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Marketing Management Unit 7
Sikkim Manipal University Page No. 121
Unit 7 Segmentation, Targeting and Positioning
Structure:
7.1 Introduction
Learning Objectives
7.2 Concept of Market Segmentation (S)
7.3 Benefits of Market Segmentation
7.4 Requisites of Effective Segmentation
7.5 The process of Market Segmentation
7.6 Bases for Segmenting Consumer Markets
7.7 Targeting (T)
7.8 Market Positioning (P)
7.9 Summary
7.10 Terminal Questions
7.11 Answers
7.12 Mini-Case
7.1 Introduction
Market segmentation is the first step in applying the marketing strategy. In
this process the marketers divide the market into homogeneous
sub-markets. On the basis of segmentation, the company will prepare and
follow different marketing programs for different segments to ensure better
customer relationship. This unit deals with the bases of market
segmentation, targeting and positioning in the minds of consumers.
Learning Objectives
After studying this unit, you will be able to
Explain the bases of market segmentation
Explain the concepts and benefits of market segmentation.
Mention the requisites of effective segmentation.
Describe the process of evaluating market segments.
Identify appropriate target market for given segment.
Develop positioning strategies and analyze the same on the basis of the
companies‟ product differentiation.
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7.2 Concept of Market Segmentation
Market Segmentation is the process of dividing a potential market into
distinct sub-markets of consumers with common needs and characteristics.
Exhibit 1
Why Segmentation?
In India, majority of the Hindu married women, contrary of the part of the
country they belong to, sport a mangalasutra. But it‟s the design of the
pendant that differentiates Mrs. Sharma from New Delhi and a
Mrs. Venkataraman from Chennai.
In America, consumer marketers such as P&G and Unilever have created
different kinds of utensil cleaners, laundry care products for Hispanics
and African-Americans. The reason being that they have different
cleaning needs depending on the way they cook and the kind of clothes
they wear. One would have imagined given the famed Indian diversity
that marketers here would have produced a host of products and product
variants to cater to large differences that exist regionally, religiously and
not to mention by caste.
So why have marketers shied away from creating products specifically for
them – despite large grouping that have completely different needs. Or
for that matter how many companies have actually devised products that
are specific to a particular community? Traditionally large Indian
companies concentrated or cared only about the urban consumers giving
importance to metros and other important cities. Many marketing experts
believe that product designers and marketers in India have traditionally
been careful of not courting specific communities, in the fear of distancing
themselves from others- a case of what might well be labeled as pseudo
secular marketing. However, in not Targeting the specific ethnicities of
the Indian society, national companies are possibly losing a huge
opportunity to take their products to the next level of popularity. “A Niche
market only implies that it is focused, it need not necessarily mean
small,” says Anand Halve who runs Chlorophyll, a brand consulting firm.
He feels national brands have a mental block when it comes to thinking
regionally, as they are constantly searching for the lowest common
denominator. Parvati Mahadev, a consumer insights consultant with
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Brandscapes puts it well when she says that by standardizing products,
one may end up meaning something to everybody, but fall short of
meaning “a lot to some people”.
Some marketing experts say catering to various social segments can
take place at several levels. First if the preferences are starkly different,
companies will have to design altogether different products (say Beef
products for Muslims). Second is where a difference in habit calls for a
change in design like a spicier wafer variant in Tamilians or Andhraites.
Another important aspect is communication and marketing for a product
to cater to various cultures. Ironically marketers who have chosen to walk
this path have been rewarded. Anchor Toothpaste, for example, changed
the paradigm for social targeting by introducing 100% vegetarian
toothpaste in early 2000‟s. The Gujarati based Anchor originally had in
mind only Gujaratis and Marwaris as the key communities for the
product. Similarly, Big Bazaar has been actively mapping tastes of its
customers and uses it for better assortment of products. Rajan Malhotra
CEO Big Bazaar points out that the chain actively stocks sticky dal in
places where there is a dominance of Gujaratis and spices where it sees
Tamilians.
Pizza hut, an international brand that believes in uniformity of its products
has chosen to do things differently in India. It has special vegetarian
outlets in Gujarat whereas in Hyderabad it does not serve pepperoni
items.
Asian Paints pushed the envelope the most. In the 1990‟s it put out a
series of ads – each of them targeted a specific community like Punjabis
or Tamilians. They were mainly aired in the run-up to a festival, like
Pongal (Tamil New Year) or Gudi Padwa (celebrated widely in
Maharashtra). It helped the brand build a “strong emotional connect” as
Amit Syngle, VP – Sales and Marketing, Asian Paints puts it.
