Segmentation, Targeting and

Positioning: Introduction
SEGMENTATION

Segmentation means to divide the marketplace into parts, or segments, which are
definable, accessible, actionable, and profitable and have a growth potential. In other
words, a company would find it impossible to target the entire market, because of time,
cost and effort restrictions. It needs to have a ‘definable’ segment – a mass of people
who can be identified and targeted with reasonable effort, cost and time.

Once such a mass is identified, it has to be checked that this mass can actually be
targeted with the resources at hand, or the segment should be accessible to the
company. Beyond this, will the segment respond to marketing actions by the company
(ads, prices, schemes, promos) or, is it actionable by the company? After this check,
even though the product and the target are clear, is it profitable to sell to them? Is the
number and value of the segment going to grow, such that the product also grows in
sales and profits?

Segmentation takes on great significance in today’s cluttered marketplace, with

thousands of products, media proliferation, ad-fatigue and general economic problems
around the world markets. Rightly segmenting the market place can make the difference
between successes and shut down for a company.

Segmentation allows a seller to closely tailor his product to the needs, desires, uses and
paying ability of customers. It allows sellers to concentrate on their resources, money,
time and effort on a profitable market, which will grow in numbers, usage and value.

TARGETING

Targeting in marketing is a strategy that breaks a large market into smaller segments to
concentrate on a specific group of customers within that audience. It defines a segment
of customers based on their unique characteristics and focuses solely on serving them.

Instead of trying to reach an entire market, a brand uses target marketing to put their
energy into connecting with a specific, defined group within that market.

The types of target markets are often segmented by characteristics such as:

 Demographics: age, gender, education, marital status, race, religion, etc.

 Psychographics: values, beliefs, interests, personality, lifestyle, etc.
 Business Industry: Business industry or vertical
 Geographic Areas: neighborhood, area code, city, region, country, etc

Why Is Targeting in Marketing So Important?

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It
impacts advertising, as well as customer experience, branding, and business operations.
When your company focuses on target market segmentation, you can do the following:

Speak directly to a defined audience. Marketing messages resonate more deeply with

audiences when readers can relate directly to the information. Brands that have a large,
varied market of customers often struggle with creating marketing campaigns that speak
directly to their audience. Because their viewers are very different, few slogans or stories
can resonate with each person on a personal level. Through target marketing, you can
alleviate this problem and focus on crafting messages for one specific audience.

Attract and convert high-quality leads. When you speak directly to the people you
want to target, you are more likely to attract the right people. Your marketing will more
effectively reach the people most likely to want to do business with you. When you
connect with the right people, you are then more likely to get high-quality, qualified leads
that will turn into paying customers.

Differentiate your brand from competitors. When you stop trying to speak to every
customer in your market and start focusing on a smaller segment of that audience, you
also start to stand out from competitors in your industry. When customers can clearly
identify with your brand and your unique selling propositions, they will choose you over a
competitor that isn’t specifically speaking to or targeting them. You can use your
positioning in marketing to make your brand more well-known and unique.

Build deeper customer loyalty. The ability to stand out from competitors by reaching
your customers on a more personal, human level also creates longer-lasting
relationships. When customers identify with your brand and feel like you are an advocate
for their specific perspectives and needs, they will likely be more loyal to your brand and
continue to do business with you over a longer period of time.

Improve products and services. Knowing your customers more intimately also helps
you look at your products and services in a new way. When you have a deep
understanding of your target audience, you can put yourself in their shoes and see how
you can improve your offerings. You can see what features you can add to better serve
your customers.

Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to
help your brand and team. Target marketing allows you to get more specific about
your marketing strategies, initiatives, and direction of your brand. It helps you clarify your
vision and get everyone in the organization on the same page. You have more direction
when it comes to shaping upcoming plans for both marketing and the business as a
whole. A focused approach helps you fully optimize your resources, time, and budget.

POSITIONING

A marketing strategy that aims to make a brand occupy a distinct position, relative to
competing brands, in the mind of the customer. Companies apply this strategy either by
emphasizing the distinguishing features of their brand (what it is, what it does and how,
etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or
luxurious, entry-level or high-end, etc.) through advertising. Once a brand is positioned,
it is very difficult to reposition it without destroying its credibility. Also called product
positioning.

