Segmentation, Targeting & Positioning

for Competitive Advantage

By S. Rashid Hussain
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Marketing Process Involves

Market orientation as philosophy

Market segmentation
Targeting market
Positioning
Marketing mix
2

Marketing Strategy

Select base for segmentation and identify appropriate

market segments.
Evaluate and appraise the market segments resulting
from the first step.
Select an overall market targeting strategy and specific
target segments.
Tailoring a distinct position in selected markets
Developing marketing mixes that serve desired
positioning strategy in the marketplace
Auditing marketing environments and efforts
3

Importance of
Segmentation and Targeting

The focus of a successful marketing program is the

customer. Effectively marketing must fully understand the
needs.
Customers with decent life and individualism have
Heterogeneous demands, This has given rise to need
segmenting.
The process of understanding the customer and choosing a
group of customer you can serve best is targeting.
So target a segmentation is core of the marketing process.
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Identify the Total Market

Identify Total Market
Effective Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

Identify the Total Market

The first step in the target market

selection process is to specifically
define the total market of all potential
customers for a product category.

Segmentation and Effectiveness

Identify Total Market

Effective
Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

Segmentation

Segmenting means dividing a heterogeneous

demanding markets into homogenous groups
based on similar characteristics or traits
Heterogeneous demand- different groups of
customers have differing needs from specific
products.
Homogeneous segment- the separation of
markets into distinctive groups based on
homogeneous characteristics.
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Criteria for
successful segmentation

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Ac
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Acc
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Criteria for
successful segmentation

tive
Distinc

Clear differences
in consumer
preferences for a
product must
exist.

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Criteria for
successful segmentation

Me
a
Ide sura
b
n ti
fiab le
le

Difference
preferences for a
product must be
identifiable and
capable of being
related to
measurable
variables.
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Criteria for
successful segmentation

b
Su

l
ti a
n
sta

The proposed
market segment
must have enough
size and
purchasing power
to be profitable.
12

Criteria for
successful segmentation

Act
i on

abl
e

Companies must
be able to respond
to difference
preferences with
an appropriate
marketing mix.

13

Criteria for
successful segmentation

Acc
ess
ibl e

The proposed
market segment
must be readily
accessible and
reachable with
market programs.
company
14

Determine Bases for Segmentation

Identify Total Market

Effective Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

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Bases for Segmentation

To divide a market into segments, firms

use segmenting criterion that describe
the characteristics of each part of the
market.

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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
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Segmentation Base

Income Level

Life-cycle

Social class
Education

Ethnic
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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
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Segmentation Base
Localizes its marketing efforts to specific
geographic regions

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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
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Segmentation Base

Grouping customers together based

on social class, lifestyles and
psychological characteristics
(attitudes, interests and opinions)
Useful but more difficult to identify and
measure compared to demographic
variables
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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
23

Segmentation Base

Markets can be segmented

based on the benefits that
consumers desire from using
a specific product

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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
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Segmentation Base

Purchase situation or occasion

Physical surroundings
Social surroundings
Temporal perspective

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Segmentation Base

Demographic
Segmentation

Segmentation

Geographic
Segmentation

Situation
Segmentation

Psychographic

Behavior/Usage

Segmentation

Benefits-Sought

Segmentation
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Segmentation Base
Markets can be segmented by how often or how
heavily consumers use a specific product
Paretos Principle or 80/20 Principle - 80% of revenue
generated by 20% of customers

Light Users
80%

Heavy Users
20%
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Segmentation Base

Information for segmenting

markets may be obtained from
database such as Census, State
Statistics, ACORN

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Segmenting Business Markets

While the steps in the target market selection

process are essentially the same for business
markets, there are three major differences:
The purchasing process, which differs
greatly from the household consumer
market.
The use of different segment variables, in
simple way, a Standard Industrial
classification is often employed
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Segmenting Business Markets

Segmentation variables used to segment

business markets:

Size
Industry
Purchasing approaches
Product usage
Situational factors (seasonal trend)
Geographic
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Select Segments for Targeting

Identify Total Market
Determine Need for
Segmentation
Determine Bases for
Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

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Targeting markets

Targeting: choose the specific segment toward

which a firm directs its market efforts.
Niche Marketing: the process of targeting a small
market segment with a specific, specialized
marketing mix.
Micromarketing- the process of targeting smaller,
more narrowly defined market segments.
On the individual consumer end of the continuum,
a firm may decide to target individual consumers
and personalize marketing efforts toward each.
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Target the Mass Market versus the

