STP in B2B

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SEGMENTING TARGETING & POSITIONING 1/2/2012 1 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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MARKET SEGMENTION “Process of dividing a market into groups of customers who have similar requirements for a product or service offering” Conducting marketing research to collect data on buying firms and competition Identify MACROSEGMENTS based on analysis of data Select MACROSEGMENTS which satisfy company objectives & resources Evaluation MACROSEGMENTS based on differences in Buying Behavior If No, identify & select meaningful MICROSEGMENTS Profile target segments on buying organization & DMU characteristics If Yes, select the target macro segments based on specific criteria Stop, and use the Macro segments as target segments 1/2/2012 2 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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Market segment cannot be practiced effectively in business marketing because of difficulty in grouping the industrial customers into market segments. Many business & individuals with different background in Decision Process. Despite the difficulties, there are distinct BENEFITS in Market segmentation. Benefits, Limitations & Requirements of Market Segmentation 1/2/2012 3 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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BENEFITS Enables the industrial marketer to compare marketing opportunities of different market segments by studying the customer needs and potential, competition and satisfaction levels of customers in each market segments. Industrial firms with availability of adequate resources can develop separate marketing strategy for different segments. Firms with less resources can succeed by concentrating on a few market segments. The budget allocation of resources can be done effectively to various segments, and hence, marketing resources can be used more efficiently. 1/2/2012 4 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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LIMITATIONS Not always beneficial or practical, particularly when market is too small. Limitations are: Increase in marketing expenses such as inventory carrying cost, marketing expenses, advertising costs, transportation cost etc.. Existence of great differences in buying practices, customer characteristics, product applications, and benefits sought by different members of buying center Despite the difficulties, there are distinct BENEFITS in Market segmentation. 1/2/2012 5 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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REQUIREMENTS Measurability: Can the size, growth and buyer characteristics be measured? Accessibility: Can the segments be identified, reached and served effectively with the firms marketing Substantiality: Are the segments large enough in terms of the sales and profit potential to serve? Compatibility: Do the company’s marketing and business strengths match the present and expected competitive and technological state of market. 1/2/2012 6 TRIDENT INSTITUTE OF MANAGEMENT Prof. Adarsh J Navale

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Evaluating the Competitive Environment: Market stability is threatened by: - Short Product Life Cycles - Changing Technologies - Frequent entry of unexpected outsiders - Repositioning by incumbents etc.. Competitive Analysis: Firms attempt to define its industry boundaries, identify competitors and determine the strengths and weaknesses of its rivals while anticipating their actions. 1/2/2012 7 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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Evaluating the Technological Environment: A check and evaluation on the following: - Product Technology - Process Technology (steps and ideas) - Management Technology (management procedures) Competitive Analysis: Firms attempt to define its industry boundaries, identify competitors and determine the strengths and weaknesses of its rivals while anticipating their actions. 1/2/2012 8 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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ACTIVITY 1: Visit: http://www.xerox.com Click on Industry Solutions Analyze the industry sectors the firm seems to cover in its market segmentation plan Identify particular product or service the Xerox company has developed for the bank customers Make a write up on the same. To be submitted before 5:00pm today (28/09/2011) 1/2/2012 9 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENT Prof. Adarsh J Navale 10 Bases for SEGMENTING Business Market Business Market can be segmented on several based, broadly classified into two major categories: MACRO SEGMENTATION & MICRO SEGMENTATION

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 11 VARIABLES EXAMPLES MACRO VARIABLES 1. Type of Industry/Customer Type of Industry: Mining, Chemical, rubber, textile etc.. Type of Customer: includes government, commercial, cooperative and institutional 2. Company Size, Usage rate Size of companies: Based on sales potential (or Usage), market is segmented by (A, B, & C) or large, medium and small size customers 3. Customer Location, Geographic area Geographical Areas: near to factory or in various regions. 4. End-use or application, benefits of products Specific end-uses or application: Aluminum for doors, frames, electrical control panels, electronic equipments, Utensils, Bus Body Building etc.. MACROSEGMENTATION: consists of identifying macro variables on the basis of industry characteristics such as type, size geographic location or product application.

