MARKET SEGMENTATION

TARGETING

AND
POSITIONING
BY B .W MAINA

MARKET
1. PLACE Market place where buyers and sellers meet to exchange goods and services e.g. Wakulima Market SITUATION Set of conditions consisting of buyers and sellers of a certain product – Economics definition DEMAND Market demand for a particular good.

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MARKET : MARKETERS’ VIEWPOINT
• Buyers with :  Needs to satisfy with a product they want  Money or income to spend which constitutes purchasing power giving them the ability to buy  Willingness to spend money to buy the good or service in question • Buyers constitute the market • Sellers constitute the industry

MARKET : MARKETERS’ DEFINITION A market consists of all potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want .

and deciding on the company‟s positioning in each market . and selecting and targeting one or more segment.TARGET MARKETING Process of dividing the market into major market segments . evaluating them .

Market segmentation Identifies the segments comprising the market 2. Market targeting Selects or aims at one or more of the segments after evaluation Product positioning Develops product and marketing mixes tailored to each segment 3. . the seller engages in: 1.TARGET MARKETING PROCESS In target marketing .

CONSUMER DIVERSITY OR HETEROGENEITY Buying habits and requirements are heterogeneous Different tastes and preferences Consumers widely scattered /spread geographically Consumers may be too numerous Difficult to serve all these consumers through mass marketing .RATIONALE FOR TARGET MARKETING 1.

SCARCITY OR RESOURCES AVAILABLE TO FIRM Lack of resources and energy to serve everywhere Difficulties in competing everywhere sometimes against superior odds Easier to serve smaller than larger market due to better focus and concentration More efficient and effective use of resources Enables firm to match organizational capabilities with specific groups of customers Firms perform better by identifying and concentrating on the most attractive parts of the market .) 2.RATIONALE FOR TARGET MARKET(CONT.

each of which tends to be homogeneous in all significant aspects • Involves taking the whole market and dividing it into homogeneous units with similar characteristics such that they react uniformly to given stimuli in the market .MARKET SEGMENTATION • Consists of taking the total heterogeneous market for a product and dividing into several sub – markets or segments .

and recognizing that not all people are alike and that one man‟s meat is one man‟s poison .MARKET SEGMENTATION(CONT) • Entails developing different demand schedules/curves for each market segment instead of having only one for the entire market • Groups together in the same segment consumers with similar needs which minimises differences among consumer groups and makes it easier to serve them • Represents the ultimate extension of the marketing concept starting with consumers and what they want.

MARKET SEGMENTATION AND CUSTOMIZATION • Products may be tailor-made or custom-made for consumers recognizing each consumer is unique and constitutes a market by himself • In industrial marketing products may be made according to buyer‟s specification • In consumer markets customization is possible but difficult as consumers are too numerous and quantities taken by each consumer too small .

ADVANTAGES OF MARKET SEGMENTATION • Easier to develop and implement a suitable market mix (4ps)for each segment since marketing mix variables can be tailored to appeal to specific customer groups • Marketing effort can be focused on customers with the greatest purchase interest instead of scattering it everywhere • Possibility of concentrating on the market in depth • Easier to understand customer needs and respond appropriately • Easier to develop and adjust product to demand • Ensures more efficient use of marketing resources • Easier to match organizational capabilities with customer groups .

ADVANTAGES OF MARKET SEGMENTATION (cont) • Easier to understand customers better end develop customer profile • Ability to identify marketing opportunities • Easier too build customer relationship to promote repeat purchases • Easier to monitor competitors activities • Easier to get in-depth knowledge of the segment through marketing research • Possible to specialize in products or services for small segments • Price discrimination can be undertaken in different segments to increase profitability . .

advertising promotional costs • Small segments may be unprofitable • Lack of economies scale . inventory .PROBLEMS OF SEGMENTATION • Difficult to select the most appropriate segmentation variable • Costs may increase due to many segments e.g.

Economic segmentation • Social class or Psychographic segmentation • Behavior : Product-related segmentation .MARKET SEGMENTATION VARIABLES OR FACTORS Market segmentation may be based on the following: • Geographic segmentation • Demographic and social.

