Market segmentation, targeting

and positioning.
 Introduction
Markets consist of buyers, and buyers differ in one
or more ways.
They may differ in their wants, resources,
locations, buying attitudes and buying
practices.
Through market segmentation, companies divide
large, heterogeneous markets into smaller
segments that can be reached more efficiently.
Customer-Driven Marketing Strategy

Differentiation
Market Segmentation
It involves Market
actually differentiating the Targeting
firm’s market offering to create superior
customer value.
It involves dividing a market
into smaller segments of It consists of evaluating each
buyers with distinct needs, market segment’s attractive-
Positioning ness and selecting one or
characteristics, or behaviors
that might require separate more market segments to
It consists of arranging for a market
marketing strategies or mixes. enter.
offering to occupy a clear, distinctive,
and desirable place relative to competing
products in the minds of target
consumers.
Market Segmentation
 Through market segmentation, companies divide large,
heterogeneous markets into smaller segments that can be
reached more efficiently and effectively with products and
services that match their unique needs.
Levels of Market Segmentation

Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Marriott)
 Segmenting Markets

A company need to recognizes that buyers differ in their

needs, perceptions and buying behaviors.
segment marketing - adapting a company's
offerings so they more closely match the needs of one
or more segments.
Niche marketing - focuses on subgroups within
identified segments.
A niche - is a more narrowly defined group, usually
identified by dividing a segment into sub -segments or
by defining a group with a distinctive set of traits who
may seek a special combination of benefits.
Mass customization - is the ability to
prepare on a mass basis individually designed products
and communications to meet each customer's
requirements.
Examples , interactive communication media such as e-
mail, fax and the Internet.
Segmenting Consumer Markets
 There is no single way to segment a market.
 A marketer has to try different segmentation variables,
alone and in combination, to find the best way to view
market structure.
Geographic Segmentation
 Geographic segmentation calls for dividing the market
into different geographical units, such as nations, regions,
states, counties, cities, or even neighborhoods.
 A company may decide to operate in one or a few
geographical areas or operate in all areas but pay
attention to geographical differences in needs and wants.
Demographic Segmentation
 Demographic segmentation
Age and Life-Cycle Stage divides the market into
Gender
segments
• Dividing based on variables
a market into such as
• age, life-cycle
Dividing stage,
a market into
gender, income,
different occupation,
age and life- education, religion,
different ethnicity,
segments based
andcycle
generation.
groups on gender
 There are two reasons:

Consumer needs, wants, and usage rates often

Incomevariables.
vary closely with demographic
• Dividing a market into
different income
segments
Demographic variables are easier to measure
than most other types of variables.
Psychographic Segmentation
Psychographic segmentation divides buyers
into different segments based on social class,
lifestyle, or personality characteristics.
People in the same demographic group can have
very different psychographic characteristics.
Personality and lifestyle segmentation will work
best when brand choice is a reflection of self
expression i.e. the brand becomes a badge which
makes public an aspect of personality. Successful
personality based segmentation is found in
categories such as cosmetics, alcoholic drinks
and cigarettes.
 Behavioral Segmentation
 Behavioral segmentation divides buyers into segments
Occasions
based on their knowledge, attitudes, uses, or responses
• Occasion segmentation
concerning a product. Benefits Sought
divides the market into • Benefit segmentation divides
segments according to the market into segments
Usage
occasions whenRatebuyers get the according to the different
• Markets can actually
idea to buy, also be segmentedUser Status
make their benefits that consumers seek
• Markets can be segmented into nonusers,
into light, medium,
purchase, or use theand heavy
purchased from the product.
item. users. ex-users, potential users, first-time users,
product
and regular users of a product.Loyalty Status
• Marketers want to reinforce and retain
• A market can also be
regular users, attract targeted nonusers,
segmented by consumer
and reinvigorate relationships
loyalty.with ex-
users. • Consumers can be loyal to
brands (Tide), stores (Target),
and companies (Apple).
Using Multiple Segmentation Bases
 Marketers rarely limit their segmentation analysis to only
one or a few variables.
 Rather, they often use multiple segmentation bases in an
effort to identify smaller, better-defined target groups.
 Such segmentation provides a powerful tool for
marketers of all kinds.
 It can help companies identify and better understand key
customer segments, reach them more efficiently, and
tailor market offerings and messages to their specific
needs.
Segmenting Business Markets
 Business buyers can be segmented geographically,
demographically (industry, company size), or by benefits
sought, use status, usage rate, and loyalty status.
 Yet, business marketers also use some additional
variables, such as operating characteristics, purchasing
approaches, situational factors, and personal
characteristics.
Segmenting International Markets
 Geographic segmentation assumes that nations close to
one another will have many common traits and behaviors.
 Using intermarket segmentation (also called cross-
market segmentation), they form segments of
consumers who have similar needs and buying behaviors
even though they are located in different countries.
Requirements for Effective Segmentation
• The size, purchasing power, and profiles of
Measurable the segments can be measured.