According to Shiv Vishvanathan, a noted social scientist, uniform product
design is more a matter of pragmatism than hypocrisy. “Ethnicity or
customs cannot be core value for a large brand, as much as
competency,” he says.
But market watchers say food, media and certain daily utility articles are
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objects where companies can gain the most by nuanced ethnic targeting.
Islamic experts say there is tremendous opportunity in items like alcohol-
free perfumes, special toothpastes, halal cosmetics, toiletries,
customized housing and even Islamic dolls.
Increasingly brands are trying to iron out the lovely and interesting kinks
(in their target audience) and making it one smooth landscape,” says
Mahadev, “while the net result is beautiful, I wonder whether this helps in
creating a more clear identity,” she added.
Most experts say in these days of media explosion, it is relatively easy to
reach out to various ethnicities of the country, Regional channels and
newspapers are dime a dozen. All it would make a different (and a
special) commercial in Bengali or Urdu. Nobody can complain anymore
that the costs of popularizing a new ethnic product are inhibiting. HUL
and its ad agency Lowe broke new ground here when they launched a
different set of ads for Surf Excel in the South, where the water is hard
and lather limited, quite contrary to the usual detergent ad with images of
frothing detergent. Clearly here was the case of recognizing that different
consumers have different needs.
Perhaps like in detergents, when parity or uniform products grow and
marketers are faced with stagnating volumes, they will take advantage of
the diversity that exists in India.
(Source: Brand Equity, The Economic Times, 25th November 2009)
7.3 Benefits of Market Segmentation
1. Understanding the needs of Consumers
2. To adopt better positioning strategies
3. Proper allocation of marketing budget
4. Helps in preparing a better competitive strategy
5. Provides guidelines in preparing media plan of the company
6. Different offerings in different segments enhance the sales
7. Customer gets more customized product
8. Helps Company to identify niche markets
9. Provides opportunities to expand market
10. Encourages innovation
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7.4 Requisites of Effective Segmentation
To be useful, market segmentation must exhibit some characteristics that
are as follows:
1. Measurable and Obtainable: The size, profile and other relevant
characteristics of the segment must be measurable and obtainable in
terms of data. If the information is not obtainable, no segmentation can
be carried out. For example, Census of India provides the data on
migration and education level, but does not specify how many of the
migrated employees are educated and if educated how many are in
white collared jobs. If a company wants to target white color collared
employees who are migrated to particular city, it will not able to measure
the same. .
2. Substantial: The segment should be large enough to be profitable. For
consumer markets, the small segment might disproportionably increase
the cost and hence products are priced too high. For example, when the
cellular services started in India cost of the incoming calls and outgoing
calls were charged at Rs 12/minute. As the number of subscribers grew,
incoming calls became free. Further growth of subscribers resulted in
lowering tariffs for outgoing calls to the lowest level in the world.
3. Accessible: The segment should be accessible through existing
network of people at an affordable cost. For example, Majority of the
rural population is still not able to access the internet due to the high
cost and non-availability of connections and bandwidth.
4. Differentiable: The segments should be different from each other and
may require different 4Ps and programs. For example, Life Insurance
Corporation of India needs separate marketing programs to sell their
insurance plans, unit plans, pension plans and group schemes
5. Actionable: The segments which a company wishes to pursue must be
actionable in the sense that there should be sufficient finance,
personnel, and capability to take them all.
Activity 1:
Mention how a nearby hospital has segmented its customers and how
segmentation has helped the hospital in providing more services.
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7.5 The Process of Market Segmentation
Figure 7.2
1. Identify existing and future wants in the current market
Marketers must examine the changing needs of the customer. This
process provides opportunity to examine whether customers are
satisfied with the existing products or not. If they are not satisfied what
are the features they are not happy with or what kind of features they
would like to have in the product at. It also helps to test the innovative
concepts that company has, commercially viable or not. For example,
Titan, wrist watch manufacturer from Tata group should analyze whether
customers are satisfied with the time accuracy in the watch. It should
also analyze what are the other features customers are looking for in
their watch. It may be style, calculator, voice recorder, jewels studded or
pulse monitor. In this case, time accuracy becomes the existing want
and other features become future wants.
2. Examine the attributes that distinguish segments.
In this process marketers should segregate different types of wants into
homogeneous categories. This may be on the basis of product features,
lifestyle or behavior. For example, Titan should analyze how style,
calculator, voice recorder, jewels studded and pulse monitor attributes
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are different. Is there any possibility of bringing some of these features
together? If yes what are the attributes that makes it homogeneous. To
illustrate, student community may be interested in style and also want
calculator in their watch.
3. Evaluate the proposed segment attractiveness on the basis of
measurability, accessibility, and size.
