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Chapter 6

Segmenting, Targeting and

Positioning in Business Marketing
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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), who have similar 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:
• Measurable
• Substantial
• Accessible
• Differentiable
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Process of segmenting and targeting

Business Markets
• Conduct marketing research
• Identify and select macro-segments
• Go for microsegmentation (if selected macro-
segments do not explain difference in buying
behavior of buying firms)
• Profile selected target segments
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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) occupies in the minds of target
customers.

In business marketing, it is the value proposition of

the market offering to target customers that
should answer the question:

“Why the target customer should buy the

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 benefits for differentiation
(Through Marketing Research)
• Select one or few differentiating benefits
(Use perceptual map)
• Communicate the positioning strategy
(With clarity and consistency)