Individual Consumer
Mass
Market
Niche

Micromarketing

The
Individual

ze
i
S
n
o
i
t
a
t
n
e
m
g
e
S
t
e
k
r
a
M
f
Continuum o
PersonalStandardized
Marketing
Mix

Niche

Micromarketing

ization
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Advantage of Targeting Efforts

Cannot effectively serve all the segments,

must target marketing efforts to a segment or
segments.
Marketing opportunities and unfilled gaps
are more accurately identified
Marketing mix is more delicately meet toe
potential customers needs
Offer the greatest potential to achieve profit or
relationship goals
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Targeting Strategy

1.Undifferentiated marketing
2.Differentiated marketing
3.Concentrated marketing
4.Custom marketing

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Targeting Strategy
Undifferentiated targeting
strategy
Concentrated strategy
Differentiated strategy

Companies might
develop one
marketing mix
strategy that is
appropriate for all
members of the
total market.

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Targeting Strategy
Undifferentiated targeting
strategy
Concentrated strategy
Differentiated strategy

Only one marketing

mix is developed
and directed
toward a few, or
perhaps one,
profitable market
segments.

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Targeting Strategy
Undifferentiated targeting
strategy
Concentrated strategy
Differentiated strategy

Exists when a firm

develops different
marketing mix
plans specially
tailored for each of
two or more market
segments.

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Alternative of Targeting Strategy

1. Single segment(concentrated)
2. Multi segment(differentiated)
3. Product specialized(one prodcuct but
different markets)
4. Market specialized(one market with different
markets)
5. Full market coverage(undif(mass)/differentiated)
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Select Positioning Strategy

Identify Total Market

Effective
Segmentation
Determine Bases for
Segmentation
Targeting Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

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Positioning
Positioning
Kotler defined: designing an
offer so that it occupies a
distinct and valued place in the
minds of the target customer.
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Positioning

Positioning
Image that customers have about
a product in relation to the
products competitors

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Positioning Strategy

Key to developing the

appropriate marketing mix is
the positioning strategy of the
product.

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Presumptions of Positioning

All products have object and

subject attributes
Recognizable
Comparable

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Select Positioning Strategy

Effective positioning
What consumers currently think about
the product, especially in relation to
competing products
What the marketer wants consumers to
think about the product
Which positioning strategy will elevate
the consumers current product image to
the desired product image.
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Select Positioning Strategy

Position Mapping- creating a

visual description about consumer
perceptions of a product on two or
more dimensions in relation to
competitors.
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Select Positioning Strategy

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Select Positioning Strategy

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Select Positioning Strategy

The positioning strategy must determine where a

company wants to go
And how to get there by positioning the product
according to any of the following ways:

Price/Quality(q-mobile)
Product Attributes(thickness of milk)
Product User(rural urban)(omni ad)
Product Usage(vim 1 spoon)
Product Class(razor and shave cream
Competition(excel +express)
Symbol(end symbol samsung)
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Marketing Mix
Identify Total Market
Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and

ControlObjective 3

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Marketing Mix

The final steps are to develop and a

marketing mix matched to the needs of the
target market
This must support the chosen positional
strategy in the selected target markets
Therefore determine the 4Ps or 7Ps of
its marketing mix as a tool to achieve the
desired position
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Recognize 4Ps and the 7Ps

Productcustomer value

Pricecost

Placeconvenience

Promotioncommunication

Peopleconsideration(respect)

Processesco-ordination (

Physical
evidenceconfirmation(approval)

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Marketing Strategy and the

Marketing Mix
Place

Product

(Distribution)
Marketing
Mix

Promotion

Price
Objective 4

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Marketing Strategy and the

Marketing Mix
Product

Refers to goods, services, people, places

and ideas
Household consumers
Business-to-business customers
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Marketing Strategy and the

Marketing Mix
Place
(Distribution)

Marketing channel is the network of

organizations that create time, place
and ownership utilities for household
consumers and business customers.
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Marketing Strategy and the

Marketing Mix

Integrated Marketing Communication (IMC)

System of management and integration of
marketing communication elements
Advertising, publicity, sales promotion,
personal selling, sponsorship marketing, and
point-of-purchase communications

Promotion
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Marketing Strategy and the

Marketing Mix

Pricing decisions are complex and are driven

by a variety of considerations including:
Customer demand, costs, information
availability, competition, profit motives,
product considerations, and legal
considerations

Price
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