Amity Business School

Segmentation,
Targeting and
Positioning

Amity Business School

Sunetra Saha
MBA Sem I
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Segmentation
• Market segmentation is the first step in applying
the marketing strategy.
• Segmentation means dividing the market into
similar sub-markets by understanding the needs
and expectations of customers.
• Companies follow different marketing programs
for different segments to maintain better
relationship with customers.

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Concept of Market
Segmentation

Definition
Market segmentation is the process of dividing a potential
market into distinct sub markets of consumers with
common needs and characteristics.
For example, Cadbury India functions in three different
markets namely, malted foods, cocoa powder and drinking
chocolates and chocolates and sugar confectionary.

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Benefits of Market
Segmentation
The benefits of market segmentation are
1. Understanding the needs of Consumers
2. To adopt better positioning strategies.
3. Proper allocation of marketing budget.
4. Helps in preparing a better competitive strategy.
5. Provides guidelines in preparing media plan of the company.
6. Different offerings in different segments enhance the sales.
7. Customer gets more customized product.
8. Helps Company to identify niches.
9. Provides opportunities to expand market
10. Encourages innovations

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Requisites of Effective Segmentation

Segmentation is successful if it has the following
characteristics:
1.Measurable and obtainable – The size, profile
and other characteristics of the segment must be
measurable and should be obtained in the form of
data.
2.Substantial – The size of the segment should be
such that it is profitable. For small segments the cost
is high and hence the products are priced very high.
3.Accessible – We should be able to reach the
segment through existing network at affordable cost.
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4. Differentiable – The segments are different

from each other and hence require different 4Ps
and programs.
5. Actionable – The segments which a company
wants to target must be actionable, i.e., there
should be sufficient finance, personnel, and
capability to target the segment.

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Segmentation
The process of market segmentation.

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1. Identify existing and future wants in the

current market
• Marketers must understand the changing needs
of customers.
• This process helps to know whether the
customer is satisfied with the existing products
or not.
• It also helps to test the company’s new and
innovative concepts.

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2. Examine the attributes that distinguish

among segments.

• In this process, marketers separate different

types of wants into similar categories.
• The separation may be done on the basis of
product features, lifestyle or behavior.

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3. Evaluate the proposed segment attractiveness on

the basis of measurability, accessibility and size
• Segments selected in second step should be analyzed for
measurability, accessibility, substantial, actionable and
differentiability.
• The further plans of the company depend on the result of this
process.

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Bases for Segmenting Consumer

Markets
1. Geographic segmentation: Dividing the market into different
geographical units such as nations, states, regions, cities or neighborhoods
2. Demographic Segmentation: In this segmentation the market is
divided into groups on the basis of variable such as age, family size, family
life-cycle, gender, income, occupation, education, religion, race, generation,
nationality and social class.
Some factors used for demographic segmentation are:

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• Age and life cycle stage – The needs and wants of consumers change
with age. On the basis of age, a market can be divided into four classes,
children, young, adults and old. A good marketing manager should
understand the age group for which the product is most suitable and then
plan his marketing, pricing and advertising policy accordingly.
For example, Hindustan Unilever launched Pepsodent Kids for
small children.
• Gender – Segmentation on the basis of gender is useful in clothing, hair-
styling, cosmetics and magazines.
• Income – Segmentation on the basis of income is useful for products
and services like automobiles, clothing, cosmetics and travel.

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3. Psychographic Segmentation: In thisAmity Business School
segmentation,
buyers are classified into different groups on the basis of
life-style or personality and values.
• People belonging to the same demographic group may
show very different psychographic characteristics.
• Some factors used for psychographic segmentation are
a) Life-style: Different people have different life-styles and
the products they use shows their life-style.
– One of the most common psychographic profiling scheme is the VALS,
developed by SRI International, INC.
– VALS defined adult consumers into eight segments. They are
1. Innovators: They are successful, sophisticated, active, take charge.
They are people with high self-esteem and rich resources. They are
business leaders and interested in growth, innovation and change. They
are image conscious.
2. Thinkers: They are mature, satisfied, comfortable, thoughtful people
who value order, knowledge and responsibility.
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3. Achievers: They are successful career and work oriented people
Amity Business
who want a controlled life. They prefer predictability School
and stability
over risk. They are committed to work and family.
4. Experiencers: They are young, enthusiastic, impulsive, disloyal,
disobedient. They want variety and excitement. They like variety
and enjoy new things. They like exercise, sports, outdoor recreation
and social activities.
5. Believers: They are traditional people with high commitment to
family, community and nation. They have a moral code. They prefer
American products and established brands.
6. Strivers: They look for motivation and approval from others. They
are unsure of themselves and have less economic, social and
psychological resources.
7. Makers: They are practical people who have constructive skills and
value self-sufficiency. They are happy with their families and have
little interest outside their family.
8. Survivors: They are poorly educated, low skilled and concerned
about their health. They satisfy urgent needs of the present. They
are concerned for security and safety. They are cautious
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consumers. They are loyal to favorite brands.
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b) Personality: Marketers use personality variables to segment

the market. They promote their products with brand personality
that resembles consumer personalities.
c) Social class: It has a strong influence on preference in cars,
clothing, home furnishings, leisure activities, reading habits, etc.
Many companies design products and services for specific social
classes.

