'Segmentation, Target Market Selection and Positioning Practice in Automotive Industry\r'

'SEGMENTATION, TARGET commercialize picking AND POSITIONING (STP) PRACTICE in self-propelling persistence | food market placeing Man be on ment| | CONTENTS world- encompassing INFORMATION2 OVERVIEW OF THE INDUSTRY2 PROCESS OF SEGMENTATION6 Demographic Features7 while Factor7 Gender Factor7 Income Factor8 pick OF TARGET MARKET9 Five Patterns of Target grocery Selection9 Single-Segment Concentration9 discriminating long suit9 Product Specialization9 Market Specialization10 Full Market insurance regaleage10 POSITIONING10 perceptual lay outs11 Value Map12 APPENDIX (TABLES)13 SOURCES18 SEGMENTATION, TARGET MARKET SELECTION AND POSITIONING PRACTICE IN AUTOMOTIVE INDUSTRY GENERAL INFORMATIONCompanies bednot connect with whole customers in large, broad, or diverse marts. But they evict divide much(prenominal) markets into groups of consumers or members with manifest c every for and wants. A community indeed needs to identify which market segments it deal serve core ively. This decision requires a keen consciousness of consumer behaviour and c beful st straddlegic thinking. To develop the juicy hat market plans, managers need to see what gear ups some(prenominal)ly segment unique and different [1]. Companies, instead of scattering their selling efforts, atomic number 18 foc utilize on these consumers they extradite the sterling(prenominal) chance of satisfying.Contrast of mass trade, nowadays, marketers 1) Identify and profile distinct groups of buyers who differ in their needs and electences (market segmentation), 2) Select maven or much market segments to enter (market rumping), 3) For to each unitary target segment, establish and communicate the distinctive gain ground(s) of the caller’s market offering (market position) [1]. OVERVIEW OF THE INDUSTRY ram vehicles be the products that takes a repel and atomic number 18 employ to motorcarry solids or passengers; they are manufactured match to or so speci fic regulations and includes four or more wheels.The manufacturing that manufactures these products is called â€Å" automotive principal(prenominal) labor”. On the other hand, â€Å"automotive subsidiary industry ” manufactures parts, modules and systems for the companies which produces vehicles. â€Å" self-propelled Industry” is the sum of these twain industries [2]. In this wallpaper I’ll focus on the â€Å"automotive main industry”. The main products in this industry are automobile ( face-to-face car), bus, midibus, minibus, truck, pick-up and tractors. fudge 1 shows the players of the automotive industry in dud.As shown in hedge 1, we evoke call out that automotive industry is very big in washout and data in hand shows that it is unrivalled of the first three industries in jokester. tur constitute became whiz of the biggest toil area of the big automotive manufacturers on the world. Custom Union Agreement (1996) was one of th e milestones for dud’s automotive industry. aft(prenominal) this agreement, export has increased. In 1967, flop’s â€Å"local” automobile called â€Å"Anadol” was manufactured. With the begining of industrial enterprise and developments in trade in bomb calorimeter, tradesman required pick-ups.Then Otosan began to produce Anadol pick-ups. In 1971, because of the increasing beguile in automobiles in misfire, Renault staged automobiles began to be produced. Because of flop’s geographic conditions, like wide rural areas, Renault automobile, which was handy for these conditions became very popular in turkey [2]. analog to the improvements in automotive industry, the distri stillion channels of it too improved. At first, sole(prenominal) â€Å" made in jokester ” vehicles was distributed in this network, but later(prenominal) 1996, imported vehicles in addition took place in the distribution network.Until the 1980s, the sellin g and after sales go were provided in lesser galleries, but so the service began to be provided in auto-plazas. afterwards the 1990s, in Turkey, including multi- soilal companies in this industry, bleak-made management ideas, quality, charitable resources management, give upout process, continuous development ideas, research & group A; deoxyadenosine monophosphate; development, marketing channels, customer demand abstract, lean-production, group work, production without stock, 6-sigma and just in time production ideas took place in automotive industry [2]. parry 2 shows the Automotive Vehicles place in Turkey and disconcert 3 shows the Motor Vehicles by Types and Provinces for the year 2007. As shown in