Case Study on Segmentation, Targeting & Positioning

Case Study on Segmentation, Targeting & Positioning

Profiles Group is a leading interior decorator and designer in the country. Mr. Neerav Gupta, one of the partners in the group has invested a good amount of money in the business. The other two partners namely Mr. Pratham Gupta who is a distant cousin of Neerav and Mr. Dev Suri are mainly into managing the firm’s country wide operations. Mr. Stanley Pereira, who is more of a sleeping partner, looks after the administrative and financial aspects of the firm.

Profiles Group has around 44 service centers in the country including state capitals and several developing cities. Since the firm’s inception in 1998, its progress has been unstoppable. The clients include many reputed companies, hotel chains, popular celebrities and even hospitals and commercial banks.

A brief background of the Partners:

Neerav Gupta had a family owned business that was into manufacturing wooden furniture but Neerav‟s interest was more into decorating. So, after completing a Master’s course in interior designing from a reputed college abroad, he decided to start his own interior design services. Meanwhile, the furniture manufacturing business was handed over to Pratham Gupta due to property and family settlement issues. But, Pratham decided to join Neerav and they both started a partnership firm.

Dev Suri, a friend of Neerav who had been living abroad, sold out his real estate business and had decided to settle on the Indian soil itself. He offered help by providing additional capital and his knowledge of real estates did help the firm although in a small way. Stanley Pereira, an experienced teacher and consultant, had worked previously in leading interior designing colleges and was instrumental in making required changes in syllabus structure and interior designing courses. He has also written many books and articles on the topic. He had retired early due to family commitments but landed up in Profiles Group as a Partner through mutual contacts.

The conversation:

All the four partners are comfortably sitting face to face on a peach colored cushioned sofa which is situated near the window corner inside Neerav’s well-structured office.

Pratham Gupta feels that since their firm has invested large funds, they must enter into more market segments especially the smaller ones. And, regarding this issue, a professional conversation takes place among the partners. The talks are as follows:

Pratham: “So, what do you think about expanding our market segments to smaller more ordinary markets?”

Stanley: “What are you exactly trying to say, Pratham? Will you explain it?”

Pratham: “Listen guys, right now, we have 44 centers and competent people to work under us, but when we see our customer base, it looks small and limited. What I mean to say is that we also need to have those individual household customers who are looking for service expertise in this field. Most household customers don’t get the necessary information as to how to go about the interiors or how to decorate their home/offices etc.”

Neerav: “I agree with your points Pratham, but don‟t you think if we have to reach the smaller segments of the market, we need a different approach to cater to their needs. We would have to advertise and communicate to these segments in a customised way. This will increase the promotion budget and our focus on the existing customers may be compromised.” Dev: “I think we need to get a balance here. Pratham‟s points are valid enough and it will make Profiles group more productive. If need be, we may have to take help of a service consultancy in order to penetrate deeper markets.”

Stanley: “Okay... so, even if we allocate these segments, we need to target them in a way where we will know the immediate impact of these segments. We have to position in such manner that we get this customer base to keep moving towards us... however, the problem lies in the demand for our product in these segments!”

Pratham: “What is that problem you are talking about, Stanley?”

Stanley: “I will tell the problem, we know our product... but these individual customer segments will see our product as a one time purchase... Interiors and designing is done by a household customer at one point... very rarely, he will seek for a change or improvement. So, is it acceptable that we cater to their one time need and then let go?”

Neerav: “I do understand that point... But, that’s always the case in our business. Interior decorations and designs are usually considered one-time expenditure by household customers.... and as a matter of fact, that has not affected the way we do our business or on our returns.”

Pratham: “See, even otherwise it should not affect our firm because individual customer segments are willing to pay or spend on interiors. If they need a good, comfortable home along with a neat set of furniture then why don’t we cater to that need, even if it’s a one time demand from a particular customer? This is exactly what I meant earlier when I said, given the expertise we have, why don’t we use it to expand our customer base? Of course, we may have to develop suitable pricing strategies, promotion strategies for these market segments which is according to me, not a big thing to do.”

