Marketing Management for MBS Level, BBA, MBS, MBA

1. IDENTIFYING MARKET
SEGMENT, TARGET AND
POSITION STRATEGIES
By Advance Saraswati Prakashan Pvt. Ltd
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2. LEARNING OBJECTIVES
After comprehensive studying of this chapter, learners will be able to:
 Bases for Consumer and Industrial Market Segmentation,
 Process of Market Segmentation,
 Evaluation and Selection of Target Market,
 Developing Positioning Strategies,
 Market Segmentation Practices in Nepal.
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3. Concept of Market Segmentation
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 “Market segmentation is a process of dividing the total market for a goods or service into
several smaller groups, such that the members of each group are similar with respect to the
factors that influence demand.”
 William J. Stanton, Michael J. Etzel and Bruce J. Walker
 “Market segmentation is the act of identifying and profiling distinct group of buyers who
might require separate product and/or marketing mixes.”  Philip Kotler
 From the above definitions, marketing segmentation is a process of grouping the
customers into number of different divisions on the bases of similar characteristics.
 The essence of segmentation is that the numbers of each group are similar with respect
to the factors that influence demand. A major element in a company’s success is the
ability to segment its market effectively.

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Organization
Product
Price
Place
(Distribution)
Promotion
Segment II
Target Market
Segment III
Single Marketing Mix Market
Segment I

5. Requirement for an Effective Market Segmentation
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 In the modern times, it is not possible for any firm to
cover the entire market successfully. That is why every
firm aims at selecting one or a few appropriate
market segments most suited for its products.
For effective market segmentation, following
requirement must be considered:
Measurable
Accessible
Divisible
Actionable
Substantial
Responsiveness

6. BASED FOR CONSUMER MARKET SEGMENTATION
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 The goods are not purchased for the re-sale, to get profit, to re-use, for re-production
but finally to use or final consumption.
 This types market is known as consumer market. In such market, convenience,
shopping and specialty goods etc. are exchanged. This market is wide. This market can
be divided by using four variables. They are geographic, psychographic,
demographic and behavioral.
Geographic Demographic Psychographic Behavioural
Bases (Variables) for Consumer
Market Segmentation

7. Geographic Variables
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 Dividing a market into different geographic variables such as region, climate, and
population density.
 Similarly, wool and woolen dresses are less desirable in Nepalgunj than in Jumla.
Region, climate and population density are the bases of geographic segmentation.
Geographic Variables
Region Population Density
Climate

8. Demographic Variables
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 Demography is the study of population.
Age
State of Family Life Cycle
Income
Sex/Gender
Demographic Variables Education
Occupation
Family Size
Social Class
Religion
Ethnic Background
It divides the market into groups based on
variables such as age, gender, education,
income, occupation, religion, family size, family
life cycle, etc. For example, for TV station,
cartoon for children, serial for housewife,
sport for youth etc.

9. Psychographic Variables
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 Psychographic segmentation means dividing the buyers into different groups on the
basis of their buying matters, lifestyle, and personality. Customers differ in terms of
interests, opinions, self-confidence, aggressiveness, extroversion, introversion, etc.
Psychographic segmentation includes following variables:
Psychographic
Variables
Lifestyle Life Value
Personality

10. Behavioral Variables
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 The market is divided on the basis of consumers’ behavior, response towards
product and buying decision. It is called behavioral segmentation. Consumer market
is generally segmented on the basis of following variables:
Buying Occasion
Benefit Sought
Usage Rate
User’s Status
Behavioural
Variables
Brand Loyalty
Attitude

11. BASES FOR INDUSTRIAL MARKET SEGMENTATION
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 Industrial markets buy products for business use, resell or to make other products.
Industrial buyers are usually well-informed. The market of the industrial
products such as raw materials, fabricating materials and parts, equipment,
installations and operating supplies, etc. is called industrial market. The variables
used for segmenting the industrial markets are:
Geographic Demographic Operating Purchase Related
Bases for Industrial Market Segmentation

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 Geographic Variables : Industrial market can be segmented on the basis of
geographic variables. It includes the area, climate and topography.
 Demographic Variables : Industrial market can be segmented on the basis of
demographic variable. Demographic variables include; types of industry and size
of business.
 Operating Variables : Industrial market can also be segmented on the basis of
operation. Operating variable includes technology, usage rate and service needs.
 Purchase Related Variables : Industrial market can also be segmented on the basis of
purchase related variable. It includes purchase structure, purchase procedures
and negotiation period.

