The document provides an overview of key concepts in segmenting, targeting, and positioning markets. It discusses: 1. How companies segment markets by identifying distinct groups with common characteristics to better satisfy their needs. Common bases for segmentation include geographic, demographic, psychographic, and behavioral factors. 2. How companies then target specific market segments to focus their marketing efforts. Approaches include mass marketing, multi-segment marketing, niche marketing, and one-to-one marketing. 3. The importance of positioning products to create differentiation in the minds of consumers relative to competitors. Companies employ strategies like product, service, channel, people, and image differentiation.

1. CHAPTER 6
Segmenting, Targeting, and Positioning
Mr. Anthony F. Balatar Jr.
Subject Instructor

2. INTRODUCTION
Usually, if you have a large collection of MP3 songs, say
2000 songs, you come up with ways of classifying or
categorizing into playlists or groups--- by genre, album,
artist, mood, etc. This way, you can make listening to
songs easier and more enjoyable. In addition, it is more
convenient to select what you want to listen to because
everything has been organized properly, such that there
will be no upbeat/ party music in your playlist that says
“Sleep and Relaxation”.

3. INTRODUCTION
Companies undergo a similar way of categorizing their
target consumers in order to offer products in the
market. It is impossible to target the entire population;
thus, companies need to segment the market in order to
identify similar characteristics in each segment. In doing
so, they can determine the needs and wants of each
segment, and create products that would suit the
preferences of their target segment.

4. INTRODUCTION
The products that you see in the stores have a distinct set
of buyers, and this set of buyers has been predetermined
by companies in a process called STP--- or segmenting,
targeting, and positioning.

5. SEGMENTING
Companies know that they cannot appeal to all buyers in
the market. For example, in the Philippines alone, it will
not be possible for any company to target all of the more
than 100 million people. Companies will need to classify
the population into groups of people with similar
characteristics in order to offer them a product and
conduct marketing activities for them. This process is
called segmentation.

6. SEGMENTING
Market segmentation is the process of dividing a big
market into smaller segments of buyers with distinct
needs, characteristics, or behaviors, so that they can be
reached more efficiently and effectively and offered with
products that match their needs.

7. SEGMENTING
Five Reasons for Market Segmentation
1. Better Satisfy Customer Needs and Wants.
Segmentation allows the identification of different
customer segments and preferences. For a company
that caters to different consumer segments all at the
same time, products can be suited to each segment’s
preferences.

8. SEGMENTING
Five Reasons for Market Segmentation
1. Better Satisfy Customer Needs and Wants.
Consumers may change their preferences as they get
older, but by identifying these changes along the way,
companies can provide solutions throughout the “life
cycle” of the customer.

9. SEGMENTING
Five Reasons for Market Segmentation
2. Better Communication. Different segments require
different communication styles. By identifying several
segments and not just blindly putting everyone
together into one segment, better marketing
collaterals may be created so they suit the style, tone,
and language of the segment.

10. SEGMENTING
Five Reasons for Market Segmentation
2. Better Communication. The company may identify
different media that it can tap to cater to different
segments. This will be more cost-efficient than doing
mass marketing and advertising in just one medium
because customers may miss the intended message
this way.

11. SEGMENTING
Five Reasons for Market Segmentation
3. Opportunity for Growth. There are some segments
that do not normally buy a company’s product. In such
a case, a company can choose to cater to this segment
by offering a different product, so that this segment
will not need to go to the competitor to find the
product that they need.

12. SEGMENTING
Five Reasons for Market Segmentation
4. Increased Innovation. By segmenting the market, new
needs may be discovered, which in turn would lead to
innovation in finding solutions to this need. A small
segment of the market with unique needs that are
unsatisfied may be targeted with products that are
sold at a premium price.

13. SEGMENTING
Five Reasons for Market Segmentation
5. Higher Profits/ Market Share. A company that goes
after several segments in the market by offering
different products is a company that increases its
profits by increasing its market share. With consumers
having different but similar preferences, companies
are able to maximize their manufacturing potential by
having products that are almost the same but only
differ in a few areas.

14. SEGMENTING
Five Reasons for Market Segmentation
5. Higher Profits/ Market Share. A company may also go
after a “niche” market, that is, a small segment of the
market, that is, a small segment of the market that has
needs different from the rest, and is willing to pay a
premium price for the products that they seek.
Although this market may seem small in number, it is
big in terms of peso value.

15. SEGMENTING
There are different ways of segmenting the market, and
most companies even combine some of these ways in
order to get to know their market better. The following
are the most common bases for market segmentation:
geographic, demographic, psychographic, behavioral.

16. SEGMENTING
Geographic Segmentation. It divides the market into
geographical units such as countries, regions, or cities.
Some global brands may opt to offer different tastes and
flavors in one particular country.

17. SEGMENTING
Demographic Segmentation. Divides the market into
segments based on demographic variables such as age,
gender, income, occupation, education, religion, and
other. This is a popular way of segmenting the market
because they are easy to measure and identify, and most
consumer needs and wants can be easily associated with
the demographic characteristics of a segment.

