Segmenting,

Targeting and
Positioning in
Business
Chapter 6 Marketing
 Chapter Questions
• What is market segmentation?
• What are its benefits, limitations, and requirements?
• What is the process of segmenting and targeting
business markets?
• What are the bases used for segmenting business
markets?
• How market segments are evaluated and selected?
• What are the target market strategies?
• What is positioning and how to develop a positioning
strategy?
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What is Market Segmentation?

• It is the process of dividing (i.e. segmenting) a market

into groups of customers (i.e. market segments)with
some common characteristics, who have similar set of
requirements for a product or service (i.e. market
offering)

• Business marketers first identify market segments and

then decide which segments to target

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 Benefits and Limitations of
Segmentation

• Benefits of market segmentation:

– Enables the marketer to study the market
– Smaller firms can survive and succeed
– Effective allocation of resources to segments

• Limitations of market Segmentation

– Due to small market or few customers
– Increase in marketing costs

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 Requirements of Effective
Segmentation
• For effective segmentation, criteria used by
marketers to evaluate potential segments are:

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 Process of Segmenting and
Targeting Business Markets

• Conduct marketing research

• Identify and select macro-segments
• Go for micro-segmentation (if selected macro-
segments do not explain difference in buying
behavior of buying firms)
• Profile selected target segments

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The Nested Approach to
Segmentation
• Here, the mentioned
five segmentation
criteria are arranged as a
Demographics nested hierarchy,
Operating variables moving from outer nests
to inner nests
Purchasing approaches
• Marketers select
Situational factors important criteria from
many criteria
Personal characteristics
• Cost & time of
information collection is
less for outer nests
compared that from 7
inner nests
 Bases/Variables for
Segmenting Business Markets
• Major Macro-variables
– Type of customer or industry
– Size of customer companies
– Usage rate of customers
– Customer’s geographic location
– Application, end-use, or benefits of the product
• Major Micro-variables
– Buying situations
– Customer firms’ capabilities
– Purchasing criteria
– Personal characteristics of buying-centre members
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 Evaluating and Selecting
Market
Segments
• Criteria used for evaluating each segment:
– Size or market potential
– Market growth
– Profitability
– Competitive analysis
– Company objectives and resources

• Most attractive segments that meet the company’s

objectives are selected
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 Target Market Strategies

• After selecting target market segments, firms

adopt one of the following strategies:
– Concentrated marketing
– Differentiated marketing
– Undifferentiated marketing

– Niche marketing

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 What is Positioning?
• It is a distinct (or unique) place a product (or service)
of a selling firm occupies in the minds of target
customers in relation to competition

• In business marketing, it is the value proposition of the

market offering of a selling firm to target customers
that should answer the question:
“Why the target customer should buy the selling
company’s product/service instead of competitors”

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 Process of Developing
Positioning Strategy?
• Decide target market segments (Segmenting and targeting)

• Identify major attributes or benefits for differentiation

(Through Marketing Research)

• Select one or few differentiating attributes or benefits (Use

perceptual map)

• Communicate the positioning strategy to target segments

(With clarity and consistency)

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