Market/Customer Segmentation,

Targeting & Positioning

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Session Objectives

To enhance participants’ appreciation and

capacity to gainfully utilize:

• Market/customer orientation as
philosophy
• Market/customer segmentation
• Targeting market
• Positioning
• Marketing mix
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Basic Customer Service/
Marketing
Strategy/requirements:
• Select base for segmentation and identify
appropriate market/customer segments.
• Evaluate and appraise the market/customer
segments resulting from the first step.
• Select an overall market targeting strategy and
specific target segments.
• Tailoring a distinct position in selected markets
• Developing marketing mixes that serve desired
positioning strategy in the marketplace
• Auditing marketing environments and efforts
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Market Segmentation

Meaning of market segmentation

Market segmentation recognizes the fact that in most, if
not all, markets, all customers are not the same with
respect to their needs and wants.
Market segmentation is the process of identifying and
classifying customers according to their different needs
and wants. By doing so, the marketer is able to decide
which groups of customers or segments to serve and on
what basis.

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Importance of
Segmentation and Targeting

• The focus of a successful marketing program is the

customer. Effectively customer care must be based on
fully understood customer needs/wants.
– Customers with decent life & individualism have Heterogeneous
demands, This has given rise to need segmenting.
• The process of understanding the customer and choosing
a group of customer you can serve best is targeting.
• So target a segmentation is core of the marketing process.

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Identify the Total Market

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 6
 Identify the Total Market

• The first step in the target

market/customer selection process is
to specifically define the total market
of all potential customers for a product
category.

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Segmentation and Effectiveness

Identify Total Market

Effective
Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 8
 Segmentation

• Segmenting means dividing a heterogeneous

demanding markets into homogenous groups
based on similar characteristics or traits
• Heterogeneous demand- different groups of
customers have differing needs from specific
products.
• Homogeneous segment- the separation of
markets into distinctive groups based on
homogeneous characteristics.

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Criteria for
successful segmentation

Ac
tive
Distinc tio
n ab
l le
tia
tan
bs
Su
Me Acc
a
Ide sura ess
ib le
n ti b
fiab le
le

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Criteria for
successful segmentation

tive
Distinc • Clear differences
in consumer
preferences for a
product must
exist.

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Criteria for
successful segmentation

• Difference
Me
a preferences for a
Ide sura
n ti b
fiab le
le
product must be
identifiable and
capable of being
related to
measurable
variables.
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Criteria for
successful segmentation

• The proposed
ti al
b sta
n
market/customer
Su
segment must
have enough size
and purchasing
power to be
profitable.
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Criteria for
successful segmentation

• Companies/
Act
io n
abl
e
entities must be
able to respond
to difference
preferences with
an appropriate
marketing mix.

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Criteria for
successful segmentation

• The proposed
Acc
ess
ib le market/customer
segment must be
readily
accessible and
reachable with
market
programs.
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Determine Bases for Segmentation

Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 16
 Bases for Segmentation

• To divide a market into segments, firms

use segmenting criterion that describe
the characteristics of each part of the
market (customers).

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Segmentation Base

Demographic Benefits-Sought
Segmentation Segmentation

Geographic Situation
Segmentation Segmentation

Psychographic Behavior/Usage
Segmentation Segmentation
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Demographic Segmentation Base

Life-cycle Income Level

Social class

Education Ethnic
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 Geographic Segmentation Base

• Localizes its marketing efforts to specific

geographic regions

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Psychographic
Segmentation Base

• Grouping customers together based

on social class, lifestyles and
psychological characteristics
(attitudes, interests and opinions)
• Useful but more difficult to identify and
measure compared to demographic
variables

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Benefits-Sought Segmentation Base

• Markets/customers can be
segmented based on the
benefits that consumers desire
from using a specific product
– E.g. mobile phones

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Situation Segmentation Base

• Purchase situation or occasion

– Physical surroundings
– Social surroundings
– Temporal (time factor) perspective

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Behavior/Usage Segmentation Base

• Markets can be segmented by how often or

how heavily consumers use a specific
product
– Pareto’s Principle or 80/20 Principle -
80% of revenue generated by 20% of
customers
Light
Light Users
Users
80%
80%
Heavy
Heavy Users
Users
20%
20%

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 Segmentation Base

• Information for segmenting

markets may be obtained from
various databases such as
Census, State Statistics,
research institutes, e.t.c

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Segmenting Business Markets

• While the steps in the target market selection

process are essentially the same for business
markets, there are three major differences:
– The purchasing process, which differs
greatly from the household consumer
market.
– The use of different segment variables, in
simple way, a Standard Industrial
classification is often employed

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Segmenting Business Markets

• Segmentation variables used to segment

business/(Organizational) markets:

– Size
– Industry
– Purchasing approaches
– Product usage
– Situational factors (seasonal trend)
– Geographic

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Select Segments for Targeting

