MARKET SEGMENTATION TARGETING AND POSITIONING

Introduction  Markets consist of buyers but buyers differ in one or more ways – needs, wants,
resources, location, buying attitudes, buying practices etc.  Within the same general market
there are groups of customers (market segments) with different wants, buying preferences, or
product-use behavior.
Target marketing thus has three major steps:
1. Market segmentation
2. Market targeting
3. Market positioning
1. MARKET SEGMENTATION
WHAT IS MARKET SEGMENTATION?
 Market segmentation can be defined as the process of dividing a potential market into
distinct subsets of consumers with common needs or characteristics and selecting one or
more segments to target with distinct marketing mix.
 Consists of taking the total heterogeneous market for a product and dividing into several
sub – markets or segments , each of which tends to be homogeneous in all significant
aspects
 Involves taking the whole market and dividing it into homogeneous units with similar
characteristics such that they react uniformly to given stimuli in the market
BENEFITS OF MARKET SEGMENTATION
 Easier to develop and implement a suitable market mix (4ps)for each segment since marketing
mix variables can be tailored to appeal to specific customer groups
 Marketing effort can be focused on customers with the greatest purchase interest instead of
scattering it everywhere
 Easier to understand customer needs and respond appropriately  Ability to identify
marketing opportunities
 Easier to build customer relationship to promote repeat purchases  Easier to monitor
competitors activities
 Easier to get in-depth knowledge of the segment through marketing research
 Possible to specialize in products or services for small segments
 Price discrimination can be undertaken in different segments to increase profitability.
PROBLEMS OF SEGMENTATION
Difficult to select the most appropriate segmentation variable
 Costs may increase due to many segments e. inventory , advertising promotional costs
 Small segments may be unprofitable
 Lack of economies scale
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
For effectiveness, the market segments should exhibit the following characteristics:
 Measurability – segment should ideally be quantifiable.
 Accessibility – segment must be accessible i.. can be reached
 Substantiality – segment should be large enough to allow profitability operations
  Actionability – it should be possible to formulate effective programmes for attracting and
serving the chosen segments
 Lifestyle – swingers, high fashion, traditionalist, sophisticate, luxurious living.
 Personality – ambitious, aggressive, detached, intelligent, social
Products can be designed to appeal to particular social classes or lifestyle e.. Clothing, luxury
cars, leisure activities, hobbies, games (golf), schools (academies), homes, hospitals, political
parties, reading habits, mobile phone tariffs.
4. Behavioural segmentation
 Benefits sought - quality, economy, convenience, prestige, durability, comfort, safety, taste.
 Use occasion - regular vs. special occasion e.. Flower giving (Valentine’s Day, Hospital,
Weddings, Funeral); Business vs. vacation air travel; normal wines vs. champagne for
celebrations.
 User status – non-user, ex user, potential user, first-time user, regular user e. airline –flier vs.
non flier; drug users rehabilitation programmes could focus on regular users to quit the habit or
to discourage non- users
 Usage rate – light, medium, heavy users e.. Coffee and beer drinkers, cigarette smokers, bank
accounts.
 Loyalty status – none, medium, strong, e. supermarket loyalty cards
 Readiness stage- unaware, aware, informed, interested e. HIV tests, pap tests, breast
screening.
 Attitude towards the product- enthusiastic, positive, negative, indifferent, hostile, eg voting
for a party
2. MARKET TARGETING
Process of dividing the market into major market segments, evaluating them, and selecting and
targeting one or more segment, and deciding on the company’s positioning in each market
RATIONALE FOR MARKET TARGETING
1. CONSUMER DIVERSITY OR HETEROGENEITY
 Buying habits and requirements are heterogeneous
 Different tastes and preferences
 Consumers widely scattered /spread geographically
 Consumers may be too numerous
 Difficult to serve all these consumers through mass marketing
2. SCARCITY OF RESOURCES AVAILABLE TO FIRM - Lack of resources and energy to
serve everywhere - Difficulties in competing everywhere sometimes against superior odds -
Easier to serve smaller than larger market due to better focus and concentration - More efficient
and effective use of resources - Enables firm to match organizational capabilities with specific
groups of customers - Firms perform better by identifying and concentrating on the most
attractive parts of the market
Market coverage strategy
Three strategies are available for the firm when deciding how many market it will serve and how
it will do it .These are: Undifferentiated marketing strategy, Differentiated marketing strategy
and concentrated marketing strategy
1 marketing strategy
  Firm can realize economies of scale leading to low costs and low prices
 Strategy appropriate when market is largely homogeneous i. buyers has the same tastes,
buy similar amounts
 Strategy fails to recognize variety in consumer tastes and preferences
 Strategy inappropriate when competitors practice active segmentation using differentiated
products
2 marketing strategy
 Firm decides to operate in several segments of the market
 Firm designs separate differentiated offer for each market segment e. cars , tooth pastes
 A good competitive strategy leading to higher profits
 Business costs could, however, increase if markets are small
3 marketing strategy
 The firm goes after a large share of one or a few sub – markets e.:
VW concentrating on small car market;Harlequin concentrating on paperback romance novel
market
Positioning Methods
1. Attribute positioning: the enterprise positions itself in terms of one or more outstanding
attributes. Benson & Hedges has chosen to position its cigarettes in terms of lightness and taste.
2. Benefit positioning: this emphasizes the unique benefits the enterprise or product offering
offers its customers, e. Gillette Blades promise a closer shave
3. Use/application positioning: an enterprise can position itself or its products in terms of the
product use or application possibility, e. Graca wine, is positioned as wine to be enjoyed at all
kinds of fun occasions.
4. User positioning: the enterprise may position their product with their users in mind.
Marketers of bungee jumping can position their market offering to appeal to the thrill seekers.
5. Competitor positioning: some products can best be positioned against competitive offerings.
BMW finds it useful to position their cars directly against that of Mercedes-Benz, their closest
rival.
6. Product category positioning: an enterprise can position itself in a product category not
traditionally associated with it thereby expanding business opportunities. A museum traditionally
regarded as an educational institution may elect to position itself as a tourist attraction.
7**. Quality/price positioning** : the enterprise may claim their product is of exceptional quality
or the lowest price.

