UNIT – 2

Pillars of Marketing
Market Segmentation
Segmental Analysis
Target Marketing
Positioning
Differentiation
 MARKET SEGMENTATION
 This is a process of dividing the total market into
several segment or the distinct group of buyers
 The total market represents the product or the service
market
 Each group of buyers are somewhat homogenous in
their nature of demand
 Each segment expects a separate and unique benefit
from the offering
 This provides marketers convenience in catering the
needs of their customers
 This process also offers an opportunity to deliver more
focused services
 This helps in achieving optimum customer satisfaction
 MARKET SEGMENTATION
Need of Market Segmentation
 Market of commodities are not homogenous but
heterogeneous
 Customers have identical characteristics but
differs in their nature, habits, hobbies, attitudes,
believes, demographics and buying patterns
 Based of customers similar qualities and
characteristics they are grouped in segments.
 In determination of difference among customers
and to market them as per their acceptability
 For effective implementation of marketing mix
 MARKET SEGMENTATION
Purpose of Market Segmentation
 In identification of market opportunities
 In allocation of marketing budget
 In implementation of an effective marketing
program
 In nurturing of an effective competition
 In evaluation of marketing activities
 In increase of sales volume
 In meeting of enhanced customer satisfaction
 For fostering of customer loyalty
Benefits of Market Segmentation
 This enables marketers to compare opportunities in
different market segments by way of,
♦ Studying the individual customer needs
♦ In identification of the actual needs of the prospects
♦ In confirmation of the market trends
♦ In estimation of the level of competition
♦ In determination of the satisfaction level of the
customers
♦ In delivering of the most effective offerings
 In development of separate marketing program (plan
& strategy) to meet the needs of different segments.
 In allocation of the marketing budget and its optimum
utilization
 Limitations of Market Segmentation
 This increases the overall marketing expenses in
terms of,
♦ Promotional cost
♦ Inventory management
♦ Logistics
♦ Transportation and
♦ Different marketing intermediaries
 An absolute segmentation is not possible due to
difference in their
♦ Buying practices
♦ Characteristics and behaviour
♦ Product application and
♦ Perceived benefits of the offerings
PROCESS OF MARKET SEGMENTATION
Establish a sample of customers

Record personal details about decision makers

To understand the actual need of customers

To arrange all decisive buying criteria of customers together

Verification of actual buying criteria to regard as segment

Identification of the prime buying motive in each segment

Determination of relative competitive strength

To actual divide the total market into segments

Criteria for Market Segmentation
Consumer Market Segmentation
1. Geographical Segmentation
2. Demographic Segmentation – Age, Life cycle
stages, Gender, Marital Status, Income, Social Class,
Family Size, Occupation, Education, Religion etc.
3. Psychographic Segmentation – Life Style,
Personality, Value, Beliefs etc.
4. Behavioral Segmentation – Knowledge, Attitude,
Use, Response of Offering, Occasion, Benefits, User
Status, Loyalty, Use Rates etc.
5. Buyer Readiness – Depending upon their extent of
readiness for purchasing the product. This follows
from unaware / aware to action.
Criteria for Market Segmentation
 Criteria of Market Segmentation
Industrial Market Segmentation
MACRO
 Industry segment and type – Mining, Chemical,
Rubber
 Customer type – Commercial, Govt., Cooperative
 Company size & status – Sales potential, Expected
business
 Location – Near to factory, remote or the third
party
 Product Benefit – End use of the product
Aluminum - Automobiles, window, Home
appliance
 Criteria of Market Segmentation
Industrial Market Segmentation
MICRO
 Customer Involvement – Demanding, Longer
decision time, More information seeker
 Organizational Capabilities – Credit period,
Frequent technical support
 Purchasing Policies – Bidding, Tenders,
Negotiation, Turnkey, Contract licensing etc
 Purchasing Criteria - Quality, Price, Non-serious,
More commission
 Personal Attributes – Risk takers, Personal
motives, etc.
 Market Targeting
Need of Market Targeting
 After segmenting the market the marketers wants
and decides to how to reach to the identified
segment.
 It is process to identify the customer segment likely
to purchase a specified good or service.
 Many times a marketer identifies a market that are
small in size but lucrative.
 Marketers makes their efforts to secure and
maintain customers for a longer period of time.
 It is a way to channelize and to place the most
profitable market at first then others in order of
preference in terms of marketing objective.
 Market Targeting Strategies
 After evaluation on different segment the
marketers decides how many segments to serve
over time.
Limited Market Coverage Targeting
● When only one or few segments are selected to serve
● It requires fewer resources
● Effective for smaller companies
● In general at the introductory stage of the product
● The company needs to penetrate, make the presence
felt, identifies niche segment and compete against the
established rivals.
● It can have various structures as,
 Market Targeting Strategies
Limited Market Coverage Targeting
◘ Single Segment Concentration
- Acquires unique info about the segment need
- Attains a strong market presence
- The company enjoys the operation economics
- Can achieve the segment leadership
- Can expect high ROI (Eg. Mercedes)
◘ Selective Concentration
- Firm selects various segments (Eg. Tata Motors)
- Each segment must have its specific objectives
- This helps in minimization of risk
- And the risk gets divided over different segments
 Market Targeting Strategies
Limited Market Coverage Targeting
◘ Product Concentration
- Firm selects one product for different segment with
little or more variants
- Each variant is targeted for a particular segment
- Firms concentrates on one product only
- E.g. Lipton Green Tea (Tulsi, Pudina. Elachi etc.)
◘ Market Concentration
- Many needs to serve one particular segment
- The firm gains a strong reputation and respect
- Many a times the firm gets the status of a supplier
- Risky as the marketers wholly depends on one
 Market Targeting Strategies
Total Market Coverage Targeting
● Marketer attempts to serve all segments with all the
products of their need.
● It is a characteristics of large firms
● E.g. Coca Cola

