Segmenting, Targeting & Positioning

Steps in the Target Marketing Process

The 12 billion dollar question: 

Global $12 billion dollar sneaker market for all kinds of athletic shoes. 

Reebok¶s marketing research shows that in 1971 only 1 of every 27 women was involved in sports; today it is 1 in 3!! Thus Reebok has put special emphasis on the female market.

Procter & Gamble 
Sells multiple brands within the same product category for a variety of products Brands feature a different mix of benefits and appeal to different segments 
Has also identified different niches within certain segments  Product modifications are useful: Tide offers seven different product formulations to serve different niches¶ needs

A Market is...
(1) (2) (3) (4) people or organizations with needs or wants, and with the ability and the willingness to buy.

A group of people that lacks any one of these characteristics is not a market.

Market Segmentation
People or organizations with needs or wants and the ability and willingness to buy A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

Market Segment Market Segmentation


Market Segmentation:

² Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Dividing market into segments, each of which behaves differently vis-à-vis your product  Selecting certain segment(s)  Developing one marketing plan for each segment  Thinking small(er)

Market segmentation aggregating buyers into groups that: 1. Have common needs and 2. Will respond similarly to marketing action. The groups that result from the market segmentation process are called market segments.

Pr duct/Usage Habits Segmentati n
Pill w Manufacturer
r et; S, ll r et

MARKET St B Si l l l r r
r et; M ,



Key: L, L r e

Segmentation ----WHY!!!!!!!!!!!!!!!!!!!! ----WHY!!!!!!!!!!!!!!!!!!!!
uyer Preference Patterns
Homogeneous preference Diffused preference Clustered preference



DURABLE Homogeneous Preference -No natural segments -All buyers have same preference




Diffused Preference -No pattern («or poor research) -Take center position




Clustered Preference -Natural segments -Increases as number of competitors increases

Values of the Two SegmentsSegmentsYoungsters & Adults - WATCHES
Adults Youngsters

Attribute 1 PRICE

Attribute 2 BEAUTY

Attribute 3 DURABILITY

Segmentation Dilemma
Mass Marketing -(Economies of Scale)

(However, everyone is different) CUSTOMIZATION

Choosing a Targeting Strategy 
Undifferentiated Marketing Differentiated Marketing Concentrated Marketing Customized Marketing

Undifferentiated Marketing 
Appeals to a broad spectrum of people  Efficient due to economies of scale  Effective when most consumers have similar needs  Example: ig azaar

Differentiated Marketing 
Develops one or more products for each of several customer groups with different product needs  Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products  Example: akme, Ponds, Fair & ovely

Concentrated Marketing 
Entails focusing efforts on offering one or more products to a single segment  Useful for smaller firms that do not have the resources to serve all markets  Example:HMT Watches

Customized Marketing 
Segments are so precisely defined that products are offered to exactly meet the needs of each individual
± Example: 

Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual
± Example: Dell Computers

Why segment? ± Identifies opportunities and needs. ± Allows firm to focus on specific needs. ± Improves marketing mix for each segment. ± Allows small firm to exist.

The Importance of Market Segmentation 
Markets have a variety of product needs and preferences  Marketers can better define customer needs  Decision makers can define objectives and allocate resources more accurately

Criteria for Successful Segmentation


Criteria for Market Segments



Criteria for Segmentation
Substantiality Identifiability Measurability
Segment must be large enough to warrant a special marketing mix. Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with Accessibility marketing mix. Unless segment responds to a Responsiveness marketing mix differently, no separate treatment is needed.

You can reach them  Group is large enough to be profitable  You have the capability to build a marketing program target for them

Segmentation ases
Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables)

Bases for Segmentation

Bases Used to Segment Consumer Markets

Demographics Psychographics Benefits Sought Behavioral

Geographic Segmentation 
Region of the country or world  Market size  Market density : TV Companies  Climate: woollen clothes  City

Bases for Segmentation

Bases Used to Segment Consumer Markets

Demographics Psychographics Benefits Sought Behavioral

Bases for Demographic Segmentation 
Age: Cartoon Network; MTV; News Channels 

Gender: Cosmetics & After Shave  Income: Economical & uxury goods  Ethnic background: Food 
Family ife Cycle: ife Insurance Companies 

Generation: Apparels  Education  Occupation: PC Selling

Bases for Segmentation

Bases Used to Segment Consumer Markets

Demographics Psychographics Benefits Sought Behavioral

Psychographic segments market in terms of shared attitudes, interests, and opinions  Segments include demographic information such as age and income, but also includes richer descriptions  Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)

