Chapter Four

Market Segmentation, Targeting and Positioning

• Buyer may differ in their wants, resources, geographical areas,
buying attitudes and buying practices that a company normally
cannot serve all customers in that market with a single product
• Companies are moving from mass marketing to target marketing

Target marketing requires marketers to take three major steps:

1. Market segmentation: Identifying and profile distinct groups of

buyers who might require separate products and/or marketing mixes
2. Market targeting: Select one or more segments to enter/serve
3. Market positioning: Establish and communicate the products
distinctive benefits in the market.
 Market segmentation
• It is the process of dividing the whole market for a product
into several smaller, internally homogenous groups
• it is dividing a market into distinct groups of buyers with
different needs, characteristics, or behaivior who might
require separate products or marketing mixes
Bases for Segmenting Consumers Markets
 Geographic Segmentation
- current population location and residence (nations, states,
regions, countries, neighborhoods, urban or rural) and future
expected shifts
- used to know regional variation in customer taste and
determine and supply goods appropriate to climate change
Segm-Bases... cont‘d
 Demographic Segmentation:- sex, age, income, occupation,
education, household size and stage in the family life cycle
 Psychographics -on the basis of life style, personality, social
class
• utilizes behavioral profiles developed from analyses of the
activities, opinions, motives, perceptions, interest and life styles
of consumers
 Behavioral Segmentation- It focuses on product related
behavior of customers
It focuses on such attributes as product usage rates (heavy, medium
or light users), the benefits derived from the product (benefit
sought), attitude towards the product (enthusiastic, positive,
indifferent, negative, hostile), buyers readiness stage (unaware,
informed, interested, desirous, intending to buy), users and non-
users etc.
Market segment Characteristics/criteria’s
• Measurability
• Accessible
• Substantial
• Differentiable
• Actionable
 Target Marketing

• Deciding which and how many segments to serve

• A target market consists of set of buyers who share
common needs or characteristics
CONSIDERATIONS
 First, target markets should be compatible with the
organization’s goals and image.
 Second, the segment’s opportunity should
commensurate with the company’s resource
 Third, the segment must be profitable
 Fourth, the segments should be with least and
smallest competitors
There are three alternative Strategies in Target Marketing

I. Aggregation (undifferentiated or mass mktg strategy) - A

firm might decide to ignore market segment differences and
go after the whole market with one offer (treating the total
market as a single segment)
• This approach focuses on what is common among
consumers rather than what is different.
• It relies on mass production, distributions/provisions, ads.
single pricing and superior image in peoples minds… and
provides cost economies.
 Target…Strategies…

II. Single segment strategy (Concentrated/Niche mkt.)

- is selecting one segment among many segments and then one
marketing mix (program) will be designed to reach this market
segment.
• This approach is desirable when the company has limited
resource to serve many segments
• But it has a risk
III. Multiple segment strategy (differentiated marketing)
-When a firm selects two or more market segments to serve
-A separate marketing mix (program) is designed for each of
such market segments
- High sales volume @ low risk
- and High cost
Positioning
• the act of designing the company’s offering and
image to occupy a distinctive place in the mind of
the target customers
Positioning task CONSISTS OF THREE STEPS
 Identifying a set of competitive advantages
 Selecting the right competitive advantage
 Communicating and delivering the chosen
position
 STEPS….. Positioning
A) Identifying possible competitive advantage
• Consumers typically choose products that give them the greatest value
• a firm should come up with some kind of benefits to customers
• A company’s offer can be differentiated along the lines of product,
services, people, distribution or image
1. Product differentiation/physical (Form, Features, Performance
quality, Durability and Reparability)
2. Service differentiation (Ordering ease, Delivery, Customer
training, Customer consulting, Maintenance and repair)
3. Personnel differentiation (hiring and training better people)
4. Channel differentiation (distribution channel’s coverage, expertise
and performance)
5. Image differentiation (the way the public perceives the company or
its product)
 STEPS….. Positioning
B) Selecting the right competitive advantage
• How many to promote: there is no fast and hard rule
-A company may select as many differentiation bases as it needs
• Which difference to promote: Not all brand differences are
meaningful or worthwhile, not every difference is a good
differentiator (Cost Vs. Benefit)
Hence the difference should be:
 Important
 Distinctive
 Superior
 Communicability
 Preemptive
 Affordability
 profitable
 STEPS….. Positioning
C) Communicating and delivering the chosen
position
•Positioning calls for concrete action not talk
E.g. if the company decides to position on better quality and service, it
should not only communicate these differentiation bases but also should
deliver it.
Otherwise, it bound to fail sooner or latter even if its positioning strategy
is the best one.
 END OF
CHAPTER
FOUR