Segmentation Targeting and

Positioning
 What is a Market Segment?

A market segment consists of a group of

customers who share a similar set of needs and
wants.

Market segmentation is the process of dividing

a broad consumer or business market, normally
consisting of existing and potential customers, into
sub-groups of consumers (known as segments)
based on some type of shared characteristics
 Preference Segments

Homogeneous preferences exist when

consumers want the same things
Diffused preferences exist when consumers want
very different things
Clustered preferences reveal natural segments
from groups with shared preferences
Individual Marketing “Customerization”
Customerization combines operationally
driven mass customization with customized
marketing in a way that empowers
consumers to design the product and service
offering of their choice.
Bases for Segmenting Consumer Market
Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral
 Geographic Segmentation

 Geographic segmentation refers to the classification of

market into various geographical areas. A marketer can’t
have similar strategies for individuals living at different
places.
 Nestle promotes Nescafe all through the year in cold
states of the country as compared to places which have
well defined summer and winter season.
 McDonald’s in India does not sell beef products as it is
strictly against the religious beliefs of the countrymen,
whereas McDonald’s in US freely sells and promotes beef
products.
Demographic Segmentation

Age and Life Cycle

Life Stage
Gender
Income
Generation
Social Class
 Psychographic Segmentation

Dividing buyers into different groups based on social

class, lifestyle, and personality characteristics
There are five psychographic segmentation variables on
the basis of which homogeneous segments can be
prepared for proper research –  Personality, Lifestyle,
Social Status, AIO (Activities, Interests, Opinions) and
Attitudes.
Personality: Market researchers can conduct a
segmentation based on personality to form a group of
people with similar personality traits. New
products/services can be launched to cater to various
personalities and new features also can be developed
for the analyzed personalities. A few defined
personalities are: creative, emotional, friendly,
opinionated, introvert, extrovert etc. help organizations
to filter their customers in a systematic manner.
Lifestyle: Various resources have to be invested if

multiple products are to be created for multiple

markets. But, product resources can be saved if

segmentation is done on the basis of lifestyle, product

development can be made more credible.

For example, if a shoe manufacturer intends to design

shoes for various sections of the market such as

athletes, office-goers, students etc.

Social Status: In most cases, the social status of

people primarily decides the products they use and

their preferences (in general). Each social class has
their choice of clothes, shoes, food, cars, electronics
etc. For examples, elitists would generally prefer
solitaires, luxury cars, holiday homes etc.
Activities, Interests, and Opinions: This
psychographic segmentation is based on what
activities are the customers inclined towards, which
topics are they enthusiastically interested in or what
are their opinions about specific matters. These
parameters are called AIO (Activities, Interests and
Opinions). 
The VALS Segmentation System
http://www.strategicbusinessinsights.com/vals/
ustypes/achievers.shtml
Attitudes: An individual’s attitude is molded by the way he/she was

raised and their cultural background. Each prospective customer will

have a different attitude which can be a variable for psychographic
segmentation.  
Groups are created by dividing customers on the basis of thoughts

and attitudes. Attitude is an intangible parameter which provides

insights into the basic nature of a customer. Each customer exhibits
different attitudes – a person belonging to a high-income group will
prefer dining at premium restaurants and drive a Mercedes Benz and
a middle-class individual will be bothered more about saving a few
extra bucks and not on luxury.
 Behavioural Segmentation

The loyalties of the customers towards a particular

brand help the marketers to classify them into
smaller groups, each group comprising of individuals
loyal towards a particular brand.
 Behavioral Segmentation

Decision Roles Behavioral Variables

Initiator Occasions
Influencer Benefits
Decider User Status

Buyer Usage Rate

Buyer-Readiness
User
Loyalty Status
Attitude
 The Brand Funnel Illustrates Variations in the
Buyer-Readiness Stage

Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used
Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers
 Behavioral
Segmentation Breakdown
 The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable
Segmenting for Business Markets

Demographic

Operating Variable

Purchasing Approaches

Situational Factors
Personal
Characteristics
Demographic:
1. Industry
2. Company size
3. Location

Operating Variables:
1. Technology
2. User or non user status
3. Customer capabilities
Purchasing approaches:
1. Purchasing –function organisation
2. Nature of existing relationship
3. General purchasing policies
4. Purchasing criteria

Situational factor:
1. Urgency
2. Specific application
3. Size or order
Personal characteristics:
1. Buyer –seller similarity
2. Attitude toward risk
3. Loyalty
 Steps in Segmentation Process

Needs-based segmentation

Segment identification Marketing-Mix

Segment attractiveness Strategy

Segment profitability

Segment positioning

Segment acid test

Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable
 Market Targeting Strategies
31

Five Patterns of Target Market Selection

Segment-by-Segment Invasion Plan