Market segmentation is a process of dividing the entire market population into multiple
meaningful segments based on marketing variables like demographics (age, gender
etc), geographic, psychographics (lifestyle, behaviour) etc. Market segmentation in
marketing is identifying a set of homogenous segments having similar needs, properties
& demands which can be used by a company to sell their product/service more
effectively.

Once an entire population is divided into market segments, companies can target them
more accurately and design their positioning accordingly. This entire process is also
known as STP (Segmentation, Targeting and Positioning).

There are 4 types of Market segmentation which are most commonly used. Market
segmentation is one of the oldest marketing trick in the books. With the customer
population and preferences becoming more wider, and the competitive options
becoming more available, market segmentation has become critical in any business or
marketing plan. In fact, people launch products keeping the market segmentation in
mind.

There are three ways to classify what the customer wants. It is known as needs, wants
and demands. However, to decide the needs, wants and demands, you need to carry
out segmentation first. And in segmentation, the first step is to determine which type of
customer will prefer your products. Accordingly, that customer will be from your targeted
segment. Who would want your product and whether it falls in the needs segment, the
wants segment or the demands segment. Once you decide the product you are going to
make, then you decide on the market segmentation.

There are 4 different types of market segmentation and all of them vary in their
implementation in the real world. Let us discuss each of them in detail.

Types of Market Segmentation

(1) Demographic Segmentation

Demographic segmentation is one of the simplest and most widest type of market
segmentation used. Most companies use it to get the right population in using their
products. Segmentation generally divides a population based on variables. Thus
demographic segmentation too has its own variables such as Age, gender, family size,
income, occupation, religion, race and nationality.

Demographic segmentation can be seen applied in the automobile market. The

automobile market has different price brackets in which automobiles are manufactured.
For example –  Maruti has the low price bracket and therefore manufactures people
driven cars. Audi and BMW have the high price bracket so it targets high end buyers.
Thus in this case, the segmentation is being done on the basis of earnings which is a
part of demography. Similarly, Age, life cycle stages, gender, income etc can be used for
demographic type of market segmentation.
(2) Behavioral Segmentation

This type of market segmentation divides the population on the basis of their behavior,
usage and decision making pattern. For example –  young people will always prefer
Dove as a soap, whereas sports enthusiast will use Lifebuoy. This is an example of
behavior based segmentation. Based on the behavior of an individual, the product is
marketed.

This type of market segmentation is in boom especially in the smart phone market. For
example –  Blackberry was launched for users who were business people, Samsung
was launched for users who like android and like various applications for a free price,
and Apple was launched for the premium customers who want to be a part of a unique
and popular niche.

Another example of behavioral segmentation is marketing during festivals. Say on

Christmas, the buying patterns will be completely different as compared to buying
patterns on normal days. Thus, the usage segmentation is also a type of behavioral
segmentation.

(3) Psychographic Segmentation

Psychographic segmentation is one which uses lifestyle of people, their activities,

interests as well as opinions to define a market segment. Psychographic segmentation is
quite similar to behavioral segmentation. But psychographic segmentation also takes the
psychological aspects of consumer buying behavior into accounts. These psychological
aspects may be consumer’s lifestyle, his social standing as well as his AIO. Do refer
more to Activities, interests and opinions.

Application of psychographic segmentation can be seen all across nowadays. For

example – Zara markets itself on the basis of lifestyle, where customers who want the
latest and differential clothing can visit the Zara stores. Similarly Arrow markets itself to
the premium office lifestyle where probably your bosses and super bosses shop for the
sharp clothing. Thus, this type of segmentation is mainly based on lifestyle or AIO.

(4) Geographic Segmentation

This type of market segmentation divides people on the basis of geography. Your
potential customers will have different needs based on the geography they are located
in. In the article on geographic segmentation, i have explained how people who are
located in non municipal areas might require a RO water purifier whereas those located
in municipal areas might need UV based purifiers. Thus, the need can vary on the basis
of geography.

Similarly in cold countries, the same company might be marketing for heaters whereas in
hot countries, the same company might be targeting air conditioners. Thus, many
companies use geographic segmentation as a basis for market segmentation.

This type of segmentation is the easiest but it was actually used in the last decade
where the industries were new and the reach was less. Today, the reach is high but still
 geographic segmentation principles are used when you are expanding the business in
more local areas as well as international territories.

