Chapter 2

Segmenting,
Targeting &
Positioning
©2022 | Basic Marketing
by Salman Zaheer
Digital version of the book is available for FREE: https://archive.org/details/basic-marketing-2020
1
Printed copy can be obtained from: https://www.readings.com.pk/pages/BookDetails.aspx?BookID=1370613
Chapter-2

Table of Contents

Opening Scenario: A Case of FMCGs

(Fast Moving Consumer Goods)
• Segmenting
• Targeting
• Positioning

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Chapter-2

Opening Scenario

A Case of FMCGs
• William Procter was a candle maker and
James Gamble a soap maker and together
they formed Procter & Gamble (P&G) in
1837.
• US based P&G is the world’s largest
consumer goods company that owns
several brands like Oral-B, Head &
Shoulders, Pantene, Safeguard, Olay, Crest,
Ariel, Pampers and Gillette.
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Opening Scenario

• Lever Brothers was established in 1885 by

William Lever and his brother James Lever
through their father’s grocery shop.
• In 1929 it merged with another company
Margarine Unie to become Unilever.
• How many of us know about Lux, Dove, Lipton,
Knorr, Surf, Sunsilk, Sunlight, Close-Up, Pond’s,
Clear, Lifebuoy and Wall’s?
• All of these are owned by Unilever that is now
world’s 3rd largest consumer-goods company and
the largest ice-cream manufacturer.
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Opening Scenario

• In 2010 Unilever Pakistan had a total of twenty-

two brands but launched seven new brands in
2011. It then retained twenty-nine brands and still
has those as of 2020.
• For example, it had three shampoo brands in
Pakistan; 'Clear' for anti-dandruff, 'Lifebuoy'
shampoo for the lower-middle class and 'Sunsilk'
for upper-middle class. Launched ‘Dove’ in 2011
as it found a gap at top end.

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Opening Scenario

• Nestle the Swiss giant is the world's largest food

and beverages company with $91 billion revenue in
2018.
• National Foods advertises by conducting various
cooking programs such as 'aaj kya pakaein’ and
through its app to target the younger audience.
• Hamdard, Gourmet, Bread and Spread, Tapal the
stated examples, we can observe how various
factors contribute to the growth of FMCGs.

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Questions

Q1. Why would a company have multiple

brands under the same product category as four
different shampoos?
Q2. How do companies identify gaps in market?
Q3. What are the various ways by which
companies select target customers?

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Segmenting, Targeting & Positioning

• Marketers prefer creating different products

so they may cater to your interests.
• It has been observed that marketers who try
to be all things for all people usually fail to
give quality service to even a single group.

www.worldometres.info/world-population/

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Segmenting, Targeting & Positioning

• Market Segmentation is the division of a
market into smaller groups that have
relatively similar needs.
• Targeting that is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter.
• Positioning is the arranging for a product to
occupy a clear, distinctive and desirable
place relative to competing products in the
minds of the target consumer.
Dove is launched for high-end 9
segment.
Chapter-2

Segmenting
• Segmentation: Making groups of potential buyers on basis of common needs
and expectation that they will respond similarly to a marketing action.
• Benefit of segmentation is that it allows companies to define different
needs and wants of potential customers and thus cater to those accordingly.
• There are four famous different types of segmentations.

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Segmentation Types: Marketers use four broad
categories as shown here.
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Table 2.1 Segmentation Types | Page-70

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Geographic Segmentation
Geographic Segmentation: Dividing potential target
market on basis of locations as region, cities or states.
• This segmentation does not assume that all
customers in one zone will make same purchase
decisions but it provides a general pattern that is
helpful to marketers.
• For example: Many newspapers & magazines have
multiple editions like Dawn has a separate edition
for Lahore and Karachi.

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Geographic Segmentation
• Climate is also often included in geographic segmentation as
it influences people's choices and lifestyles.
• Multiple cities in same region may have similar lifestyle and
hence a business may target them as a single type.
• For example, Karachi biryani (a dish made up of rice and
mostly chicken) is different as it is spicier and has potato in it
while biryani in Lahore has different composition and
mildness in spices.

Climate influences product sale as

Northern areas demand jackets all
across year but only during winter in
most of Pakistan. 14
Chapter-2

Demographic Segmentation

Demographic Segmentation: Making groups of

potential customers on basis of factors such as
gender, age, income, occupation, education, religion,
ethnicity and life cycle.
• Marketers choose demographic variables is that
these are closely linked to the customer's needs
and can be easily measured.
• Lego has a standard block size but created larger
blocks for kids below three years of age.

