MARKET SEGMENTATION AND

POSITIONING
BASES FOR SEGMENTING
CONSUMER MARKETS

• Market segmentation divides a market into well-

defined slices.

• A market segment consists of a group of

customers who share a similar set of needs and
wants. The marketer’s task is to identify the
appropriate number and nature of market
segments and decide which one(s) to target.
GROUPS OF VARIABLES

• Two broad groups of variables can be used to

segment consumer markets.

• Defining segments through descriptive

characteristics: geographic, demographic, and
psychographic

• Defining segments through behavioral

considerations, such as consumer responses to
benefits, usage occasions, or brands.
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GEOGRAPHIC SEGMENTATION

• Geographic segmentation divides the market into

geographical units such as nations, states, regions, counties,
cities, or neighbourhoods. The company can operate in one
or a few areas, or it can operate in all but pay attention to
local variations.

• In India Rural and Urban Market

• Nowadays Metro and non-Metro

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DEMOGRAPHIC SEGMENTATION

• In demographic segmentation, we divide the

market on variables such as age, family size, family
life cycle, gender, income, occupation, education,
religion, race, generation, nationality, and social
class.
DEMOGRAPHIC VARIABLES

• Age:

• Consumer wants and abilities change with age.

• It is the most common basis of segmentation

(Child’s Pester Power)
PROFILING
220
GENERATION
PART 3 CONNECTING WITH CUSTOMERS
COHORTS
TABLE 8.3 Profiling U.S. Generation Cohorts
Generational Cohort Birth Range Approximate Size

Millennials (Gen Y) 1979–1994 78 million Raised with rel

with the environ
independence a
Gen X 1964–1978 50 million Sometimes see
technological sa
Baby Boomers 1946–1964 76 million Still largely in th
and lifestyles th
Silent Generation 1925–1945 42 million Defying their ad
marketing that
Sources: Kenneth Gronbach, “The 6 Markets You Need to Know Now,” Advertising Age, June 2, 2008, p. 21; Geoffr
Generational Cohorts, Their Workplace Values, and Why Managers Should Care (New York: Hungry Minds, 2002).

Because Gen Y members are often t

DEMOGRAPHIC VARIABLES

• Income:

• Income segmentation is a long-standing practice

in such categories as automobiles, clothing,
cosmetics, financial services, and travel.
DEMOGRAPHIC VARIABLES

• Gender

• Men and women have different attitudes and

behave differently, based partly on genetic
makeup and partly on socialization.
1
 AVON’S MARKETING| CHAPTER
IS LASER-
IDENTIFYING MARKET SEGMENTS AND TARGETS
8 217

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g, Honda decided
When it was ready
firm deliberately
arents.

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r concern, such as
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erson, deciding to
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r major concerns.

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DEMOGRAPHIC VARIABLES

• Occupation: Important variable for segmentation

• Self employed, Full time, Part time, Housewives,

and Doctors

• Education

• Literates, illiterates, high school educated,

university educated

• Marital Status
 PSYCHOGRAPHIC
SEGMENTATION
CONNECTING WITH CUSTOMERS

VALSTM Framework
Innovators
on System: High Resources
High Innovation
art Primary
Motivation

Ideals Achievement Self-Expression

c Business Insights (SBI),
ts.com/VALS. Used with

Thinkers Achievers Experiencers

Believers Strivers Makers

Low Resources
Low Innovation
Survivors

psychological/personality traits, lifestyle, or values. People within the same demographic group
can exhibit very different psychographic profiles.
One of the most popular commercially available classification systems based on psychographic
PSYCHOGRAPHIC
SEGMENTATION
• The four groups with higher resources are:

• Innovators—Successful, sophisticated, active, “take-charge” people with high self-

esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented
products and services.

• Thinkers—Mature, satisfied, and reflective people motivated by ideals and who value
order, knowledge, and responsibility. They seek durability, functionality, and value in
products.

• Achievers—Successful, goal-oriented people who focus on career and family. They

favor 

premium products that demonstrate success to their peers.

• Experiencers—Young, enthusiastic, impulsive people who seek variety and excitement. 


They spend a comparatively high proportion of income on fashion, entertainment,
and socializing.
PSYCHOGRAPHIC
SEGMENTATION

• The four groups with lower resources are:

• Believers—Conservative, conventional, and traditional people with concrete

beliefs. They prefer familiar products and are loyal to established brands.

• Strivers—Trendy and fun-loving people who are resource-constrained. They

favor stylish products that emulate the purchases of those with greater
material wealth.

• Makers—Practical, down-to-earth, self-sufficient people who like to work

with their hands. They seek products with a practical or functional purpose.

• Survivors—Elderly, passive people concerned about change and loyal to

their favorite brands.
BEHAVIOURAL SEGMENTATION

• In behavioral segmentation, marketers divide

buyers into groups on the basis of their knowledge
of, attitude toward, use of, or response to a product.

• Not everyone who buys a product has the same

needs or wants the same benefits from it.

