Market Segmentation, Target Market and Positioning

This weeks reading focused on Marketing Strategy. The authors broadly classify Marketing Strategy into three distinct phases:

1. Market Segmentation

2. Target Market Selection

3. Positioning.

I tried to implement these ‘mantras’ into  my venture and the following are my thoughts on that.

Market Segmentation

From the outset I was very clear that I want to target a very specific group of people in India’s society. My segmentation is based on affordability. I target the rural people of India who have an income of (Rs.2000 to Rs.5000) p.m. This represents a section of society who are in a position of moving into the ‘comfortable living’ bracket of the rural society, if provided with amenities like infrastructure and in the case of my firm – Clean Energy. Now corroborating this with what the article states, I guess my venture falls into the Segmentation based on observable characteristics of customers.

I also tried to answer the three questions posed at the end of the section.

Understand the benefits the customers seek.

The customers seek access to low cost lighting, with no effects on their health (as opposed to kerosene lamps). This is the benefit my firm provides to the customers.

Segment the market and develop prototypical customer profiles based on the customer benefits.

I have segmented the market based on the affordability of the customers and specifically target the customers in the income range of Rs.2000 to Rs.5000 p.m. As of now, I have no basis for selecting this range apart from my ‘gut feeling’ of having worked with the rural people in India. But I am open to change this range depending on actual conditions and locations within India.

Find observable variables most likely to discriminate among the benefit segments to identify membership in specific segments.

One common thread that runs through the customers I want to target is that these people are primarily into agriculture and cottage industry (like weaving, dying, etc.). So in my marketing strategy I need to focus on those facts that these people can relate to. Thing like improving income generation, improving kids education and improving health are what these customers would be most concerned about.

Target Market Selection

The authors state the in order to understand Target Market selection, it is important that one understands Differentiation.

The authors suggest that one draws up a competitor capability matrix.

	Light my Home (My Firm)	D-Light	Duron Energy	TERI (Government of India)
Ability to conceive and design	?	X	X
Ability to produce	?	X	X
Ability to Market	YES			X
Ability to Finance	?			X
Ability to manage/execute	YES	X	X

This is my matrix. The ‘X’ indicates ‘Good capability. And the immediate thing that hits me is the advantage the competitors have over me in the first two rows. This worried me. All these firms have the advantage of starting early, optimizing their design and product. If I were to start the design process for my product, I would literally have to start at the drawing board. What do I do? I have the technical know-how of how to build a solar lamp, but is it worth investing time, effort and money into product development. I must seriously consider this. Shall I just focus on the distribution of these products rather than manufacture? The reason I say this is because, row 3 and row 5 are the strengths of my firm, thanks to my previous experience of working with the rural Indians. My contacts and distribution chain is already set up in a gross form. I need to only optimize this. I could really do with some suggestion.

Any help on this?

Positioning

In order to arrange a product to occupy a clear, distinctive and attractive position in the market, one needs to position their product appropriately. I decided to work on this for my product, as per the article.

• Who are my customers? 

I have already identified my customers. So this part is OK.

• What is the set of needs this product fulfills?

Again, I have answered this, so I am fine.

• Why is the product the best option to satisfy those needs?

So this is my USP. Distribution. The problem with ‘high-tech’ in India is availability to the common man in the rural areas. I ask myself this question, ‘If a cake of soap can be made available in the remotest location, why not a solar lamp’? I am not being utopian in any way by asserting this question. It is a reality. Coke and Pepsi have done this. You can find Coke and Pepsi in virtually every small shop-around-the-corner in remote Indian areas. This is something which can be made feasible with by setting up low-cost distribution chains.

So I got thinking, ‘What is my Positioning Statement’?

Light my home provides the cheapest and the most widely available clean energy solar lamps among all low cost lighting solutions because you can buy it at your corner store.

Or

Light my home is the best option for your clean and low cost lighting needs because you can buy it in the end-of-the-road shop.

My thoughts: Somehow, this does not convince me enough. It sounds like a weak statement to convince someone. Is it a convincing argument that just because something is available close to you, then it the best choice? Well in retrospect, that is true. Don’t we base our decision on availability and distance. We all like ‘close to home’ shops. In fact when I moved to Pittsburgh, one of the criteria in selecting a place to stay was ‘It must be close to Giant Eagle’. So distance does matter.

In summary, I need to decide if I must produce and design the lamps myself. I could start off distributing products from other manufacturers and then once I have a foothold into the business, possibly explore the fact that I could design the product myself. That remains to be seen. Meanwhile, as we move on in the semester, I find myself thinking on dimensions that I would never have thought on before, on things I had taken for granted. Like Prof. Tim Zak’s example on the engineer who thinks, ‘My product is good so people must buy it’. After all, at the end of the day, I am an engineer. And it is good to look outside that box for a moment or two.