

consumers a reason to switch, so they have

identified two points-of-difference to highlight as

part of their overall positioning (which are built

around high-quality ingredients and having more

flexibility in the menu for the individual).

The overall combination of POP and POD creates

their overall positioning.98

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