Segmentation, Targeting and

Positioning
Marketing Management I
Segmentation
 Dividing the market into distinct group of buyers
who have different needs, characteristics or
behavior, and who need separate marketing
programs.

 A market segment consists of a group of customers who share a

similar set of needs and wants.

 Ex: Rural people between the age group of 18 – 35.

Basis/ Variables of Segmenting the Market

 Geographic

 Demographic

 Psychographic

 Behavioral
Basis/ Variables of Segmenting the Market

 Geographic
Nation, States, Region, City, Town, Density, Climate
 Demographic
Age, Gender, Family Size, Family Life Cycle, Income, Occupation,
Education, Religion, Nationality.
 Psychographic
Social Class, Lifestyle, Personality
 Behavioral
Decision Roles, Occasions, Benefits, User Status, User Rates, Loyalty
Status, Attitude
Major Segmentation Variables:

 Geographic –
Climatic Zones, Nations, States, Regions, City, Town,
Density (urban, suburban, rural).
 Demographic –
Age, Gender, Family Size, Family Life Cycle, Income,
Occupation, Education, Religion, Nationality.

Age
Babies, kids,
tweens(8-14), teens,
youth(upto 29)
working age (above
30), senior citizens
 Psychographic –
Use of psychology and demographics to better
understand consumers.
Social Class (working class, upper class) [Education and
Occupation] [Influence clothing, home furnishing, reading habits,
eating habits ] [Vegetarian], [halal and jhatka]
Lifestyle (achievers, strivers)
Personality (ambitious, compulsive)
Social Class

Social classes are society’s relatively permanent and

ordered divisions whose members share similar
values, interests and behavior. Indian marketers use
socioeconomic classification, which is a combination
of education and occupation of the main earning
member of a household
Lifestyle
Life Style is a person’s pattern of living in the world
as expressed in activities, interests and opinions
(AIO).

Activities (work, hobbies, shopping, social events,

sports).
Interest (food, fashion, family recreation) and
Opinions (about themselves, social issues,
business, products)
Personality
Personality refers to the unique psychological
characteristics that lead to relatively
consistent and lasting responses to one’s
own environment.

It may be described as
self – confidence, sociability, independence,
dominance, adaptability, defensiveness,
aggressiveness, sincerity.
VALS – Values and Lifestyle Segmentation

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MOTIVATION
VALS – Values and Lifestyle Segmentation
 Consumers are inspired by one of the three primary
motivations: ideals, achievement, and self – expression.
 Those motivated by ideals are guided by knowledge and
principles.
 Those motivated by achievement look for products and
services for demonstrating their success.
 Those motivated by self – expression desire social or physical
activity, variety and risk.
 Resources is determined by personality traits such as – energy,
self confidence, intellectualism, novelty, and innovativeness.
 Different level of resources enhance or constraint primary
motivations
 Innovators: spend more on upscale or niche products.
 Thinkers: seek functionality, durability, value in products.
 Achievers: seek premium products to show success.
 Experiencers: impulsive people. Fashion, entertainment
 Believers: loyal to established brands.
 Strivers: emulate the purchase of achievers.
 Makers: Practical. Seek functional benefits.
 Survivors: Elderly people. Loyal to their brands.
 Major Segmentation Variables:
Behavioral –

 Decision Roles (initiator, influencer, decider, buyer, user) –

[kitchen appliances]
 Occasions, Benefits [Festivals, Wedding Season, Greeting
cards, Gym, Toothpaste]
 User Status (user/ non - user), - [baby products, blood donors]
 User Rates (light, medium, heavy) - [mobile, Cabs, Fr Flyer]
 Loyalty Status (medium, strong)
 Attitude - [political parties – voters]
Benefit Segmentation
 By purchasing and using products, consumers are trying to
satisfy specific needs and wants.
 In essence, they look for products that provide specific benefits
to them.
 Identifying consumer groups looking for specific benefits from
the use of a product or service is known as benefit
segmentation and is widely used by marketers
Attitude
 Attitude, a person’s consistently favorable or
unfavorable evaluations, feelings, and tendencies
towards an object or idea.
 Five attitudes about products are:
 Enthusiastic, Positive, Indifferent, Negative, Hostile.

 Education, Money, FaceBook, Consumerism, Movie,

Medicine, Ayurvedic Drug
 Benefit segmentation of toothpaste market
Principal benefit Psychographics Behavioural Demographic Brands much
sought Characteristics Characteristics Characteristics favoured

Brightness of Outgoing, active, Smokers Teenagers Close-up,

teeth fun loving, high Youngsters Aquafresh
(cosmetic) sociability

Decay Health conscious Heavy users Large families Pepsodent,

prevention Colgate total
(medicinal)

Taste (good Self-indulgent, Mint lovers Children Aquafresh,

taste, flavour) hedonic Colgate

Low price Price- conscious, Heavy users Men, traditional Neem, Babool,
(economy) independent Vicco Vajradanti
SEGMETING BUSIESS MARKETS
Business Markets
 Consumer and business marketers use many of the same
variables to segment their markets.
 Business buyers can be segmented geographically,
demographically (industry, company size), or by benefits
sought, user status, usage rate and loyalty status.
 Business marketers also use additional variables such as
customer operating characteristics, purchasing approaches,
situational factors and personal characteristics.
 By going after segments instead of the whole market,
companies can deliver just the right value proposition to
each segment served and capture more value in return
 Operating Variables: Operating variables deal with the
customer technologies, user and no user or heavy user status,
and the customer capabilities.

