Segmentation, Targeting

& Positioning

Module II
 Objectives

1. Identify the essential components of a market.
2. Outline the role of market segmentation in developing a
marketing strategy.
3. Describe the criteria necessary for effective segmentation.
4. Explain each of the four bases for segmenting consumer
markets.
5. Identify the steps in the market segmentation process.
6. Discuss four basic strategies for reaching target markets.
7. Summarize the types of positioning strategies.
8. Explain the reasons for positioning and repositioning
products.
 Selecting a Target Market
Before a marketing mix strategy can be
implemented, the marketer must identify,
evaluate, and select a target market.
Market: people or institutions with sufficient
purchasing power, authority, and willingness to
buy
Target market: specific segment of consumers
most likely to purchase a particular product

8-3
 Effective Targeting
Requires

Identify and profile distinct groups of
buyers who differ in their needs and
preferences
Select one or more market segments to enter
Establish and communicate the distinctive
benefits of the market offering
Fords Model T Followed a Mass Market
Approach

 Four levels of
Micromarketing

Segments Niches

Local areas Individuals

 What is a Market
Segment?

A market segment consists of a group of
customers who share a similar set of
needs ad wants.
 The Role of Market
Segmentation

Market Segmentation:
division of the total
market into smaller,
relatively homogeneous
groups
No single marketing
mix can satisfy
everyone. Therefore,
separate marketing
mixes should be used
for different market
segments.
 Toms of Maine

Targeting a Specific
Marketing Segment

Which segment?
 Criteria for Effective
Segmentation

Market segmentation cannot be used in all cases.
To be effective, segmentation must meet the
following basic requirements.
The market segments must be measurable in terms
of both purchasing power and size.
Marketers must be able to effectively promote to and
serve a market segment.
Market segments must be sufficiently large to be
potentially profitable.
The number of segments must match the firms
capabilities.
No Market Segmentation

Segmented by Gender

Segmented by Age

 Preference Segments

Homogeneous preferences exist when consumers
want the same things
Diffused preferences exist when consumers want
very different things
Clustered preferences reveal natural segments from
groups with shared preferences
 The Himalaya Drug
Company serves a

growing niche market
by focusing on
ayurvedic medicines
and health
supplements
Segmenting Consumer Markets

Geographic
Geographic

Demographic
Demographic

Psychographic
Psychographic

Behavioral
Behavioral
 Segmenting Consumer
Markets

Geographic Segmentation: Dividing
an overall market into homogeneous
groups on the basis of their locations
Does not ensure that all consumers in
a location will make the same buying
decision.
Help in identifying some general
patterns.
 Pampers
This ad is an
example of
geographic
segmentation.

When visiting the
web site look for the
different countries
Pampers markets to.
 Segmenting Consumer
Markets

Demographic
segmentation: dividing
consumer groups
according to characteristics
such as sex, age, income,
occupation, education,
household size, and stage
in the family life cycle
Demographic Segmentation
Age
Age and
and Life
Life Cycle
Cycle
Life
Life Stage
Stage
Gender
Gender
Income
Income
Generation
Generation
Social
Social Class
Class
Segmenting by gender

Marketers must ensure that
traditional assumptions are not false
Other firms start by targeting one
gender and then switch to both
To some companies market
successfully to both genders

Segmenting by age
Many firms identify
market segments on
the basis of age
Products are often

designed to meet
the specific needs of
certain age groups
Examples: baby
food and denture
cream. Dole:
Developing a
Product Specifically
for Children
Bank Al
Habib
targets
senior
citizens
 Segmenting by household type
The traditional family has declined over the years
Single-parent families, single-person households, and
non-family group households have more than doubled
during the same time
Non-traditional households make likely buyers of
single-serving and convenience foods
DINKs, dual-income childless couples, are big buyers of
gourmet foods, luxury items, and travel

8-27
 Engels laws: three general statements
based on his studies on the impact of
household income changes on consumer
spending behavior
According to Engle, as family income
increases:
A smaller percentage of expenditures
go for food
The percentage spent on housing and
household operations and clothing
remains constant
The percentage spent on other items
(such as recreation and education)
increases
 Jaguar
Segmentation
based on income
 Psychographic Segmentation
Divides a population into groups that have
similar psychological characteristics,
values, and lifestyles