Segments selected in the above steps should be evaluated against the
requisites i.e. measurability, accessibility, substantial, actionable and
differentiability. Company‟s further programs will depend on the outcome
of this process.
Titan should examine
a. How large is the student segment is, who like style and also want
calculator?
b. How to get the data pertaining to these students?
c. Whether this segment is accessible to existing Titan showrooms?
d. How this segment is different from current segments? If selected,
what value this proposed segment adds to the company?
Self Assessment Questions
1. ____________is the process of dividing a potential market into distinct
sub-markets of consumers with common needs and characteristics.
2. Measurability of the segment is assessed on
a. Size
b. Profitability
c. Required resources
d. All the above.
3. The requisite of segmentation which specify on 4Ps and programs is
a. Action
b. Substantial
c. Differentiability
d. All the above.
4. Future wants of the customer should be analyzed before identifying the
segments.
a. Yes
b. No
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5. Segmentation encourages innovation
a. True
b. False
7.6 Bases for Segmenting Consumer Markets
Figure 7.3
1) Geographic segmentation: In this type of segmentation, the market is
divided into different geographical units such as nations, states, regions,
cities or neighborhoods. The company can operate in one or a few
Geographic areas or operate in all but pay attention to local variations.
For example, Bennett, Coleman and Co. Ltd divided markets according
to geographical units for their tabloids. In Bangalore, the tabloid is
known as Bangalore Mirror where as it is Mumbai Mirror in Mumbai.
2) Demographic Segmentation: In demographic segmentation the market
is divided into groups based on variables such as age, family size, family
life-cycle, gender, income, occupation, education, religion, race,
Consumer
Market
Segments
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generation, nationality and social class. Demographic variables are the
most popular bases for distinguishing customer groups. One reason is
that consumers‟ wants, preferences and usage rates are often
associated with demographic variables. Demographic variables are easy
to measure. Even when the target market is described in non-
demographic terms, the link back to demographic characteristics is
needed in order to estimate the size of the target market and appropriate
media that should be used to reach it efficiently. Some of the
demographic variables used are :
a) Age and Life-Cycle Stage: Consumers‟ wants and abilities change
with age. On the basis of age, a market can be divided into four parts
viz., children, young, adults and old. For the consumers belonging to
the different age groups, different types of products are produced.
For instance, different types of ready-made garments are produced
for consumers of different age groups. A successful marketing
manager should understand the age group for which the product
would be most suited and determine a suitable marketing policy,
pricing policy, advertising policy etc...
For example, HUL launched „Pepsodent kids‟ toothpaste for small
children.
b) Gender: Gender segmentation has long been applied in clothing,
hair-styling, cosmetics and magazines. For example, Emami
segmented its personal care products on the basis of gender i.e.
Emami Naturally Fair for women and Fair and Handsome for men.
c) Income: Segmentation based on Income is a traditional practice
followed in product categories such as automobiles, clothing,
cosmetics and travel. However, income does not always determine
the best customers for a given product.
For example, Baja Auto limited, a leading automobile company,
manufactures different bikes for different commuters on the basis of
the Income levels. For entry level (income less than Rs 35000) it is
Bajaj CT 100, for mid segment (income greater than Rs 35000 but
less than Rs. 60000) it is Pulsar and for the upper segment (income
greater than Rs 60000) Avenger and Eliminator are positioned
respectively.
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3) Psychographic Segmentation: In Psychographic segmentation, buyers
are classified into different groups on the basis of life-style or personality
and values. People within the same demographic group can exhibit very
different psychographic profiles.
a) Life-style: People have different life-styles and products they
consume express their life-styles. Many companies seek
opportunities in life-style segmentation. But life-style segmentation
does not always work.
Figure 7.4
One of the most used psychographic profiling schemes is called
VALSTM. Developed by SRI International, Inc., its first version, groups
the entire U.S. population into eight groups, based on the identities
they seek and implement via marketplace behaviors.
The Eight VALSTM Group: Using the self-orientation and resources
dimensions, VALS defines eight segments of adult consumers who
have different attitudes, exhibit distinctive behavior and decision
making patterns. These segments are Innovators Thinkers,
Achievers, Experiencers, Believers, Strivers, Makers and Survivors
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Innovators are successful, sophisticated, active, take-charge people
with high self-esteem and abundant resources. They are leaders in
business and government and are interested in growth, innovation,
and change. They seek to develop, explore and express themselves
in a variety of ways, sometimes guided by principles and sometimes
by a desire to have an effect or to make a change. They seek to
develop, explore and express themselves in a variety of ways. Image
is important to them, not as evidence of status or power but as an
expression of their taste, independence, and character. They
possess a wide range of interests, are concerned with social issues,
and show a cultivated taste for the finer things in life. For example,
CEO‟s of MNC‟s, Entrepreneurs belong to this category.