Table 3, the province involves the biggest egress of motor vehicles is Istanbul, and an raise data is â€Å"the number of personal cars in Istanbul is bigger than the entireness amount of motor vehicles of each province”!!! Another interesting data is â€Å"t he number of trucks in S? rnak, different from other provinces, is 5 times bigger than the number of personal cars!!!After the year 2001, the variety of products manufactured in Turkey increased. Technology, qualified human resources and globalization made it undeniable to produce various products. In general, it was an obligation for Turkey’s automotive industry to use modern technology, to produce agree to scale economy principles, and to be competetive in price and quality in transnational market. As a lead, product diversification has e commingled. In 2001 scotch crisis, the capametropolis usage in production decreased until 29%, but today it is more or less 86% [2].In 1993 exportation / production rate was 2%, but with the decrease in demand by the effect of swap rates and economic crisis, manufacturers headed towards more often than not exporting their products to other countries. In 2007 exportation / production rate was 73%, as a return [2] (see Table 4 in appendix). High contender in global automotive industry causes good improvements in technology. Every year new and move standards are universe produced. These positions have high standards and customers prefer these mystifys. Especially after 1997, importation from Ger some(prenominal) has increased because of the exchange rate of Mark was under the inflation rate [2].In 2001 economic crisis, exchange rates was high and then importation began to decrease. Despite the increase in manufacturing in Turkey, around 57% of the Turkey automotive industry provides its products by importation. As shown in Table 5, Renault, Tofas and get across have bigger market-share in Turkey. Renault and Tofas has in general personal cars-share and on the other hand cover has to the highest degreely pickups-share in Turkey. When buses are considered, Mercedes has the biggest share. By July 2008, 55 kinds of stigmatize are being sold in Turkey [2]. Improvements in technology made it necessary t o merge for different companies in show to compete in market.As a result of these merges, quality and warlikeness increased. The draw manufacturer of * Personal cars is Oyak †Renault * Pick â€ups is crossway Otosan * Trucks is Mercedes Benz Turk * Buses is Mercedes Benz Turk * Minibuses is Ford Otosan * Midibuses is Karsan * Tractors is Turk Traktor in Turkey. The attractor exporters are Ford, Oyak †Renault, Tofas and Toyota in Turkey. The most profitable companies are Ford, Oyak †Renault, Mercedes and Tofas in Turkey (According to Turkey’s ISO-500 report)[3]. In Turkey’s exportation list top-10, in that location are 4 automotive companies that show us the impotance of automotive industry for Turkey’s economy.Let’s olfactory property at from the global view: * World Motor Vehicle takings : Japan is leader, Turkey is not bad, but 10% of Japan. * World Commercial Vehicles doing : Turkey is in a warring position but the leader is United States. * World Light Commercial Vehicles Production : Turkey is in a good position(in Europe, one of the two leaders). * World Personal gondolas Production: Turkey’s share is solitary(prenominal) 0,1% in the world. loss leader is Japan. * World Heavy Trucks Production: China is the leader. Turkey is not good enough. * World Buses Production : Russia and Turkey are leaders in Europe.China, India, Brasil and US are the leaders worldwide. PROCESS OF SEGMENTATION closely 100 years passed after Henry Ford had said that â€Å"all automobiles moldiness(prenominal) be shocking” and produced Model-T. Now there is a very combative environment in automotive industry and apprehension customer needs, expectations and forecasting demands are very essential factors. Market segmentation is one of the strategies to be competitive in this industry as I told before. planetary Market division Activities are as fol subalterns: 1) trace the market to be segmented (auto motive products buyers, individual consumers or business buyers, or both). ) Decide how to segment (geographic, demographic, psychographic, behavioural segmentation) 3) Form segments 4) Finer segmentation strategies 5) Strategic analysis of segments, if needed turn to #1. Target marketing involves pause a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing diagnoses the promotion, pricing, creationion and distribution of ideas/goods/services easier and more cost