Market

Market Segmentation,
Segmentation,
Targeting,
Targeting, and
and
Positioning
Positioning
Definition
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
Definition

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

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.

Accessible
Accessible • Segments can be effectively
reached and served.

Substantial
Substantial • Segments are large or
profitable enough to serve.

Differential
Differential • Segments must respond
differently to different marketing
mix elements & programs.

Actionable
Actionable • Effective programs can be
designed to attract and serve
the segments.
Steps
Steps in
in Segmentation,
Segmentation, Targeting,
Targeting, and
and
Positioning
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
1. Identify Bases
Market Segmentation
for Segmenting the Market
Step
Step 1.
1. Market
Market Segmentation
Segmentation
Levels
Levels of
of Market
Market Segmentation
Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)
Segment
Segment Marketing
Marketing
Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)
Niche
Niche Marketing
Marketing
Different
Different products
products to
to subgroups
subgroups within
within segments
segments
(more
(more segmentation)
segmentation)
Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals and
and locations
locations
(complete
(complete segmentation)
segmentation)
Local Marketing Individual Marketing
Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
Levels
Levels of
of Market
Market Segmentation
Segmentation Cont…
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
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting Consumer
Consumer
Markets
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
GEOGRAPHIC SEGMENTATION
SEGMENTATION

Geographic segmentation Division of an overall

market into homogenous groups based on their
locations.
Demographic
Demographic Segmentation
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
Psychographic Segmentation
Segmentation

Divides Buyers Into Different Groups Based on:

Behavioral
Behavioral Segmentation
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
Behavioral Segmentation
Segmentation cont…
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
Step 2.
2. Market
Market Targeting
Targeting
Evaluating
Evaluating Market
Market Segments
Segments (developing
(developing
selection
selection criteria)
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
Step 2.
2. Market
Market Targeting
Targeting
Market
Market Coverage
Coverage Strategies
Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix

A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
C. Concentrated Marketing
Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage
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
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage:
Advantage: Strategies
Strategies

Product
Product Product
Product
Class
Class Attributes
Attributes

Away
Away from
from Benefits
Benefits
Competitors
Competitors HH
GG
Offered
Offered
CC

AA

DD
Against
Against aa EE
BB
Usage
Usage
Competitor
Competitor
FF
Occasions
Occasions

User
User Class
Class
Steps
Steps to
to Choosing
Choosing and
and Implementing
Implementing
aa Positioning
Positioning Strategy
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
Identifying Possible
Possible Competitive
Competitive
Advantages
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
Choosing the
the Right
Right Competitive
Competitive Aadvantages
Aadvantages

Important
Important

Profitable
Profitable Criteria Distinctive
Distinctive
For Determining
Which Differences
To Promote
Superior
Superior
Affordable
Affordable

Preemptive
Preemptive Communicable
Communicable
Table
Table:: Examples
ExamplesofofValue
ValuePropositions
Propositions
Demand
DemandStates
Statesand
andMarketing
MarketingTasks
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
Mountain Dew
Dew
Positioning
Positioning Statement:
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
Table 11.3:
11.3: Differentiation
Differentiation Variables
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 Responsive
Reliability consulting ness
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