Thinkers are mature, satisfied, comfortable, reflective people who
value order, knowledge, and responsibility. Most are well educated
and in (or recently retired from) professional occupations, content
with their career, families, and tend to center around the home.
Thinkers have a moderate respect for the status quo institution, but
they are open minded to new ideas and social changes. They tend to
base their decision on firmly held principles and consequently
appear calm and self-assured. Thinkers are conservative, practical
consumers who value performance, service, and price more than
personal values (e.g., social and emotional values). For example:
Senior professionals, Politicians can make up this segment.
Achievers are successful career or work oriented people who like to
feel that they are in control of their lives. They value predictability
and stability over risk. They are deeply committed to work and
family. Work provides them with a sense of duty, material rewards,
and prestige. Their social lives are centered on family, religion and
career. Achievers follow conventional lives, are conservative in
nature, and respect authority and status quo. Image is important to
them. They favor established prestige products and services that
show success to their peers. For example, Successful professionals
like Doctors, Lawyers belong to this segment.
Experiencers are young, enthusiastic, impulsive, and rebellious.
They seek variety and excitement, savoring the new, the offsets, and
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the risky. They are still in the process of formulating life values and
behavior patterns and quickly become enthusiastic about new
possibilities but are equally cool also. At this stage in their lives they
are politically uncommitted, uninformed, and highly unsure about
what they believe. Their energy finds an outlet in exercise, sports,
outdoor recreation, and social activities. Experiences are avid
consumers and spend much of their income on clothing, fast food,
music and movies For example; Young IT professionals belong in
this category.
Believers are conservative, conventional people with commitment to
family, religion, community, and the nation. Living by a moral code is
very important to them. As consumers, Believers are conservative
and predictable and favor domestic products and established
brands. Their income, education, and energy levels are modest but
sufficient to meet their needs. For example, Middle income groups
belong to this category.
Strivers seek motivation, self-definition and approval from the world
around them. They strive to find a secure place in life, and may lack
economic, social, and psychological resources. Strivers are
concerned about the opinions and approval of others. Money defines
success for them and they often feel that life has given them a raw
deal as they find they don‟t have enough money. Strivers are
impressed by possessions, but what they wish to obtain is often
beyond their reach. For example, low income groups are a part of
this market segment.
Makers are practical people who have constructive skills and value
self-sufficiency. They live within a traditional context of family,
practical work and physical recreation and have little interest in what
lies outside that context. Makers experience the world by working in
it, building a house, raising children, fixing a car, or canning
vegetables and have enough skills, income and energy to carry out
their projects successfully. Makers are politically conservative,
suspicious of new ideas, respectful of government authority and
organized labor, but resentful of government intrusion on individual
rights. They are unimpressed by material possessions other than
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those with a practical or functional purpose such as tools, utility
vehicles, and fishing equipment. For example, Trade Union leaders,
Human activists may belong in this segment.
Survivors tend to be chronically poor, ill-educated, low skilled,
elderly and concerned about their health. Preoccupied with the
urgent needs of the present moment, they do not show a strong self-
orientation. Their chief concerns are security and safety. Survivors
are cautious consumers. They represent a very modest market for
most products and services but they are loyal to favorite brands. For
example, Retired employees, senior citizens can easily belong to this
segment.
b) Personality: When Marketers use personality variables to segment
the markets, they endow their products with brand personality that
corresponds to consumer personalities. For example, Raymond
advertises its fabrics with the tag „The Complete Man.‟
c) Social Class: It has a strong influence on the consumer preferences
and the products they buy or consume. For example, when buying
cars, clothing, home furnishings, leisure activities, reading habits
etc., Social class becomes the key factor. Many companies design
products and services for specific social classes. For example, TATA
Nano was introduced in the market as a One-Lakh Car that could be
affordable by middle and lower income groups.
4) Behavioral Segmentation or Consumer Response Segmentation:
In behavioral segmentation, buyers are divided into groups on the basis of
their knowledge or attitude towards the use of, or response to a product.