Bases for Psychographic Segmentation

Motivation Lifestyles Psychographic Segmentation Attitude

‡Health Supplements ‡Cosmetics ‡Safola ‡Life Insurance ‡LG Products

Life Style: VALS

VALS Framework
‡PRINCIPLE ORIENTED: ‡Fulfilled: Mature, Well Educated, Informed, Respectful but Open minded ‡Believers: Conservative, Conventional, follow established rules ‡STATUS ORIENTED: ‡Achievers:Committed to family and Work, Image is very Important ‡Strivers: Unsure of themselves, Money is a measure of success ‡ACTION ORIENTED: ‡Experiencers: Young, Vital, Enthusiastic, rebellions ‡Makers: Practical, Suspicious of new ideas, value working with their hands

Bases for Segmentation

Bases Used to Segment Consumer Markets

Demographics Psychographics Benefits Sought Behavioral

Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product . Maruti Esteem, Honda City

Bases for Segmentation

Bases Used to Segment Consumer Markets

Demographics Psychographics Benefits Sought Behavioral

Segmenting by Behavior 
Behavioral segmentation slices consumers on the basis of how they act toward, feel about, or use a product

Market Segmentation

Behavioral Segmentation Variables 
Occasions  User Status  User Rates: Airlines  Loyalty Status: Credit Cards  Readiness Stage 

Attitude Toward the Product

Business Marketing Segmentation


Customer Type Customer Size Product Use

Business Markets

Purchasing Criteria


Purchasing Strategy Importance
Personal Characteristics

Steps in Segmenting a Market

Select a market for study

Choose bases for segmentation

Select descriptors

Profile and analyze segments

Select target markets

Design, implement, maintain mkting mix

Target Market
A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

Strategies for Selecting Target Markets

Undifferentiated Concentrated Strategy Strategy

Multisegment Strategy

Undifferentiated Targeting Strategy
Potential savings on production and marketing costs

Disadvantages: Disadvantages 

Company more susceptible to competition

Concentrated Targeting Strategy
Advantages: Advantages 
Concentration of resources  Meets narrowly defined segment  Small firms can compete  Strong positioning

Disadvantages: Disadvantages 

Segments too small, or changing  Large competitors may market to niche segment

Multisegment Targeting Strategy
Advantages: Advantages 
Greater financial success  Economies of scale

Disadvantages: Disadvantages 

High costs  Cannibalization

Developing a specific marketing mix to influence potential customers¶ overall perception of a brand, product line, or organization in general.

The place a product, brand, or group of products occupies in consumers¶ minds relative to competing offerings.

Procter & Gamble--11 Brands of Detergent Gamble--11 
Tide: all purpose family detergent, tough on stains, keeps clothing looking like new  Cheer with Triple Color Guard: the color expert, guards against fading  Bold: built in fabric softener  Gain: gives you clean, fresh-smelling clothes  Era: built in stain removers  Dash: does it all for a low price  Dreft: removes tough baby stains but gently  Ariel: targeted to Upper Class market

Toothpaste Example 
Pepsodent Close-Up Aqua fresh Colgate CDC Colgate Jr. Kids Tooth Decay Freshness Appeal Triple Benefit Teeth Strong Teeth brand with fluoride

Choosing a Positioning Strategy:
± Identifying possible competitive advantages
‡ Products, services, channels, people or image can be sources of differentiation.

± Choosing the right competitive advantage
‡ How many differences to promote?
± Unique selling proposition (pick one benefit; Volvo = safety) ± Choose more than one if others share a claim to be best:

‡ Which differences to promote?
- Some: Important, Distinctive, Superior, Affordable, visible to buyers.

Choosing a Positioning Strategy:
± Developing a positioning statement
‡ Positioning statements summarize the company or brand positioning ‡ EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-ofdifference).

± Communicating the chosen position

Steps to Choosing and Implementing a Positioning Strategy 

Step 1. Identifying a set of possible competitive advantages:
± Competitive Differentiation. 

Step 2. Selecting the right competitive advantage.  Step 3. Effectively communicating and delivering the chosen position to the market.  Step 4: Evaluate market response and reposition if necessary

What Kind of Advantages to Focus On?
Product Class Away from Competitors

Product/Service Attributes Benefits Offered Usage Occasions

Against a Competitor Personnel


Image Users

1.Attribute Positioning 2.Benefit Positioning 3. Use Positioning

GM: Safety Maruti:Economy PVR:Leisure Based Entertainment Bungee Jumping: Adventurous IIPM:Better Than IIMs IIMs: Best B School

4. User Positioning 5.Competitor Positioning 6. Product Category

Which Competitive Advantages?



Criteria for Determining Which Differences to Promote





How Many Differences to Promote? 

Trend to broaden and position to more segments
± Lux soap: cleanses, deodorizes, moisturizes ± Risks of disbelief and loss of clear position 

± Under positioning ± Over positioning ± Confusion

Effective Positioning 
Assess the positions of competing products  Determine the dimensions of these positions  Choose an effective market position

Changing consumers¶ perceptions of a brand in relation to competing brands.

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