GEOGRAPHIC SEGMENTATION • Market divided into different geographical units eg Provinces. newspapers • Company concentrates in one geographic area instead of operating nationally • Useful in initially defining markets . regions or districts – soft drinks Rural versus urban – bakeries.

low-tar cigarettes. teenager. music • Sex – male. clothes. female e.DEMOGRAPHIC AND SOCIO-ECONOMIC SEGMENTATION Uses population characteristics such as: • Age – babies. clubs • Family size – products packaged in family sizes • Marital status – married.g.family planning . contraceptives. young. single.g.counseling. hairdressing cosmetics. divorced e.g.magazines which appeal to men or women • Health condition/concerns – diet foods. clothes. old e. toys.

food.g. Chinese. clothes. secondary. judge. *The above factors are the most popular bases for distinguishing between customer groups . banker • Education – primary. Protestant. medium. houses.g.DEMOGRAPHIC AND SOCIO-ECONOMIC SEGMENTATION (cont) • Income-low. jobs • Religion – Catholic. radio and TV station • Ethic group e. Food such as Indian. books. college e. doctor. clubs • Occupation – teacher. books. cars. clothes • Race/Nationality e.g. lawyer. Muslim e. hotels.g. training courses. FM radio stations.g.high income groups e. food. clothes.

reading habits. middle. Clothing.SOCIAL CLASS. political parties.g. hospitals. games (golf). • Personality – ambitious. schools (academies). detached. hobbies. . social • Products can be designed to appeal to particular social classes or lifestyle e. aggressive. luxurious living. homes. mobile phone tariffs..PSYCHOGRAPHIC SEGMENTATION • Social class – lower. luxury cars. leisure activities. traditionalist. upper • Lifestyle – swingers. sophisticate. intelligent. high fashion.

g. bank accounts. non flier. cigarette smokers. heavy users e. • Use occasion .users • Usage rate – light. durability. comfort. Hospital. e. Funeral). economy. Coffee and beer drinkers. supermarket loyalty cards ..g. medium. normal wines vs. prestige.quality. Flower giving (Valentine‟s Day. vacation air travel. strong.BEHAVIOURAL:PRODUCTRELATED SEGMENTATION • Benefits sought . medium. taste.g. potential user. • Loyalty status – none.g. • User status – non-user. first-time user.convenience. champaigne for celebrations. Weddings.regular vs special occasion e. regular user e. safety. Business vs. ex user.. drug users rehabilitation programmes could focus on regular users to quit the habit or to discourage non. airline –flier vs.

informed. golf clubs.unaware.g. negative. indifferent. hostile.g. sports shoes . • Attitude towards the productenthusiastic. pap tests. eg voting for a party • Application – by professionals or amateurs e. aware.BEHAVIOURAL:PRODUCTRELATED SEGMENTATION (cont) • Readiness stage. positive. car (rally cars). HIV tests. breast screening. interested e. cameras.

PRODUCT LIFE CYCLE AND MARKET SEGMENTATION • Consider the product‟s life cycle (PLC) • Most products have a distinct life cycle: Introduction. . Saturation and Decline • Needs and lifestyles change leading to changes in demand requiring revision of strategies for market segmentation especially in terms of product differentiation eg in Introductory phase – No competition hence no need for differentiation Growth stage – Competitive strategy required and product may be differentiated. Maturity. Growth.

can be reached • Substantiality – segment should be large enough to allow profitability operations • Actionability – it should be possible to formulate effective programmes for attracting and serving the chosen segments • Responsiveness – segment should be willing to react to the unique marketing programmes developed e.REQUIREMENTS FOR EFFECTIVE SEGMENTATION For effectiveness.. .g. willingness to buy in response to variations in marketing mix • Differentiability – segments should be conceptually distinguishable and respond differently to different marketing mix. • Accessibility – segment must be accessible i. the market segments should exhibit the following characteristics: • Measurability – segment should ideally be quantifiable.e.

MARKET TARGETING • Market targeting is the process by which the firm identifies and selects one or more market segment(s) requiring a separate marketing mix. • Market segmentation reveals the market segmentation opportunities facing the firm. • Market targeting entails evaluating the segments identified and selecting the most attractive one(s) .