Some marketers believe that behavioral variables are the ideal primary
factors for creating market segments. Some of the behavioral factors are:
a) Occasions: According to the occasions, buyers develop a need,
purchase a product or use a product. It can help firms expand product
usage. A company can consider critical life events to see whether they
are accompanied by certain needs. For example, Tanishq a TATA
enterprise offers gold schemes and promotions for Akshaya Thrutiya
(auspicious day to purchase jewellery)
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b) Benefits: Buyers can be classified according to the benefits they seek
from the products. For example, Peter England, a Madhura garment
brand positioned its wrinkle free trousers on the basis of benefits.
c) User Status: Markets can be segmented into non-users, potential
users, first time users and regular users of a product. Each market
segment requires a different marketing strategy. The company‟s market
position will also influence its focus. Market leaders will focus on
attracting potential users, whereas smaller firms will try to attract current
users away from the market leader. For example, Kishkinda resort near
Hampi classifies its customers according to this characteristic. Resort
believes that locals falls into non- user category, affluent class come to
Hampi as potential users, foreigners as first time users, rich people near
Hampi who frequently come there as regular users.
d) Usage Rate: Markets can be segmented into 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. Marketers prefer
to attract one heavy user rather than several light users and so, they
vary their promotional efforts accordingly.
For example, Alan Paine textile brand, offered 4 cotton trousers for
Rs. 999. Here, the Company is interested in getting profits from sales
volume rather than its selling price.
e) Loyal Status: Consumers have varying degrees of loyalty to specific
brands, stores and other entities. Buyers can be divided into four groups
according to brand loyalty status.
a) Hard-core Loyals: Consumers who buy one brand all the time. For
example, customer may be using only BSNL cellular services though
there are different options available.
b) Split Loyals: Consumers who are loyal to two or three brands. For
example, consumer may go for tax savings schemes of post offices
and Life Insurance Corporation of India
c) Shifting Loyals: Consumers who shift from one brand to another.
For example, consumer who used Nokia cell phones starts buying
Sony- Ericsson mobiles.
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d) Switchers: Consumers who show no loyalty to any brand. When
there is a low involvement and few significant perceived brand
differences consumer try to purchase different brands in the
category. For example, a customer who bought Cinthol wants to try
Medimix, Mysore Sandal, Himalaya, Santoor, Chandrika etc…
A company can identify its product‟s strengths by studying its Hard-core
Loyal. By studying its Split Loyal, the company can pinpoint which
brands are most competitive with its own. By looking at customers who
are shifting away from its brand, the company can learn about its
marketing weaknesses and attempt to correct them.
f) Buyer-Readiness Stage: A market consists of people in different
stages of readiness to buy a product. Some are unaware of the product,
some are aware, some are informed, some are interested, some desire
the product and some intend to buy. The relative number makes a big
difference in designing a marketing program. For example, People may
be aware of Aqua guard but don‟t know much about it.
Activity 2:
Identify the bases by which companies have segmented their markets for
these products (taking help from the television ads and other
advertisements): Nakshatra diamonds, Cinthol soaps, Domex toilet
cleaner and Parker pen.
7.7 Targeting
Targeting is defined as a group of people or organizations for which an
organization designs, implements and maintains the marketing mix.
Once the bases for segmentation are selected, the marketer has to identify
the people or organization to whom the product is meant. Organizations
may not differentiate their customer or it may have different customer for
different products. In the next section we will study how to identify the target
customers.
Selecting Target Market Segments
Depending upon the emerging patterns of market segmentation,
homogeneous preference (showing no natural segments as in case of soft
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drinks sale by Pepsi and Coca-Cola), diffused preference (showing clear
preferences as in case of automobile market), and clustered preference
(market showing natural segments as in case of occupation having impact
on the types of clothes worn), a company chooses its market segmentation
strategy.
A) Undifferentiated Marketing: It is a market coverage strategy in which
the company treats the target market as one and does not consider that
there are market segments that exhibit uncommon needs. The company
focuses on the centre of the target market to get maximum advantage.
The feature of „one product-all segments‟ calls for presenting one
marketing-mix for the target market. For example, the Coca-Cola
Company sells Coke, Limca, Thums-up etc., and does not distinguish
the target audience.
B) Differentiated Marketing: It is a market coverage strategy in which the
company goes for proper market segmentation as depicted by its
analysis of the total market. The company, therefore, goes for several
products or several segment approach which calls for preparing different
marketing mixes for each of the market segment. This strategy is
followed by Hindustan Unilever Limited which sells different soaps (Life
Buoy, Lux, Rexona, Liril, Pears etc.) and each of them has its own
market. Thus, the company creates segments in the soap market and
not in toiletries market (including soaps, detergents, toothpaste, etc.)
C) Concentrated Marketing: It is a market coverage strategy in which
company follows „one product-one segment‟ principle. For example,
Ashok Leyland produces large chassis of machine which can be used
for buses and trucks. The manufacturer gets maximum knowledge about
the segment‟s needs and therefore acquires special reputation. This
strategy can also help small companies to stand against a large
corporation because small companies can create niches in its one-
product one-segment approach by providing maximum varieties.