Benefits of Segmentation
1. Determining market opportunities

Market segmentation enables to identify market opportunities. The marketer can study
the needs of each segment in the light of current offerings by the competitors. From such
study, the marketer can find out the current satisfaction of customers.

Segments with low level of satisfaction from present offering may represent excellent
market opportunities. For example, customers may not be satisfied with the current
offering of water purifiers in terms of product or after-sale service. Such situation enables
a marketer to launch a new range of water purifiers and market them well.

2. Adjustments in Marketing Appeals

Sellers can make best possible adjustments of their product and marketing appeals.
Instead of one marketing programme aimed to draw in all potential buyers, sellers can
create separate marketing programmes designed to satisfy the needs of different
customers. Proper advertising and sales promotional appeals can be made depending
on the target audience.

3. Developing Marketing Programmes

Companies can develop marketing programmes and budgets based on a clearer idea of
the response characteristics of specific market segments. They can budget funds to
different segments depending on their buying response.

4. Designing a Product

Market segmentation helps in designing products that really match the demands of the
target audience. Products with high market potential can be designed and directed to
meet the satisfaction of the target market.

5. Media Selection

It helps in selection of advertising media more intelligently and in allocating funds to

various media. The funds are allocated to various media depending on the target audi-
ence, impact of the media, competitor advertising, and so on.

6. Timing of Marketing efforts

It helps in setting the timings of the promotional efforts so that more emphasis is placed
during those periods when response is likely to be at its peak. For instance, consumer
goods can be heavily advertised to Christians during Christmas season and to Hindus
during Diwali time.

7. Efficient Use of Resources

 By tailoring marketing programme to individual market segments, management can do a
better marketing job and make more efficient use of the marketing resources. For
example, a small firm can effectively use its limited resources – money, sales force, etc.
– in one or two segmented markets rather than unsuccessfully aiming at a wider market.

8. Better Service to Customers

Market segmentation enables a company to concentrate its marketing efforts in a

particular market area, thereby, providing a better service to the target customers.
Proper marketing segmentation can facilitate customer satisfaction.

9. Helps in Fixing Prices

The marketing segmentation also enables to fix prices of the goods and services. Since
different market segments have different price perceptions, it is necessary to adopt
different pricing strategies for the markets. For instance, the prices for lower-income
groups have to be lower and the product and promotional efforts are adjusted
accordingly.

10. Assist in Distribution Strategies

Segmentation also assists in adopting suitable distribution strategies. Different market

segments may require different distribution mix. For example, if the product is of very
high quality intended to target the upper class, then it must be distributed at prestigious
outlets located at selective places.

 1 COMMENT

There are following criteria for an effective segmentation

(i) Measurable and Obtainable

The size, profile and other relevant characteristics of the segment must be measurable and
obtainable in terms of data.

It has to be possible to determine the values of the variables used for segmentation with
justifiable efforts. This is important especially for demographic and geographic variables. For
an organisation with direct sales (without intermediaries), the own customer database could
deliver valuable information on buying behaviour (frequency, volume, product groups, mode
of payment etc).

(ii) Relevant

The size and profit potential of a market segment have to be large enough to economically
justify separate marketing activities for this segment. If a segment is small in size then the
cost of marketing activities cannot be justified.
(iii) Accessible

The segment has to be accessible and servable for the organisation. That means, the customer
segments may be decided considering that they can be accessed through various target-group
specific advertising media such as magazines or websites the target audience likes to use.

(iv) Substantial

The segments should be substantial to generate required returns. Activities with small
segments will give a biased result or negative results.

(v) Valid

This means the extent to which the base is directly associated with the differences in needs
and wants between the different segments. Given that the segmentation is essentially
concerned with identifying groups with different needs and wants, it is vital that the
segmentation base is meaningful and that different preferences or needs show clear variations
in market behaviour and response to individually designed marketing mixes.

(vi) Unique or Distinguishable or Differentiable

The market segments have to be that diverse that they show different reactions to different
marketing mixes. If not then there would have been no use to break them up in segments.

(vii) Appropriate

The segments must be appropriate to the organisation’s objectives and resources.

(viii) Stable

The segments must be stable so that its behaviour in the future can be predicted with a
sufficient degree of confidence.

(ix) Congruous

The needs and characteristics of each segment must be similar otherwise the main objective
of segmentation will not be served. If within a segment the behaviour of consumers are
different and that they react differently, then a unique marketing strategy cannot be
implemented for everyone. This will call for a further segmentation.