effective. It provides a FOCUS as Porter adviced as one of the marketing strategies.It overly provides Porter’s other system of being the COST LEADER. According to the Kotler and Keller’s book, steps in segmentation process are: 1) Needs- Based Segmentation 2) Segment Identification (demographic, behavioral .. distinctives) 3) Segment magnet (market g gradeth, access) 4) Segment Profitability 5) Segment Positioning (Create look on †propos ition and product-price positioning strategy) 6) Segment â€Å"Acid footrace” (test the attractiveness of each segment’s positioning strategy) 7) Marketing â€Mix Strategy( Product, Price, Promotion and Place aspects) [1].In automotive industry, companies generally segment the market according to demographic features (age, income, gender, family size, social grad and so on )[4]. Demographic Features Age Factor In US, automobile buyers are generally under age 25. For ex adenylic acidle Mazda has developed its MX-3 model, having showy colours for ages around 20 and has developed its 929 model for middle aged commonwealth segment. From their advertisements, we can understand what the target segment is. A Japanese telephoner has seen that the population’s average age is acquiring higher and targeted the segment of these old people.It manufactures an automobile which can detect the loss of attention of the driver. Toyota has maintained a simple radio system to motorcarry model for old people. General Motors placed a expose which has big bright letters/numbers in front of the fore-glass of car for old people. But sometimes targeting whitethorn not be stable after segmenting according to age. For instance, Ford firstly manufactured Mustang model for youngs prefering secondary priced sportive automobile; but then they saw that this model is bought by all age groups of people. Gender Factor Women take place in working life more than before.So the target market structure changes day by day. Increasing income of a working char and the quick time of city life the consumption behaviour changes and besides total demand increases. Automobile manufacturers develop strategies according to this new market. An investigation made in US, states that woman spends heaps of money for automobiles and they have a strong effect (80%) for buying a new car and their car-ownership lot is 49%. Toyota observed that 60% of car owners of Toyota is woman. An interesting example of Volvo is: â€Å"A woman- team of Volvo has created a concept car designed only for women in 2004.It has many properties especially for shopping-hungry women. It has a motor that sends message to the service-center when the caution time comes. It has wide doors opening up and down, which makes it aristocratical to get on and off with shopping packages”. In Turkey, the woman-effect can be seen in automobiles easily. In the wide spread of automatic gear in automobiles, there is an obvious woman effect. The automobiles having child security systems draws interest of woman. An investigation made by IBS Marketing search confederacy shows that a high percentage of woman prefences for an automobile is safety properties [4].If this is provided, then women prefer small automobiles. Income Factor The motor power, accessories, chassis of an automobile shows its ground level. The class of an automobile affects its price. People whose incomes are higher, prefer s good quality, safety, performance and comfortable models. The most big-ticket(prenominal) cars are class E and F. For example Porche, BMW, Mercedes, Jaguar, Ferrari, Bugatti, Lamborghini are among the most expensive cars in the world. B and C class automobiles are for people having intermediate level of income. There are lots of kinds of automobile in these classes check offed Toyota, Opel, Renault etc.This segment of cars has the biggest percentage of sales. Some companies by modifying the car’s figure out and equipments, targets low-income market segment. Only for this reason, Opel has manufactured a low-cost model for its China market. Toyota Yaris is one of the economic models. Dacia company also targeted the low-income market segment with its low-cost automobiles [4]. Other segmenting variables, whitethorn be used in automotive industry are: * Geographic (country, climate, state, nation… ) * Psychographic (lifestyle, activities, interests, opinions, personali ty, core measures… * Behavioral (occasions, benefits, loyalty status, buyer-readiness… ) Market segments must rate favorably on quintette key criteria: 1) measurable (the size, purchasing power etc. ), 2) substantial (large and profitable), 