Market Segmentation,

Targeting & Positioning

Chapter-4
 Presentation Outline
Concept of market and market segmentation
Objective of market segmentation
Process of market segmentation
Targeting the market: Concept and types of target market, focusing
marketing program
Product positioning for target market: concept and process of product
positioning
 Concept of Market
 The word market derived from the Latin word “Mercatus” which means place for
performing the business acts.
 In narrow view, market is the place where buying and selling for needs and
wants for getting satisfaction is performed.
 However, in broad view, market may or may not be a place, there may or may not
be gathering of buyer and seller at stated time, but to be a market there must be
the transfer of title(ownership) of product on the basis of monetary value.
 Thus, a market is the set of actual and potential buyer of a product with need to
satisfy, money to spend and willingness to spend money to create exchange
relationship.
 Definition of Market

A market is the aggregate demand of the potential and existing byers of a

product.
American Marketing Association

A market may be defined as a people with needs to satisfy, money to spend and
the willingness to spend it.
Willian J. Stanton
 Concept of Market

Place concept
Exchange
Physical place concept
Process of
Commodity concept exchange
Process of buying and
selling product and
services Space concept
Face to face meeting is
Demand concept not necessary
Focuses on the Marketing can be done
aggregate demand of through virtual
the product or service in world/internet
a certain geographical
area
 Types of Market
A. On the basis of geographical area
I. Local market
II. Regional market
III. National market
IV. Internal market
V. Global market
B. On the basis of business volume
VI. Wholesale market
VII.Retail market
 Concept of Market Segmentation
.
A market consists of customers with needs to satisfy, money to spend and
willingness to buy products. No single product can satisfy the needs of all
customers in the market place. Customers vary in terms of needs, characteristic,
buying behavior, purchasing power and preferences.

Market segmentation is the process of dividing the total market into

homogeneous sub-sets of customers having similar needs and characteristics.

It is the process of dividing or segregating heterogeneous market into sub-set

of homogeneous market.
Modern marketing views total market as consisting of heterogeneous groups.
The market is divided into segments. One or more segments are selected as
target market. Separate marketing mix is designed for each selected segment.
 Definitions of Market Segmentation

“Dividing a market into distinct group of buyers with different needs,

characteristics or behavior and who might require separate products
or marketing mixes.”
Philip Kotler
.
 Objectives of Market Segmentation

1. To identify the need of consumers

2. Optimum utilization of resources(marketers centralize the resources on the
profitable segments only)
3. Increase efficiency(when marketers centralizes resources on profitable
segments, it eventually decreases the unnecessary investment and increases
overall organizational efficiency)
4. Helps to determine appropriate marketing strategies for segments
 Process of Market Segmentation
Process of market
segmentation

Segment Segment
Segment
Segment analysis evaluation selection
identification
 Total demand  Segment size &  Single
 Market research
 Market share of Growth segment
 Data collection
competitor  Structural coverage
 Information
 Govt. policies & attractiveness  Multi
collection
laws  Organizational segment
resources coverage
 Types of Market
C. On the basis of consumption
I. Consumer market
II. Industrial market
D. On the basis of nature of product
III. Commodity market
IV. Financial market(share, debenture etc.)
 Segmentation Variables For Consumer Market

The market where goods are purchased for final

consumption, is known as consumer market. In consumer
market, goods are not purchased for re-sale, to get profit,
to re-use and for re-production.
 Segmentation Variables For Consumer Market

A. Geographic variable
I. Region/area: (District, zone, development region etc. In international
marketing- Europe: Eastern Europe, Western Europe, North America, South
Asia )
II. Topography/climate: (Himal. Pahad, Tarai)
III. Population density(Rural are, Urban Area, Suburban area)
 Segmentation Variables For Consumer Market

