Segmentation, Targeting, and

Positioning
Building the Right Relationships with the
Right Customers
 Learning Goals
1. Learn the three steps of target marketing, market
segmentation, target marketing, and market positioning
2. Understand the major bases for segmenting consumer and
business marketing strategy
3. Know how companies identify attractive market segments
and choose target marketing strategy
4. Realize how companies position their products for maximum
competitive advantage in the marketplace
• Sells multiple brands within • Has also identified
the same product category different niches within
for a variety of products certain segments
• Product modifications are
• Brands feature a different
useful: Rin Advanced, Rin
mix of benefits and appeal Jasmine
to different segments
 “In any color as long
as it is Black”- Henry Ford

MASS MARKETING TO
MARKET SEGMENTATION
& TARGETING
“ There will be no market for
products that everybody likes a
little, only for products that
somebody likes a lot “
 Steps in market segmentation, targeting and
positioning
Market Segmentation
– Identify bases for segmenting the market
– Develop segment profiles
Target Marketing
– Develop measure of segment attractiveness
– Select target segments
Market Positioning
– Develop positioning for target segments
– Develop a marketing mix for each segment
 Market Segmentation
Buyers differ in one or more respects.

They may differ in:

 Their wants,
 Purchasing power,
 Geographical locations,
 Buying attitudes and
 Buying practices.
 Definition
Market Segmentation:
– Dividing (Grouping) a market into distinct
groups with distinct needs, characteristics, or
behavior who might require separate
products or marketing mixes.
 Segmenting Consumer Markets
Geographical segmentation
Demographic segmentation
– Most popular segmentation (consumer wants, preferences,
usage rates highly associated with demographic variable- also easy to
measure)

Psychographic segmentation
– Lifestyle, social class, and personality-based
segmentation
Behavioral segmentation
 Geographic Segmentation
Variables
• World region • Neighborhood
or country • City or
• India metro size
• State • Density
• City • Climate

Rural- urban- Oxemberg readymade

 Demographic Segmentation Variables-
most popular – link to demographic variable is necessary to
know the size of the target market and media.

• Age • Occupation
• Gender • Education
• Family size • Religion
• Family life cycle • Race
• Income- credit cards • Generation
• Nationality
 Behavioral Segmentation
Variables
• User Rates- light, medium,
• Occasions- when they get the heavy
idea to buy, actually make their
purchase, or use the purchased item. • Loyalty Status- Colgate-
• can help firms build up product middle class
usage.
• Readiness Stage
• Benefits- toothpaste
• User Status- non-users,
potential users
 Psychographic segmentation
• Personality- ambitious, sociable, introverted,
extroverted
• Life-style- Activates (golf, travel), interests
(politics, modern art), Opinions (conservation,
capitalism).
• Values- Fab India- eco friendly
 Segmenting Business Markets
Demographic segmentation
– Industry, company size, location
Operating variables
– Technology, usage status
Purchasing approaches
Situational factors
– Urgency, specific application, size of order
Personal characteristics
– Buyer-seller similarity, attitudes toward risk, loyalty
 Segmenting International Markets
Geographic segmentation
– Location or region
Economic factors
– Population income or level of economic development
Political and legal factors
– Type / stability of government, monetary regulations, amount of
bureaucracy, etc.
Cultural factors
– Language, religion, values, attitudes, customs, behavioral patterns
 Requirements for Effective
Segmentation
Measurable
– Size, purchasing power, and profile of segment
Accessible
– Can be reached and served
Substantial
– Large and profitable enough to serve
Differentiable
– Respond differently
Actionable
– Effective programs can be developed
 Measurable
• Several left handed people- but no products
targeted at left handed people.
 Accessible
• A deodorant co. finds that heavy users of its
brand are single men and women who
socialize a lot. Unless the group shops or lives
in a certain place and exposed to certain
media, it would be difficult to reach them.
 Substantial
• Cars specially for very large people- 7 ‘ in ht.
 Actionable
• May identify several segments, but the co.
may not have the resources.
Procedure for Market segmentation

Survey stage:
– Attributes and their importance ratings
– Brand awareness and brand ratings
– Product usage patterns
– Attitudes towards the product category
– Demographics, psychographics and mediagraphics of
the respondents
 Analysis stage
Profiling stage
 Bases for Segmenting Consumer
Markets
Geographic

Region, City or Metro

Size, Density, Climate Demographic

Age, Gender, Family size

and life cycle, Race,
Occupation, or Income ...

Psychographic
Lifestyle or Personality
Behavioral
Occasions, Benefits,
Uses, or Attitudes
 Target Marketing
Target Market
– Consists of a set of buyers who share common
needs or characteristics that the company decides
to serve
Having identified market- segment
opportunities,

Decide how many and which one to target.

 Target Marketing
Evaluating Market Segments
– Segment size and growth
– Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
– Company objectives and resources
 Target Marketing

Levels of Target Market Segments

– Undifferentiated (mass) marketing
– Differentiated (segmented) marketing
– Concentrated (niche) marketing
– Micromarketing (local or individual)- (McDonald's
product for Indian markets)
 Five Patterns of Target Market Selection
Single-segment Selective Product
concentration specialization specialization
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3

Market Full market

specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P = Product
M = Market P2 P2
P3 P3
Choosing a Target Marketing Strategy
Considerations include:
– Company resources- concentrated /niche for low resources.
– The degree of product variability- steel, fruits
– Product’s life-cycle stage-
– Market variability
– Competitors’ marketing strategies
 Target Marketing
Socially Responsible Targeting
– Some segments, especially children, are at special
risk
– Many potential abuses on the Internet, including
fraud Internet shoppers
– Controversy occurs when the methods used are
questionable
 Niche Marketing

• A niche is a more narrowly defined customer group

seeking a distinctive mix of benefits. Marketers
usually identify niches by dividing a segment into
sub-segments.
• Rolls-Royce, Ferrari, Black and Decker- DIY
POSITIONING
 POSITIONING
• is the act of designing
the company’s offering
and image to occupy a
distinctive place in the
target market’s mind.
A product’s position is the way a product is
defined by consumers on important attributes-
the place the product occupies in consumers’
minds relative to competing products.