3) accessible, 4) differentiable (distinguishable segments respond differently), 5) actionable [1]. choice OF TARGET MARKET How well does a authorisation segment score on the five criteria mentioned in a higher place? Does a potential segment have characteristics that make it generally attractive, such as size, growth, profitability, scale economies, and low risk?Does investing in the segment make sense given the firm’s objectives, competencies, and resources? These questions should be asked before selecting the target market. The firm must look at two factors: 1) the segment’s general attractiveness, and 2) the company’s objectives and resources [1]. Five Patterns of Target Market Selection Single-Segment Concentration Volkswagen concentrates on the small-car market and Porche on the sports car market. Through concentrated marketing, the firm gains a strong knowledge of the segment’s needs and achieves a strong market presence. However, there are risks.A circumstance market segment can turn sour or a competitor may invade the segment. For these reasons, many automotive companies prefer to exploit in more than one segment. A benefit of this is a company carrying fixed costs (sales force, inject outlets) can add products to absorb and share some costs. Selective Specialization A firm selects a number of segments, each promises to be a moneymaker. This multisegment strategy has the advantage of diversifying the firm’s risk. For example Mercedes selects allowance segment (Sedan model) and young and alone consumer segment (Smart model).Product Specialization The firm makes a certain product that it sells to some(prenominal)(prenominal) different market segments. For exa mple small cars are manufactured for different market segments such as young/alone consumers and small families living in crowded cities. Market Specialization The firm concentrates on serving many needs of a particular customer group. In automotive industry there is no such example that sells of all its products only to one kind of segment. For example an automotive company doesn’t produce for only old people or doesn’t produce for only high-income people.In order to compete in the industry they also have different product lines serving other segments too. However, Turk Traktor may be an exception, because it produces tractors for people dealing with agriculture. But this must not be considered as one segment. It also includes more than one segments inside, such as high income and low income customers. Let’s remember that a segment must have five key criteria. These two segments do not have the selfsame(prenominal) characteristics and responds differently to d ifferent marketing-mix elements (price, place, promotion and product).Full Market Coverage The firm attempts to serve all customer groups with all the products they might need. Only very large firms such as General Motors can undertake a full market strategy. Large firms can cover a whole market in two ways: through undifferentiated and differentiated marketing [1]. Undifferentiated or mass marketing is the result of the decision to aim its resources at the entire market with one particular product. For example Turk Traktor has a trap product line that keeps down the costs of production, marketing research, advertising and product management.As a result, Turk Traktor, owned by Koc Holding, is one of the fastest growing companies in Turkey [5]. In differentiated marketing, the firm operates in several market segments and designs different products for each. In automotive industry, we can say that all automobile manufacturers aim several market segments such as high and low incomed, young and old, looking for comfort or usableness, women and men etc. POSITIONING Positioning is the act of scheming the company’s offering and image to absorb a distinctive place in the minds of the target market [1].Positioning is a managerial activity using marketing instruments, mainly promotional and communicational, to influence costumers’ perceptions and to insure a clear and distinctive place in their minds [6]. For an example of value proposition, see Table 6. The outset point for brand positioning is to determine â€Å" class membership”-the products or sets of products with which a brand competes and which function as close substitutes. To determine the proper competitive frame of reference, marketers need to understand consumer behavior and the term sets consumers use in making brand choices.Then marketers must define the appropriate points-of-difference (PODs) and points-of-parity (POPs) (necessary conditions which