Segmentation,

Targeting
and Market Positioning

Chapter 4
OBJECTIVES

Define the three steps of target marketing: market

segmentation, market targeting and market
positioning.
List and discuss the major bases for segmenting
consumer and business markets.
Explain how companies identify attractive market
segments and choose a target marketing strategy.
Discuss how companies position their products for
maximum competitive advantage in the
marketplace.
 Definition

Market Segmentation:
Dividing a market into distinct
groups with distinct needs,
characteristics,
or behavior who
might require
separate products
or marketing
mixes.
 Steps in Market
Segmentation, Targeting,
and Market Positioning
Market Segmentation
Key Topics Geographical
segmentation
Segmenting Demographic
Consumer Markets segmentation
Psychographic
segmentation
Behavioral
segmentation
Using multiple
segmentation
variables
Market Segmentation
Key Topics Marketing mixes are customized
geographically for dividing the
market into different geographical
units.
Segmenting A company may decide to operate
Consumer Markets in one or a few geographical areas
or to operate in all areas but pay
attention to geographical
differences in needs and wants.
Geographical
segmentation Examples:-
region of the world or country,
city, neighborhood, density,
climate, East, West, South,
North, Central, Coastal, Hilly
etc.
Market Segmentation
Key Topics Divides the market into groups
based on variables such as age,
gender, family size, family life
Segmenting cycle, income, occupation,
education, religion, race, and
Consumer Markets nationality.

Demographic factors are the most

popular bases for segmenting
Demographic customer groups, largely because
consumer needs, wants, and
segmentation usage are easier to measure than
most other types of variables.

Examples:-
age, gender Male and Female,
family size, family life cycle,
Income, Etnicity, Occupation,
Education, nationality, religion,
generation etc.
Market Segmentation
Key Topics Divides buyers into different
groups based on social class,
lifestyle, or personality
characteristics.
Segmenting People in the same demographic
Consumer Markets group can have very different
psychographic makeup.

Psychographic Examples:-
Personality, life style, value,
segmentation attitude, social class,
personality based
segmentation etc.
Market Segmentation
Key Topics Divides buyers into groups
based on their knowledge,
attitudes, uses or responses to a
product
Segmenting Many marketers believe that
Consumer Markets behavior variables are the best
starting point for building
market segments.

Behavioral Examples:-
segmentation benefit sought , product
usage rate, brand loyalty,
product end use, readiness-
to-buy stage, decision
making unit , profitability,
income status, occasions,
attitude toward the product
Market Segmentation
Key Topics Combination of:

Segmenting Geographical segmentation

Consumer Markets
Demographic segmentation

Using multiple Psychographic segmentation

segmentation
variables Behavioral segmentation
Segmenting Business
Markets

Consumer and business markets Business marketers can also use:

use many of the same variables Operating characteristics.
for segmentation. Purchasing approaches.
Situational factors.
Personal characteristics.
Market Segmentation
Key Topics Demographic segmentation
Industry, company size,
location
Segmenting Operating variables
Business Markets Technology, usage status,
customer capabilities
Purchasing approaches
Situational factors
Urgency, specific
application, size of order
Personal characteristics
Buyer-seller similarity,
attitudes toward risk,
loyalty
Market Segmentation
Key Topics Demographic segmentation
Industry, company size,
location
Segmenting Operating variables
Business Markets Technology, usage status,
customer capabilities
Purchasing approaches
Situational factors
Urgency, specific
application, size of order
Personal characteristics
Buyer-seller similarity,
attitudes toward risk,
loyalty
Market Segmentation
Key Topics Geographic segmentation
Location or region
Economic factors
Segmenting Population income or level
International of economic development
Markets Political and legal factors
Type / stability of
government, monetary
regulations, amount of
bureaucracy, etc.
Cultural factors
Language, religion, values,
attitudes, customs,
behavioral patterns
Market Segmentation
Measurable
Ability to measure numerically
Key Topics Size, purchasing power, and profile
of segment
Accessible
Requirements for Ability to reach segment
Effective Can be reached and served
Substantial
Segmentation Ability to support the business.
Large and profitable enough to
serve
Differentiable
Ability to find unique position in
segment
Respond differently
Actionable
Ability to pursue and capture the
segment
Effective programs can be
developed
Definition
Market
Targeting:
the process of
evaluating
each market
segments
attractiveness
and selecting
one or more
segments to
enter
 Market Targeting

Evaluating Market Segments

Segment size and growth
Segment structural attractiveness
Level of competition
Substitute products
Power of buyers
Powerful suppliers
Company objectives and resources
Market Targeting Strategies
 Levels of Segmentation
Mass marketing.
No segments and single marketing mix.
Differentiated marketing.
Large segments with specific marketing
mixes.
Niche marketing.
Small segments with specialized marketing
mixes.
Micro-marketing.
Customized marketing to individuals.
Undifferentiated
Marketing