Dev: “Let’s first consult with our marketing hero and ask their opinion or suggestions as well”

Dev takes out his cell phone to dial Mr. Sunil’s number and he immediately gets the connection. Sunil is the head of the marketing section and he is very efficient in his job. He also has an acceptable humour quotient. Dev asks Sunil to come over to Neerav’s office.

Sunil enters the office:

Sunil: “What’s up, Bosses?”

Dev gives a brief explanation to Sunil about the potential market.

Sunil: “that’s a welcome sign actually... we have the necessary resources and we are available to any customer at any given point... So, I think it‟s a good idea that we update our customer profiles also... Only thing is we have to make sure we are targeting and positioning our customer segment in the way they feel comfortable to approach us...”

Pratham: “Nicely said Sunil... You are our man in this task.... We rely on you to make our markets bigger and customer segments broader...”

Sunil: “Always thinking in the interests of Profiles Group, Mr. Gupta... Not to worry... You tell me the confirmed plans and leave the execution on me...”

Neerav: “Well, what can I say? If we are sure about managing the newer segments which is existing out there, then our work is just to target them and position our product as per the given requirements”

Dev: “There is one important suggestion I would like to present here.... We need to ensure that we properly differentiate our existing customers from the newer ones so that we are not overriding one another or our customers don’t feel compromised at any point.”

Stanley: “That’s a really valuable suggestion, Dev... I completely agree with this point”

Sunil: “Me too... Mr. Suri has stated an absolute theory... But, it’s not that we can’t take the benefits from the two and use it for our purpose... Somewhere, we can link the newer segments with the existing ones and gradually Profiles Group will mean the same to every one. That is however applicable in the long term... For now, we need to attend our customer base on a one-to-one basis... So, we do it slow and steady”

Neerav: “Sunil, I don’t understand, but whenever you speak you visualize the big picture as well... I admire your quality and also that you are very loyal to Profiles Group”

Sunil: “Anytime Mr. Gupta, I am at your service....Just give the command and it will be done”

All of them laugh at that comment and decide to have an official meeting regarding the Segmenting, Targeting and Positioning strategies for the potential market. Within a month, the scheduled meeting is done with the involvement of key people and various points are noted down for implementation.

The marketing team after a brainstorming session also comes up with a collective idea about introducing Re-decorating and re-designing to be offered as a part of Profile’s group’s services. This meant that clients or customers can think about re-designing or re-decorating their homes/offices with the already available possessions and existing furniture. This also meant less cost to the clients. This idea was taken up seriously and plans to implement such services were already underway.

The Progress:

The next six months in the Profiles Group has made everyone busy with different tasks and agendas to be accomplished. Sunil is the busiest person around and he is actively engaged in marketing activities related to the targeting and positioning of their product to the new customer base.

Very soon, the results are noticeable in the Profiles Group. After a considerable amount of planning and hard work, the subsequent months showed positive results as given below:

 The markets are segmented based on the income level of the household customers

 Their needs, wants and demands are analyzed

 These markets are targeted based on their desire, willingness and capabilities to attain the required interiors and furnishings.

 Sunil headed a separate section namely Re-designing and Re-decorating Services at the firm’s main office. Sunil was immediately involved in making special centers for Re-designing and re-decorating services in different parts of the country.

 Marketing section was taken over by a competent person - Ms. Sneha Agarwal who has over 8 years of experience in interior designing. She was chosen on the recommendation of Stanley Pereira as Sneha had been a merit student previously and Stanley had been her teacher.

 Neerav had even managed to get some MNC‟s as the firm’s clients.

 Positioning of Profiles Group’s product and services was done in three ways –

 For the already existing customer base which include the corporate and business houses, film industry and celebrities and other big units who spend huge amounts on the interior decorations.

 For the newer segments also termed as the individual household segments who have limited spending abilities but have a desire for elegant interiors at reasonable rates.

 For the collective market – re-design and re-decor services were offered.

 The structure of the firm’s web-site was made more user-friendly and included several videos showing how proper layout and interiors increased efficiency, easy movement, allowed more lighting and ventilation and created a feeling of well-being and comfort.