 Purchasing Approaches: Some companies have centralized

purchasing while others have decentralized purchasing.
Industrial marketing often involves competitive tendering.
 In this process, the purchasing organization undertakes to
procure goods and services from suitable suppliers. This is
normally done for high value of some purchases and the
purchasing organization shall seek a number of bids from
competing suppliers and choose the best offering. This is called
strategic procurement. Organizational structure or power
structure is also important criteria. This gives an insight into
the general purchase policy of the buying organization.
 Situational Variables: These variables include the
urgency, quick delivery or scheduled delivery of the goods
and services. The other criteria may be specific
application and size of the order.
 Personal Characteristics: Personal selling is very
important & effective in industrial marketing because
many products need to be customized to suit the
requirements of the individual customer. Other criteria are
buyer-seller similarity, attitude towards risk and loyalty of
a industrial customer.
Requirements for effective segmentation:

 Measurable. (Left hander)

 Accessible. (Can be reached and served)

 Substantial. (large and profitable enough)

 Differentiable. (respond differently to different

marketing mixes and strategies)

 Actionable. (the company must have resources to attract

and serve the segment)
 Why Segmentation is Necessary

 Consumer needs differs

 Differentiation helps products

compete

 Segmentation helps identify

media
 Differentiating
Designing unique market offerings to create superior
market value is known as differentiating.

 Targeting
The process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter
is known as targeting.
Target Market:
A set of buyers sharing common needs or characteristics
that the company decides to serve.

Three factors:

•Segment size and

growth rate
•Segment structural
attractiveness
•Company resources
Selecting Target Market:

 Undifferentiated Marketing (Mass Marketing)

 Differentiated Marketing (Segmented Marketing)
 Concentrated Marketing (Niche Marketing)
 Micro Marketing (Local or Individual Marketing)
 Determining How Many Segments to Enter

 Undifferentiated Marketing: This strategy of mass marketing

focuses on what is common in the needs of consumers rather than
what is different. Undifferentiated marketing provides cost
economies.

 Differentiated Marketing: These companies expect higher sales

volumes by offering product versions and a stronger position
within each segment. Differentiated marketing strategy increases
costs considerably.

 Concentrated Marketing: The company targets a segment and goes

for a large market share instead of a small share in a few segment
or niches. Concentrated strategy involves more than normal risks
Selecting Target Market:

 Undifferentiated Marketing (Mass Marketing):

targeting the whole market with one offer.

 Differentiated Marketing (Segmented Marketing):

The firm targets several segments and designs separate
offers for each.
Selecting Target Market:
 Differentiated Marketing
(Segmented Marketing):
Selecting Target Market:
 Concentrated Marketing (Niche Marketing):
A large share of one or few smaller segments.
Whereas the segments are large and normally attract
several competitors, niches are smaller and may attract only
one or a few competitors.
Niching lets smaller companies focus their limited
resources on serving niches that may be unimportant to or
overlooked by larger competitors.
Selecting Target Market:

 Micromarketing (Local or Individual Marketing):

tailoring products and marketing programs to suit the tastes
of specific individuals and locations.

Local Marketing: involves tailoring brands and promotions

to the needs and wants of local customer groups – cities,
neighborhoods, and specific locations. (Real Estate,)
Individual Marketing – tailoring products and marketing
programs to the needs and preferences of individual
customers. (Chartered Financial Analyst, Architects). Also
referred as mass customization.
Factors to be considered for choosing a
market – targeting strategy.
 Company Resources: With limited resources concentrated
marketing is more convenient.
 Degree of Product Variability: Undifferentiated marketing
is more suited to uniform products.
 Product Life Cycle: When a firm introduces a new
product only one version may be practical.
 Market Variability: If most buyers have same tastes, react
to the same way to marketing efforts undifferentiated
marketing is appropriate.
 Competitors Strategy: If competitors use differentiated
marketing, using mass marketing strategy will be futile.
Brand Positioning:

 Creating a brand offer in such a manner that it occupies a

clear, distinct and desirable place and value in the
minds of consumer as delivering some central or unique
benefit(s).

Successful Positioning includes:

 Communicating the benefits of the product
 Communicating a unique selling proposition
Positioning
Positioning Maps

 Perceptual Positioning Maps:

It shows consumer perceptions of their brands versus

competing products on important buying dimensions
Positioning
What is your USP?
Unique Selling Proposition

According to some experts

 A company should develop a unique selling proposition
for its each brand and should stick to it.
 Each brand should pick an attribute and promote itself as
number one in it.
 People tend to remember number one better.
Selecting an overall positioning strategy:
Price
More Same Less

More for More for the More for

More More same Less

Same for Benefits

Same less

Less for
Less much less

Value Proposition Model

Selecting an overall positioning strategy
 More for more: more services or better product for more
prices. (Five Star Hotel)

 More for the same: more services or better product for the
same price. (Toyota Lexus and BMW)

 The same for less: same service or product for less price.
(Big Bazaar)
 Less for much less: less service or product features for
much less price. (Ginger, Mobile Brands – economy
segment)

 More for less: ‘More car per car’ – Tata Indica