Segmentation, Targeting & Positioning

for Competitive Advantage

Nathan George, M.S., J.D.

1
 Marketing Process Involves

• Market orientation as philosophy

• Market segmentation
• Targeting market
• Positioning
• Marketing mix

3
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 4
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.

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Identify the Total Market

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 6
 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.

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Segmentation and Effectiveness

Identify Total Market

Effective
Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 8
 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.

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Criteria for
successful segmentation

Ac
i s t i n ctive tion
D
ab
l le
n tia
a
b st
Su
Me Acc
a e
Ide sura ssib
l
ntif ble e
iab
le

10
Criteria for
successful segmentation

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

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Criteria for
successful segmentation

•Difference
Me
a preferences for a
Ide sura
nti b
fiab le
le
product must be
identifiable and
capable of being
related to
measurable
variables.
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Criteria for
successful segmentation

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

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Criteria for
successful segmentation

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

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Criteria for
successful segmentation

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

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Determine Bases for Segmentation

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 16
 Bases for Segmentation

• To divide a market into segments, firms

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

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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Segmentation Base

Life-cycle Income Level

Social class

Education Ethnic

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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 Segmentation Base

• Localizes its marketing efforts to specific

geographic regions

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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 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

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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Segmentation Base

• Markets can be segmented

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

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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Segmentation Base

• Purchase situation or occasion

– Physical surroundings
– Social surroundings
– Temporal perspective

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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 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 Users
80%
Heavy Users
20%

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 Segmentation Base

• Information for segmenting

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

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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
– Standard Industrial classification is often
employed

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Segmenting Business Markets

• Segmentation variables used to segment

business markets:

– Size
– Industry
– Purchasing approaches
– Product usage
– Situational factors (seasonal trend)
– Geographic
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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 33
 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 34
Target the Mass Market versus the
Individual Consumer

Mass
Market
Niche Micro-
marketing The
Individual

e n t a t i o n S i ze
M a r k e t S e g m
f
Continuum o Personal-
Micro- ization
Standardized Niche marketing
Marketing
Mix 35
 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 created strategically to meet
potential customer’s needs
• Offers the greatest potential to achieve profit
or relationship goals

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Targeting Strategy

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

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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.

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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.

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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.

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Alternative of Targeting Strategy

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

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Select Positioning Strategy

Identify Total Market

Effective
Segmentation

Determine Bases for

Segmentation

Targeting Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 42
 Positioning

Positioning

• Kotler defined: “designing an

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

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 Positioning

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

• Key to developing the

appropriate marketing mix is
the positioning strategy of the
product.

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 Presumptions of Positioning

• All products have object and

subject attributes
• Recognizable
• Comparable

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 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.
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Select Positioning Strategy

• Position Mapping- creating a

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

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Select Positioning Strategy

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Select Positioning Strategy

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 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 51
Marketing Mix

Identify Total Market

Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 52
 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

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 Recognize 4Ps and the 7Ps

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

Place
Product
(Distribution)

Marketing
Mix

Promotion Price

Objective 4 55
 Marketing Strategy and the
Marketing Mix

Product

• Refers to goods, services, people, places

and ideas
– Household consumers
– Business-to-business customers
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 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.

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 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

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 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

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