(x) Actionable or Feasible

It has to be possible to approach each segment with a particular marketing programme and to
draw advantages from that. The segments that a company wishes to pursue must be
actionable in the sense that there should be sufficient finance, personnel and capability to take
them all. Hence, depending upon the reach of the company, the segments must be selected.

 1 COMMENT
Market segmentation is not something only applicable to the top companies. In fact, small
businesses became large companies due to the application of marketing concepts, a major one
of which was Segmentation of the market. Marketing strategy starts with segmentation, and
hence learning the steps of market segmentation is important for any business.

The 7 steps of Market Segmentation

(1) Determine the need of the segment

What are the needs of the customers and how can you group customers based on their needs?
You have to think of this in terms of consumption by customers or what would each of your
customers like to have.

For example – In a region, there are many normal restaurants but there is no Italian restaurant
or there is no fast food chain. So, you came to know the NEED of consumers in that specific
region.

(2) Identifying the segment

Once you know the need of the customers, you need to identify that “who” will be the
customers to choose your product over other offerings. Quite simply, you have to decide
which type of segmentation you are going to use in this case. Is it going to be geographic,
demographic, psychographic or what? The 1st step gives you a mass of crowd, and in the 2nd
step, you have to differentiate the people from within that crowd.

Taking the same above example of Italian restaurant – The target will be children, youngsters
and middle aged people. Italian food is generally not preferred by old age people who prefer
food which can be easily chewed (that’s what I feel at least. Lets see if I have teeth by the
time I am 60). So you know the segment now.

(3) Which segment is most attractive?

Now, we approach the targeting phase in the steps of market segmentation. Out of the various
segments you have identified via demography, geography or psychographic, you have to
choose which the most attractive segment is for you. This is a tough question to answer
because one of them will be left out.

If you are using psychographic segmentation, then you need to target the psychology of
consumers which takes time. So you will not be able to expand faster. But if your product is
basic, then you can use demographic segmentation as the base, and expand much faster in
surrounding regions. So this step involves deciding on ALL the different types of
segmentation that you can use.

Attractiveness of the firm also depends on the competition available in the segment. If the
competition is too much in a given segment, then it does not make sense to take that segment
into consideration. In fact, that segment is not attractive at all.
Taking the above example of an Italian restaurant, the restaurant owner realizes that he has
more middle aged people and youngsters in his vicinity. So it is better to market his store on
weekends and malls where this target group is likely to go. The middle aged people can bring
children and elders as per their convenience. So the 1st target is the middle aged group, and
the 2nd target is youngsters. He is using a combination of demographic and geographic
segmentation to target middle aged people in his region.

(4) Is the segment giving profit?

So, now you have different types of segmentation being analyzed for their attractiveness.
Which segment do you think will give you the maximum crowd has been decided in the 3rd
step? But which of those segments is most profitable is a decision to be taken in the 4th step.
This is also one more targeting step in the process of segmentation.

Example – The Italian restaurant owner above decides that he is getting fantastic profitability
from the middle aged group, but he is getting poor profitability from youngsters. Youngsters
like fast food and they like socializing. So they order very less, and spend a lot of time at the
table, thereby reducing the profitability. So what does the owner do? How does he change
this mindset when one of the segments he has identified is less profitable? Let’s find out in
the 5th step.

(5) Positioning for the segment

Once you have identified the most profitable segments via the steps of market segmentation,
then you need to position your product in the mind of the consumers. I would not dive deep
into positioning here as you can read this quick guide to positioning. The basic concept is that
the firm needs to place a value on its products.

If the firm wants a customer to buy their product, what is the value being provided to the
customer, and in his mindset, where does the customer place the brand after purchasing the
product? What was the value of the product to the customer and how valuable does he think
the brand is – that is the work of positioning. And to complete the process of segmentation,
you need to position your product in the mind of your segments.

Example – In the above case we saw that the Italian restaurant owner was finding youngsters
unprofitable. So what does he do? How does he target that segment as well? Simple. He starts
a fast food chain right next to the Italian restaurant. What happens is, although the area has
other fast food restaurants, his restaurant is the only one which offers good Italian cuisine and
a good fast food restaurant next door itself. So both, the middle aged target group and the
youngsters can enjoy. He has converted the profit earned from the middle aged group, into
more profit, and has achieved top of the mind positioning for all people in his region.