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4. In behavioral segmentation, buyers are divided into

groups on the basis of their knowledge or attitude
towards the use of, or response to a product.
• Some factors used for behavioral segmentation are
1. Occasions
2. Benefits
3. User status
4. Usage rate
5. Loyal status
6. Buyer readiness stage

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1. Occasions: Buyers develop a need, purchase or use a product according

to occasion. For example, Tanishq offer schemes and promotions for
purchasing on Akshaya Truthiya.
2. Benefits: Buyers can be classified according to the benefits they are
looking for.
3. User status: Markets can be segmented into non-users, potential users,
first time users and regular users of a product. Marketing strategy for each
segment is different.
4. Usage rate: Markets can be segmented into light, medium and heavy
product users. Heavy users are less in number but responsible for a large
part of total consumption. Marketers like to attract one heavy user rather
than many light users. For example, textile brand Allan Paine offered 4
cotton trousers for Rs. 999. It wanted to earn profits from sales volume.

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5. Loyal status: Consumers have different levels of loyalty for

different brands and stores. According to brand loyalty status,
buyers can be divided into four groups:
a) Hard core loyal: Such consumers buy only one brand all the
time.
b) Split loyal: Such consumers are loyal to two or three brands.
c) Shifting loyal: Such consumers shift from one brand to another.
d) Switchers: Such consumers show no loyalty to any brand.
6. Buyer readiness stage: A market consists of buyers who are at
different stages of willingness to buy a product. Some are unaware of the
product, some are aware, some are informed, some are interested, some
desire the product and some plan to buy.

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Targeting

• Targeting is defined as a group of people or organizations for which an organization

designs, implements and maintains the marketing mix.
• After segmentation, it is important to identify the people or organization for which
the product is meant.
• Selecting target market segments
• A company chooses its market segmentation strategy on the basis of following
factors
– Homogeneous preference showing no natural segments as in case of cold
drinks.
– Diffused preference showing clear preferences as in case of automobiles.
– Clustered preference, market showing natural segments as in case of
occupation having impact on the types of clothes worn.

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• Undifferentiated marketing: In this strategy, the whole target market is

treated as one and it is considered that there are no market segments that
show uncommon needs. The company believes on ‘one product-all
segments strategy’ and has one marketing mix for the target market. For
example, Coca Cola sells Coke, Limca, Thums-up, etc. and does not
differentiate between the target audience.
• Differentiated marketing: In this marketing strategy the company
divides the market into segments and uses different marketing mix for each
segment. This strategy is used by Hindustan Unilever which sells soaps like
Lifebuoy, Lux, Rexona, Liril, Pears, etc. and each has its own market.
• Concentrated marketing: In this marketing strategy the company
follows ‘one product one segment policy’. For example Ashok Leyland
produces large chassis of machines for buses and trucks.

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Comparison of Market Coverage Strategies

Focus Undifferentiated Differentiated Concentrated

Marketing Marketing Marketing

Product One/Few Many One/Few

Segment All Many One/Few

Marketing Mix One Many One/Few

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Choosing a Market Coverage Strategy

Undifferentiated Differentiated Concentrated

Marketing Marketing Marketing

Constrained Firm More suitable Least suitable Most suitable

Resources

Common Usage Most suitable More suitable Least suitable

Products

Different need Least suitable Most suitable More suitable

satisfying products

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Market Positioning
• Positioning is defined as the process of designing the company’s products
and image to occupy a unique place in the target market’s mind.
• Many marketers favor promoting only one major benefit and Rosser Reeves
called it as “a unique selling proposition”. Some unique selling propositions
(USPs) companies use are best quality, best service, lowest price, best
value, safest, more advanced technology, etc.

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The four major positioning errors that a company must
avoid are

•Under positioning: Some companies find that buyers have

only an unclear idea of the brand.
•Over positioning: Buyers have very narrow image of the
brand.
•Confused positioning: Buyers have confused image of the
brand because the company has made too many claims or
changed the brand positioning too frequently.
•Doubtful positioning: Buyers do not easily believe the claims
made by brands about the product’s features, price or
manufacturer.

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Bases of positioning the product

1. Attribute positioning: The company positions itself on the basis of attribute
like size or number of years in existence. Sunfeast positions its snacky
brand as bigger, lighter and cheaper.
2. Benefit positioning: The company positions its product as leader in
providing a certain benefit. For example Santro positioned itself as India’s
simplest car to drive.
3. Use or application positioning: The company positions its products as
best for certain use or application. For example, Kenstar positioned its
products as unexpectedly cold.
4. User positioning: The company positions its product as best for some user
group. For example, Parle-G positions the boy in the advertisement as rock
star targeting the kids and boys.

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5. Competitor positioning: The company claims its products as better

than a named competitor.
6. Product category positioning: The company positions its product
as leader in certain product category. For example, Bajaj CT 100
was positioned as leader in the entry segment bikes.
7. Quality or price positioning: The product is positioned as offering
the best value. For example, the vegetable oil brand Dhara positions
itself as ‘anokhi shuddata, anokha asar’. This means the company
offers unique purity and unique effect.

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