The Product Life Cycle

The period a product or a service takes place in the market is known as its life cycle. That is, the
period it enters the market until the time it exits the market or is taken off from the shelves
(decline) (Shahmarichatghieh et al., 2015). The product life cycle theory explains the duration a
product takes in the market. For instance, a successful entrance in the market for the first time
leads to high demand and hence replacing the outdated similar products (whose demand falls
drastically) from the market. Product life cycle theory is a very common concept applied in the
field of management to help managers come up with good decisions on pricing methods,
marketing methods, expansion to new markets, packaging, and how to reduce costs.
Evolution
The product life cycle has evolved with time. The initial or traditional concept of the product life
cycle theory is based on sales against time. It means that when a graph of time (x-
product enjoys a different length of time in the market before commercial death (removed from
shelves). Another concept is that at each stage, sales and consumption of a product faces various
challenges and opportunities. The third concept is that sales of each product rise at some point
and fall towards the end of the cycle. Finally, each product at each stage requires a specific
marketing technique and human resource strategy.
The above concepts are explained in stages as follows:
1**. Development stage** :
A product at the development stage is still an idea and does not generate any revenue. At this
stage, a company or business injects in more money to develop the idea into a product that can
generate revenue. After development, the product is thus test marketed to the target consumers
Introduction Stage
The introductory stage is characterized by low sales as the product is still new to consumers.
Therefore, to make customers aware of the just-introduced product in the market, the
manufacturer must invest heavily in informational marketing. At this stage of a product's life
cycle, the marketing mix that should be applied is the strategy that will aid in creating demand
for the new product. The strategies can be making the products readily available at affordable
prices.
Growth Stage
At the growth stage, customers are generally aware of its existence. This is the stage where the
product records high sales and revenue. Therefore, at this stage, more marketing that
differentiates the product from other similar products is highly recommended. Among the
marketing strategies that will be applied at this stage will showing customers the benefits of the
product over other similar competing products. While doing this the company will be building a
brand that customers would want to associate with (Sharma, 2013).
Maturity Stage
The maturity stage is when the product has reached the peak of its sales and no further marketing
can increase its sales. However, the manufacturers or producers can maintain this stage by
creating customer loyalty. Customer loyalty can be achieved by applying relevant
marketing mix strategies such as providing special promotions to keep repeat buyers and attract
new buyers by making the product more affordable
Decline Stage
The decline stage is characterized by a drop in sales. This is because the product market is full of
competing products. Additionally, customer choice and preference may have shifted to a new
product or substitute. At the decline stage, the product can still record sales if its product loyalty
strategy developed in the maturity stage was successful. However, the product will not attract
new customers. Therefore, the marketing mix strategy at this stage will be putting more effort
into maintaining the product's brand image among its existing customers (Sharma, 2013).