(6) Expanding the Segment

All segments need to be scalable. So, if you have found a segment, that segment should be
such that the business is able to expand with the type of segmentation chosen. If the segment
is very niche, then the business will run out of its course in due time. Hence the expansion of
the segment is the second last step of market segmentation.
 In the above example, the Italian restaurant owner has the best process in his hand – an Italian
restaurant combined with a fast food chain. He was using both Demographic and geographic
segmentation. Now he starts looking at other geographic segments in other regions where he
can establish the same concept and expand his business. Naturally, with more expansion he
will earn more profits.

(7) Incorporating the segmentation into your marketing strategy

Once you have found a segment which is profitable and expandable, you need to incorporate
that segment in your marketing strategy. How do you think McDonalds or KFC became such
big chains of fast food? They had a very clear process of segmentation because of which it
became easier to find regions to target.

With the steps of market segmentation, your segments become clear and then you can adapt
other variables of marketing strategy as per the segment being targeted. You can modify the
products, keep the optimum price, enhance the distribution and the place and finally promote
clearly and crisply to your target audience. Business becomes simpler due to the process of
market segmentation.

The four bases for segmenting consumer market are as follows:

1. Demographic Segmentation
2. Geographic Segmentation
3. Psychographic Segmentation
4. Behavioural Segmentation.

(1) Demographic Segmentation

Demographic segmentation divides the markets into groups based on variables such as
age, gender, family size, income, occupation, education, religion, race and nationality.
Demographic factors are the most popular bases for segmenting the consumer group.
One reason is that consumer needs, wants, and usage rates often vary closely with the
demographic variables. Moreover, demographic factors are easier to measure than most
other type of variables.

(a) Age

It is one of the most common demographic variables used to segment markets. Some
companies offer different products, or use different marketing approaches for different
age groups. For example, McDonald’s targets children, teens, adults and seniors with
different ads and media. Markets that are commonly segmented by age includes
clothing, toys, music, automobiles, soaps, shampoos and foods.

(b) Gender

Gender segmentation is used in clothing, cosmetics and magazines.

(c) Income
Markets are also segmented on the basis of income. Income is used to divide the
markets because it influences the people’s product purchase. It affects a consumer’s
buying power and style of living. Income includes housing, furniture, automobile,
clothing, alcoholic, beverages, food, sporting goods, luxury goods, financial services and
travel.

(d) Family cycle

Product needs vary according to age, number of persons in the household, marital
status, and number and age of children. These variables can be combined into a single
variable called family life cycle. Housing, home appliances, furniture, food and
automobile are few of the numerous product markets segmented by the family cycle
stages. Social class can be divided into upper class, middle class and lower class. Many
companies deal in clothing, home furnishing, leisure activities, design products and
services for specific social classes.

(2) Geographic Segmentation

Geographic segmentation refers to dividing a market into different geographical units

such as nations, states, regions, cities, or neighborhoods. For example, national
newspapers are published and distributed to different cities in different languages to
cater to the needs of the consumers.

Geographic variables such as climate, terrain, natural resources, and population density
also influence consumer product needs. Companies may divide markets into regions
because the differences in geographic variables can cause consumer needs and wants
to differ from one region to another.

(3) Psychographic Segmentation

Psychographic segmentation pertains to lifestyle and personality traits. In the case of

certain products, buying behaviour predominantly depends on lifestyle and personality
characteristics.

(a) Personality characteristics

It refers to a person’s individual character traits, attitudes and habits. Here markets are
segmented according to competitiveness, introvert, extrovert, ambitious,
aggressiveness, etc. This type of segmentation is used when a product is similar to
many competing products, and consumer needs for products are not affected by other
segmentation variables.

(b) Lifestyle

It is the manner in which people live and spend their time and money. Lifestyle analysis
provides marketers with a broad view of consumers because it segments the markets
into groups on the basis of activities, interests, beliefs and opinions. Companies making
cosmetics, alcoholic beverages and furniture’s segment market according to the lifestyle.
(4) Behavioural Segmentation

In behavioural segmentation, buyers are divided into groups on the basis of their
knowledge of, attitude towards, use of, or response to a product. Behavioural
segmentation includes segmentation on the basis of occasions, user status, usage rate
loyalty status, buyer-readiness stage and attitude.

