Chapter Five

Segmenting, Targeting Positioning

• A market consists of all possible consumers for a good
or service.
• Business cannot serve all markets with the products
they sell. They must identify the parts of the market
that it can serve best
• Mass marketing is the marketing of one product to all
buyers. The argument for mass marketing is that it
leads to lowest costs and prices because of economic
of scale
• Product variety marketing is where the seller produces
two or more products with varying features. Assumes
that customers have different tests that change over
time and seek variety and change.
• Target market is where the seller identifies
market segment(s) to serve , and develops
marketing mix for each segment.
• Macro Marketing is targeting the mass
market and serving the broad market
• Micro marketing is the form of target
marketing in which companies tailor their
marketing programs to the needs and wants
of narrowly defined customers.
Niche Marketing: A niche is a
more narrowly defined group. Different
products to subgroups within segments. (more
segmentation)
• Geographic Segmentation
• Demographics Segmentation
• Psychographics Segmentation
• Behavioral Segementation
 Geographic

• Dividing the market into subsets of

nations, states, regions, countries, cities,
climates neighborhood
• Advantage: Proximity, market closer to
each other easier to serve ,visit etc.
• Limitation: Areas in the same region may
not have similar needs and similar in
development, income etc. example Japan
and Vietnam
• Income
• Populations
• Age distribution
• Gender
• Education
• Occupation
• Family Life Cycle
Income: is the single most important segmentation
variable and indicator of market potential for most
products
• Annual per capita income widely varies from $81 in
Congo to $40,896 in Japan.
• It is important to realize that the national income
figures such as per capita income is only average.
There are people with high income level (class) in low
per capita income nations.
• Companies divide the population of the same country
in to low, middle and high income groups and target
their products accordingly.
Population: It is important to note that the population of
some affluent societies is too small.
Large population (China, India etc.) is more important for
products with low enough price (consumable goods such
as soft drinks, ball point pens
Age: is another useful demographic variables for
segmentation. For example teens have interests in fashion,
music etc. Elite older and more affluent spend on more
prestigious products.
Gender: Male and female have different needs which require
separate attention
Education: customers differ in their educational level and their
consumption
Family Life Cycle -single, newly married, full nest, empty nest,
solitary, unmarried couples, solitary survivor, single parent.
Segmenting the market on the basis of values,
attitude, and life style or personalities
Life style examples include such as cosmetics,
beverages and alcohol
Personality: people exhibit different personalities
and products that suit their personalities example
such as hotels they visit, cars they buy (Mercedes,
Chevrolet, Ford etc. )
 Essential of an effective segment

Measurable • Size, purchasing power,

profiles of segments can be
measured.
Substantial • Segments must be large or
profitable enough to serve.

Accessible • Segments can be

effectively reached and
served.

Differential • Segments must respond

differently to different
marketing mix elements &
actions.
Actionable • Capture, must be able to
attract and
serve the segments.
• Market targeting is the act of evaluating and
comparing the identified groups of segments
and selecting one or more of them with the
highest potential.
• A marketing mix (Program) is then devised to
provide the organization with the best return
on sales while simultaneously creating the
maximum value of customers.
 Three criteria for targeting
1. Current size of the market segment and growth
potential: The market segment should be large enough to
give the company opportunity to make reasonable profit.
If it is not large or profitable today, it should have high
growth potential so as to be attractive in terms of
company’s long term strategy
2. Potential competition: A segment characterized by strong
competition (present and potential) may be avoided.
3. Compatibility and feasibility: The segment should be
compatible with the overall goal and competitive
advantage of the organization.
 Targeting Strategies.
1. Standardized Market (Undifferentiated): It is
analogues to mass marketing in a single country,
serving the mass or the whole market with one
marketing program example coca cola for all
markets.
2. Differentiated Market Target: Operate in several
market segment and designing different marketing
programs (multiple marketing mix offerings)
Example shampoo for adults, shampoo for children
3. Concentrated market targeting: concentrate on one
marketing mix (4p’s), on a selected target
 C. Concentrated Marketing
Segment 3
Company
Segment 2 Marketing
Mix
Segment 1
B. Differentiated Marketing
Company
Segment 3
Marketing Mix 3
Company
Segment 2
Marketing Mix 2
Segment 1 Company
Marketing Mix 1
A. Undifferentiated (Mass) Marketing
Company
Market Marketing
Mix
Selecting Market Segment
• Product’s Position -- the place the product occupies in
consumers’ minds relative to competing products on
such as benefit, quality, price
• Positioning decision helps
– To give products of a company the greatest
advantage in selected target markets,
– To guide design marketing mixes to create these
planned positions.
– To decide whether the product should be upgraded,
simplified to meet customer needs and competition
 Product Positioning Map
High Price
• Four Seasons

• Hilton
• Sheraton
• Marriott
Low Quality

• Holiday Inn

High Quality
• Hampton Inn

• Days Inn
• Econolodge

• Motel 6

Low Price
What are the two approaches to positioning a
product in the market?
• Head to head poisoning: involves competing
directly with competitors on similar product
attributes in the same target market
• Differentiation positioning: involves finding a
less competitive, smaller market in which a
brand is located.
Companies also follow a differentiation positioning
strategy among brands within their own
products to avoid cannibalization.
 Major Positioning Errors
Under positioning: Failing to really position the
company or product at all
Over positioning: Giving buyers a too narrow and
limited picture of the company/product
Confused positioning: that leaves consumers with
confused idea about the company/product
Doubtful positioning: when buyers find it hard to
believe the brand claim in view product’s features,
price etc.