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Chapter 4
market Segmentation, Targeting and
positioning
 Introduction
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 A company cannot serve all customers in a broad

market

 The customers are too numerous and diverse in

their buying requirements

 the company needs to identify the market

segments that it can serve more effectively.

 Result, a general shift from mass marketing to

target marketing
 Market Segmentation
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 Market Segmentation: division of the total

market into smaller, relatively homogeneous groups

 Market Segmentation is the process of

identifying and profiling distinct group of
buyers who might require separate products
or marketing mixes
 Level of Market Segmentation
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 Level of Market Segmentation
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Undifferentiated (Mass) marketing

 Mass producing, mass distributing and mass
promoting about the same product in about
the same way to all consumers.
 It focus on commonness but it ignore the
different
 The main advantage of this target is
achieving economies of scale.
 Level of Market Segmentation
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Undifferentiated (Mass) marketing

 The limitations are:
 Problems arise in appealing all the customers with one offer
and difficult in penetrating focused markets
 The traditional argument for mass marketing is that it
creates the largest potential market, which leads to the
lowest costs, which in turn can translate into either
lower prices or higher margins.
 Level of Market Segmentation
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Segmenting Markets
 A company that practices segment marketing recognizes
that buyers differ in their needs, perceptions and buying
behaviors.
 A market segment consists of a large identifiable
group within a market, with similar wants,
purchasing power, geographical location, buying
attitudes, or buying habits.
 It focus on different but ignore commonness.
 Level of Market Segmentation
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Segmenting Markets
 With this strategy a firm decides to target several market
segment and design separate offers for each.
 Advantage: The company hopes increasing sales and
strong position with in each market segment
 The main problem is increasing cost.
• More expensive than undifferentiated marketing
− Extra marketing research
− Forecasting, sales analysis, promotion, planning, and channel
management
− Extra promotion, advertising
 Level of Market Segmentation
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Concentrating or Niche Marketing Strategy

 A niche is a more narrowly defined group, typically
a small market whose needs are not being well
served.
 Niche marketing focuses on subgroups within the segments.
• Niche offers smaller companies an opportunity to
compete by focusing their limited resources on serving
niches that may be unimportant to or overlooked by
larger competitors.
 Level of Market Segmentation
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Concentrating or Niche Marketing Strategy

 segments are fairly large and normally attract
several competitors, whereas, niches are fairly
small and may attract only one or two rivals
• Niche marketing is appealing when
 Limited resources
 Greater knowledge of consumer needs in the
niches
 Level of Market Segmentation
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Micro-Marketing
• Micromarketing is the practice of tailoring products and
marketing programs to suit the tastes of specific
individuals and locations.
• Micromarketing includes:
Local marketing (tailoring brands and promotions to the
needs and wants of local customer groups - cities,
neighborhoods and even specific stores)
Individual Marketing (tailoring products and marketing
programs to the needs and preferences of individual
customers)
No Market Segmentation
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Segmented by Gender
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Segmented by Age
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LO4
Bases for Segmentation
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Geography

Demographics

Psychographics

Behavioral variables
 Geographic Segmentation
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 Geographic segmentation calls for dividing the market

into different geographical units such as nations,
states, regions, cities, or neighborhoods.
 A company may decide to operate in one or
a few geographical areas, or to operate in
all areas but pay attention to geographical
differences in needs and wants.
 Ex.- Mcdonalds globally, sell burgers aimed at local
markets, for example, burgers are made from lamb in India
rather then beef because of religious issues. In Mexico
more chilli sauce is added and so on.
 Demographic segmentation:
• Income Under $1000,
17 $1000-$2500, over $2500
• Age Under 5, 5-10, 10-19, 20-34, 35+
• Gender Male, Female
• Family lifecycle Young, single, married, no children
• Social class Upper class, middle class, lower class
• Education High school, Diploma, Degree
• Occupation Professional, managers, clerical, employee
• Religion Orthodox, Muslim, catholic, protestant, etc
• Ethnic Background African, Asian, Europea
 Psychographic Segmentation
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 Psychographic Segmentation: dividing a population into

groups that have similar psychological characteristics,
lifestyles and personality.

 Lifestyle: people’s decisions about how to live their daily

lives, including activities (work, hobbies, shopping, sports,
and social events), Interests (food, fashion, family,
recreation), opinions (about themselves, social issues,
business, products).
 Behavioral Segmentation
 Some marketers regularly attempt
19 to segment their markets on
the basis of product related behavior
 Benefits desired: - Cost, quality, operating life
 Occasions: - Regular occasions, special occasions
 User status: - Non-user, ex-user, potential user, and first time
user
 Usage rate: - nonuser, light user, heavy user.
 Loyalty status: - None, medium, strong, absolute

 Readiness stage: - unaware-aware, informed, interested

desirous, intending to buy

 Attitude toward products: - Enthusiastic, positive, indifferent,

negative hostile
Criteria for Effective Segmentation
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Actionable

Accessibility

Measurability /
Identifiability

Substantiality
 Target Marketing
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Target marketing requires marketers to take three major

steps
 Market Segmentation: identify and profile distinct
groups of buyers who might require separate products or
marketing mixes
 Market Targeting: evaluate each market segment’s
attractiveness and select one or more market segments to
enter

 Market Positioning: establish and communicate the

products’ key distinctive benefits in the market
 Product Positioning
 Establish and communicate the products key distinctive
benefits in the market.

 Positioning is what you do to the mind of the prospect.

 Positioning is the act of designing the company’s offering and image

so that they occupy a meaningful and distinct competitive position in

the target customer’s mind. The positioning task consists of three
steps.
 Identifying a set of possible competitive advantages on which to
build a position.
 Selecting the right competitive advantages
 Effectively communicating and delivering the chosen position to
the market.
 Product Positioning ........
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 Positioning begins with actually
differentiating the company’s marketing offer
so that it will give consumers more value than
competitors’ offers do.

 Differentiation is the act of designing a set of

meaning-full differences to distinguish the

company’s offering from competitors’
offerings.
 Product
Areas of product differentiation
Differentiation: The main product differentiations are
features, performance, conformance, durability, reliability, reparability,
style and design.

 Features: characteristics that supplement the products basic function

 Performance: products primary characteristics operate

 Conformance: quality is the degree to which all the produced units are

identical and meet the promised target specifications.

 Durability: product’s expected operating life under natural and/or

stressful conditions.

 Reliability: product will not manufacture or fail within a specified time

 Reparability: is a measure of the ease of fixing a product

 Style: describes the product’s looks and feel to the buyer

 Design: is the totality of features

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 Service Differentiation: The main service differentiations are

ordering ease, delivery, installation, customer training,

customers consulting, maintenance and repair, and a few
others.

 Personal Differentiation Companies can gain a strong

competitive advantage through hiring and training better people
than their competitions do.
Any question?