B. Demographic variable(study of population)

I. Age(Children, teenage, adult)
II. Income(lower income: price sensitive consumer, higher income)
III. Gender(male and female)
IV. Education(literate, highly educated, uneducated)
V. Occupation(professor, doctor, driver)
VI. Family size(nuclear, joint)
VII.Social class(upper, middle, lower)
VIII.Religion(Hindu, Muslim, Kristian)
IX. Ethnicity(Brahmin, Shrepa, Magar etc.)
 Segmentation Variables For Consumer Market
C. Psychographic variable
I. Life style (traditional and modern)
II. Personality(extrovert, introvert, emotional stability, openness, agreeableness)
III. Buying motive
Rational motive
Emotional motive(love, affection etc.)
Ego motive( status, self-respect etc.)
D. Behavioral variables
I. Benefits
II. Purchase occasion(frequently or occasionally)
III. Brand loyalty
 Segmentation Variables For Industrial Market
A. Geographic variable
I. Area: (Local, regional, national, international and global)
II. Topography and climate(it affects movement of product, product need,
packaging requirement etc.)
B. Demographic variable
III. Types of industry(agricultural, communication, finance, real estate etc.)
IV. Size of business
 Very small customers-footpath vendors
 Small customers-small and cottage industries
 Medium customer- medium size industry
 Large customers-big industry
 Segmentation Variables For Industrial Market
C. Operating variables:
Technology
Manual technology(human labor is used)
Mechanized technology(machines are used)
Automated technology(automatic machines are used)
Computerized technology( computers are used)
Robotics technology( Roberts are used)
Service need
Before sales service
After sales service
Warranties and guarantee etc.
 Segmentation Variables For Industrial Market
D. Purchase related variables:
Purchase organization (centralized or decentralized, individual/purchase
committee/purchase department)
Negotiation period: (segmentation can be done according to the length of
negotiation. The period of negotiation may be short or long). Government may
take long time to make purchase negotiation than the private and non-
governmental customer.
 Target Market
Concept of Target Market
 A target market is a particular market segment at which a marketing
campaign is focused. It is a group of customer towards which a
business has decided to aim its marketing effort and ultimately its
merchandise.
 The process of evaluating segments and focusing marketing efforts on a
country, region, or group of people that has significant potential to
respond.
 Marketing mix such as a product, price, place and promotion strategy
determines the success of a product in the target market.
 Target Market
 Target market is decided after detail analysis of size of market segment, growth
rate of segment, competition in segment, estimated profit, potential sales in
segment, brand loyalty of existing customer in segment, risk in the segment.

 Target market is a group of customer for whom a seller designs a particular

marketing mix.
Stanton, Etzel and Walker
 Types of Target Market
1. Undifferentiated market
2. Differentiated market
3. Concentrated market
 Types of Target Market
1. Undifferentiated market
 It is known as mass market. The firm offers only product for entire market. A
firm might decide to ignore market segments differences. It focused on an entire
target market rather than segment of it.

Single
Marketing
Mix

Organization
Target Market
 Types of Target Market
2. Differentiated market
 It is known as segmented market. A firm may decide to target several market
segment and designs separate offers for them. The firm offers different kinds of
products for different market segment.
Marketing Mix 1

Marketing Mix 2

Target Market
 Types of Target Market
3. Concentrated market
 This kind of marketing is also called niche marketing. A niche is a fairly small
group whose needs have not been well served. They are more profitable to serve.
 Focusing Marketing Program

1. Single segment coverage

2. Multi-segment coverage
3. Product specialization
4. Market specialization
5. Full market coverage
 Focusing Marketing Program
1. Single segment coverage
 It focuses only one segment.

A B C
D E F
G H I
 Focusing Marketing Program
2. Multi-segment coverage
 It focuses on more than one consumer type.

A B C
D E F
G H I
 Focusing Marketing Program
3. Product specialization
 A sells certain product to several potential customers within the product areas. For
Example, Bajaj auto has almost product specialization in two wheelers-scooters
motor-cycles.

A B C
D E F
G H I
 Focusing Marketing Program
4. Market specialization
 Here, firm take up a particular market segment for supplying all relevant products
to a target group. For example, producing all sort of home appliances for a
particular market segment.

A B C

D E F

G H I
 Focusing Marketing Program
5. Full market coverage
 Differentiated or undifferentiated marketing mix strategy is offered to the entire
market. This is a mass marketing strategy.
A……… B…………… ……………
………… …………… ……………
…………. …………. ………….C
D……… …………… F……………
………… …………… ……………
………….. ……….....E …………….
G……… H………… I……………
………… …………… ……………
………….. …………… …………….
 Product Positioning
 For example, a
 Product positioning is not what you two wheeler
do to the product; positioning is what manufacturer
you do in the mind of a prospect. It might engineer
the product to be
is attempt to create different but
safer, more
attractive image of product in the
accommodative
mind of consumer.
and more fuel
efficient than
those of
competitors.
 Types of Product Positioning

1. Attribute positioning(taste, size, color, speed, durability etc.)

2. Benefit positioning(certain benefits to the consumer after the consumption such
as better health, comfort etc.)
3. User positioning (teen age group, young, adult etc.)
4. Competitive positioning(better than competitors’: quality, price, after sale
service etc.)
 Product Positioning Process

1. Identifying potential competitive advantage

2. Choosing the appropriate competitive advantage
3. Signaling the competitive advantage(by communication in the mind of
consumers)