Market Segmentation, Targeting, and

Positioning for Competitive

Advantage

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 The STP Process
• Segmentation is the process of classifying customers
into groups which share some common characteristic
• Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter
• Positioning is arranging for a product to occupy a
clear, distinctive and desirable place relative to
competing products in the mind of the consumer
 Why Market Segmentation?
• Company can not serve all the customers.
• Market consist of buyers, buyers differ in one or more
respects like wants, purchasing power, geographical location,
buying attitudes. Any of these variables can be used to
segment a market.

Market Segment
• A large identifiable group within a market with similar wants,
purchasing power, geographical locations, buying attitudes

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 Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Selection Criteria Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
 Bases for Segmentation

Psychographic
Psychographic Demographic
Demographic

Customer
Customer
Characteristics
Characteristics

Geographic
Geographic

Usage
Behavior
Usage Rate
Behavior
Rate Outlets
Outlets

Behavioral
Behavioral

Awareness
Awareness Benefits
Benefits

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Step 1. Market Segmentation
Geographic Segmentation
World Region or Country

City or Metro Size

Density or Climate

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 Market Segmentation
Demographic Segmentation
• Dividing the market into groups
based on variables such as:
– Age
– Life-cycle stage or family size
– Gender
– Income
– Occupation
– Education
– Religion
– Race
– Nationality
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 Psychographic Segmentation
• Social Class

• Lifestyle

• Personality

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 Social Class
• Society’s relatively permanent & ordered divisions
whose members share similar values, interests,
and behaviors.
• Measured by a Combination of: Occupation,
Income, Education, Wealth and Other Variables.
• Persons with in each social class tends to behave
more alike than persons from different social
class.
• Persons are perceived as occupying inferior or
superior positions according to their social class.
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 Life Style:

• Person’s life style is the person’s pattern of living in the world

as expressed in the person’s Activities, Interest & Opinions.
• Life style portray the whole person interacting with his or her
environment.
• Person coming from same subculture, social class &
occupation may lead quite different life style.

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 Personality & Self Concept:

• By personality we mean the person’s distinguishing

psychological characteristics that lead to relatively
consistent & enduring responses to his or her
environment.
• Personality is usually describe by traits like- self
confidence, dominance, autonomy, sociability,
defensiveness, & adaptability.
• This suggest using these appeals in advertisements.

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 Market Segmentation
Behavioral Segmentation
• Dividing the market into groups based on variables such as:
– Occasions: Regular Occasions (Festivals) Special Occasions (Birth, Marriage)
– Benefits sought: Quality, Service, Economy, Speed
– User status: Non user, Ex user, Potential user, First time user, Regular user
– Usage rate: Light/ Medium/ Heavy user
– Loyalty status: None , medium, strong, absolute
– Readiness Stage: Unaware, aware, informed, interested, desirous, intended to buy
– Attitude Towards product: Enthusiastic, Positive, Indifferent, Negative, Hostile

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 Selecting a Target Market (Targeting)
Determining how many segments to enter
• Undifferentiated strategy- offer one product to entire market
• Multisegment strategy – selecting multiple segments,
developing separate marketing strategies for each
• Concentrated strategy – selecting one segment, developing
one marketing mix for that segment
Determining which segments to target
• Size and Sales potential
• Growth opportunities
• Cost
• Competition
• Compatibility
 Market Targeting
Evaluating Market Segments (Developing
Selection Criteria)
• Segment Size and Growth
– Analyze current segment sales, growth rates, and expected
profitability for various segments.
• Segment Structural Attractiveness
– Consider effects of: competitors, availability of substitute
products, and the power of buyers & suppliers.
• Company Objectives and Resources
– Examine company skills & resources needed to succeed in that
segment(s).
– Offer superior value & gain advantages over competitors. 14
Selecting Market Segments (Market Coverage Strategies)

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 Target Market Approaches: Undifferentiated
Marketing ( Mass Marketing)
• Product: Limited no. of service offerings under one brand for
many type of customers.
• Distribution: All possible outlets
• Promotion: Mass Media
• Price: One popular price range
• Target Market: Broad range of consumers
• Strategy Emphasis: Appeal to large number of consumers via
a uniform broad based marketing programs

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 Target Market Approaches: Differentiated
Marketing
• Product: Distinct brand for each consumer group
• Distribution: All suitable outlets differs by segment
• Promotion: All suitable Media differs by segment
• Price: Distinct price range for each consumer group
• Target Market: Two or more well defined consumer group
• Strategy Emphasis: Appeal to two or more distinct market
segments via different marketing plans catering to each
segment

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 Target Market Approaches: Concentrated
Marketing
• Product: One brand which has been aimed to one consumer
group
• Distribution: All suitable outlets
• Promotion: All suitable Media
• Price: One price range aimed to consumer group
• Target Market: One well defined consumer group
• Strategy Emphasis: Appeal to one specific consumer group via
a highly specialized but uniform marketing program

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 Selecting the Market Segments

• Single segment Concentration

• Selective Specialization
• Market Specialization
• Product Specialization
• Full Coverage

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Basic Target Marketing Strategies
 Selecting a target market for a fast-food
restaurant next to a metropolitan college

Products: Meals
Between-meal After-
Markets Breakfast Lunch snack Dinner
Dinner
Snack
Student
Dormitory O S L O L
Apartment S L L S S
Day commuter O L M S O
Night commuter O O S L M

Nonstudent
Faculty or staff O L S S O
Live in area O S M M S
Work in area S L O S O

Key: L, Large market; M, medium market; S, small market; O, no market

 Positioning

• Positioning is not what

you do to a particular
product but what you do
to the mind of
prospect/customer.
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 Why Positioning
• Through positioning marketers seeks to answer following
questions.
• What is the current position of service in the minds of target
market?
• What position does the firm want to own i.e. looking for
positions or holes in the market place?
• How to manipulate what’s already in the mind?
• How can it be done?

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Choosing a Positioning Strategy
Step 1. Identifying
Possible Competitive
Advantages
Step 2. Choosing the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position

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 Identifying Possible Competitive
Advantages

Product Services
Differentiation Differentiation
i.e. Features, Performance, i.e. Delivery, Installation,
Style & Design, Attributes Repair Services, Customer
Training Services
Channel
Image Differentiation People
Differentiation Differentiation
i.e. Symbols, Characters i.e. Hiring, Training
Better People Than
Competitors Do

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 Advertising actions to reach specific student segments

Products: Meals
Markets Between-meal After- Dinner
Lunch snack Dinner
Snack

Dormitory students S L O L
Apartment students L L S S
Day commuter students L M S O
Night commuter students O S L M

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