Lifestyle: peoples decisions about how to
live their daily lives, including family, job,
social, and consumer activities
The most common method for developing
psychographic profiles of a population is to
conduct a large-scale survey:
VALS and VALS 2.
Values and Lifestyles
VALS 2 - Network

ACTUALIZERS Abundant Resources

8%
Principle Status Oriented Action Oriented
Oriented
FULFILLED ACHIEVERS EXPERIENCERS
11% 13% 12%

BELIEVERS STRIVERS MAKERS

16% 13% 13%

STRUGGLERS Minimal Resources

12%
Segmenting Consumer
Markets

Product-related segmentation: dividing a
consumer population into homogeneous
groups based on characteristics of their

relationships to the product
Can take the form of segmenting based on:
Benefits that people seek when they buy
Usage rates for a product
Consumers brand loyalty toward a
product
 Benefits
Focuses on the
attributes that
people seek in a
good or service
and the benefits
that they expect
to receive from
that good or
service
Groups
consumers into
segments based
on what they
want a product to
do for them
Eclipse

Segmenting
by Benefits
Sought
 Usage Rates

Segmenting by grouping people according
to the amounts of a product that they buy
and use
Markets often divided into heavy-user,
moderate-user, and light-user segments
The 80/20 principle (Paretos Law) holds
that a big percentage of a products
revenues (roughly 80%) comes from a
relative small, loyal percentage (around
20%) of total customers
Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers
Brand Loyalty
Segmenting consumers grouped according

to the strength of brand loyalty felt toward
a product
A practical example of this would be the
frequent flyer programs of airlines and
many hotels
 The Market
Segmentation
Process
Stage I: Identify Segmentation Process

Stage II: Develop Relevant Profile

Stage III: Forecast Market Potential

Stage IV: Forecast Market Share

Stage V: Select Specific Segment

 Stage I: Identify Segmentation Process
Marketers follow two methods to determine the
bases on which to identify markets:

Segments are predefined by managers based on
their observation of the behavioral and
demographic characteristics of likely users
Segments are defined by asking customers
which attributes
are important and then
clustering the responses
 Stage II: Develop Relevant Profile
Next, marketers seek further understanding of the
consumer in each promising segment

Must develop a profile of the typical consumer and
each segment
Helps to accurately match consumer needs with the
firms marketing offers
 Stage III: Forecast Market Potential
Market segmentation and market
opportunity analysis combine to produce

a forecast of market potential within each
segment
Defines a preliminary go or no-go
decision since the sales potential in each
segment must justify resources devoted
to further analysis
 Stage IV: Forecast Market Share
The next step is to forecast the
firms probable market share

Competitors positions in targeted
segments must be analyzed
A specific marketing strategy must
be designed to serve the targeted
segments
The firm determines the expected
level of resources it must commit
to tap the potential demand in each
segment
 Stage V: Select Specific Segment
The preceding information, analysis, and
forecasts allow management to assess the

potential for achieving company goals and to
justify committing resources in developing one
or more segments
Marketers also weigh more than
monetary costs and benefits
at this stage
Strategies for Reaching
Target Markets

Undifferentiated Differentiated Marketing
Marketing

Concentrated Marketing Micromarketing

 C. Concentrated Marketing
Segment
Segment33
Company
Company
Segment
Segment22 Marketing
Marketing
Mix
Mix
Segment
Segment11
B. Differentiated Marketing
Company
Company
Segment
Segment33 Marketing
MarketingMix
Mix33
Company
Company
Segment
Segment22 Marketing
MarketingMix
Mix22
Segment Company
Company
Segment11 Marketing
MarketingMix
A. Undifferentiated Marketing Mix11
Company
Company
Market
Market Marketing
Marketing
Mix
Mix

Market Coverage Strategies
Market Targeting
Patterns of Target Market Selection

Patterns of Target Market Selection

Patterns of Target Market Selection


Undifferentiated marketing: when a firm produces
only one product or product line and promotes it to
all customers with a single marketing mix
Sometimes called mass marketing
Much more common in the past

Undifferentiated
Marketing
 Differentiated marketing: when a firm produces
numerous products and promotes them with a
different marketing mix designed to satisfy smaller
segments
Tends to raise costs

Firms may be forced to practice differentiated
marketing to remain competitive

Differentiated Marketing
 Differentiated
Marketing
Procter and Gamble
Practicing
Differentiated
Marketing
 Lunchables
Using a
Differentiated
Marketing Strategy