Identify Total Market

Determine Need for

Segmentation

Determine Bases for

Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 28
 Targeting

• Targeting: choose the specific segment toward

which a firm directs its customer service. E.g.:
• Niche Marketing: the process of targeting a
small market segment with a specific,
specialized marketing mix.
• Micromarketing- the process of targeting smaller,
more narrowly defined customer segments.
• On the individual consumer end of the
continuum, a firm may decide to target individual
consumers and personalize marketing efforts
toward each. 29
Target the Mass Market versus the
Individual Consumer

Mass
Market
Niche Micro-
marketing The
Individual

e n t a t i o n Si ze
Ma r k e t Se g m
Co nt i n u u m o f Personal-
Micro- ization
Standardized Niche marketing
Marketing
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Mix
 Advantage of Targeting Efforts

• Cannot effectively serve all the segments,

must target marketing efforts to a segment or
segments.
• Marketing opportunities and unfilled ‘gaps ’
are more accurately identified
• Marketing mix is more delicately designed to
meet potential customer’s needs
• Offer the greatest potential to achieve profit or
relationship goals

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Targeting Strategy

1.Undifferentiated marketing
2.Differentiated marketing
3.Concentrated marketing
4.Custom marketing

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Targeting Strategy
Undifferentiated targeting • Companies /firms
strategy
Concentrated strategy
Differentiated strategy
might develop one
marketing mix
strategy that is
appropriate for all
members of the
total market.- e.g.
Microsoft software
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Targeting Strategy

Undifferentiated targeting • Only one marketing

strategy
mix is developed
Concentrated strategy
and directed
toward a few, or
Differentiated strategy
perhaps one,
profitable market
segments.

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Targeting Strategy

Undifferentiated targeting
strategy
• Exists when a firm
develops different
Concentrated strategy
marketing mix
plans specially
Differentiated strategy
tailored for each of
two or more market
segments.

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Alternative of Targeting Strategy

1. Single segment
2. Multi segment
3. Product specialized
4. Market specialized
5. Full market coverage

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Select Positioning Strategy

Identify Total Market

Effective
Segmentation

Determine Bases for

Segmentation

Targeting Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 37
 Positioning

Positioning

• Kotler defined: “designing an

offer so that it occupies a
distinct and valued place in the
minds of the target customer.”

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 Positioning

Positioning
Image that customers have about
a product in relation to the
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product’s competitors
 Positioning Strategy

• Key to developing the

appropriate marketing mix is
the positioning strategy of the
product.

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 Presumptions of Positioning

• All products have object and

subject attributes
• Recognizable
• Comparable

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 Select Positioning Strategy

• Effective positioning
– What consumers currently think about
the product, especially in relation to
competing products
– What the marketer wants consumers to
think about the product
– Which positioning strategy will elevate
the consumers’ current product image to
the desired product image.
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Select Positioning Strategy

• Position Mapping- creating a

visual description about consumer
perceptions of a product on two or
more dimensions in relation to
competitors.

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 Select Positioning Strategy

• The positioning strategy must determine

where a company/firm wants to go
• And how to get there by positioning the
product according to any of the following
ways:
– Price/Quality
– Product Attributes
– Product User
– Product Usage
– Product Class
– Competition 44
– Symbol
Marketing Mix

Identify Total Market

Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

ControlObjective 3 45
 Marketing Mix

• The final steps are to develop a marketing

mix matched to the needs of the target
market/customers
• This must support the chosen positional
strategy in the selected target markets
• Therefore determine the ‘4Ps ’ or “7Ps” of
its marketing mix as a tool to achieve the
desired position

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 Recognize 4Ps and the 7Ps

• Productcustomer value
• Pricecost
• Placeconvenience
• Promotioncommunication
• Peopleconsideration
• Processesco-ordination
• Physical evidenceconfirmation
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 Marketing Strategy and the
Marketing Mix

Place
Product
(Distribution)

Marketing
Mix

Promotion Price

Objective 4 48
 Marketing Strategy and the
Marketing Mix

Product

• Refers to goods, services, people, places

and ideas
– Household consumers
– Business-to-business customers
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 Marketing Strategy and the
Marketing Mix

Place
(Distribution)

• Marketing channel is the network of

organizations that create time, place
and ownership utilities for household
consumers and business customers.

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 Marketing Strategy and the
Marketing Mix

• Integrated Marketing Communication (IMC)

• System of management and integration of
marketing communication elements
– Advertising, publicity, sales promotion,
personal selling, sponsorship marketing, and
point-of-purchase communications

Promotion
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 Marketing Strategy and the
Marketing Mix

• Pricing decisions are complex and are driven

by a variety of considerations including:
– Customer demand, costs, information
availability, competition, profit motives,
product considerations, and legal
considerations

Price

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Conclusion:

• Segmenting, Targeting & positioning are critical for

ensuring excellent customer service/care,
customer satisfaction & obtaining customer
loyalty, minimizing wastages, e.t.c. = all leading to
efficiency and effectiveness.

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