Accessible • The market segments can be effectively

reached and served.

• A segment should be the largest possible

Substantial homogeneous group worth purchasing with a
tailored marketing program.
• The segments are conceptually

Differentiable distinguishable and respond differently to

different marketing mix elements and
programs.

Actionable • Effective programs can be designed for

attracting and serving the segments.
Market Targeting
The firm now has to evaluate the Various
segments and decide how many and which
segments it can serve best.
Segmentation is a means to target marketing.
Target marketing is the choice of specific
segments to serve. A firm needs to evaluate the
segments and decide which ones to serve.
In evaluating market segments which can be
targeted, a company should examine two broad
issues: (i) Relative attractiveness of the market
segments (ii) Company’s capability to compete
in various segments.
Evaluating Market Segments
In evaluating different market segments, a firm
must look at three factors:

Segment Company
Segment size and
structural objectives and
growth
attractiveness resources

A segment is less attractive if it already

contains many strong and aggressive
competitors or if it is easy for new
entrants to come into the segment.
Segment size
Large-sized segments are more attractive than
small ones since sales potential are greater
and the chance of achieving economies of scale
gets improved. But large segments are
highly competitive since other companies are
also targeting these bigger segments.
Smaller companies may not have the resources to
compete in large segments and so
may find smaller segments more attractive
Segment growth rate
Growing segments are usually more attractive
than stagnant or declining segments as
new business opportunities will be greater in
growing markets. But growth markets
have heavy competition. Such markets need
commitment of enormous resources in
production and marketing as new capacities have
to be created to serve the growing
number of customers and the company has to
reach the customers through various
Selecting Target Market Segments
A target market consists of a set of buyers who
share common needs or characteristics that the
company decides to serve.
A target market is a group of people or
organizations for which a company designs,
implements, and maintains a marketing mix
intended to meet the needs of that group,
resulting
in mutually beneficial and satisfying exchanges.
Undifferentiated Marketing
 Using an undifferentiated marketing (or mass
marketing) strategy, a firm might decide to ignore
market segment differences and target the whole market
with one offer.
 Such a strategy focuses on what is common in the needs
of consumers rather than on what is different.
Undifferentiated Strategy

Single
Marketing
Mix

Organization

Target Market
Differentiated Marketing
 Using a differentiated marketing (or segmented
marketing) strategy, a firm decides to target several
market segments and designs separate offers for each.
 By offering product and marketing variations to
segments, companies hope for higher sales and a stronger
position within each market segment.
 Developing a stronger position within several segments
creates more total sales than undifferentiated marketing
across all segments.
Concentrated Marketing
 When using a concentrated marketing (or niche
marketing) strategy, instead of going after a small share
of a large market, a firm goes after a large share of one or
a few smaller segments or niches.
 Today, the low cost of setting up shop on the Internet
makes it even more profitable to serve seemingly
miniscule niches.
Single segment, concentrated marketing strategy

Single
Marketing
Mix

Organization

Target Market
Micromarketing
Micromarketing is the tailoring and marketing
programs to the needs and wants of specific
individuals and local customer segments; it
includes local marketing and individual
marketing.
Micromarketing
Individual Marketing.
• It is the tailoring products and marketing programs to
the needs and preferences of individual customers.
Individual
marketing

It is the process by which

firms interact one-to-one
Mass customization with masses of customers
to design products and
One-to-one marketing services tailor-made to
individual needs.

