Segmentation, Targeting & Positioning

for Competitive Advantage

By Dr. Kevin Lance Jones

1
 Marketing Process Involves

• Market orientation as philosophy

• Market segmentation
• Targeting market
• Positioning
• Marketing mix

2
Marketing Strategy

• Select base for segmentation and identify appropriate

market segments.
• Evaluate and appraise the market segments resulting
from the first step.
• Select an overall market targeting strategy and specific
target segments.
• Tailoring a distinct position in selected markets
• Developing marketing mixes that serve desired
positioning strategy in the marketplace
• Auditing marketing environments and efforts
3
Importance of
Segmentation and Targeting

• The focus of a successful marketing program is the

customer. Effectively marketing must fully understand the
needs.
• Customers with decent life and individualism have
Heterogeneous demands, This has given rise to need
segmenting.
• The process of understanding the customer and choosing
a group of customer you can serve best is targeting.
• So target a segmentation is core of the marketing process.

4
Identify the Total Market

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 5
 Identify the Total Market

• The first step in the target market

selection process is to specifically
define the total market of all potential
customers for a product category.

6
Segmentation and Effectiveness

Identify Total Market

Effective
Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 7
 Segmentation

• Segmenting means dividing a heterogeneous

demanding markets into homogenous groups
based on similar characteristics or traits
• Heterogeneous demand- different groups of
customers have differing needs from specific
products.
• Homogeneous segment- the separation of
markets into distinctive groups based on
homogeneous characteristics.

8
Criteria for
successful segmentation

Ac
i sti nc tive tio
D n ab
l le
t ia
tan
bs
Su
Me Acc
a
Ide sura ess
ible
ntif ble
iab
le

9
Criteria for
successful segmentation

tive
Distinc •Clear differences
in consumer
preferences for a
product must
exist.

10
Criteria for
successful segmentation

•Difference
Me
a preferences for a
Ide sura
ntif ble
iab
le
product must be
identifiable and
capable of being
related to
measurable
variables.
11
Criteria for
successful segmentation

l
•The proposed
ti a
b sta
n
market segment
Su
must have enough
size and
purchasing power
to be profitable.

12
Criteria for
successful segmentation

•Companies must
Act
io nab
le
be able to respond
to difference
preferences with
an appropriate
marketing mix.

13
Criteria for
successful segmentation

Acc
•The proposed
ess
ible market segment
must be readily
accessible and
reachable with
market programs.

14
Determine Bases for Segmentation

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 15
 Bases for Segmentation

• To divide a market into segments, firms

use segmenting criterion that describe
the characteristics of each part of the
market.

16
Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
17
Segmentation Base

Life-cycle Income Level

Social class

Education Ethnic

18
Segmentation
Segmentation Base
Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
19
 Segmentation Base

• Localizes its marketing efforts to specific

geographic regions

20
Segmentation
Segmentation Base
Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
21
 Segmentation Base

• Grouping customers together based

on social class, lifestyles and
psychological characteristics
(attitudes, interests and opinions)
• Useful but more difficult to identify and
measure compared to demographic
variables

22
Segmentation
Segmentation Base
Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
23
Segmentation Base

• Markets can be segmented

based on the benefits that
consumers desire from using a
specific product

24
Segmentation
Segmentation Base
Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
25
Segmentation Base

• Purchase situation or occasion

– Physical surroundings
– Social surroundings
– Temporal perspective

26
Segmentation
Segmentation Base
Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
27
 Segmentation Base

• Markets can be segmented by how often or how

heavily consumers use a specific product
– Pareto’s Principle or 80/20 Principle - 80% of revenue
generated by 20% of customers

Light
Light Users
Users
80%
80%
Heavy
Heavy Users
Users
20%
20%

28
 Segmentation Base

• Information for segmenting

markets may be obtained from
database such as Census, State
Statistics, ACORN

29
Segmenting Business Markets

• While the steps in the target market selection

process are essentially the same for business
markets, there are three major differences:
– The purchasing process, which differs
greatly from the household consumer
market.
– The use of different segment variables, in
simple way, a Standard Industrial
classification is often employed

30
Segmenting Business Markets

• Segmentation variables used to segment

business markets:

– Size
– Industry
– Purchasing approaches
– Product usage
– Situational factors (seasonal trend)
– Geographic
31
Select Segments for Targeting