(a) Occasion

Buyers can be distinguished according to the occasions when they purchase a product,
use a product, or develop a need to use a product. It helps the firm expand the product
usage. For example, Cadbury’s advertising to promote the product during wedding
season is an example of occasion segmentation.

(b) User status

Sometimes the markets are segmented on the basis of user status, that is, on the basis
of non-user, ex-user, potential user, first-time user and regular user of the product. Large
companies usually target potential users, whereas smaller firms focus on current users.

(c) Usage Rate

Markets can be distinguished on the basis of usage rate, that is, on the basis of light,
medium and heavy users. Heavy users are often a small percentage of the market, but
account for a high percentage of the total consumption. Marketers usually prefer to
attract a heavy user rather than several light users, and vary their promotional efforts
accordingly.

(d) Loyalty Status

Buyers can be divided on the basis of their loyalty status—hardcore loyal (consumer
who buy one brand all the time), split loyal (consumers who are loyal to two or three
brands), shifting loyal (consumers who shift from one brand to another), and switchers
(consumers who show no loyalty to any brand).

(e) Buyer readiness stage

The six psychological stages through which a person passes when deciding to purchase
a product. The six stages are awareness of the product, knowledge of what it does,
interest in the product, preference over competing products, conviction of the product’s
suitability, and purchase. Marketing campaigns exist in large part to move the target
audience through the buyer readiness stages.

Targeting- Meaning, Target

market strategies
Target market refers to a specific and well-defined consumer segment within the
business’s serviceable market which the business wants to sell its products and services
and direct its marketing efforts to.

The purpose of evaluating market segments is to choose one or more segments to

enter. Target market selection is the choice of which and how many market segments
the company will compete in.

When selecting their target markets, companies have to make a choice of whether they
are going to be focused on one or few segments or they are going to cater to the mass
market. The choice that companies make at this stage will determine their marketing mix
and positioning plank.

There are Four Generic Target Marketing Strategies.

1. Undifferentiated Marketing

There may be no strong differences in customer characteristics. Alternatively, the cost of

developing a separate marketing mix for separate segments may outweigh the potential
gains of meeting customer needs more exactly. Under these circumstances a company
will decide to develop a single marketing mix for the whole market. There is absence of
segmentation.

This strategy can occur by default. Companies which lack a marketing orientation may
practice this strategy because of lack of customer knowledge. It is convenient since a
single product has to be developed.

A company using an undifferentiated targeting strategy essentially adopts a mass-

market philosophy. It views the market as one big market with no individual segments.
The company uses one marketing mix for the entire market. The company assumes that
individual customers have similar needs that can be met with a common marketing mix.

The first company in an industry normally uses an undifferentiated targeting strategy.

There is no competition at this stage and the company does not feel the need to tailor
marketing mixes to the needs of market segments.

Since there is no alternate offering, customers have to buy the pioneer’s product. Ford’s
Model T is a classical example of an undifferentiated targeting strategy. Companies
marketing commodity products like sugar also follow this strategy.

Companies following undifferentiated targeting strategies save on production and

marketing costs. Since only one product is produced, the company achieves economies
of mass production. Marketing costs are also lower as only one product has to be
promoted and there is a single channel of distribution.

But undifferentiated targeting strategy is hardly ever a well considered strategy.

Companies adopting this strategy have either been blissfully ignorant about differences
among customers or have been arrogant enough to believe that their product will live up
to the expectations of all customers, till focused competitors invade the market with more
appropriate products for different segments.
Therefore companies following this strategy will be susceptible to incursions from
competitors who design their marketing mixes specifically for smaller segments.

Finding out that customers have diverse needs that can only be met by products with
different characteristics means that managers have to develop new products, design
new promotional campaigns and develop new distribution channels. Moving into new
segments means that salespeople have to start prospecting for new customers.

2. Differentiated marketing or multi-segment targeting

When market segmentation reveals several potential target segments that the company
can serve profitably, specific marketing mixes can be developed to appeal to all or some
of the segments. A differentiated marketing strategy exploits the differences between
marketing segments by designing a specific marketing mix for each segment.

A company following multi-segment targeting strategy serves two or more well- defined
segments and develops a distinct marketing mix for each one of them. Separate brands
are developed to serve each of the segments.

It is the most sought after target market strategy because it has the potential to generate
sales volume, higher profits, larger market share and economies of scale in
manufacturing and marketing. But the strategy involves greater product design,
production, and promotion, inventory, marketing research and management costs.