Choosing a Market Coverage Strategy: The following table depicts an
overview of the three market coverage strategies: Table 7.1 provides a
snap-shot view.
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Table 7.1: Comparison of Market Coverage Strategies
Focus Undifferentiated
Marketing Differentiating
Marketing Concentrated
Marketing
Product One/Few Many One/Few
Segment All Many One/Few
Marketing-Mix One Many One/Few
Given the comparison of different coverage strategies, it is easy to identify
the relevant strategies as shown in Table 7.2.
Table 7.2: Choosing a Market Coverage Strategy
Undifferentiated
Marketing
Differentiating
Marketing
Concentrated
Marketing
Constrained
Firm Resources More suitable Least suitable Most suitable
Common usage
Products Most suitable More suitable Least suitable
Different need
Satisfying products Least suitable Most suitable More suitable
Given the above table, the firm‟s resources and the product‟s requirement in
its present form (by all or few) would decide the choice of a particular
market- coverage strategy. Finally, the competitor‟s adaptation of a
particular strategy should be considered for deciding the company‟s own
strategy. For example, Coca-Cola starts segmenting soft drinks market and
targets family, Pepsi cannot ignore it because it would be suicidal for them
(segmentation would provide differentiation of products more easily).
7.8 Market Positioning
Each firm needs to develop a distinctive positioning for its market offering.
Positioning is the act of designing the company‟s offering and image to
occupy a distinctive place in the target market‟s mind. Many marketers
advocate promoting only one central benefit and Rosser Reeves called it as
“a unique selling proposition”. Some of the USPs includes “best quality”,
“best service”, “Lowest price”, “best value”, “safest”, “more advanced
technology” etc. If a company hammers away at one of these positioning
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and delivers on it, it will probably be best known and recalled for its
strengths.
Not everyone agrees that single-benefit positioning is always best. Double-
benefit positioning may be necessary if two or more firms claim to be best
on the same attribute. There are even cases of successful triple-benefit
positioning.
As the companies increase the number of claims for their brand, they risk
disbelief and a loss of clear positioning. In general, a company must avoid
four major positioning errors.
1) Under positioning: Some companies discover that buyers have only a
vague idea of the brand. The brand is seen as just another entry in a
crowded marketplace.
2) Over-positioning: Buyers may have too narrow image of the brand.
3) Confused Positioning: Buyers might have a confused image of the
brand resulting from the company‟s too many claims or changing the
brand‟s positioning too frequently.
4) Doubtful Positioning: Buyers may find it hard to believe the brand
claims in view of the product‟s features, price or manufacturer.
Positioning maps:
Two dimensional graphs of how a product, brand or company is perceived
versus competition.
Before identifying the positioning strategies for the product, marketer
prepares its perceptual maps. These maps are drawn on important buying
dimensions of consumer for company products as well as competitor
products.
How to construct Position maps?
1. Evaluate the buying dimensions of customer
2. Select two buying dimensions of consumer; for example price and
quality.
3. Identify the relative market share: relative market share is the ratio of
company‟s market share to its largest competitors‟ share.
4. Draw the circles according to relative market share on two dimension
graph
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Position map for Toilet soaps
Figure 7.3
Bases for positioning the product
Overcoming the positioning difficulties enables the company to solve the
marketing-mix problem. Thus seizing the “high-quality position” requires the
firm to produce high quality products, charge a high price, distribute through
high-class dealers and advertise in high-quality media vehicles.
The bases for positioning strategies are:
1. Attribute Positioning: A company positions itself on an attribute such
as size or number of years in existence. For example, Sunfeast
positions its snacky brand as bigger lighter and crisper. (Figure 7.5)
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Figure 7.5 Figure 7.6
2. Benefit Positioning: The product is positioned as the leader in a certain
benefit.
Automotive: Hyundai Santro
Headline: India's best-loved family car is now also India's simplest car to
drive.
Subhead: Hyundai introduces Santro Zip plus Automatic.
No shifting gears, no clutch, no problems.
Baseline: The simplest car to drive. (Positioning)
3. Use or Application Positioning: Positioning the product as best for
some use and application. For Example, Kenstar positioned its product
as unexpectedly cold. (Figure 7.7)
Figure 7.7 Figure 7.8
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4. User Positioning: Positioning the product as best for some user group.
In this advertisement (Figure 7.8) of Parle –G, the boy was positioned as
rock star. This advertisement basically targets the kids and boys.
5. Competitor Positioning: The product claims to be better in some way
than a particular competitor. In this advertisement (Figure 7.9)
Mathrubhumi base line says ‘In the wake of ABC results, Mathrubhumi
celebrates the addition of 33,960 copies while nearest competitor
laments the loss of 7,258 copies. Planners, take note‟. It is directly
mentioning its and competitor's newspaper sales figures.
