MARKET

SEGMENTATION,
TARGETING AND
POSITIONING
SEGMENTING THE MARKET

 Instead of trying to market what is easiest for us

to market, we must find out much more what the
consumer is willing to buy-----We must apply our
creativeness more intelligently to people, and
their wants and needs, rather than to products.

(CHARLES G. MORTIMER)
 MARKETS EXHIBIT VAST
DIFFERENCES
 A marketer should have deeper understanding of markets, which
are the starting point for all marketing planning and control.
 To understand a particular market, one should first have a
working knowledge of the important institutional characteristics
of five types of markets:

Consumer Market Producer Market Reseller Market

COMPANY Govt. Market

International
Market
(PRODUCT)

(Buying motives are different in each market, therefore different selling

techniques will be used for gaining success in each market)
MARKET SEGMENTATION

 A company can not serve all customers in a

broad market. The customers are too
numerous and diverse in their buying
requirements. The company needs to identify
the market segments that it can serve more
effectively.
 Many companies are embracing target
marketing. Here sellers distinguish the major
market segments, target one or more of those
segments, and develop products and
marketing programs tailored to each.
STRATEGIC MARKETING
PROCESS
 It is a managerial process of
identifying, analyzing, choosing and
exploiting marketing opportunities to
fulfill the company’s mission and
objectives. More specifically it consists
of :
(1.) Market Opportunity Analysis
(2.) Market Segmentation and Target Market
Selection
(3.) Competitive Positioning
(4.) Marketing Strategy and Marketing Mix.
TARGET MARKETING
Target marketing requires marketers to take
three major steps :
 (1) Identify and profile distinct groups of
buyers who might require separate products
or marketing mixes (market segmentation).
 (2) Select one or more market segments to
enter (market targeting).
 (3) Establish and communicate the products’
key distinctive benefits in the market (market
positioning).
MARKET SEGMENTATION
 Markets differ in their degree of
heterogeneity . At one extreme they are
homogeneous (Similar) and at the other
extreme they are heterogeneous
(Substantially different).
 Market Segmentation is the process of
identifying group of buyers with
different buying desires or requirements.
 There may be three basic market preferences:
1.Homogeneous, 2. Diffused, and 3.
Clustered
 BASIC MARKET
PREFERENCE PATTERNS

::::::::::::::
::::::::::::::
Attribute ::::::::::::::
Attribute :::::::::::::: Attri.
::::::::::::::
::::::::::::::
Y Y :::::::::::::::::
::::::::::: Y
::::::::::::::
::::::::::::::

Attribute X Attribute X Attribute X

A.Homogeneous B.Diffused C.Clustered

Preferences Preferences Preferences
MARKET-SEGMENTATION PROCEDURE
(THREE STEP PROCESS FOR IDENTIFYING MARKET
SEGMENTS)
 (1) Survey Stage : The researcher
conducts exploratory interviews and
focus groups to gain insight into
consumer motivations, attitudes, and
behavior. Then the researcher collects
data on attributes and their importance
ratings; brand awareness and brand
ratings; product usage patterns; and
geographics, demographics and
psychographics of the respondents.
MARKET-SEGMENTATION PROCEDURE
(THREE STEP PROCESS FOR IDENTIFYING MARKET
SEGMENTS)

 (2) Analysis Stage : The researcher applies

factor analysis to the data to remove highly
correlated variables, then applies cluster
analysis to create a specified number of
maximally different segments.
 (3) Profiling Stage : Each cluster is profiled in
terms of its distinguishing attitudes, behavior,
demographics, psychographics, and media
patterns. Each segment is given a name based
on its dominant characteristic.
ADVANTAGES OF MARKET
SEGMENTATION
 It improves a company’s understanding of why
consumers do or do not buy certain products. Therefore
prepares a company to meet changing market demands.
 Information gained from segmentation allows the
organization to plan a systematic and effective
marketing programme to satisfy the consumer needs.
 Better assessment of the strengths and weaknesses of
the competition.
 Better allocation of marketing resources.
HOW TO RATE SEGMENTS ?
(CRITERIA FOR SELECTING SEGMENTS)
 MEASURABILITY

 SIZE

 ACCESSABILITY

 RESPONSIVENESS
SEGMENTATION ANALYSIS
(BASIS OF
SEGMENTATION)
CONSUMER CHARACTERISTICS
(1) Geographic ( Where they live ? )
(2) Demographic ( Who they are ? )
(3) Psychographic (How they behave ? )
(On the basis of social class, life style, personality etc.)
 CONSUMER RESPONSES
(4) Behavioral Segments (Why they buy ? )
(Buyer readiness stage, Benefits sought, Usage rate,
Attitude, Loyalty, Occasions, User status)
TARGET MARKET
STRATEGY
 Sellers may have different
thinking for their Marketing
Strategy:
(1) Mass Marketing
(2) Product Variety Marketing
(3) Target Marketing
TARGET MARKET
STRATEGIES
(1.) UNDIFFERENTIATED

MARKETING MARKET
MIX
TARGET MARKET
STRATEGIES
(2.) DIFFERENTIATED

Mktg. Mix 1 Seg. 1

MM2 Seg. 2

MM3 Seg. 3
TARGET MARKET
STRATEGIES
(3.) CONCENTRATED

Segment 1

Marketing Mix Seg. 2

Seg. 3
FIVE PATTERNS OF TARGET
MARKET SELECTION
 (1) Single Market Concentration
 (2) Market Specialization

 (3) Product Specialization

 (4) Selective Specialization

 (5) Full Coverage

FACTORS CONSIDERED IMPORTANT IN
THE SELECTION OF TARGET MARKET
STRATEGY

 1. Company’s Resources
 2. Product Homogeneity

 3. Product Stage in the Life

Cycle
 4. Market Homogeneity

 5. Competitive Marketing
Strategy
POSITIONING FOR
COMPETITIVE ADVANTAGE
What is Market Positioning ?
 A product’s position is the way the
product is defined by consumers on
important attributes.

 The place, a product occupies in

consumers’ minds relative to
competing products.
POSITIONING STRATEGIES
 Product Attributes
 Needs they fill or the benefits they offer

 Usage Occasions

 Users

 Against a Competitor

 Away from Competitors

 Product Classes

(Marketers often use a combination of

these positioning strategies)
IDENTIFYING POSSIBLE
COMPETITIVE ADVANTAGE
 Product Differentiation

 Services Differentiation

 Personnel Differentiation

 Image Differentiation
SELECTING THE RIGHT
COMPETITIVE ADVANTAGE

 How many differences to

promote ?
 Which differences to

promote ?
DEVELOPING AND
COMMUNICATING A
POSITIONING STRATEGY
All products can be differentiated to some
extent. But not all differences are meaningful
or worthwhile. A difference is worth
establishing to the extent that it satisfies the
following criteria :
 Important : The difference delivers a highly
valued benefit to a sufficient numbers of
buyers.
 Distinctive : The difference is delivered in a
distinctive way.
DEVELOPING AND
COMMUNICATING A
POSITIONING STRATEGY
 Superior : The difference is superior to
other ways of obtaining the benefit.
 Preemptive : The difference cannot be
easily copied by competitors.
 Affordable : The buyer can afford to pay
for the difference.
 Profitable : The company will find it
profitable to introduce the difference.