Market Segmentation,

Targeting, and
Positioning
Definition

• Market Segmentation:
–Dividing a market into distinct groups
of buyers with distinct needs,
characteristics, or behavior who
might require separate products or
marketing mixes.
Definition

• Market targeting:
- the process of evaluating each market
segments attractiveness and selecting
one or more segments to enter
Definition

• Market Positioning :
- Positioning is arranging for a product
to occupy a clear, distinctive and
desirable place relative to competing
products in the mind of the consumer
Advantages of Segmentation

1. The process of breaking up a homogeneous

market into heterogeneous segments forces
the marketer to analyse and consider both the
needs of the market and the company’s ability
to competently serve those needs – thereby
making the company better informed about its
customers
2. Competitor offerings and marketing
positioning must also be analysed in this
context so the company must consider what
its competitive advantages and disadvantages
are, helping it to clarify its own positioning
strategy
3. Limited resources are used to best advantage,
targeted at those segments that offer the best
potential
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments can be effectively

reached and served.

Substantial • Segments are large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing
mix elements & programs.

Actionable • Effective programs can be

designed to attract and serve
the segments.
Steps in Segmentation, Targeting, and
Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Selection Criteria
Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Step 1. Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Niche Marketing
Different products to subgroups within segments
(more segmentation)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Local Marketing Individual Marketing
Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
Levels of Market Segmentation Cont…
1. Mass MARKETING
• Undifferentiated marketing Strategy that focuses on
producing a single product and marketing it to all customers;
also called mass marketing.
• More common in the past than today.
• Uses mass producing, mass distributing, mass advertising.
“one size fits all”
• Henry Ford’s Model T is an excellent example of
undifferentiated or mass marketing.
• Coca-cola.
• Maruti Suzuki

-Advantages:
• Creates largest potential market.
• Lowest cost
• Higher margins
2. SEGMENT MARKETING

• Buyers differ in their needs, perception and buying behavior

• Differentiated marketing Strategy that focuses on producing

several products and pricing, promoting, and distributing them
with different marketing mixes designed to satisfy smaller
segments.

• Raises production and promotion costs.

• Can increase satisfaction among individual segments.
• Leads to higher overall sales.

• Ex.- Hyundai : I10, i20, verna, creta, elentra,.

• Marriott hotel- families, business travelers, and others.
3. NICHE MARKETING

• Concentrated marketing Focusing marketing efforts

on satisfying a single market sub-segment; also called
niche marketing.
• The Internet is ideal for targeting small
niche markets.
• There is some risk in focusing on only one market.
• As in future- “ there will be no market for products that
everybody likes a little, only for products that somebody
likes a lot”.

• Example: Ferrari, Ford premium, Audi, Mercedes etc.

4. MICRO MARKETING
• Micromarketing is the practice of tailoring products and
marketing programs to suit the taste of specific individuals and
locations. targeting potential customers at very
narrow, basic levels.
• Having your next car or sneakers built to order? (life
insurance e.g.)

a) Local marketing- tailoring brands and promotions to the

needs and wants of local customer groups —cities,
neighborhoods, specific stores. Ex. Wal-Mart.

b) Individual marketing- tailoring products and marketing

programs to the needs and preferences of individual
customers also labeled- “markets of one mkt.”,
“customized mkt.”, “one-to-one mkt.” ex. DELL, furniture
made to order.
Step 1. Market Segmentation
Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

Demographic
Age, gender, family size
and life cycle,
or income

Psychographic
Social class, lifestyle,
or personality

Behavioural
Occasions, benefits
sought, user status,
usage rate, loyalty
GEOGRAPHIC SEGMENTATION

Geographic segmentation Division of an overall

market into homogenous groups based on their
locations.
Demographic Segmentation

• Dividing the market into groups

based on variables such as:
– Age
– Gender
– Family size or life cycle
– Income
– Occupation
– Education
– Religion
– Race
– Generation
– Nationality
Psychographic Segmentation

Divides Buyers Into Different Groups Based on:

 Behavioral Segmentation

• Dividing the market into groups

based on variables such as:
–Occasions
–Benefits (travel)
–User status
–Usage rate
–Loyalty status
–Readiness stage
–Attitude toward product
Behavioral Segmentation cont…