Markets-of-one marketing
Multiple-segment, differentiated strategy

Organization

Target Market
Choosing a Targeting Strategy

Concentrated
Firm’s resources are limited
marketing

Uniform products

A firm introduces a new product Undifferentiated

marketing

Mature stage of the product

Differentiated
Buyers have the same tastes,
marketing
buy the same amounts, and
react the same way to
marketing efforts
Differentiation and Positioning
A product position is the way a product is
defined by consumers on important attributes ─
the place the product occupies in consumers’
minds relative to competing products.

• Consumers are overloaded with information

about products and services.
• They cannot reevaluate products every time
they make a buying decision.
• To simplify the buying process, consumers
organize products, services, and companies
into categories and “position” them in their
minds.
Positioning Maps
 In planning their differentiation and positioning
strategies, marketers often prepare perceptual positioning
maps that show consumer perceptions of their brands
versus competing products on important buying
dimensions.
Choosing a Differentiation and
Positioning Strategy
 The differentiation and positioning task consists of three
steps:
1. Identifying a set of differentiating competitive advantages
on which to build a position

2. Choosing the right competitive advantages

3. Selecting an overall positioning strategy

• The company must then effectively communicate and deliver the

chosen position to the market.
Identifying Possible Value Differences and
Competitive Advantages
 The competitive advantage is an advantage over
competitors gained by offering greater customer value,
either by having lower prices or providing more benefits
that justify higher prices.
 To find points of differentiation, marketers must think
through the customer’s entire experience with the
company’s product or service.
 An alert company can find ways to differentiate itself at
every customer contact point.
Choosing the Right Competitive
Advantages
 How Many Differences to Promote.
• A company should develop a unique selling proposition
(USP) for each brand and stick to it.
 Which differences to Promote.
• A difference is worth establishing to the extent that it satisfies
the following criteria:
• Important
• Distance
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
Selecting an Overall Positioning
Strategy
The
• Thus, fullinpositioning
The
any market, offor
Same
there aisfor
brandLessis
usually called
room the
for many
More More
different
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proposition ─ the fulloccupying
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powerful
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upscale ─ everyone
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• The important thing is that each company must
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positioned.
charging
develop its own winning positioning strategy, one that
• It not onlythe
makes offers higherspecial
company quality,
toititsalso gives
target prestige to
consumers.
the buyer.
Less for Much Less
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• A market almost always for Less
exists for products that offer less
More
and therefore cost less. for the Same
• Of course, the winning value proposition would be to offer
• • Companies
Few for
more people need,
less.
can want,
attack or can afford
a competitor’s “the very best” in
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• positioning
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companies
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claim
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comparable
• In many cases, consumers will gladly settle for less than
companies
quality at a can
loweractually
price. achieve such lofty positions.
optimal performance or give up some of the bells and
whistles in exchange for a lower price.
Developing a Position Statement
 The positioning statement is a statement that summarize
company or brand positioning using this form: To (target
segment and need) our (brand) is (concept) that (point of
difference).
 Note that the positioning statement first states the
product’s membership in a category (digital content
management application) and then shows its point of
difference from other members of the category (easily
capture moments and ideas and remember them later).
Communicating and Delivering the
Chosen Position
 Once a company has built the desired position, it must
take care to maintain the position through consistent
performance and communication.
 It must closely monitor and adapt the position over time
to match changes in consumer needs and competitors’
strategies.
The End