MARKETING MANAGEMENT

Dr. Belay Kinati , MBA, PhD

Department of Commerce
College of Business and Economics
Wollega University

Dr. Belay Kinati 12/23/2020

 Chapter-3
Market Segmentation, Targeting
and Positioning

Dr. Belay Kinati 12/23/2020

 Learning objectives
At the end of this chapter you should able
to;
 Explain market segmentation and basis of
market segmentation
 Describe market targeting and positioning
 Explain levels of market segmentation.
 Discuss the steps in segmentation,
targeting, and positioning
Dr. Belay Kinati 12/23/2020
 The STP Process
1. Segmentation-
Dividing the total market for a
good or service into groups of
similar consumers.

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 Contd.
3. Market positioning
 Establishing and communicating the
key distinctive benefit(s) of the
company’s market offering to each
target.

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 Requirements for Effective
Segmentation

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Steps in Segmentation, Targeting,
and Positioning

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Levels of Market Segmentation

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 Segmenting Consumer Markets
Nation or
Bases for
Segmentation country
State or region
Geographic City or metro
Demographic size
Psychographic Density
Behavioral Climate

Dr. Belay Kinati

 Segmenting Consumer Markets
Age, race, gender
Bases for Income, education
Segmentation Family size
Family life cycle
Geographic
Occupation
Demographic
Religion, nationality
Psychographic
Generation
Behavioral
Social class

Dr. Belay Kinati

 Segmenting Consumer Markets

Bases for Lifestyle

Segmentation Activities
Interests
Geographic Opinions
Demographic Personality
Psychographic Core values
Behavioral

Dr. Belay Kinati

 Segmenting Consumer Markets

Bases for Occasions

Segmentation Benefits
User status
Geographic Usage rate
Demographic Loyalty status

Psychographic Buyer-readiness

Behavioral Attitude

Dr. Belay Kinati

Contd.

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 2. Market Targeting
Market Targeting
 Selecting one or more market segments to
enter.
 A target market is a group of people
toward whom a firm markets its goods.
Evaluate market segments from the angles of;
 Segment Size and Growth
 Analyze sales, growth rates and expected
profitability for various segments.
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 Contd.
Segment Structural Attractiveness
 Consider effects of: competitors, availability of
substitute products and, the power of buyers &
suppliers.
 Attractive if there is least & smallest competitors.
Company Objectives and Resources
 Select segment in harmony with skills, knowledge,
objectives and resources possessed by company.
 Look for Competitive Advantages.

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Contd.

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Choose market-coverage strategy by
using
Product variability:
Undifferentiated marketing  for
uniform products (e.g., steel).
Differentiation or concentration
marketing  for products that can
vary in design (e.g., cameras and
cars).
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 Contd.
Product's stage in the life cycle:
 When a firm introduces a new product
undifferentiated marketing or
concentrated marketing
 In the mature stage of the PLC 
differentiated marketing .
Company resources:
Concentrated marketing for a firm with
limited resources.
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 Contd.
Market variability:
 Undifferentiated marketing  when buyers
have same tastes, buy same amounts and
react in same way to marketing efforts
Competitors‘ marketing strategies:
 When competitors use undifferentiated
marketing a firm gain advantage using
differentiated or concentrated marketing.
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3. Positioning for Competitive
Advantage
Product’s Position
The way the product is defined by
consumers on important attributes.
The place the product occupies in
consumers’ minds relative to
competing products.

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Cont’d
Marketers must:
Plan positions to give their products
the greatest advantage in selected
target markets,
Design marketing mixes to create
these planned positions.

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 Steps to Choosing and Implementing
a Positioning Strategy
Step 1.
 Identifying Possible Competitive
Advantages: Competitive Differentiation.
Step 2.
 Selecting the Right Competitive
Advantage: Unique Selling Proposition
(USP).

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 Steps to Choosing and Implementing
a Positioning Strategy
Step 3.
Communicating and Delivering the
Chosen Position.
Step 4.
Support the positioning strategy
with a unique marketing mix.

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Developing Competitive Differentiation
Differentiation is the act of designing a set of meaningful differences to
distinguish the company’s offer from the competitor’s offers. THE
OBJECTIVE IS TO CREATE A SUSTAINABLE COMPETITIVE
ADVANTAGE through bases for differentiation:

a. Product Differentiation – Performance, Durability, reliability

b. Services – installation, consulting, training, repairs
c. Personnel – competence, , responsiveness, communication
d. Image –symbol, innovative,
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 Developing Competitive Differentiation
The objective of differentiation is to create a sustainable
competitive advantage through bases for differentiation.
A company can differentiate its market offering along
five dimensions:
 Product differentiation on features, performance, style or

design, form,
 Service differentiation through speedy, convenient, or

careful delivery, ordering ease, installation, customer

training & maintenance and repair
 Channels differentiation - coverage, expertise, and

performance

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 Cont’d
 People differentiation –hiring and training
better people than their competitors do. Well-
trained personnel exhibit six characteristics:
competence, courtesy, credibility, reliability,
responsiveness, and communication.
 Image differentiation– Buyers respond
differently to company and brand images. Image
is the way the public perceives the company or
its products. An effective image establishes the
product’s character and value proposition.

Dr. Belay Kinati 12/23/2020

 Developing & Communicating a Positioning
Strategy
 All products can be differentiated to some extent.
Criteria for determining which difference to
promote:
 Important: The difference delivers a highly valued
benefit to target buyers.
 Distinctive: Competitors do not offer the difference,
or the company can offer it in a more distinctive way.
 Superior: The difference is superior to other ways
that customers might obtain the same benefit.

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 Cont’d
 Communicable: The difference is communicable
and visible to buyers.
 Preemptive: Competitors cannot easily copy the
difference.
 Affordable: Buyers can afford to pay for the
difference.
 Profitable: The company can introduce the
difference profitably.

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 Methods to position products
In general, various positioning methods can
be distinguished.
1.Attribute Positioning / Customer Benefits
 The enterprise positions itself in terms of one
or more outstanding attributes or benefits.
2. Product Benefit Positioning
 This positioning method emphasizes the unique
benefits that the enterprise or product offers.

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 Cont’d
3. Quality / Price Positioning
The enterprise may claim that its product is
of exceptional quality, or has the lowest price.
4. Use / Application Positioning
An enterprise can position itself on its
market offering in terms of the product use
or application possibility. Nike describes one
of its shoes as the best for running, another
best for X training, another best for soccer.
Dr. Belay Kinati 12/23/2020
 Cont’d
5. User Positioning
The enterprise may position its products
with users in mind, using models or
personalities. Influences image of product by
association.
 6. Product Class Positioning
Some marketers need to make critical
positioning decisions that involve what
product class or category the product falls in.
Dr. Belay Kinati 12/23/2020
 Cont’d
7.Competitor Positioning
Some market offerings can best be
positioned against competitive
offerings.
8. Origin Positioning
E.g., France perfume

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 The End

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