Section 6

MARKETING SEGMENTATION, TARGETING

AND POSIOTIONING
Agenda
6.1. Market segmentation
• Definition and the importance of market segmentation.
• Variables for segmenting consumer market
• Variables for segmenting business market
• Requirements for effective segmentation

6.2. Market targeting

• Market targeting definition
• Bases for selecting target markets
•
6.3. Positioning
• Market positioning definition
• Bases for positioning
• Positioning maps
o Marketing boils down to two questions:
o Which customers will we serve?
o How will we servethem?
o The goal is to create more value to customers we serve than competitors
do.
o Focusing on the buyer who have greater interest in the values they
create best
7.1.1 Segmenting consumer markets
• There is no single wayto segment amarket.
• Companies divide large market into smaller segments that can be reached
more efficiently and effectively with products and services that match their
unique needs.
o Market segmentation should be relied on the distinct needs, characteristics or
behavior that might require separate marketing strategies.

Select customers to serve Decide on a value proposition

Segmentation Differentiation
Divide the total market into Differentiate the market offering
smaller segments Create value to create superior customer value
for targeted
Targeting customers Positioning
Select the segment or Position the market offering in
segments to enter the minds of target customers
7.1.1 Segmenting consumer markets (cont)
o A marketer has to try different segmentation variables, alone and in
combination.
o Marketers rarely limit their segmentation analysis to only one or afew
variables only. Rather, they often use multiple segmentation bases in aneffort
to identify smaller, better defined target groups.
7.1.1 Segmenting consumer markets (cont)
o Four major variables: geographic, demographic, psychographic and
behavior.
o Geographic segmentation: geographical units, such as nations,
states, regions, countries, cities or even neighborhood.
o Demographic segmentation: age, gender, family size, income,
occupation, education, religion, race, generation and
nationality
o Psychographic segmentation: social class, lifestyle, personal
characteristics
o Behavior segmentation: knowledge, Attitudes, occasions,
benefit sought, responses, usage rate, user status, loyalty status
(seems to be the most effective market segmenting method)
Geographic
World region or country North America, Canada, Western Europe, Middle East, Pacific Rim, China, India, Brazil
Country region Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South
Atlantic, Middle Atlantic, New England
City or metro size Under 5,000; 5,000–20,000; 20,000–50,000; 50,000–100,000; 100,000–250,000;
250,000–500,000; 500,000–1,000,000; 1,000,000–4,000,000; over 4,000,000
Density Urban, suburban, exurban, rural
Climate Northern, southern

Demographic
Age Under 6, 6–11, 12–19, 20–34, 35–49, 50–64, 65 and over
Gender Male, female
Family size 1–2, 3–4, 5 or more
Family life cycle Young, single; married, no children; married with children; single parents; unmarried couples; older,
married, no children under 18; older, single; other
Income Under $20,000; $20,000–$30,000; $30,000–$50,000; $50,000–$100,000; $100,000–$250,000;
over $250,000
Occupation Professional and technical; managers, officials, and proprietors; clerical; sales; craftspeople; supervisors;
farmers; students; homemakers; unemployed; retired
Education Primary school or less; some high school; high school graduate; some college; college graduate,
advanced degree
Religion Catholic, Protestant, Jewish, Muslim, Hindu, other
Race Asian, Hispanic, Black, White
Generation Baby boomer, Generation X, Millennial
Nationality North American, South American, British, French, German, Russian, Japanese
Psychographic
Social class Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers
Lifestyle Achievers, strivers, survivors
Personality Compulsive, outgoing, authoritarian, ambitious

Behavioral
Occasions Regular occasion; special occasion; holiday; seasonal
Benefits Quality, service, economy, convenience, speed
User status Nonuser, ex-user, potential user, first-time user, regular user
User rates Light user, medium user, heavy user
Loyalty status None, medium, strong, absolute
Readiness stage Unaware, aware, informed, interested, desirous, intending to buy
Attitude toward product Enthusiastic, positive, indifferent, negative, hostile
Activity: Segmenting your consumer market
• Work in group (at home)

• Choose variables to do market segmenting

• With each variables, identify specific indicators

• Segmenting the whole market to smallersegments

“VUA CUA” RESTAURANT

1. Step 1: Identify Variables: Region, Gender, Age range, Income, family size, family life cycle, Occupation, personality, service
standard (types of restaurant),User rates, loyalty status