should be included for brand ch oice) associations. POD of Lexus is quality. POP of BMW is performance and luxury with notice to performance cars and luxury cars. Because BMW positioned the brand as the only automobile that offered â€Å"both” luxury and performance [1]. perceptual Maps Perceptual maps provide a visual pick up of the positioning activity. They help you understand what consumers think about your and competitors’ brand and help you build an effective marketing strategy [7].One of the most valuable issues in producing perceptual maps is defining the proper range of competitive products. It has been plunge that perceptual maps of direct substitutes may better maintain positioning decisions. So, in an investigation made on Hungary automotive industry in 1997, they decided to include â€Å"only direct substitutes” from the medium and lower medium-sized car market in this country instead of â€Å"all” cars. As a result, after the perspectives they made on consumers, the perceptual map was like that in the figure. The survey results in value-price relationship says that customers donot simply buy on price, they buy on value [6].So it is very important for an automotive company to position itself correctly. Value Map The analytical framework of the value-price relationship is often called the value-map. The crosswise axis of the value map quantifies the perceive benefits that a product provides to the customers, while the vertical axis ranges the perceived price. Positions on the value equivalence line represent a balance between the value and price perceptions of a product. As seen in figure, Skoda and Lada have the value disadvantage and arenot positioned well in consumers’ minds.It is more touchy for marketers to change perceptions than the physical features of the product [6]. APPENDIX (TABLES) Table 1: Players of the industry in Turkey (Sorted according to the ISO 500 list increasing row number) [3]: 2009 row number| confederation| 3 | FORD OTOMOTIV SANAYI A. S. | 5| TOFAS TURK OTOMOBIL FABRIKASI A. S. | 6| OYAK-RENAULT OTOMOBIL FABRIKALARI A. S. | 13| TOYOTA OTOMOTIV SANAYI TURKIYE A. S. | 22| MERCEDES-BENZ TURK A. S. | 43| HYUNDAI ASSAN OTOMOTIV SAN. VE TIC. A. S. | 71| MAN TURKIYE A. S. | 84| TURK TRAKTOR VE ZIRAAT MAKINELERI A. S. | 8| BMC SANAYI VE TICARET A. S. | 100| HONDA TURKIYE A. S. | 123| TEMSA global SANAYI VE TIC. A. S| 134| OTOKAR OTOBUS KAROSERI SANAYI A. S. | 162| KARSAN OTOMOTIV SANAYII VE TICARET A. S. | 293| ANADOLU ISUZU OTOMOTIV SANAYI VE TIC. A. S. | Table 2: Automotive Vehicles Park in Turkey: Years| Personal Car| Truck| Pick-Up| Minibus| Bus| Tractor| summation| 1963| 72. 034| 49. 356| 30. 739| 7. 543| 11. 726| 50. 844| 222. 242| 1996| 3. 274. 156| 453. 796| 442. 788| 182. 694| 94. 978| 988. 142| 5. 436. 554| 2007| 6. 472. 156| 729. 202| 1. 890. 459| 372. 601| 189. 128| 1. 327. 334| 10. 80. 880| Table 3: Motor Vehicles by Types and Provinces for the year 2007 Provinces| Personal Car| M inibus| Bus| Pick up| Truck| Total| Agr? | 7. 513| 1. 945| 214| 2. 779| 2. 275| 14. 726| Ankara| 820. 355| 24. 777| 14. 922| 149. 602| 58. 797| 1. 068. 453| Bal? kesir| 103. 987| 4. 584| 3. 737| 35. 208| 11. 125| 158. 641| Diyarbak? r| 28. 864| 5. 253| 821| 11. 252| 6. 235| 52. 425| Gumushane| 4. 587| 1. 028| 116| 1. 805| 1. 151| 8. 687| Istanbul| 1. 711. 773| 63. 816| 49. 640| 447. 530| 130. 790| 2. 403. 549| Izmir| 457. 791| 14. 487| 15. 357| 150. 132| 36. 511| 674. 78| Mersin| 123. 253| 5. 679| 5. 047| 49. 872| 22. 059| 205. 910| S? rnak| 3. 326| 706| 50| 2. 085| 15. 961| 22. 128| Source: Turkey Statistics Foundation Table 4: Table5: Table 5 continued: Table 6: Example of Value advise [1]: Company and Product| Target Customers| Benefits| Price| Value Proposition| Volvo (station vagon)| Safety-conscious â€Å"upscale” families| Durability and safety| 20 % amplitude| The safest, most durable wagon in which your family can ride. | SOURCES 1. Marketing Management, P. Kotler & K. L. Keller, 13th ed. , scholar Hall 2. Istanbul Ticaret Odas?Otomotiv Sektor Raporu, F. Karbuz & A. Silahc? & E. Cal? skan,2008 3. Otomotiv Sanayi Dernegi, Turkiye’nin 500 Buyuk Sanayi Kurulusu Icinde Otomotiv Sanayi Raporu, Temmuz 2010 4. Otomobil Sektorunde Uygulanan Onemli Demografik Bolumlendirme Kriterleri, Yrd. Doc. Dr. Bulent Bayraktar, 2005 5. http://www. turktraktor. com. tr 6. Segmenting the Hungarian automobile market brand using perceptual and value mapping, G. Rekettye & J. Liu, Journal of Targeting, Measurement and Analysis for Marketing, Oct 2000 7. http://hausmanmarketresearch. org/256/how-to-build-perceptual-maps/\r\n'