Nirma, Reliance mobile, Big Bazaar,

Surf, Airtel, Food World/ Shoppers Stop
 Why position ?
Overwhelming information about products &
Services.
Consumer cannot re-evaluate products every time
a buying decisions is made.
To simplify the buying process, consumers organise
products, services and companies into categories
and “position” them in their minds.– complex set
of perceptions, feelings, impressions- with or
without the help of marketers !!
 -- So Marketers,
do not want to leave the product
positioning to chance.

They must plan positions that will give their

products the greatest advantage in selected
target markets
They must design marketing mixes to create
these planned positions.
Positioning is the act of
designing the company’s
offering and image to
occupy a distinctive
place in the target
market’s mind.
Choosing a positioning strategy

Value propositions represent the full positioning of

the brand
Possible value propositions:
– More for More – Mont Blanc, Mercedes, Baskin Robbins
– More for the Same – Lexus vs Mercedes
– The Same for Less - Amul, Nirma, Big Bazaar
– Less for Much Less – Indigo Airlines
– More for Less- Tata Indica (more space)
 Positioning
Positioning:
– The place the product occupies in consumers’ minds
relative to competing products.
– Typically defined by consumers on the basis of
important attributes.
– Involves implanting the brand’s unique benefits and
differentiation in the customer’s mind.
– Positioning maps that plot perceptions of brands are
commonly used.
 Points-of-Parity
and Points-of-Difference
• Points-of-difference (PODs) are attributes or
benefits that consumers strongly associate
with a brand, positively evaluate, and believe
that they could not find to the same extent
with a competitive brand.
• Points-of-parity associations (POPs), on the
other hand, are not necessarily unique to the
brand but may in fact be shared with other
brands.

3.39
 Brand Positioning Guidelines
• Two key issues in arriving at the optimal
competitive brand positioning are:
– Defining and communicating the competitive frame
of reference
– Choosing and establishing points-of-parity and
points-of-difference

3.40
 Defining and Communicating the
Competitive Frame of Reference
• Defining a competitive frame of reference for
a brand positioning is to determine category
membership.
• The preferred approach to positioning is to
inform consumers of a brand’s membership
before stating its point of difference in
relationship to other category members.

3.41
 Choosing a Positioning Strategy

Topics Differentiation can be based on

– Products
Identifying possible – Services
competitive advantages – Channels
– People
Choosing the right – Image
competitive advantage
Choosing a positioning
strategy
 Product Differentiation

Fea-
Form Quality Design
tures

Dura- Relia- Size of

Style
bility bility package
 Services Differentiation

Customer
Customer
Ordering
Ordering Installation-
Installation- Consulting-
Ease Internetcon.
con. Consulting-
Ease Internet Cosmetics, nutritional
Cosmetics, nutritional

Miscellaneous
supplements
supplements

Services
Maintenance
Maintenance
Delivery-
Delivery- Customer
Customer
Pizza,photos
photos Training &&Repair-
Repair-
Pizza, Training EurekaForbes
Forbes
Eureka
 Differentiation
• Personnel- Singapore Airlines, Mc Donald, Eureka Forbes, Walt
Disney
• Channel- Avon, Dell, Amway, Tupperware
Image Differentiation

Media Atmosphere
Symbols

Events

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 Important
Important

Profitable
Profitable Distinctive
Distinctive

Differences Worth
Establishing
Affordable
Affordable Superior
Superior

Preemptive
Preemptive

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 Market Segmentation

Topics • How many differences to

promote?
– Unique selling proposition
Identifying possible
– Several benefits
competitive advantages
• Which differences to promote?
Choosing the right Criteria include:
competitive advantage – Important
Choosing a positioning – Distinctive
strategy – Superior
– Communicable
– Preemptive
– Affordable
– Profitable
 Market Segmentation

Topics • Value propositions represent the

full positioning of the brand
Identifying possible
• Possible value propositions:
competitive advantages – More for More mont blanc
Choosing the right – More for the Same lexus
competitive advantage – The Same for Less big bazaar
Choosing a positioning – Less for Much Less Indigo
strategy – More for Less Tata Indica
 Developing a
Positioning Statement
Positioning statements summarize the company
or brand positioning
– EXAMPLE: To (target segment and need) our
(brand) is (concept) that (point-of-difference)
 Communicating the Positioning
Companies must be certain to DELIVER their
value propositions.
Positions must be monitored and adapted over
time.
 Perceptual Mapping
• Perceptual mapping allows marketers to
determine how their products appear to
consumers in relation to competitive brands
on one or more relevant characteristics.
• It is a graph of products within a category
based on two major benefits or attributes.
• It allows them to see gaps in the positioning
of all the products and identify areas for new
products.
• Because unfilled gaps or “unowned”
perceptual positions present opportunities for
competitors, sophisticated marketers create
several distinct offerings, often in the form of
different brands, to fill several identified
niches.

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56
57
 Positioning Strategy
• Perceptual maps are very helpful for
determining an appropriate competitive
strategy, depending upon the brand’s
positioning. There are various strategic
approaches to using perceptual maps, such as:

58
• Looking for market gaps
• Crowding a competitor
• Repositioning a brand
• Repositioning a competitor
• Adopting a me-too positioning
Perceptual
map with
clear
market
gaps
(opportuniti
es)