Concentrated marketing (niche marketing): when a
firm commits all of its marketing resources to serve a
single market segment
Attractive to small firms with limited resources and to
firms offering highly specialized goods and services

Concentrated Marketing

The Revolution brand of
ready-made womens
apparel successfully focuses
on the niche segment of
plus-size clothes.
1. Market segmentation involves
aggregating prospective buyers into
groups that have two key
characteristics. What are they?
A: The groups should (1) have common
needs and (2) respond similarly to a
marketing action.
2. When should a firm segment its
markets?
A: A firm goes to the expense of
segmenting its markets when this
will increase its sales, profit, and
return on investment.
3. The process of segmenting and
targeting markets is a bridge between
what two marketing activities?
A: identifying market needs and taking
marketing actions
 Positioning

Act of designing the companys
offering and image to occupy
a distinctive place in the mind of
the target market.

Positioning provides synergy among 4Ps.

 Choosing a Positioning
Strategy

Step 1. Identifying
Possible Competitive
Advantages
Step 2. Selecting the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position

CHP: 8&10-60
 Positioning

The place a product occupies in consumers
minds relative to competing products.
 Definition.

Positioning is not what you do to a product.
Positioning is what you do to the mind of
the prospect.
Positioning is ,how you differentiate
yourself in the mind of your prospect.
e.g.
Mysore Sandal -Purity and natural fragrance.
Margo- Herbal(neem).
Lifebuoy-Hygiene.
GOOGLE. BMW. INDIA.
SEARCH DRIVING DIVERSITY

Positioning Example

eBays positioning: No
matter what it is, you
can find it on eBay!
 Positioning Example

To (target segment and need) our (brand) is a

(concept) that (point-of-difference).

To busy mobile professionals who need to

always be in the loop, Blackberry is a wireless
connectivity solution that allows you to stay
connected to people and resources while on
the go more easily and reliably than the
competing technologies.
 How these companies positioned
themselves

Mercedes-Benz prestige.
BMW driving.
Volvo.. Safety.
Starbucks high-end coffee..
Rolexhigh-end watches.
Google .Search.
Red bull energy drink.
FedEx overnight (delivery)
 Positioning Strategy

Competitive advantages
Points of Parity
Points of Difference => Differentiation

Positioning results from differentiation and

competitive advantages.

Positioning may change over time.

 Defining Associations
Points-of-difference (PODs)

Points-of-parity
Attributes or benefits
(POPs)
consumers strongly
Associations that are not
associate with a brand,
necessarily unique to the
positively evaluate, and
brand but may be shared
believe they could not
with other brands
find to the same extent
with a competitive brand
Consumer Desirability Criteria for
PODs

Relevance
Relevance

Distinctiveness
Distinctiveness

Believability
Believability
Deliverability Criteria for
PODs

Feasibility
Feasibility

Communicability
Communicability

Sustainability
Sustainability
Product Differentiation

A positioning strategy that some
firms use to distinguish their
products from those of
competitors.
Perceptual Mapping

A means of displaying or
graphing, in two or more
dimensions, the location of
products, brands, or groups of
products in customers minds.
 POSITIONING THE PRODUCT

Product Positioning Using Perceptual

Maps
Identify Important Attributes for a
Product Class
Judgments of Existing Brands on These
Important Attributes
Ratings of an Ideal Brands Attributes
Perceptual Map
Chocolate Milk
.. For Adults ??
Your challenge as a marketing manager: Try
to position chocolate milk to make it more
appealing to adults
 POSITIONING THE PRODUCT

Product Positioning Using Perceptual

Maps
Positioning Chocolate Milk for Adults
Finding a New Position for Chocolate Milk
in the Minds of Adults: Nutrition

Packaging Adult Chocolate Milk

A perceptual map to suggest a strategy for
positioning chocolate milk to reach adults
 Perceptual Mapping--Levis

High Price Vintage

Red Line
Slates
Red Tab
Red Tab Elesco
Dockers

Designer
Dry Goods Silver Tab
Classic

Premium

501
Dockers L2
Red Tab
Classics Basics

Old product
Low Price New product
 Positioning Bases
Attribute
Attribute
Price
Price and
and Quality
Quality

Use
Use or
or Application
Application

Product
Product User
User
Positioning
Positioning
Bases
Bases Product
Product Class
Class

Competitor
Competitor
Repositioning

Changing consumers perceptions
of a brand
in relation to
competing brands.