Identify Total Market

Determine Need for

Segmentation

Determine Bases for

Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 32
 Targeting

• Targeting: choose the specific segment toward

which a firm directs its market efforts.
• Niche Marketing: the process of targeting a small
market segment with a specific, specialized
marketing mix.
• Micromarketing- the process of targeting smaller,
more narrowly defined market segments.
• On the individual consumer end of the continuum,
a firm may decide to target individual consumers
and personalize marketing efforts toward each.
33
Target the Mass Market versus the
Individual Consumer

Mass
Market
Niche Micro-
marketing The
Individual

e n ta ti o n S ize
Mar ke t Se gm
f
Continuum o Personal-
Micro- ization
Standardized Niche marketing
Marketing
Mix 34
 Advantage of Targeting Efforts

• Cannot effectively serve all the segments,

must target marketing efforts to a segment or
segments.
• Marketing opportunities and unfilled ‘gaps ’
are more accurately identified
• Marketing mix is more delicately meet toe
potential customer’s needs
• Offer the greatest potential to achieve profit or
relationship goals

35
Targeting Strategy

1.Undifferentiated marketing
2.Differentiated marketing
3.Concentrated marketing
4.Custom marketing

36
Targeting Strategy

Undifferentiated targeting
strategy
• Companies might
develop one
Concentrated strategy marketing mix
strategy that is
Differentiated strategy
appropriate for all
members of the
total market.

37
Targeting Strategy

Undifferentiated targeting
strategy
• Only one marketing
mix is developed
Concentrated strategy
and directed
toward a few, or
Differentiated strategy
perhaps one,
profitable market
segments.

38
Targeting Strategy

Undifferentiated targeting
strategy • Exists when a firm
develops different
Concentrated strategy
marketing mix
plans specially
Differentiated strategy
tailored for each of
two or more market
segments.

39
Alternative of Targeting Strategy

1. Single segment
2. Multi segment
3. Product specialized
4. Market specialized
5. Full market coverage

40
Select Positioning Strategy

Identify Total Market

Effective
Segmentation

Determine Bases for

Segmentation

Targeting Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 41
 Positioning

Positioning

• Kotler defined: “designing an

offer so that it occupies a
distinct and valued place in the
minds of the target customer.”

42
 Positioning

Positioning
Image that customers have about
a product in relation to the
43
product’s competitors
 Positioning Strategy

• Key to developing the

appropriate marketing mix is
the positioning strategy of the
product.

44
 Presumptions of Positioning

• All products have object and

subject attributes
• Recognizable
• Comparable

45
 Select Positioning Strategy

• Effective positioning
– What consumers currently think about
the product, especially in relation to
competing products
– What the marketer wants consumers to
think about the product
– Which positioning strategy will elevate
the consumers’ current product image to
the desired product image.
46
Select Positioning Strategy

• Position Mapping- creating a

visual description about consumer
perceptions of a product on two or
more dimensions in relation to
competitors.

47
Select Positioning Strategy

48
Select Positioning Strategy

49
 Select Positioning Strategy

• The positioning strategy must determine where a

company wants to go
• And how to get there by positioning the product
according to any of the following ways:
– Price/Quality
– Product Attributes
– Product User
– Product Usage
– Product Class
– Competition
– Symbol
50
Marketing Mix

Identify Total Market

Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 51
 Marketing Mix

• The final steps are to develop and a

marketing mix matched to the needs of the
target market
• This must support the chosen positional
strategy in the selected target markets
• Therefore determine the ‘4Ps ’ or “7Ps” of
its marketing mix as a tool to achieve the
desired position

52
 Recognize 4Ps and the 7Ps

• Productcustomer value
• Pricecost
• Placeconvenience
• Promotioncommunication
• Peopleconsideration
• Processesco-ordination
• Physical evidenceconfirmation
53
 Marketing Strategy and the
Marketing Mix

Place
Product
(Distribution)

Marketing
Mix

Promotion Price

Objective 4 54
 Marketing Strategy and the
Marketing Mix

Product

• Refers to goods, services, people, places

and ideas
– Household consumers
– Business-to-business customers
55
 Marketing Strategy and the
Marketing Mix

Place
(Distribution)

• Marketing channel is the network of

organizations that create time, place
and ownership utilities for household
consumers and business customers.

56
 Marketing Strategy and the
Marketing Mix

• Integrated Marketing Communication (IMC)

• System of management and integration of
marketing communication elements
– Advertising, publicity, sales promotion,
personal selling, sponsorship marketing, and
point-of-purchase communications

Promotion

57
 Marketing Strategy and the
Marketing Mix

• Pricing decisions are complex and are driven

by a variety of considerations including:
– Customer demand, costs, information
availability, competition, profit motives,
product considerations, and legal
considerations

Price

58