 A CD was also launched which included these videos and the necessary information of the Profile’s firm with the contact addresses and numbers. The CD also included interview with certain well-known clients who were highly satisfied with the firm’s services. This established trust and good communication in the market.

 Soon enough, the firm launches into environmental friendly interiors and develops „Go Green‟ initiatives that uses more re-cycled and renewable substances.

 There was a plan to begin annual contests and games which involved household customer segments to give their ideas or suggestions for a well laid out interiors using eco-friendly materials and “Go-Green‟ initiatives.

The Partners and the interview:

It’s been two years now since Profile’s Group had moved into individual household segments.

All four partners are seated on the sofa inside Neerav‟s office except this time the sofa is of cream shade and a press reporter namely Namitha Goel is sitting on a single sofa across them. Namitha Goel had scheduled this interview and later will be published in the “Living Designs”, a new monthly magazine that deals with interiors. She begins with a direct question to Neerav –

Namitha: “Mr. Neerav Gupta, do you think the reason for the substantial increase in your customer base is due to the Redesign and re-decoration services?

Neerav: “Well, to a considerable extent, I believe it is so. Re-design is not about my taste or your taste. It’s about working with what the client owns and making them happy. Most people are good in re-arranging their stuff but they don’t have time or energy to do it. So, we offer them this assistance.”

Namitha: “How come you got this thought about making these household segments as your customers? I mean, your firm is associated with the influential clientele base and considering that, why did you feel that these household segments would prove to be a lucrative market for you?”

Neerav: “The entire credit for making individual household segments as our customers goes to my business partners here, my workforce and their efforts. Around two and a half years back, we had just got into a conversation in this very same office and Pratham suggested about tapping these markets with our available resources. Let me clarify that we decided to target this segment not for profits but we felt they too would benefit from our expertise in this field.”

Namitha: “According to the market survey, it seems that there is no close competitor for you in this business. So, your firm stands at the top like it’s been from a long time. What do you say in this matter?”

Neerav is about to answer but his cell phone rings and he attends to it quickly.

Neerav: “Excuse me, Ms. Namitha.., I have urgent business call that can’t wait..., Carry on with your questions and my team mates will answer. I have to go now.” He addresses his partners and leaves the office in a hurry.

The interview proceeds and remaining partners contribute their views. The interview takes another 45 minutes and Namitha Goel is satisfied with her work as a press reporter. She leaves the Profile’s Group office with a sense of achievement.

The next month’s issue of “Living Designs” carries the cover story of the Profiles Group with the partners‟ exclusive interview placed in the shaded column of the magazine pages.

Questions: 1 Examine the progress of Profile’s Group as a leading interior designer and decorator.

·         The markets are segmented based on the income level of the household customers

·         Their needs, wants and demands are analyzed

·         These markets are targeted based on their desire, willingness and capabilities to attain the required interiors and furnishings.

·         Positioning of Profiles Group’s product and services was done in three ways –

·         For the already existing customer base which include the corporate and business houses, film industry and celebrities and other big units who spend huge amounts on the interior decorations.

·         For the newer segments also termed as the individual household segments who have limited spending abilities but have a desire for elegant interiors at reasonable rates.

·         For the collective market – re-design and re-decor services were offered.

·         The structure of the firm’s web-site was made more user-friendly and included several videos showing how proper layout and interiors increased efficiency, easy movement, allowed more lighting and ventilation and created a feeling of well-being and comfort.

·         A CD was also launched which included these videos and the necessary information of the Profile’s firm with the contact addresses and numbers. The CD also included interview with certain well-known clients who were highly satisfied with the firm’s services. This established trust and good communication in the market.

·         Soon enough, the firm launches into environmental friendly interiors and develops „Go Green‟ initiatives that uses more re-cycled and renewable substances.

·         There was a plan to begin annual contests and games which involved household customer segments to give their ideas or suggestions for a well laid out interiors using eco-friendly materials and “Go-Green‟ initiatives.

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