Figure 7.9 Figure 7.10
6. Product Category Positioning: The product is positioned as the leader
in a certain product category. Bajaj CT 100 was positioned as leader in
the entry segment bikes. (Figure 7.10)
7. Quality or Price Positioning: The product is positioned as offering the
best value.
Figure 7.11
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The vegetable oil brand Dhara positions itself as „anokhi shuddata, anokha
asar‟. This means, company offers unique purity and unique effect.
Activity 3:
Are you able to note down the targeting and positioning strategies of the
particular brand of shampoo (or soap) that you use. Suggest how your
shampoo (or soap) can be effectively positioned in the market so that
more people will buy it.
Self Assessment Questions
6. In _____________segmentation, buyers are divided into different
groups on the basis of life-style or personality and values.
7. By studying its _________________ a company can pinpoint which
brands are most competitive with its own.
8. _______________ is a market coverage strategy in which company
follows „one product-one segment‟ principle.
9. ______________ is the act of designing the company‟s offering and
image to occupy a distinctive place in the target market‟s mind.
10. __________ are consumers who buy one brand all the time.
7.9 Summary
Market Segmentation is the process of dividing a potential market into
distinct sub-markets that is, having consumers segments with common
needs and characteristics.
The size, profile and other relevant characteristics of the segment must
be measurable and obtainable in terms of data.
Target marketing helps the marketer to identify the markets – the group
of customers for whom the product is designed.
Buyers can be classified into four groups based on brand loyalty status:
o „Hard-core Loyals‟ are those consumers who buy one brand all the
time.
o „Split Loyals‟ is those consumers who are loyal to two or three
brands.
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o „Shifting Loyals‟ are those consumers who shift from one brand to
another.
o „Switchers‟ are those consumers who show no loyalty to any brand.
Positioning is the act of designing the company‟s offering and image to
occupy a distinctive place in the target customers‟ mind.
List of Key terms
Segmentation
Target markets
Market positioning
Segmentation Bases
Differentiation
Concentrated Marketing
7.10 Terminal Questions
1. What do you mean by segmentation? What are its benefits?
2. Discuss the various bases for segmenting consumer markets.
3. Explain the methods of selecting target market segments.
4. Write a note on positioning of the product.
5. What are the requisites of effective segmentation?
7.11 Answers
Answers to Self Assessment Questions:
1. Market segmentation
2. Size
3. Differentiability
4. Yes
5. True
6. Psychographic
7. Split Loyals
8. Concentrated Marketing
9. Positioning
10. Hard-core Loyal
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Answers to Terminal Questions:
1. Refer to 7.2 & 7.3
2. Refer to 7.6
3. Refer to 7.7
4. Refer to 7.8
5. Refer to 7.4
7.12 Mini-Case
Business profile of Dabur Foods Ltd.
"There are a lot of juicewalaas in city markets, so juice is not
something Indian consumers had not seen before. And, we felt if we
give them juices in a packaged form, which is more hygienic, it should
do well" – Amit Burman, CEO, Dabur Food Ltd.
Dabur has launched Dabur Amla Flower magic hair oil. It is targeted at
college-going girls. It contains Amla and the scents of white flowers
such rajnigandha, mogra and jasmine. It costs Rs. 38 for a 100 ml pack
and Rs. 20 for a 50 ml pack - Brand line, The Hindu November 19th 2009
Dabur India Ltd (Dabur India), a part of the Dabur Group, was
incorporated in 1975 for manufacturing and marketing FMCG, ayurvedic and
pharmaceutical products. The pharmaceutical division of the company was
demerged in 2003. In Apr 2006, three entities, Balsara Hygiene Products
Ltd, Balsara Home Products Ltd and Best Cosmetics Ltd were merged with
Dabur India.
Business Profile: Dabur India operates with four divisions namely, consumer
care, consumer healthcare, foods and international business division. The
consumer care caters to six FMCG segments of hair care, oral care, health
supplements, digestives, home care and skin and baby care. Some of its
major brands include, Vatika, Meswak, Hajmola, Babool and Odomos
among others. Consumer healthcare deals in ayurvedic products under the
brands Honitus, Nature Care and Shankpushpi among others. Dabur India
operates its food business through Dabur Foods Ltd that offers juices,
nectars, drinks and food additives under the brand names Real, Active and
Coolers among others.
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Here is an extract of the interview:
In Brand Speak, Amit Burman, Chief Executive Officer, Dabur Foods Ltd.,
speaks to exchange4media's Nikhil Gupta, on its brand strategy, psyche
of Indian housewife and buying patterns in the processed food category.