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Demographic Segmentation
Another way marketers divide population on the basis of age is
regarding their birth years.
• Silent Generation: (born between 1928 to 1945) They
entered this world by WW2, only 'lucky few' are alive and a
blessing for they have seen a lot of history of last century.
• Baby Boomers: Generation born between 1946 and 1964.
• Generation X: Those who were born between 1965 and 1980.
• Generation Y (Millennial): Born between 1981 and 1995.
• Generation Z: Children born between 1996 and 2010.
• Generation Alpha: Those who are born from 2011 to 2025. 16
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Demographic Segmentation
Family Life-Cycle Stage

Family Life Cycle: Various stages of a family's

existence.
• Multiple stages and typically a consumer moves from
childhood, adulthood unmarried, married, married
with kids, retired and finally one remaining spouse.
• For example a bachelor might save money to
purchase a video game console but the same person
after marriage may forget what video games are and
would be spending bulk on his spouse or family life. Family life cycle influences one's purchases, an
unmarried person has different lifestyle than
someone married with kids. 17
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Demographic Segmentation

Gender: There are major differences between

the two genders, for example, men have a higher
vision, emotional control, physical strength and
intelligence while females excel in integrity,
ability to multitask and compassion/care.
•More recently segregation lines between gender
differences have started becoming blurred
because of continuous fall in moral and ethical
values, some men prefer to look like women and Gender based segmentation is very common
vice versa. in garments, magazines and make-up
products because of differences among men 18
and women.
Chapter-2

Demographic Segmentation

Income: Income allows customers to purchase

accordingly.
•Broadly, speaking three segments are considered,
called lower-class, middleclass and upper-class.
•In mobile phones Samsung has price ranges from
Rs.15,000 for A-series but Rs. 200,000 for their
Mercedes is targeting upper-class but
Galaxy Note 20 Plus and 3.5 lac for Galaxy Z it has launched C-class for lower-
upper class, starting price in Pakistan
Fold 2 that is targeted at upper-class. around 1.1 crore in 2020.
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Ad - The Journey https://www.youtube.com/watch?v=-V2vHSuUJog

Chapter-2

Demographic Segmentation
• After spending on necessities an individual is left with
'discretionary income'.
Discretionary income = Gross income - taxes – necessities
• At the end of day broadly each consumer has limited share of
pocket for a certain product category.
• This share of pocket of all consumers combined in a total
population makes a net total from which each company offering
the relevant product tries to get maximum share.

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Demographic Segmentation
Education: In Pakistan around 8% people have tertiary education
i.e. who have some university degree.
• Targeting and promoting to the illiterate who cannot read has to
be done using personal communication.
Religion: Very few products are targeted on the basis of religion
except for those that are meant for some form of supplication.
• Two brothers of Pakistan origin were living in US and realized
that there was a requirement of Muslim superheroes. So, they
launched comics 'Buraaq', named after Holy Prophet's ride/animal
from miraj ‫ ) معـرـاـج‬incident, targeting non-Muslims to promote
positive image of Islam.
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BURAAQ‫ َب ّراق‬- Animated Promo: https://www.youtube.com/watch?v=Jgch3P_uMb4

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Psychographic Segmentation

Psychographic Segmentation: Dividing a market on

basis of lifestyle or personality.
• Psychologists however have clipped people on
basis of some broad similarities such as Big Five
personality or Myers-Briggs 16 personalities.
• Marketers create products that reflect a specific
attribute.
• Mountain Dew ads are targeted at the adventure- Tapal Tezdum: ‘lagae tha ker kae’
(meaning 'it hits hard') is targeting a
loving personality type. very specific strong man
image/lifestyle in villages of
Pakistan. 22
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Behavioural Segmentation

Behavioural Segmentation: Dividing a segment on the basis of consumer's usage

of product.
• The behavioural segmentation is usually considered to be the trickiest out of
the four bases because marketers might go through several deep researches to
know about the consumer’s response towards a certain product which is
ultimately a time-taking and expensive activity.
• It has further sub-types such as occasion, benefit, user status, usage-rate and
loyalty.

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Behavioural Segmentation
● Occasion Segmentation: A number of people would purchase a product on special occasions
only. (Independence Day, FIFA World Cup etc).
● Benefit Segmentation: People using the exact same product may seek different benefits from
it. A cycle may be used for traveling, exercising, an uphill adventure or racing.

Many brands try to customize their

promotion campaigns on various events
as is especially observed in Muslim
countries on occasions of Ramadan and
Eid.
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Behavioural Segmentation

• Usage Rate – (Non-user, ex-user, light user, heavy user). A company may target non-
users using ads emphasizing 'give it a try once.
• Loyalty Status (brand) – (no, little, high). Some people would be very loyal to a brand
and may even advocate their favourite brand in their circle of friends.
80/20 Rule (Pareto Rule): A concept that says that 80 percent of company's sales come
from 20 percent customers.
• This rule is found relevant in many areas and especially in marketing as it has been
observed that 20% heavy users are those customers that account for 80% sales of the
company, while the remaining 80% customers contribute to only 20% revenue.