• e.g. for watches; A consumer buys for functional

purpose, durability, as a gift, an accessory or a
jewellery item.
MARKET TARGET

• Once the firm has identified its market-segment

opportunities, it must decide how many and which
ones to target.
EFFECTIVE SEGMENTATION
CRITERIA
• Not all segmentation schemes are useful.

• To be useful, market segments must rate favorably on five key criteria:

• Measurable. The size, purchasing power, and characteristics of the segments can be
measured.

• Substantial. The segments are large and profitable enough to serve. A segment
should be the largest possible homogeneous group worth going after with a tailored
marketing program.are less than four feet tall.

• Accessible. The segments can be effectively reached and served.

• Differentiable. The segments are conceptually distinguishable and respond

differently to different marketing-mix elements and programs.

• Actionable. Effective programs can be formulated for attracting and serving the
segments.
EVALUATING AND SELECTING
THE MARKET SEGMENTS

• In evaluating different market segments, the firm

must look at two factors: the segment’s overall
attractiveness and the company’s objectives and
resources.

• Marketers have a range or continuum of possible

levels of segmentation that can guide their target
market decisions
POSSIBLE LEVELS OF
SEGMENTATION
IDENTIFYING MARKET SEGMENTS AND TARGETS | CHA

Full |Fig. 8.4|

Market Multiple
Coverage Segments Single Individuals Possible Lev
Segments as Segments
Segmentatio

Customization

Mass Market

market), General Motors (vehicle market), and Coca-Cola (nonalcoholic beverage market) can
undertake a full market coverage strategy. Large firms can cover a whole market in two broad ways:
through differentiated or undifferentiated marketing.
In undifferentiated or mass marketing, the firm ignores segment differences and goes after the
whole market with one offer. It designs a marketing program for a product with a superior image
that can be sold to the broadest number of buyers via mass distribution and mass communications.
Undifferentiated marketing is appropriate when all consumers have roughly the same preferences
and the market shows no natural segments. Henry Ford epitomized this strategy when he offered
the Model-T Ford in one color, black.
The argument for mass marketing is that it creates the largest potential market, which leads to
the lowest costs, which in turn can lead to lower prices or higher margins. The narrow product
line keeps down the costs of research and development, production, inventory, transportation,
LEVELS OF MARKET
SEGMENTATION

• FULL MARKET COVERAGE: With full market coverage, a firm attempts to

serve all customer groups with all the products they might need.

• Large firms can cover a whole market in two broad ways: through
differentiated or undifferentiated marketing.

• In undifferentiated or mass marketing, the firm ignores segment

differences and goes after the whole market with one offer.

• In differentiated marketing, the firm sells different products to all the

different segments of the market.
LEVELS OF MARKET
SEGMENTATION

• MULTIPLE SEGMENT SPECIALIZATION: With selective specialization, a firm

selects a subset of all the possible segments, each objectively attractive and
appropriate.

• A firm can also attempt to achieve some synergy with product or market
specialization.

• With product specialization, the firm sells a certain product to several

different market segments.

• With market specialization, the firm concentrates on serving many needs

of a particular customer group.
LEVELS OF MARKET
SEGMENTATION

• SINGLE-SEGMENT CONCENTRATION: With single-segment concentration,

the firm markets to only one particular segment.

• A niche is a more narrowly defined customer group seeking a distinctive mix

of benefits within a segment. Marketers usually identify niches by dividing a
segment into subsegments.

• INDIVIDUAL MARKETING The ultimate level of segmentation leads to

“segments of one,” “customized marketing,” or “one-to-one marketing.”
PRODUCT POSITIONING

• Positioning is the act of designing the product and

service offering of a company in the minds of the
customer’s so that

• the consumer can relate the product and service

offering to a need or want;

• the marketer can create a distinctive image of himself.

• the consumer can perceive a brand’s characteristics

relative to those of competitive offerings.
PROCESS OF POSITIONING

• Choosing “what to position”: The criteria to promote could relate

to products, services, the 4Ps, company image and reputation,
and the people. As a strategy, positioning can be based on:

• perceived benefits, characteristics or image

• competition

• a combination of both.

• “How many criteria” to use for positioning

• What “qualities” should the criteria for positioning possess?

CRITERIA FOR POSITIONING

• Distinctive

• Superior

• Communicable

• Preemptive

• Affordable

• Profitable

• Above all should have Value for the segment

POP AND POD

• A marketer could choose amongst two kinds of positioning strategies; he could either opt
for positioning on i) Points of parity (POP) or ii) Points of difference (POD).

• Points of parity (POP): Here the product in question is not unique in nature; it is shared by
other competitive brands; The product or service offering is similar to that of the competitor.
POP has two basic forms, viz., (a) Category point-of-parity; b) Competitive point-of-parity.

• Category point-of-parity: The product or service offering should possess these qualities
in order to qualify being a part of the product or service category. These are the bare
minimum that all the brands should possess in order to qualify as a part of the product or
service industry

• Competitive point-of-parity: These are developed to fight against and balance out with
the competitors’ points-of-difference.

• Points of difference (POD): Here the product or service offering is unique; The positioning is
based on the USP (Unique Selling Proposition). This USP leads to differentiation and can
thus, develop competitive brand positioning.