Occasion segmentation divides buyers into groups

according to occasions when they get the idea to buy,
actually make purchases, or respond to a product

Benefit segmentation requires finding the major benefits

people look for in the product class, the kinds of
people who look for each benefit, and the major
brands that deliver each benefit

User status divides buyers into ex-users, potential users,

first-time users, and regular users of a product

7-15
Usage rate divides buyers into light, medium,
and heavy product users

Loyalty status divides buyers into groups

according to their degree of loyalty

7-16
Step 2. Market Targeting
Evaluating Market Segments (developing
selection criteria)
• Segment Size and Growth
– Analyze sales, growth rates and expected profitability for
various segments.

• Segment Structural Attractiveness

– Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

• Company Objectives and Resources

– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
Step 2. Market Targeting
Market Coverage Strategies
Company
Marketing Market
Mix

A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Marketing

Segment 1
Company
Marketing Segment 2
Mix
Segment 3

C. Concentrated Marketing
Step 3. Positioning for Competitive
Advantage

• Product’s Position - the way the product is

defined by consumers on important
attributes - the place the product occupies
in consumers’ minds relative to competing
products.

• Marketers must:
–Plan positions to give their products the
greatest advantage in selected target markets,
–Design marketing mixes to create these
planned positions.
Step 3. Positioning for Competitive
Advantage: Strategies

Product Product
Class Attributes

Away from Benefits

Competitors H
G
Offered
C

D
Against a E
B
Usage
F
Competitor Occasions

User Class
Steps to Choosing and Implementing
a Positioning Strategy

• Step 1. Identifying Possible Competitive

Advantages: Competitive Differentiation.

• Step 2. Selecting the Right Competitive

Advantage: Unique Selling Proposition (USP).

• Step 3. Communicating and Delivering the

Chosen Position.

• Step 4. Support the positioning strategy with a

unique marketing mix
 Identifying Possible Competitive
Advantages

Product Services
Differentiation Differentiation

(Features, Performance, Style (Delivery, Installation,

& Design, or Attributes) Repair Services, Customer
Training Services)

Image Personnel
Differentiation Differentiation

(Symbols, Atmospheres, (Hiring, Training Better

Events) People Than Competitors
Do)
Choosing the Right Competitive Aadvantages

Important

Profitable Criteria Distinctive

For Determining
Which Differences
To Promote
Superior
Affordable

Preemptive Communicable
 Table : Examples of Value Propositions
Demand States and Marketing Tasks

Company
and Target Value
Product Customers Benefits Price Proposition
Mercedes Safety- Durability 20% The safest, most
(station conscious and safety premium durable car in
wagon) “upscale” which your family
families can ride

Domino’s Convenience- Delivery 15% A good hot pizza,

(pizza) minded pizza speed and premium delivered to your
lovers good quality door within 30
minutes of
ordering, at a
moderate price
Mountain Dew
Positioning Statement:
• Target group
– Young, active soft-drink consumers with
little time for sleep
• Benefit
– Gives you more energy than rival brands,
because it has more caffeine.
• Resulting goal facilitation
– You can stay alert and keep going even
when you haven’t been able to get a good
night’s sleep.
Table 11.3: Differentiation Variables

Product Services Personnel Channel Image

Form Ordering Competenc Coverage Symbols

ease e
Features Delivery Courtesy Expertise Media

Performance Installation Credibility Performanc Atmosphere

e
Conformanc Customer Reliability Events
e training
Durability Customer Responsiv
Reliability consulting eness
Reparability Maintenanc communica
e & repair tion
Style
design
• Sheer driving pleasure. BMW
• The ultimate driving machine. BMW
• The most trusted name in news. CNN
• “Look sharp, feel sharp.” Gillette
• Don’t dream it. Drive it. Jaguar
• Because I’m worth it. L’Oréal
• The mark of a man. Old Spice
• I’m lovin it .McDonald
• The taste of a new generation. Pepsi
• Maybe she’s born with it. Maybe it’s
Maybelline. Maybelline