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Concept Test |
Segmentation | Page
79

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Using Multiple Segmentation Bases

• Geodemographic segmentation is quite common

among different brands as information about both
geography and demography is relatively easily
available.
• For example, Lexus (a luxury car by Toyota) is
targeted at the global elite, in other words
geographically all globe but demographically
only the elite-class.
• Similarly, IKEA (furniture brand) aims to target
Lexus uses geodemographic
the middle and upper-middle class in several segmentation by targeting global elite.
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countries.
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Segmenting Business Markets

There are two broad types of companies based
on their customers.
• B2C (Business to Consumer): Selling by
businesses to end-users.
• B2B (Business to Business): Selling by one
business to another company that uses the
products for profit generation.
The types of segments in B2B are relatively
different: Geographically and Each business market may have
different requirements and hence can be
Demographically.. segmented accordingly.
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Requirements for Effective Segmentation

A segment must be:

• Measurable: If a company cannot measure the size of a segment then it'll be difficult for them
to cater to it.
• Accessible: It means to what extent it is possible for the company to reach its target market.
• Substantial: The target market of a segment must be large enough and have purchasing power.
• Differentiable: Customers of a segment must show clear differences in their requirements as
opposed to other segments or groups.
• Actionable: Organizations should be able to serve this segment well, such as it must have
enough staff and resources.

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Targeting
• Targeting: Group of potential customers towards which an
organization directs its marketing program.

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Undifferentiated (Mass) Targeting

Undifferentiated (Mass) Targeting: Targeting the whole

market with one kind of offer.
• It focuses on the common needs of people rather than
differences.
• Two major advantages:
1) It is low-cost,
2) Allows for efficiency too because of effective
utilization of resources as inventory control and Products that cannot be
distribution also become convenient in single types of differentiated such as salt, pulses,
rice and gasoline are mostly used for
products. mass marketing. 31
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Differentiated (Segmented) Targeting

• Differentiated (Segmented) Targeting: An

approach to target several market segments
and designing separate offers (marketing mix)
for each.
• For example, P&G and Unilever have
multiple different soaps and shampoos for
different customer types.
• This segmentation type is costly because each
segment requires a separate marketing mix. Segmented targeting is common in products like
magazines.
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Concentrated (Niche) Targeting

Concentrated (Niche) Targeting: A targeting

strategy in which a company goes for a large
share of one segment.
• Small companies with limited resources
may also opt for one small segment because
such segments have limited profit potential
so are ignored by large companies.

Luxury sports cars like Koenigsegg target a single and

usually small segment.

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Customized (Micro) Targeting

Customized (Micro) Targeting: Implementing a
different marketing mix for each individual or local
market.
• Customization stems from the beginning of the
civilization, a shoe or slippers would be made
exactly according to a person’s feet.

Mug Art provides customization for each

individual order, such as printing of
name on mugs, pillows and so on.
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Choosing a Targeting Strategy

• Before selecting a segment a

company must evaluate each
market segment, know its size and
current growth.
• PLC (Product-Life Cycle) stages
also influence a company's decision
to target. A company's targeting strategy may depend on a number of
factors including its competition. Sega was once a famous
• Competitor’s marketing strategy video game console manufacturer in 1980s and even 90s but
may also influence a firm's due to large competitors as Sony and Microsoft, it quit console
industry and remained in game development only.
decision.
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Positioning

Positioning: Developing an overall image for a

product or brand to occupy a clear, distinctive and
desirable in the mind of target market.
• Changes are sometimes physical (in the product
itself) but sometimes these are only artificially
created in mind of customer through massive
advertising.
• The human mind wants to simplify things.
All cars serve prime need of transportation
• Product position is always as defined by consumers but each brand tries to position itself
and not by company or manager or CEO. differently. Toyota Prius is a fuel-efficient
hybrid. 36
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Perceptual Positioning Map

Positioning Map: A
diagram/graph of how
customers view different brands
on the basis of important
characteristics.
• Positioning cannot be done
in isolation as consumers
compare different brands
with each other.
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Repositioning

• Sometimes a company has to reposition a product that is to change the

position in mind of potential buyers.
• It is often a bit difficult to reposition as a lot of investment has to be done
in advertising.
• Example, Nokia repositioned from a paper manufacturer to a mobile
phone company.

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Positioning Statement

• Positioning Statement: A one or two sentences that

articulate a firm's product value and core customer. It
is usually written as: To (target segment and need)
our (brand) is (concept) that (point of difference).

To (target segment and need) our (brand) is (concept) that (point of difference).

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Other Positioning Considerations

• A company should focus on one unique benefit or feature of its product called
USP (Unique Selling Proposition/Point) as it makes the product stand out from
all others.
• Concept of USP may sound simple but it is often the key to effective positioning.
• For example, Lux was the leading beauty-soap brand in Pakistan so P&G came
up with Safeguard and introduced it as an anti-bacterial soap instead of a beauty
soap.
• In this product category they were number one by default. Their success was
mimicked and other brands also developed anti-bacterial soap.

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Selecting a Value Proposition

• There are simply two dimensions of
'price' and 'benefits'.
• More benefits for more price.
• More benefits for same price.
• Same benefits for lesser price.
• Less benefits for much lesser price.
• More benefits for less price.
Xiaomi offers high-end specs such as twice the
space, more RAM and better camera resolution
than other brands but is still lower priced than
those, thus it gives more value for lesser price.
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 ‫َج َزاك ُُم‬
‫الله‬
ُ
THANK YOU!

©2022 | Basic Marketing

by Salman Zaheer
Digital version of the book is available for FREE: https://archive.org/details/basic-marketing-2020
Printed copy can be obtained from: https://www.readings.com.pk/pages/BookDetails.aspx?BookID=1370613