Session 3

Market Segmentation, Targeting,

and Positioning for Competitive
Advantage

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 Market Segmentation,
Targeting, and Positioning
Companies today recognize that they cannot appeal
to all buyers in the market-place, or at least not to
all buyers in the same way.
 Additionally, companies vary in their abilities to
serve different segments of the market.
 Rather than trying to compete in an entire
market each company must identify the parts of
the market that it serve best.
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 Market Segmentation,
Targeting, and Positioning
Today, most companies are moving away from
mass marketing. Instead, they practice market
segmentation and targeting.
 In this way, sellers can identify market

segments, select one or more of them, and

develop products and marketing programs
tailored to each.
 Instead of scattering their marketing efforts (the

“shotgun” approach), they can focus on the

buyers who have greater purchase interest (the
“rifle” approach).
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 Three Major Steps of Market
Targeting
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop segment profiles

Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments

Market positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each segment 4
 Market Segmentation

Markets consist of buyers and buyers differ in one

or more ways. They may differ in their wants,

resources, locations, buying attitudes, and buying

practices.
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 Market Segmentation
Levels of Market Segmentation
Through Market Segmentation, Companies Divide Large,
Heterogeneous Markets into Smaller Segments that Can be
Reached More Efficiently And Effectively With Products and
Services That Match Their Unique Needs.
Mass Marketing
Same product to all consumers
(no segmentation, i.e Coca-Cola)

Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Surya, Khukuri)
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 Market Segmentation
Levels of Market Segmentation

Market segmentation can be carried out at several

different levels.
 Companies can practice no segmentation (mass
marketing),
marketing complete segmentation
(micromarketing),
micromarketing or something in between
(segment marketing or niche marketing).
marketing
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 Market Segmentation
Levels of Market Segmentation
Niche Marketing
Different products to subgroups within segments
(more segmentation, i.e. Standard or Luxury SUV’s)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)

Local Marketing Individual Marketing

Tailoring brands/ promotions to Tailoring products and programs
local customer groups, i.e Sears to the needs of individual
customers, i.e. Dell
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 Segmenting Consumer
Markets
 There is no best way to segment a market.
 Market segmentation is the first step in target
marketing. Since markets of buyers differ in one
or more ways, any of a variety of variables can
be used to segment a market. Common
variables are:
 Geographic segmentation
 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation 9
Geographic Segmentation

World Region or Country

City or Metro Size

Density or Climate

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Demographic Segmentation
Dividing the market into groups
based on variables such as:
 Age

 Gender

 Family size or life cycle

 Income

 Occupation

 Education

 Religion

 Race

 Generation

 Nationality
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 Psychographic Segmentation

Divides Buyers Into Different Groups Based on:

•Social Class
•Lifestyle
•Personality

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 Behavioral Segmentation

Dividing the market into

groups based on variables
such as:
 Occasions

 Benefits

 User status

 Usage rate

 Loyalty status

 Readiness stage

 Attitude toward product

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 Targeting Multiple Segments
Today there is a trend toward targeting multiple
segments. Very often, companies begin their
marketing with one targeted segment, then
expand into other segments. This often boosts a
company’s competitive advantage and knowledge
of the customer base.
 One of the most promising developments in
multivariable segmentation is “geo-
demographic” segmentation.
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Market Segmentation
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

Measurable of segments can be measured.

Accessible
Accessible • Segments can be effectively
reached and served.

• Segments are large or

Substantial
Substantial profitable enough to serve.

• Segments must respond

Differential
Differential differently to different
marketing mix elements &
programs.
• Effective programs can be
Actionable
Actionable designed to attract and serve
the segments.
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 Market Targeting

This includes:

 Evaluating Market Segments

 Selecting Market Segments

 Socially Responsible Target Marketing

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 Evaluating Market Segments
Segment Size and Growth
 Analyze current sales, growth rates and expected

profitability for various segments.

Segment Structural Attractiveness
 Consider effects of: competitors, availability of

substitute products and, the power of buyers &

suppliers.
Company Objectives and Resources
 Company skills & resources needed to succeed in

that segment(s).
 Look for Competitive Advantages.
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 Selecting Market Segments
After evaluating different segments, the company
hopes to find one or more market segments worth
entering. It must engage in target market
selection.
 Target market is defined as being a set of
buyers who share common needs or
characteristics that the company decides to
serve.
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 Selecting Market Segments
Company
Company
Marketing
Marketing Market
Market
Mix
Mix
A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
C. Concentrated Marketing 19
Factors need to be considered
while Selecting Market Segments

Company
Company Resources
Resources

Product
Product Variability
Variability

Product’s
Product’s Stage
Stage in
in the
the Life
Life Cycle
Cycle

Market
Market Variability
Variability

Competitor’s
Competitor’s Marketing
Marketing Strategies
Strategies

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 Choosing a Positioning
Strategy
Product’s Position - the way the product is defined
by consumers on important attributes - the place
the product occupies in consumers’ minds relative
to competing products.
Marketers must:
 Plan positions to give their products the greatest
advantage in selected target markets,
 Design marketing mixes to create these planned
positions.
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 Choosing a Positioning
Strategy
Step 1. Identifying
Possible Competitive
Advantages
Step 2. Selecting the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position

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 Identifying Possible
Competitive Advantages
Key to winning and keeping customers is to
understand their needs and buying processes
better than competitors do and deliver more
value.
Competitive advantage is an advantage over
competitors gained by offering consumers greater
value, either through lower prices or by providing
more benefits, that justify competitive advantage,
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 How many differences to
promote?
Many marketers think that companies should
aggressively promote only one benefit to the
target market.
 Ad man Rosser Reeves called this benefit the
Unique Selling Proposition (USP).
 OR go for the number one attribute.
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 How many differences to
promote?
Others believe that more than one differentiating
factor is fine. However, avoid:
 Under-positioning – failing to ever really
position the company at all.
 Over-positioning – giving buyers too narrow
a picture of the company.
 Confused positioning – leaving buyers with a
confused image of a company.
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 Selecting an Overall
Positioning Strategy
Price
More The same Less
More More More More
for for the for
More same Less
Benefits

The same
The Same X ? for
less

Less for
Less X X much
less
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 Communicating and Delivering
the Chosen Position
Once position is chosen, company must take
strong steps to deliver and communicate the
desired position to target consumers.
All the company’s marketing mix must support
the positioning strategy.
Positioning strategy must be monitored and
adapted over time to match changes in consumer
needs and competitor’s strategies.
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