Q. How is your brand 'Real' fruit juice doing in the market?
A. We launched it in the year 1999, and over the years it has shown us
very good growth. From last year to this year, it grew at about 30%. I
believe its good growth but then we are starting from a very small
base, for a category, which is at a very nascent stage as compared to
its potential today.
Q. What kind of background research you had done before
launching your products – 'Real' fruit juice and 'Homemade'
cooking pastes?
A. When we launched 'Real', we didn't do much of market research, as
we clearly saw there was a gap in the market. And looking at the
Indian consumers, and there are so many juicewalahas in the market,
so juice was not something Indian consumers had not seen before.
So, we felt if we give them juices in a packaged form, which is more
hygienic, it should do well. In other categories, 'yes,' before launching
'Homemade,' we did a lot of research. What we found was that in a
typical Indian household, cooking as an activity could be split to two
parts. One is the negative activity, which involves preparation of right
mix of spices and pastes for the food. The other one being the
positive activity, which consists of what an Indian housewife ads on
top which makes the final food different in your house than my house.
That is where she gets the pride from serving guests, husband, her
family, that's something she doesn't wants to loose. So, we decided
rather than if we focus on the positive labour, we would be taking
away this feeling of pride from her, so we focused on the negative
labour, where ginger paste from my house and your house is crushed
the same way, garlic paste in my house and your house is crushed
the same way. So, we are focusing on what is around the main meal
and we are not focusing on the main meal.
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Q. How did the market react to 'Homemade' pastes?
A. Most of the products that we have launched actually try to create a
category. Even today there is no national level player except us
present in the market.
Q. How fast is the 'Homemade' range growing sales wise?
A. Sales are not growing that fast. In India, there is an inherent problem
in the processed food category; they compare the commodity with the
market prices. If they were to go out and buy 200g of ginger, it should
be equal to so many grams of paste. They don't look at the
processing part, that processing is free in their minds. Similarly, what
happens is when the commodity prices are going high our product
starts selling more. Also, what we have seen is that a housewife
usually keeps a bottle of Ginger paste of a garlic paste in the
refrigerator and it‟s only used as an emergency. But in regular use,
that is something we are trying to create, it should be a regular use
item.
Q. What is the USP of Homemade?
A. The USP as I explained, one insight that we got from the consumer,
that the taste of spices grinded on Silbatta (grinding stone) is different
from the taste we get from the mixer. We incorporated that in our
manufacturing process, we actually use stone grinding to give the
same taste to the consumers. We also ran an ad campaign, which
has a tagline, saying, "Homemade Ka Paste, Swad Silbatte Wala."
Q. Going further, how do you maintain a check at the retailers level
that the products are being displayed properly at the point-of-
purchase (pop) since the bottles are usually not clean, which
creates a perception that it might be very old?
A. See, the manufacturing date is printed over there, but in terms of
cleaning the bottles and all, when our sales officers visit the stores;
his first job is to check that the products are displayed properly and
the bottles are kept clean.
Q. Just exploring one thought, wont it be better if the "Homemade"
pastes are delivered to the housewife at home, since a lot many
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times she would feel awkward picking it up from the shop
shelves?
A. That's a good suggestion, but rather shying away from sending it to
their house; we have to build a brand to tell that consumer that it as
good as fresh. It‟s an inherent problem; people in India will never
agree that something that is packaged is fresh. Thus, the onus is on
every player in the processed food industry to change the perception
to- whatever is on the shelf is fresh.
Q. Going back to 'Real' fruit juice. Who is the typical target
consumer? And are you trying to compete with Softy Drinks as
category?
A. In 'Real', we have two range of juices one is Real fruit juice other is
Real Active juice. The Real fruit juice is targeted towards the
housewife and kids, and the Real Active juice is targeted towards the
young adults between the ages of 24 to 35. We are very clearly
focused on the in-home segment and soft drink is more out- of- home
impulse purchase.
Q. How do you maintain the balance in availability of product on the
counter as well as the freshness of the product?
A. I think it has been a learning experience, in terms of distribution.
Very clearly, in processed foods as a category, the date of
manufacturing is very critical to the consumer. So, we worked on our
products, and now our products are about 35 days from date of
manufacture.
(Source: www.exchange4media.com)
A MBA student after reading the above business profile of Dabur Foods
Ltd., and the excerpts from the interview wants to identify the bases for
segmenting consumer markets for Dabur‟s different products. She needs
help in knowing the strategies that were adopted by Dabur in targeting these
segments and how products were positioned in the Indian market. She is
also curious to know the global opportunities that Dabur may have with its
variety of products.
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