Unit 5

Segmentation, Targeting and

Positioning Strategies
Market Segmentation

 Market segmentation, also called market

segregation is the process of dividing large,
heterogeneous market into smaller,
homogeneous sub-markets which have
common needs and characteristics.
 Dividing a market into distinct groups with
distinct needs, characteristics, or behavior
who might require separate products or
marketing mixes.
Requirements for Effective Segmentation

“Lefties” are hard to

identify and measure, so
few firms target this
segment.
Requirements
Requirementsfor
forEffective
EffectiveSegmentation
Segmentation

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.

Accessible
Accessible • Segments can be effectively
reached and served.

Substantial • Segments are large or profitable

Substantial
enough to serve.

Differential • Segments must respond

Differential differently to different marketing
mix elements & programs.

Actionable
Actionable • Effective programs can be
designed to attract and serve
the segments.
Steps in Segmentation, Targeting, and
Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Evaluation of market segments Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market

Process of market segmentation

The STP Process

 Segmentation is the process of classifying customers into

groups which share some common characteristic
 Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter
 Positioning is arranging for a product to occupy a clear,
distinctive and desirable place relative to competing
products in the mind of the consumer
Levels of market segmentation

 Mass Marketing: Seller offer same product

for all the buyers with different needs and
seller engages in the mass production, mass
distribution, and mass promotion of one
product for all buyers. In this case, the size of
market will be larger and the promotion and
advertising expenses becomes generic in
nature to attract the entire customers.
 Segment Marketing: In this level of market
segmentation, a marketer divides a total
market into several segment depending upon
the needs, problems, requirements, buying
behavior, purchasing capacity, social class,
and other demographic variables, and then
select some of the segments to sell his entire
range of products.
 Niche Marketing: A niche is a more closely defined group,
it is dividing the segment into sub-segment and it can be
divided by identifying the distinct trait of consumer which
might need special combination of benefits.
 Local Marketing: It focus on brands and promotion to the
needs and wants of local consumer and design marketing
program according to the need of local consumer groups
cities, neighborhoods and even specific stores.
 Individual Marketing: It focuses on satisfying the needs
and wants of individual prospective customer. It is also
known as one-to-one marketing and customized
marketing.
Market Segmentation Variables
 Segmentation Variables for consumer market
 Geographic
 Demographic
 Psychographic
 Behavioral
 Other (anything!)
 No single best way to segment a market.
 Often best to combine variables and identify smaller, better-
defined target groups.
Geographic Segmentation
 Divide markets into different geographic
units.
 Examples:
 World Region or Country: North America, Western
Europe, European Union, Pacific Rim, Mexico, etc.
 Country Region: Pacific, Mountain, East Coast, etc.
 City or Metro Size: New York, San Francisco
 Population Density: rural, suburban, urban
 Climate: northern, southern, tropical, semi-tropical
Demographic Segmentation

 Use Differences in:

 age, gender, family size, family life cycle, income,
occupation, education, race, and religion

 Most frequently used segmentation variable

▪ Ease of measurement and high availability.
Psychographic Segmentation

Psychographic segmentation
divides a market into
different groups based on
social class, lifestyle, or
personality characteristics.

People in the same demographic classification

often have very different lifestyles and personalities.
Behavioral Segmentation
 Occasion
 Loyalty Status
 Special promotions
Nonusers, ex-users, potential users, first-time
& labels
users, for holidays.
regular users.
 Special products for
special occasions.

 Usage Rate
 Benefits Sought
 Light, medium, heavy.
 Different segments
desire different
benefits from the
same products.
Base for segmenting Organizational
Markets
 Use of product: It is  Size of Market or Size
concerned with the purpose of Purchase: What will
of using products or how the
customer will use the
be the lot-size per
product. purchase

 Buying characteristics: It  Geographical Areas: On

includes price sensitivity, the basis of areas’ level
importance of services, types
of purchase (First purchase of industrial
or second purchase), development, nature of
requirement of home industries and their
delivery, buying procedures brand preferences etc.
etc.
Segment Evaluation, Analysis and
Selection
 Before selecting a target market, marketers
have to critically evaluate and decide how
many or which one segment to serve in order
to acquire more opportunities from the
desired market segment.

 Normally three tools are available for

evaluating market segments:
 Size and growth of segments: A market segment must have
right size, i.e., manageable and profitable. Large companies
prefer large segments, while small companies prefer small
segments. Similarly the segment must have appropriate
growth potential.

 Structural attractiveness of segment: It indicates long-term

profitability. A market segment might have desirable size and
growth potential and still not be attractive from the viewpoint
of profitability because it depends on:
• Number of competitors and their strength
• Rate of new entrants in the target market
• Availability of potential substitutes in the market
• Bargaining power of buyers and suppliers
 Company objectives and resources: Although, a
market segment has positive size and growth
characteristics and is structurally attractive, it
may not mesh with the company’s long-run
objectives. A market segment must be able to
achieve company’s desired goal. Similarly, the
company must have adequate resources in terms
of finance; manpower and skill to manage market
segments properly and successfully run the
market.
Selection of market/Target
Marketing
After various forces are being properly
evaluated, then the marketer’s task is to select a
best market segment/s where they want to
serve. Such market segment/s is called target
market/s.
Target Market
 Consists of a set of buyers who share common
needs or characteristics that the company decides
to serve
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 Example

eBay’s positioning: No
matter what “it” is, you can
find “it” on eBay!
 Positioning Example

To (target segment and need) our (brand) is a

(concept) that (point-of-difference).

“To busy mobile professionals who need to

always be in the loop, Blackberry is a wireless
connectivity solution that allows you to stay
connected to people and resources while on
the go more easily and reliably than the
competing technologies.”
Process of Product Positioning

 Identify the target market

 Identify the product features
 Identify the competitors
 Select the best position
 Promote brands
 Monitoring
Types of Product Positioning/ Decision

 Positioning on specific product features

 Positioning on benefits, problem solution or
needs
 Positioning on specific usage occasions
 Positioning for user category
 Positioning against another product
 Positioning on product class dissociation