MARKET TARGETING :EVALUATION For proper evaluation it is useful to assess: • The profit potential of the various segments • The strengths and weakness of the firm • Strengths and weakness may be assessed by considering Human resource capacities – skills. competencies and experience Material resources – facilities. equipment Financial resources – money available . abilities.

MARKET COVERAGE STRATEGY Three strategies are available for the firm when deciding how many market it will serve and how it will do it .These are: • Undifferentiated marketing strategy • Differentiated marketing strategy • Concentrated marketing strategy .

UNDIFFERENTIATED MARKETING STRATEGY • The firm ignores market segment differences and goes for the whole market with the product • The focus is on what is common in the needs of consumers rather than on what is the different • The firm designs a product and marketing programme that will appeal to the broadest numbers of buyers • The firm relies on mass distribution and mass advertising .

buyers has the same tastes.e.UNDIFFERENTIATED MARKETING STRATEGY: ADVANTAGES AND LIMITATIONS • Firm can realise economies of scale leading to low costs and low prices • Strategy appropriate when market is largely homogeneous i. buy similar amounts • Strategy fails to recognize variety in consumer tastes and preferences • Strategy inappropriate when competitors practice active segmentation using differentiated products .

DIFFERENTIATED MARKETING STATEGY • Firm decides to operate in several segments of the market • Firm designs separate differentiated offer for each market segment e. cars .however. tooth pastes • A good competitive strategy leading to higher profits • Business costs could. increase if markets are small .g.

: VW concentrating on small car market Harlequin concentrating on paperback romance novel market • • • • • Strategy used when the firm„s resources are limited Firm can get strong market position in the market segment served Firm can get greater knowledge of segment‟s needs Firm may enjoy economics of scale High risks should the segment turn sour .g.CONCENTRATED MARKET STRATEGY • The firm goes after a large share of one or a few sub – markets e.

cars Product stage in the production cycle During introduction of a new product one version may be launched and undifferentiated or concentrated marketing may be used In other stages of PLC use differentiated marketing 3. Company recourses If resources are limited use concentrated marketing Product homogeneity Undifferentiated marketing more suited for homogeneous products e. cameras .g. cement Products capable of design variation more suited to differentiation or concentration e.FACTORS AFFECTING CHOICE OF MARKET COVERAGE STRATEGY 1. 2. .g. steel .

Competitive marketing strategies If a competitor practises active segmentation . use undifferentiated strategy 5. undifferentiated marketing can be suicidal If competitor practice undifferentiated marketing . react in the same way to market stimuli. use differentiated or concentrated marketing to gain advantage .FACTORS AFFECTING CHOICE OF MARKET COVERAGE STRATEGY (cont) 4.Marketing homogeneity If buyers have same tastes . buy the same amounts per period.

PRODUCT POSITIONING • Positioning is the act of designing the company‟s product and marketing mix to fit a given place in the consumer‟s mind • You position or the place the product in the mind of the consumer or prospect • Positioning is what you do to the mind rather than the product • For each segment the company develops and communicates a product-positioning strategy to compete effectively .

consumer perception plays a key role • Advertising is a useful tool for positioning and repositioning as it is greatly influences consumer perceptions and preferences • Advertisements should be believable • What is portrayed in the ad must be compatible with the brand .ADVERTISING AND POSITIONING • In positioning a product .

for beer.low tar.price used Low in alcohol .mild cigarette Strong or weak For special occasions For power – Guinness As clear as your conscience For use with meals or at parties Taste For ladies e. Redds Good handling –(BMW) Economical –(Nissan) High picture quality – Flat TV screen Reliable .g.PRODUCT ATTRIBUTE USED IN POSITIONING • • • • • • • • • • • • • High quality .

eg Bic pens and others Coca cola vs. Pepsi cola Omo vs. Aquafresh Batteries . Close-up vs. Toss vs.POSITIONING AGAINST OTHER PRODUCTS • • • • • Product may be positioned against other products. Persil Colgate vs.

LEAR JET BUSINESS JET –ADVERTISEMENT The best way to beat your biggest competitor .time It outpaces the clock It lets you manage many situations in the most effective way : face to face After all “time flies”. Shouldn‟t you? The clock is a ruthless rival. Never retreats. . Never hesitates. It never rests.

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