13. PROCESS OF MARKET SEGMENTATION
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Evaluation of Market Segments
Profiling
Analysis
Market Survey
Selection of Target Market

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 Market Survey : Market survey is conducted to collect the information which is
necessary for market segmentation.
 Analysis: Although, the information is real and accurate but it has no meaning
unless it is analyzed. So, the collected information should be carefully studied and
analyzed.
 Profiling: After identifying the basis for market segmentation each of them should
be profiled. This process includes the task of classifying the consumers because the
bases of the segmentation vary from the consumer market to the industrial market.
 Evaluation of Market Segments: After dividing the market into different segments,
then each segment is profiled. Then, better option should be selected by the
marketing manager. The better option is that from which more profit can be
achieved.
 Selection of Target Market Segments: Selection of market segment is the final stage of
market segmentation process. After evaluating each segment, appropriate segment
should be selected.

15. EVALUATION OF TARGET MARKET/MARKET SEGMENT
 In evaluating different market segments, a firm must look at three factors; segment
size and growth, segment structural attractiveness, and company objectives and
resources.
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Segment Size and Growth
Segment Structural Attractiveness
Segment Relation
Social Environment
Evaluation of Target
Market/Market Segment
Organizational Objectives and Resources

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 Segment Size and Growth: The Company must first collect and analyze the data on
current segment sales, growth rates, and expected profitability for various
segments.
 Segment Structural Attractiveness: The Company also needs to examine major
structural factors that affect long-run segment attractiveness. For example, a
segment is less attractive if it already contains many strong and aggressive
competitors.
 Segment Relation: When selecting a market segment, the organization should
evaluate the relationship of each segment with the other segment.
 Social Environment: The social environment also affects the market segment.
Because every society and society's way of life, cultural values, and norms are
different.
 Company’s Organizational Objectives and Resources: Even if a segment has the right
size and growth and is structurally attractive, the company must consider its own
objectives and resources in relation to that segment.

17. SELECTION OF TARGET MARKET/MARKET SEGMENT
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 Once a marketer has evaluated the different segments for their size, growth, and
attractiveness, and found that they are compatible with the company objectives
and resources, the obvious step is to go far selecting the market segments.
 Segment Analysis: While analyzing the market segments, their size, growth rate
and long-term profitability should be studied carefully.
 Market Coverage Pattern: This includes Single segment Coverage, Multi Segment
Coverage, Full Market Coverage, Market Specialization, Product Specialization,
Niche Marketing.
 Inter Segment Relationship: While selecting market segment, inter-segment
relationship should be maintained in performance and technical aspects.

18. DEVELOPING POSITIONING STRATEGIES
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 “Positioning is the act of designing the company’s image and value offer so that the
segment’s customers understand and appreciate what company stands for in relation to its
competitors.”  Philip Kotler
 “Product positioning is a process of identifying the needs of market segments, product
strength and weakness and the extent to which competing product are perceived to meet
the consumer needs.”  James L. Hesket
From the above definitions, positioning is a creative exercise which starts with a
product. But positioning is not what you do to a product. Positioning is what you
do to the mind of the prospect. In other words, the product is positioned in the
mindset of the prospect. The shortest route to the customer’s heart is through the
mind.

19. Strategies/Types of Product Positioning
 The major strategies of product positioning to create demand in target market are
explained below:
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Attribute Positioning
Benefit Positioning
Usage Positioning
User Positioning
Strategies/Types of
Product Positioning
Competitive Positioning
Image Positioning

20. Process of Product Positioning
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Communicating the Competitive Advantages
Selecting Competitive Advantages
Identifying Potential Competitive Advantages

21. SEGMENTATION PRACTICES IN NEPAL
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 Market segmentation is the process of dividing a total market into small groups of
buyers for sale of products and services.
 The Nepalese market is supply driven with product variation. Collaboration with
foreign investor and companies is increasing in manufacturing as well as service
sectors.
 Some of the leading companies are doing market segmentation. Especially, Hulas
Biscuits, Surya Tobacco Company, Coca-Cola, Nepal lever, Standard Chartered
Bank Nepal Limited, Janakpur Cigarette factory, Distilleries, etc., are adopting the
segmentation strategies.
 The following points are the practices of market segmentation in Nepal:
Systematic Segmentation
Non-Systematic Segmentation
Segmentation Practices in Nepal

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Non-Systematic Segmentation
Generally market is segmented on the basis of information collected by different techniques.
In the Nepalese context, market is not segmented on the basis of information.
Segmentation is not based on systematic market research. Past experience, competitor’s strategy,
hunches of management have influenced segmentation.
Systematic Segmentation
In Nepal, markets are not segmented on the basis of hunches only. Most of the multinational
companies are segmenting their market on the basis of scientific research.
In Nepal, the segmentation variables used by Nepalese marketers are as like geographic variables,
Demographic variables, Psychographic variables, Behavioral variables.

23. CASE ANALYSIS & REPORT
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 Please go through the books for case analysis.
Let’s Check our Capabilities 1
 Please try to solve the case of CASTROL from book with the answer of these
Questions:
a. Identify the problem faced by Castrol regarding marketing segmentation.
b. Why the market segmentation is felt by Castrol? Explain.
c. Explain the market segmentation of Castrol.
 Make a short presentation on this case and try to present it in class.

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