Focus is on Product and Uses mass Henry Fords

common (not marketing advertising Model T
different) program are and excellent
needs of geared to the distribution. example of
consumers. largest undifferentiate
number of d or mass
buyers. marketing.
Differentiated Marketing

Firm targets several market segments and designs

separate offers for each.
The goal is to have higher sales and a stronger
position with each market segment.
This approach increases the costs of doing business.
General Motors claims to make a car for every
segment.
Niche Marketing

The focus is acquiring a large share of one or a few

segments of niches.
Generally, there are fewer competitors.
The Internet is ideal for targeting small
niche markets.
There is some risk in focusing on only one market.
Micromarketing

Tailoring products and marketing programs to suit

the tastes of specific individuals and locations.
Local Marketing: Tailoring brands and promotions to the
needs and wants of local customer groupscities,
neighbourhoods, specific stores.
Individual Marketing: Tailoring products and marketing
programs to the needs and preferences of individual
customers.
 Market Targeting
Choosing a Target-
Marketing Strategy
Requires Consideration of:
Company resourcesLimited resources
stick with concentrated strategy; lots of resources
use a differentiated strategy.
The degree of product variability
Milk, citrus, aluminum, etc. use undifferentiated
strategy.
Products life-cycle stage
New product with no competition use
undifferentiated strategy; mature stage with
competition use differentiated strategy
 Market Targeting
Choosing a Target-
Marketing Strategy
Requires Consideration of:
Market variability
If most buyers have the same tastes, buy the
same amounts and react the same way to
marketing efforts, undifferentiated approach is
OK.
Competitors marketing
strategies
If competition is using differentiated or
concentrated you have to match that strategy.
If competition is using undifferentiated, go with
differentiated or concentrated.
 Definition

Market Positioning:
The place the product occupies in
consumers minds relative to competing
products.
has come to mean the process by which
marketers try to create an image or identity
in the minds of their target market for its
product, brand, or organization.
Typically defined by consumers on the basis
of important attributes.
 Definition

Kotler : Arranging for a product to

occupy a clear, distinctive, and desirable
place relative to competing products in
the minds of target customers

In easy word it is locating your products

in the minds of your customers
 Definition

Process to create an image or identity in

the mind of your customer

To find an unoccupied niche in the mind

of the customer
Positioning is
Flexible,
it can be:
slogan
tagline
concept
rational benefit
jingle OR
entire ad
Example:

Ivory Snow is positioned as

the gentle detergent for fine
washable and baby clothes
At Subway Restaurant, you
Eat Fresh
Example:

Toyota Yaris and Honda Fit

are positioned on economic

Mercedes and Cadillac on

luxury

Volvo on powerfully on
safety
Types of positioning
concepts
Functional positions
Solve problems
Provide benefits to customers
Get favorable perception by investors
(stock profile) and lenders
Symbolic positions
Self-image enhancement
Ego identification
Belongingness and social
meaningfulness
Affective fulfillment
Experiential positions
Positioning map
The benefit of perceptual
mapping:

1. The organisation plots the perception of the product

or service offered from the point of view of the
buyer, therefore assisting the company in helping
them understand what their customers views are on
their products.
2. The map may help the organisation identify a gap in
the market.
 Market Positioning

Choosing a Market Positioning

Strategy:
Identifying possible competitive
advantages -- many potential
sources of differentiation exist:
Products
Services
Channels
People
Image
 Market Positioning

Choosing a Market Positioning

Strategy:
Choosing the right competitive
advantage
How many differences to promote?
Unique selling proposition
Market Positioning errors to avoid
Which differences to promote?
 Market Positioning
Criteria for Meaningful Differences

Important Distinctive
Superior Communicable
Preemptive Affordable
Profitable
 Market Positioning

Choosing a Market Positioning

Strategy:
Communicating and delivering the
chosen position
Entire marketing mix must support
the
chosen strategy
May require changes to the product,

pricing, distribution or promotion.

Positioning Strategies:
Strategy Me
Too consumers
can position
themselves
close to their
competitors so
that consumers
can make a
direct
comparison
when they
Positioning Strategies:
Strategy Away
from
Competitor
- Offering a
benefit which is
superior
depends much
on the
marketing mix
strategy
Positioning Strategies:

Pricing strategy - must reflect the Promotion strategy must

benefit offered communicate the benefit
Successful Positioning

Product position.
How a product is viewed by consumers relative to
competing products.
Three positioning steps.
Identify competitive advantages on which to build a
differentiated position.
Choose the right competitive differentiation.
Select an overall positioning strategy.
Looking Back

Define the three steps of target marketing: market

segmentation, market targeting and market
positioning.
List and discuss the major bases for segmenting
consumer and business markets.
Explain how companies identify attractive market
segments and choose a target marketing strategy.
Discuss how companies position their products for
maximum competitive advantage in the
marketplace.