Another potential cost is cannibalization, which occurs when sales of a new product cut
into sales of a firm’s existing products. Before deciding to use this strategy, a company
should compare the benefits and costs of multi-segment targeting to those of
undifferentiated and concentrated targeting.

The car market is most clearly segmented. There are segments for small cars, luxury
cars, sports utility vehicles, etc. Most car makers like General Motors, Ford, Toyota,
Honda and others offer cars for all the segments. Though Toyota entered the US market
with small cars, it eventually chose to operate in most of the segments.

3. Focus or Concentrated Targeting

Several segments may be identified but a company may not serve all of them. Some
may be unattractive or out of line with the company’s business strengths. A company
may target just one segment with a single marketing mix. It understands the needs, and
motives of the segment’s customers and designs a specialized marketing mix.

Companies have discovered that concentrating resources and meeting the needs of a
narrowly defined market segment is more profitable than spreading resources over
several different segments. Starbucks became successful by focusing exclusively on
customers who wanted gourmet coffee products.

The strategy is suited for companies with limited resources as these resources may be
too stretched if it competes in many segments. Focused marketing allows R&D
expenditure to be concentrated on meeting needs of one set of customers and
managerial activities are devoted to understanding and catering to their needs.

Large organizations may not be interested in serving the needs of this one segment or
their energies may be so dissipated across the whole market that they pay insufficient
attention to the requirements of this small segment. One danger that such niche
marketers face is attracting competition from larger organizations in the industry if they
are very successful.

Companies following concentrated targeting strategies are obviously putting all their
eggs in one basket. If their chosen segments were to become unprofitable or shrink in
size, the companies will be in problem. Such companies also face problems when they
want to move to some other segments, especially when they have been serving a
segment for a long time.

They become so strongly associated with serving a segment with a particular type of
product or service, that the customers of other segments find it very difficult to associate
with them. They believe that the company can serve only that particular segment.

Companies which start with concentrated targeting strategy but nurse ambitions to serve
more segments should make early and periodic forays into other segments.

The idea is to avoid being labelled as the company which exclusively serves a particular
segment. The association with one particular segment should not be allowed to become
so strong that customers cannot imagine the company doing something else.

Mercedes offers premium cars for the upper segment of the market only. It does not
offer cars for the middle and lower segments. But Mercedes segments the premium
segment and offers different cars for its different premium segments.

Some companies are focused in another way. They focus on heavy users—the small
percentage of customers that account for large share of a product’s sale.

The problem with such a strategy is that all the major players would be targeting this
segment, and hence serving this segment will involve high marketing expenditure, price
cutting and low profitability. A more sensible strategy is to target a small, less attractive
segment rather than choose the same segment that every company is after.

4. Customized Marketing

In some markets, the requirements of individual customers are unique and their
purchasing power is sufficient to make designing a separate marketing mix for each
customer a viable option. Many service providers such as advertising, marketing
research firms, architects and solicitors vary their offerings on a customer to customer
basis.

They will discuss face to face with each customer their requirements and tailor their
services accordingly. Customized marketing is also found within organizational markets
because of high value of orders and special needs of customers.
 Customized marketing is associated with close relationships between the supplier and
customer because the high value of an order justifies large marketing and sales efforts
being focused on each buyer.

Market Positioning- Meaning,

Positioning Strategies
In marketing, positioning has come to mean the process by which marketers try to create
an image or identity in the minds of their target market for their product, brand, or
organization. Brand positioning is at the heart of marketing strategy.

It is the act of designing the company’s offer and image so that it occupies a distinct and
valued place in the target customer’s minds. A good brand positioning helps to guide
marketing strategy by clarifying what a brand is all about, how it is unique, how it is
similar to competitive brands, and why consumers purchase it. Thus, in simple words
brand positioning refers to the position or image which a brand enjoys in the minds of
present and potential customers.

POSITIONING STRATEGIES

1. Positioning by product attributes and benefits

It is to associate a product with an attribute, a product feature, or a consumer feature.

Sometimes a product can be positioned in terms of two or more attributes
simultaneously. The price/quality attribute dimension is commonly used for positioning
the products.

A common approach is setting the brand apart from competitors on the basis of the
specific characteristics or benefits offered. Sometimes a product may be positioned on
more than one product benefit. Marketers attempt to identify salient attributes (those that
are important to consumers and are the basis for making a purchase decision).

