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Market Segmentation, Targeting,
and Positioning for Competitive
Advantage
Ms. Chulani Senarathna
MBA – University of Colombo
B.com (Special) Hons. - USJ
Chartered Marketer – CIM (UK)
Management Consultant
National Institute of Business
Management
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Benefits of Market Segmentation ;
Effective use of scare resources.
Improve Profitability –
Separate marketing programs developed to meet
each segments particular needs creates a better
match between what the marketer offers and
what the consumers desires.
Develop Competitive Advantages.
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Market Segmentation
Breaking large heterogeneous market down in to
small, more homogeneous markets with distinct
needs, characteristics, or behaviors, who might
require separate products or
marketing mixes.
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Levels of Market Segmentation
Mass Marketing
Same product to all consumers/ No segmentation
(i.e. sugar, rice, Coca-Cola & Panadol at one time )
Segment Marketing
Different products for different segments
(i.e. Newspapers, Milk Powder, Shoes, Perfumes)
Niche Marketing
Different products to subgroups within the segments
(i.e. Milk Powder, Magazines, Fast Food )
Individual Marketing
Tailoring products and programs to the needs of
individual customers
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Bases for Market Segmentation
Geographical
Demographical
Psycho graphical
Behavioral
Best to use multiple approaches in order to identify smaller,
better-defined target groups.
Start with a single base and then expand to other bases.
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Population Density or Climate
i.e. Recreation & Clothing
Urban, Sub-urban, Rural
Reflection of income – level, spending patterns
World Region or Country
Reflection of consumption patterns
Geographic Segmentation
Divide based upon where people live
(Historically popular way of dividing markets)
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Demographic Segmentation
Dividing the market into groups
based on variables such as:
Age –
Gender –
Life cycle Stage –
Income –
Occupation –
Education –
Religion –
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Psychographics Segmentation
Divides Buyers Into Different Groups Based On: AIO
(Activities, Interests & Opinions)
Strong influence on person’s preferences in Cars, Clothes,
Home applicants, Leisure activities & retail stores
Pleasure seekers & Traditional home/family oriented. i.e.
Fashions & recreational activities
Independent, Sensitive, Ambitious, Prestige Conscious. i.e.
Cosmetics, Recreation & Liquor
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Behavioral Segmentation
Dividing the market into groups based on variables
such as:
Occasions – Special Products for Special occasions
Benefits sought – Durability, Economical, Safety
Usage rate – Light, Medium, Heavy
Each will result in different kind of marketing appeals.
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Measurable: size, purchasing power, and profiles of
segments can be measured.
Accessible: segments can be effectively reached and
served.
Substantial: segments are large or profitable enough to
serve.
Differential: segments are conceptually distinguishable
and respond differently to different marketing mix
elements and programs.
Requirements for an Effective Segment ;
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Choosing a Market Coverage Strategy
Company Objectives, strengths and Resources
Competition in the segments
Expected growth of the segments
Cost of reaching the segments
Profitability of the segments
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Positioning
Process of creating a favorable perception of
the product/brand in the minds of potential
buyers.
Volvo – Most safest car in the world
Dialog – Future Today
Surf excel – Remove the hardest stains
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Choosing a Positioning Strategy
Step 2. Choosing the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position
Step 1. Identifying
Possible Competitive
Advantages
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Services
Differentiation
i.e. Delivery, Installation,
Repair Services, Customer
Training Services
Product
Differentiation
i.e. Features, Performance,
Style & Design, Attributes
Identifying Possible Competitive
Advantages ;
People
Differentiation
i.e. Hiring, Training Better
People Than Competitors
Do
Image
Differentiation
i.e. Symbols, Characters
Channel
Differentiation
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Communicating and Delivering
the Chosen Position
Company must take strong steps to deliver and
communicate the desired position to target
consumers. E.g. Promotional Tools
All the company’s marketing mix must support
the positioning strategy.
Positioning strategy must be monitored and
adapted over time to match changes in consumer
needs and competitors’ strategies.
19. A perceptual map is a diagram used by businesses to map out
how their customers perceive different items, products, or
brands. By gathering aggregate customer data, it builds a
viewpoint for how your principal users understand the relative
positioning of different products or brands within the market.
Perceptual is very helpful to businesses, and it helps create
informed decisions about how customers view the general
positioning of different brands. Depending on the data collected
they can also accommodate different scopes of comparison,
helping businesses compare specific attributes or advantages.
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21. When building a perceptual map, the first step is deciding what
factors you want to compare and focus on. These will be the
variables in your map and will be placed on the X and Y axes.
These variables will usually be determinant attributes.
Determinant attributes are features of a product/service that
ultimately convince the buyer to choose that option. They might
not be the most important feature, but they are important to
the customer.
In our car example, some determinant attributes might be
comfort, price, top speed, interior design, or safety rating.
Once you determine which variables you want to use, it’s time
to distribute surveys and gather customer feedback.
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How To Build a Perceptual Map
22. Once you have your feedback and your variables nailed down, it’s time
to build your map. The most common diagram for a perceptual map is
a simple XY Matrix with the vertical axis representing one variable and
the horizontal axis representing the other.
Usually, depending on these variables, the scale is from low to high on
each axis which creates different general relations in each quadrant.
The placement in the quadrant is important, but the placement relative
to the other variables is equally as important. This way you can analyze
your factor’s individual performance and their performance relative to
their competition.
The final step of building your perceptual map is placing your factors in
the matrix and seeing how they compare to one another. Online
whiteboards make creating and analyzing a perceptual map incredibly
easy while allowing you to manipulate it whichever way you need.
Going back to our car example, the perceptual map might end up
looking something like this.
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