2. Step 2: break down the indicators

• Region: City metro, Sub-urban, Tourism places, market, super-market, entertainment centres.
• Gender: Male, female, Others
• Age range: <18, 18-23, 23-35, 36-45, >45
• Income: N/A, < 6 mil VND, 6-11 million, 11-20mil, >20mil
• Family life cycle: Single, Married-no children, Married-withchildren
• Occupation: pupil-student, officer, worker, free-lancer, pensioner, business owner, un-employee.
• User rates:
• Step 3: choose the most effective groups.
• Segment 1: Metro, Male, 23-35, < 6 mil, Married-with children, officer
• Segment 2: Sub-urban, Male, 23-35, < 6 mil, Married-with children, officer
• Segment 3: Sub-urban, Male, 23-35, 11-20mil, Married-no children, officer
7.1.2 Segmenting business market
o Consumer and business marketers use manyof the samevariables to segment
their markets.
o Business buyers mayuse some variables for market segmentation:
geographically, demographically (industry, company size), or by benefits
sought, user status, usage rate, and loyaltystatus.
o Business marketers also use some additional variables, such as customer
operating characteristics, purchasing approaches, situational factors, and
personalcharacteristics.
7.1.3 Requirements for effective segmentation
• There are manyways to segment amarket, but not all segmentations are
effective.
o Measurable: The size, purchasing power, and profiles of the
segments can be measured.
o Accessible: The market segments can be effectively reached and
served.
o Substantial: The market segments are large or profitable enough to
serve.

o Differentiable: The segments are conceptually distinguishable

o Actionable: Effective programs can be designed for attracting and
serving the segments
 2. Target Market

2.1. Definition:
The target market is the market that consists of customers who share the same needs
or desires that the business is capable of meeting. At the same time, the business's
marketing activities can create a competitive advantage and help achieve its
predetermined business objectives.
The target market is one or several market segments that a business
selects and decides to focus its marketing efforts on in order to achieve its
business objectives.
 2. Target Market

2.3. Target Market Selection Strategies:

Pᵢ = Product i (i = 1, 2, 3) Mᵢ = Market i (i = 1, 2, 3)

1.Focus on one market segment (single-segment strategy)

2.Selective specialization (specialization based on capability)
3.Market specialization
4.Product specialization
5. Full market coverage
 Single Segment Marketing
• The selected market segment must meet the following conditions:
⚬ There must be a match between customer needs and the company’s product supply
capabilities.
⚬ It should be a segment with no competitors or one that competitors have overlooked.
⚬ The segment should be considered a reasonable starting point and a foundation for future
business expansion.
• Advantages:
⚬ Ability to secure a strong position within the market segment
⚬ Cost savings
⚬ Potential for a high return on investment
• Disadvantages:
⚬ Higher-than-normal risk
⚬ Difficult to scale up production
• Applicable to: Startups and small to medium-sized enterprises (SMEs)
• Example: Volkswagen focusing only on the small car market segment
 Selective specialization
• The business selects several market segments that are not closely related, but each segment is
objectively attractive and aligns with the company’s goals and resources.
• Advantages:
⚬ Diversifies the company’s risks. Even if one market segment becomes unattractive, the
company can still generate revenue from other segments.
• Disadvantages:
⚬ The company must have relatively large business resources, especially strong management
capabilities.
• Example: The multi-segment strategy of ABBOTT (USA) in the Vietnamese dairy market.
 Market specialization
• The business focuses on serving many different needs of a specific customer group.
• Advantages:
⚬ The company gains widespread credibility and customer trust.
⚬ It becomes easier to develop new products for an existing loyal customer base.
• Disadvantages:
⚬ It is very difficult for the company to shift to a different customer group, especially if that
group is already “owned” by other brands.
• Example: Johnson & Johnson offers a wide range of baby skincare products such as body wash,
baby powder, shampoo, mosquito repellent cream, and baby massage oil.
 Product specialization
• The business focuses on producing a specific product to sell to
multiple market segments.
• Advantages:
⚬ The company builds a strong brand image and reputation in the
specialized product field.
⚬ Cost savings in production, though transportation costs may be
high.
• Disadvantages:
⚬ The company faces risks if a superior or substitute product enters
the market, potentially replacing the product it focuses on.
• Example: Biti’s produces shoes and sandals of the same type for
people of all ages.
 Full market coverage

• The business aims to serve all customer groups with every product
they might need.
• Advantages:
⚬ The company gains strong market power and influence.
• Disadvantages:
⚬ Requires significant investment in product diversification,
production costs, administration, warehousing, marketing, etc.
⚬ Very difficult to implement; only large enterprises can pursue this
strategy.
• Example: IBM (in the computer market), General Motors (in the
automobile market)
 2. Target Market

2.4. Strategies for Responding to the Target Market :

1,Company’s 2.Degree of 3. Stage in the

financial product product life
Criteria for capacity uniformity cycle

Choosing a
Target Market
Response
Strategy
4. Degree of
5.Competitors’
market
strategies
homogeneity
7.3 Differentiation and Positioning
• A product’s position is the waythe product is defined
by consumers on important attributes, the place the
product occupies in consumers’ minds relative to 85
Cadillac Escalade
competingproducts.

Price (thousands of $)
Infiniti QX56
75 Lexus LX570

• Products are madein factories, but brands happen in Lincoln Navigator

Toyota Land Cruiser
65
Land Rover Range Rover
the minds of consumers.
• A product’s position is the complex set of 55

perceptions, impressions, and feelingsthat 45

Luxury Performance
Orientation
consumers have for the product comparedwith
competingproducts.