2. Positioning by Price/Quality

Marketers often use price/quality characteristics to position their brands. One way they
do it is with ads that reflect the image of a high-quality brand where cost, while not
irrelevant, is considered secondary to the quality benefits derived from using the brand.
Premium brands positioned at the high end of the market use this approach for
positioning the product.

Another way to use price/quality characteristics for positioning is to focus on the quality
or value offered by the brand at a very competitive price. Although price is an important
consideration, the product quality must be comparable to, or even better than, competing
brands for the positioning strategy to be effective.

3. Positioning By Use or Application

 Another way is to communicate a specific image or position for a brand to associate it
with a specific use or application. Surf Excel is positioned as stain remover ‘Surf Excel
hai na!’ Also, Clinic All Clear – ‘Dare to wear black’.

4. Positioning By Product Class

Often the competition for a particular product comes from outside the product class. For
example, airlines know that while they compete with other airlines, trains and buses are
also viable alternatives. Manufacturers of music CDs must compete with the cassette
industry. The product is positioned against others that, while not exactly the same,
provide the same class of benefits.

5. Positioning By Product User

Positioning a product by associating it with a particular user or group of users is yet

another approach. Motography Motorola Mobile, in this ad the persona of the user of the
product has been positioned.

6. Positioning By Competitor

Competitors may be as important to positioning strategy as a firm’s own product or

services. In today’s market, an effective positioning strategy for a product or brand may
focus on specific competitors.

This approach is similar to positioning by product class, although the competition is

within the same product category in this case. Onida was positioned against the giants in
the television industry through this strategy. Onida colour TV was launched with the
message that all others were clones and only Onida was the leader— ‘Neighbour’s envy,
owner’s pride’.

7. Positioning By Cultural Symbols

This is an additional positioning strategy wherein the cultural symbols are used to
differentiate the brands. Examples are Humara Bajaj, Tata Tea, and Ronald McDonald.
Each of these symbols has successfully differentiated the product it represents from
competitors.

Value Proposition
 1 COMMENT

Value proposition refers to a business or marketing statement that a company uses to

summarize why a consumer should buy a product or use a service. This statement convinces a
potential consumer that one particular product or service will add more value or better solve a
problem than other similar offerings will. Companies use this statement to target customers
who will benefit most from using the company’s products, and this helps maintain an
economic moat.
A value proposition, which is an essential element of an elevator pitch, should be simple and
easy to remember. It should emphasize both the benefits the customer will receive and the
price the customer will be charged as compared to the competition. An important goal of a
value proposition is to convince the customer that he will be getting many more benefits than
he is being asked to pay for.

To create an effective value proposition, an organization should first determine exactly what
benefits a customer wants and how much the customer is willing to pay for them. The phrase
“value proposition” is credited to Michael Lanning and Edward Michaels, who first used the
term in a 1988 staff paper for the consulting firm McKinsey and Co. In the paper, which was
entitled “A business is a value delivery system,” the authors define value proposition as “a
clear, simple statement of the benefits, both tangible and intangible, that the company will
provide, along with the approximate price it will charge each customer segment for those
benefits.”

Creating a Successful Value Proposition

A company’s value proposition communicates the number one reason why a product or
service is best suited for a customer segment. Therefore, it should always be displayed
prominently on a company’s website and in other consumer touch points. It also must be
intuitive, so that a customer can read or hear the value proposition and understand the
delivered value without further explanation.

A successful value proposition has a bold headline that communicates the delivered benefit to
the consumer. The headline should be a single memorable sentence, phrase or even a tagline.
A sub-headline is often displayed below the main headline, expanding on the explanation of
delivered value and providing a specific example of why the product or service is superior to
others the consumer may be considering. The sub-heading can be a short paragraph between
two and three sentences, with bullet points below the sub-heading to list the key features or
benefits of the product. This allows consumers to scan the value proposition quickly and pick
up on the product features. Added visuals increase the ease of communication between
business and consumer.

Value propositions can follow different formats, as long as they are unique to the company
and to the consumers, it is servicing. However, all effective value propositions are easy to
understand and demonstrate specific results from a customer using a product or service. They
differentiate a product or service from any competition, avoid overused marketing
buzzwords, and communicate value within five seconds.