● Three ways of total market coverage targeting as,

 Market Targeting Strategies
Total Market Coverage Targeting
◘ Undifferentiated Marketing
- Covers whole market with solitary offer
- Focuses on prime need of the buyer
- Marketing programs appeals to entire market
- Can also be referred as standardization or mass
marketing program
- Firms gets the benefits of mass production
- Firms enjoys the advantages of economy
- No variation in marketing mix elements (All Ps)
- This is for mass audience (Eg. Ceasefire)
 Market Targeting Strategies
Total Market Coverage Targeting
◘ Differentiated Marketing
- For different market segments
- Different promotional programs for each segment
- The firm concentrates to meet the expectations of
all the segments by offering somewhat different
products
- The segments turns to loyal segment
- The firm estimates the volume of business
- Firm gets economic stability and reliability
- E.g. Railways – Sleeper, A/c, First and General
 Market Targeting Strategies
Total Market Coverage Targeting
◘ Concentrated Marketing
- When the firm resources are limited
- Firm tends to large share of small market
segment
- This also known as focus marketing
- In sense, it is a combination of both
standardization and differentiation
- It helps in finding of the niche market
- It caters to economy and premium segments
- Maruti Alto with std, Lx, Lxi, Vxi, CNG, Airbag etc
 Market Positioning & Differentiation
 It provides a platform to the product offer and
brand to get through the target audience’s mind.
 Marketers tends to create and maintain a
favourable image of their products or brands to
occupy a distinctive place in audience mind
 Positioning is nothing to do with the product but
what you project into the minds of the prospects.
 It is to create a perception for the product or a
brand that how it is different from the other
competing offerings.
 It is a deliberate attempt and effort of marketers for
the growth of sales and profits.
Importance of Market Positioning & Differentiation
 It occupies a right place in the prospect mind.
 It connects offerings with the target market needs.
 It provides ease in serving to a particular market
segment.
 For each segment their exists a unique USP or the
benchmark.
 It helps in categorization of the entire product
range.
 It provides competitive advantages for the product
promotion.
 It allows to cover entire market segment.
 It is beneficial in optimal customer satisfaction.
Market Positioning & Differentiation
Strategies
 By Corporate Identification
 By brand or product endorsement
 By brand or product category
 By benefit of the offerings
 By usage or use time
 By price
 By quality
 By demographic segment
 By behaviour
 By Unique attribute
 Classification of Products
Two Prime Categories of Product
1 Consumer Products
– Intended for household consumer, non-business
use.
2 Business Products
– Intended primarily for producing other products or
providing services in a business.
 Four Types of Consumer Goods
– Convenience goods.
– Shopping goods.
– Specialty goods.
– Unsought goods.
 Classification of Consumer Goods
Convenience Goods
 Consumer is familiar with and buys with minimum effort.
 Typically have a low unit price.
 Products purchased frequently.
 Readily accessible and widely distributed.
 Retailers usually carry several brands,
 E.g. tobacco, toothpaste batteries
Shopping Goods
 Consumers usually compare price, quality and style.
 Buying habits affect distribution and promotional strategies.
 Manufacturers work closely with retailers.
 Retail stores often buy shopping goods in large quantities
and distribution direct from manufacturers to the retailer is
common.
 E.g. appliances, furniture.
 Classification of Consumer Goods
Specialty Goods
 Consumer
– Has strong brand preference.
– Is willing to forgo more accessible substitutes.
– Is willing to invest time and effort in product search.
– Fewer store outlets.
– E.g. sound equipment.
 Unsought Goods
 Consumer goods that are not yet known or that are
not yet needed.
 Seller must place emphasis on demonstrating that
consumers might have a need for this product.
 Classification of Business Goods
Business Goods
 Five Categories:
 Raw Materials — Goods in their natural
state.
 Fabricated materials and parts — They
become part of the product.
 Installations — Manufactured business
products.
 Accessory Equipment — Used in the
production operations of a business.
 Operating supplies — Aid in the firm’s