Segmentation, Targeting & Positioning

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 Market Segmentation

 Market Segmentation: division of

the total market into smaller,

relatively homogeneous groups.

 No single marketing mix can satisfy

everyone. Therefore, separate marketing

mixes should be used for different

market segments.

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Steps in Segmenting the market

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Basis of Market Segmentation

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 Geographic Segmentation

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Segmenting by age

 Sociologists attribute different consumer needs

and wants among various age groups to the
cohort effect.

 Cohort effect is a tendency among members of a

generation to be influenced and drawn together
by significant events occurring during their key
formative years, roughly 17 to 22 years of age

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Family Life Cycle Stages Segmentation

 The process of family

formation and
dissolution.
 The underlying theme
is that life stage, not
age per se, is the
primary determinant of
many consumer
purchases.

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 Usage Rates

 Segmenting by grouping people according

to the amounts of a product that they buy
and use
 Markets often divided into heavy-user,
moderate-user, and light-user segments
 The 80/20 principle (“Pareto’s Law”) holds
that a big percentage of a product’s
revenues (roughly 80%) comes from a
relative small, loyal percentage (around
20%) of total customers

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Pharmaceutical industry segmentation

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 Shopper Segments : India
DISCERNING “I am very particular about the brands and productsI buy for my
SHOPPER IS IT GOOD
family. Offers are necessary but they have to be relevant tome” ENOUGH?

BARGAIN “If I find a good offer I will buy it even if I don’t need thatproduct IS IT ON SPECIAL
HUNTER at that time” OFFER?

“The store that you shop at reflects your status… when I tell my
IMAGE SHOPPER IS IT UP
friends where I shop, they need to feel that I have someclass…”
MARKET?

CONVENIENCE “I juggle so many things during the day, I want things thatmake
SHOPPER IS IT EASY?
my life easier, even if it means paying a little more”

COMPETITIVE “I like visiting various stores to see what’s the latest…I get a high IS IT NEW?
SHOPPER when my friends ask my opinion of newlaunches”

“My life today is better than it was yesterday, and will be better
PROGRESSIVE IS IT BETTER
tomorrow… my shopping reflects this… I can afford so muchmore
SHOPPER THAN BEFORE?
now…”
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Criteria for Effective Segmentation

 Market segmentation cannot be used in all cases. To

be effective, segmentation must meet the following
basic requirements.
 The market segments must be measurable in
terms of both purchasing power and size.
 Marketers must be able to effectively promote to
and serve a market segment.
 Market segments must be sufficiently large to be
potentially profitable.
 The number of segments must match the firm’s
capabilities.

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A Useful Tool for Assessing Market
Segments: Segment Rating Chart
WEIGHT RATING (0-10) TOTAL
Market attractiveness factors
Customer needs and behavior .5 10 5.0
Segment size and growth rate .3 7 2.1
Macro trends .2 8 1.6
Total: Market attractiveness 1.0 8.7
Competitive position factors
Opportunity for competitive advantage .6 7 4.2
Capabilities and resources .2 5 1.0
Industry attractiveness .2 7 1.4
Total: Competitive position 1.0 6.6

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 The Market Attractiveness/
Competitive Position Matrix

Market
Attractiveness
High
(8-10) 
Moderate
(4-7)
Low
(0-3)
Low Moderate High
(0-3) (4-7) (8-10)
Company’s Competitive Position

 = Market attractiveness and competitive position of distance runners segment

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Market Targeting
Market Coverage Strategies
Company
Marketing Market
Mix

A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Marketing

Segment 1
Company
Marketing Segment 2
Mix
Segment 3
C. Concentrated Marketing
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 Five Patterns of Target Market
Selection
Single-segment Selective Product
concentration specialization specialization
P M1 M2 M3 M1 M2 M3
1 P1 P1 M1 M2 M3
P P2 P2
2
P P3 P3
3

Market Full market

specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P = Product
M = Market P2 P2
P3 P3
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 Product Positioning

 Positioning is what you do to the mind of the

prospect. That is, you position the product in
the mind of the prospect.
-Al Ries and Jack Trout (1981)

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 Positioning Statements

FedEX
Fast, reliable on-time delivery
Southwest Airlines
Affordable, no-frills air travel
Rolex
Status-symbol fashion accessory
Ebay
The virtual marketplace to buy or sell anything

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Positioning of Procter & Gamble
Detergents
Market
Brand Positioning
Share
Tide Tough, powerful cleaning 31.1%
Cheer Tough cleaning, color protection 8.2%
Bold Detergent plus fabric softener 2.9%
Gain Sunshine scent and odor-removing formula 2.6%
Era Stain treatment and stain removal 2.2%
Dash Value brand 1.8%
Oxydol Bleach-boosted formula, whitening 1.4%
Solo Detergent and fabric softener in liquid form
1.2%
Dreft Outstanding cleaning for baby clothes, safe 1.0%

LO
Ivory Snow
9 Fabric & skin safety on baby clothes 0.7%
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12007.1%
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Product Positioning Dimensions
 ProductAttributes / Differences / Benefits

 Product User / Usage

 By Association

 Problem Solution
 Against a Competitor /Away from

Competitors
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Product Positioning using perceptual maps

High moisturizing
Zest
Tone 7
4
Lever 2000
Dove
5 2

Safeguard
Coast
Lux 8
Nondeodorant 3 Deodorant

1
Dial
Lifebuoy
Lava
6
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2
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 Exercise #: Beer Market
• How would you name vertical and horizontal axes?
• Which two attributes are most important to describe the horizontal axis?
Popular
Full Bodied Heavy with Men

Special
Occasions
Blue Collar Dining Out Premium
GoodValue

Popular
Pale Color with
Women
On a
Light Less Filling 26
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 Exercise # Solution
• How would you name vertical and horizontal axes?
- Vertical: Heavy/Light
- Horizontal: Premium/Budget

• Which two attributes are most important to describe the horizontal axis?
- Premium
- Good value

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 Exercise #: Beer Market
• Which beer is most popular with men?
• In what ways does Budweiser different from Miller or Coors?
Heavy Popular
Heavy
Full Bodied • with Men
Old Milwaukee Budweiser
• Beck’s •
Meister Brau Special • Heineken
• Miller • Occasions
Blue Collar
Good Value • Dining Out Premium
• Coors
Budget Stroh’s
Premium
• Michelob
•
Miller
Coors Popular
Pale Color Lite
• Light with

On a
• Women
Old
Budget Milwaukee Light Light
ay, Marc 8, 28
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 Group Exercise - Solution
• Which beer is most popular with men?
- Beck’s

• In what ways does Budweiser different from Miller or Coors?

- More popular with men
- Heavier
- Less preferred for special occasion

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 Exercise #: Beer Market
• Which beers are most likely to be purchased by consumer in segment #3?
• If you reposition Stroh’s, where would you move this product?
Heavy
• Budweiser
Old Milwaukee

3
• 1 Beck’s •
4
Meister Brau • Heineken
• Miller •
•
• Coors
Budget Stroh’s Premium
• Michelob
2
5
•
Miller
Coors
Lite
• Light
•
Old
ilwaukee Light 30
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 Group Exercise Solution
• Which beers are most likely to be purchased by consumer in segment #3?
- Old Milwaukee

• If you reposition Stroh’s, where would you move this product?

- Toward segment #5

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