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 12 VARIABLES EXAMPLES MICRO VARIABLES 1. Buying Situations Should we serve customers who need more information, help or decision making process from suppliers? 2. Organizational capabilities Should we concentrate on customers who need financial support (more credit), more services (prompt or quick deliveries), or Technical support? 3. Purchasing Policies Should we focus on customers who prefer competitive bidding, market based negotiated prices, turn-key contracts or service contracts? 4. Purchasing criteria Should we serve the customers who seek Quality, Service or Price? Personal Characteristics Should we focus on the customers based on the personal characteristics of Buying-Center members such as risk-takers, Risk-avoiders? MICROSEGMENTATION: are homogeneous groups of customers within the macro segments. Based on the purchasing decisions.

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 13 TARGET MARKETING EVALUATING MARKET SEGMENTS based on: Size and Growth Profitability Analysis Competitive Analysis Company Objectives & Resources

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 14 SIZE AND GROWTH: Company needs to find out Size of each market segment Current and future market potential can be obtained by using one or more Demand Forecasting Methods. -Time Series Analysis Method - Sales Force Estimate Method - Expert Opinion etc.. PROFITABILITY: Three elements involved in analyzing profitability of each potential segment. - Market Potential -Sales Forecast -Profitability Estimated Sales Revenue-Costs of Marketing, Servicing & Maintaining the customers in the same time period.

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 15 COMPETITIVE ANALYSIS: Profit Potential and ability of the industrial marketer to penetrate a particular market segment depends on a careful analysis of the strengths and weaknesses of the existing &/or potential competitors. To be identified in each segment in each of the following areas: -Manufacturing -R&D -Finance -Technical Service -Product Quality -Delivery Performance - Sales Force - Advertising - Distribution - Technology - Organization & Management reputation.

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 16 COMPANY OBJECTIVES & RESOURCES: Industrial Marketer should ask whether each potential segment is in line with the company’s objectives. Analysis of resource or strengths to be in line with the success factors of each segment.

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 17 APPLICATION ASSIGNMENT: USB Internet Modem Mirrors Refrigerators Photo + Scanning Copying Machine

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 18 TARGET MARKET STRATEGIES CONCENTRATED MARKETING DIFFERENTIATED MARKETING UNDIFFERENTIATED MARKETING

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 19 CONCENTRATED MARKETING: Focusing all the marketing efforts on a single or relatively few, carefully-defined segment(s). Very narrow range of products/service accompanied by high quality, high price & highly selective promotional & distribution strategies. May be done by the companies with limited resources Involves more risk as the market potential in chosen segment can decline or big competitor may invade

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 20 DIFFERENTIATED MARKETING: Targeting several segments whose needs, product usages or market responses are appreciably different. Developing separate marketing strategies/plans for each of its chosen segments. Despite of higher costs the aim is to achieve greater sales volume and stronger position in the market

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 21 UNDIFFERENTIATED MARKETING: Can sometimes be due to lack of effective segmentation. Developing a single marketing plan fore the entire market Despite of higher costs the aim is to achieve greater sales volume and stronger position in the market

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 22 POSITIONING STRATEGIES Positioning is defined as the distinct place a product/service occupies in the minds of the target customers relative to competing products/services Infosys Technologies Tata L & T Honda

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 23 Critical Components of Positioning Statement: Target: mentions the characteristics of the target customers in which the supplier is interested Offering Concept: states the absolutely necessary attributes of the market offering for target customer Value Proposition: indicates the difference of the market offering compared to the next-best-alternative offering that are valuable to the customers

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1/2/2012 TRIDENT INSTITUTE OF MANAGEMENTProf. Adarsh J Navale 24 Criteria to select the positioning statements from a number of alternative position statements. Target: mentions the characteristics of the target customers in which the supplier is interested Offering Concept: states the absolutely necessary attributes of the market offering for target customer Value Proposition: indicates the difference of the market offering compared to the next-best-alternative offering that are valuable to the customers

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