18. SEGMENTING
Examples of Demographic Segmentation
Age Consumer preferences change over time.
Life Stage
A life stage defines a person’s major concern, such as choosing which college to
go to, getting married, shopping for the first baby, and buying a new car or
home.
Gender
Male and female consumers have obvious differences in needs and wants. There
are brands that appeal to both, but variations may be available that appeal to
different genders. Gender differentiation has also been applied to apparel,
personal care, and sports products.
Income It is a popular practice in travel, automobile, cosmetics, and financial services.
Religion It has a strong influence on people’s choices.

19. SEGMENTING
Psychographic Segmentation. It is use to better
understand consumers. This type of segmentation
divides the market into segments based on psychological
or personality traits, lifestyle, and values. It combines
psychological and demographic characteristics of the
market. It digs deeper into the customers’ aspirations,
interests, life goals, and lifestyles.

20. SEGMENTING
Behavioral Segmentation. In this type, the market is
divided into segments based on consumers’ knowledge
of, attitude toward, use of, or response to a product.
Behavioral segmentation looks at several behavior
variables: occasion, benefit sought, user status, usage
rate, and loyalty status.

21. SEGMENTING
Examples of Behavioral Segmentation
Occasion
Consumers can be grouped according to the time, season, or occasion when
they think of buying, actually buy, or consume a product.
Benefits Sought
Consumers can be divided into segments according to the different benefits
that they look for in a product.
User Status
Based on how often they use a product, consumers can be grouped into non-
users, ex-users, potential users, first-time users, and regular users. Companies
would want to attract non-users, potential users, first-time users, win back the
ex-users, and retain regular users.
Usage Rate Consumers can be categorized into light, medium, and heavy product users.
Loyalty Status
Consumers can be segmented based on their degree of loyalty to a product.
Loyal users are well-loved by companies because they continue to buy their
products, and voluntarily promote the products in their social circles.

22. SEGMENTING
How to do Effective Segmentation?
The market segments have to be measurable and
significant. They must be big in market size or big in
market value--- either the population is big or the
market has significant purchasing power or the capacity
to buy more expensive products.

23. SEGMENTING
How to do Effective Segmentation?
The market segments need to be accessible for easier
communication and delivery of goods. They also need to
be differentiable, which means that they react
differently and have different needs and wants. If male
and female consumers respond similarly to the
marketing efforts of a fast-food brand, then they do not
require separate segments.

24. TARGETING
If companies need to choose the right market segment or
segments to pursue and offer their products to. A target
market is a set of buyers who have common needs and
characteristics that the company decides to serve. In
choosing the right segment for the product, a company
may choose to do mass marketing, multi-segment
marketing, niche marketing, or one-to-one marketing.

25. TARGETING
Mass Marketing. It is a “one size fits all” approach that
focuses on the common concern of a big market and
targets them with one offer. Most products that use mass
marketing strategy focus on the most common need---
to buy products at a low cost. It assumes that the
population has a common need, and chooses to cater to
that instead of segmenting the market into smaller
groups with common characteristics.

26. TARGETING
Multi-Segment Marketing. It focuses on two or more
segments of the market in one product category.
Companies use multi-segment marketing to ensure they
get a bigger share of the market in a certain product or
category. It increases the company’s market share,
strengthens its image and position in the market, and
increases overall sales. Although there is a risk
cannibalization among the company brands, the
company would prefer to lose customers to one of their
own brands rather than to a competitor.

27. TARGETING
Niche Marketing. If the company chooses to target a
small market with big purchasing power. Products
marketed using niche marketing are almost always in the
premium category, and naturally dictates a higher price.

28. TARGETING
One-to one Marketing. It is the opposite of mass
marketing. It provides individualized attention to
customers to build a long-lasting and personalized
relationship with them.

29. POSITIONING
Companies want their consumers to remember their
brands in a positive light. When consumers remember
brands, there is a higher chance that they will consider
buying these brands in their next purchase. Positioning is
placing a product’s distinct characteristics--- brand,
offerings, endorser, history--- in the consumer’s minds
relative to its competitors. It is how a customer
remembers the product based on attributes that are
important to consumers.

30. POSITIONING
Differentiation Strategies
In order to position a product in the market, the company
has to decide on a differentiation strategy or competitive
advantage. Competitive advantage is a product’s
advantage over its competitors gained by offering
consumers better value. This is also referred to as a
unique selling proposition or USP.

31. POSITIONING
Examples of Differentiation Strategies
Product
Differentiation
Companies can differentiate their products by offering unique features,
benefits, performance, or style.
Service
Differentiation
The level of service provided to its customers can also create a difference
beyond physical product differentiation.
Channel
Differentiation
It is choosing different avenues to make your products available to
consumers.
People
Differentiation
Hiring and training people in a certain way can create.
Image
Differentiation
An image is a perception of consumers about a brand. Companies can create
a favorable image in different ways.

32. MARKETINGTO BUSINESS MARKETSVS
MARKETINGTO CONSUMER MARKETS
Business markets consist of organizations, groups, and
companies that purchase products as raw materials that
require further processing, capital items that aid in the
company’s production or operations, and supplies and
services that include operating supplies and repair and
maintenance items. Business markets require more
personal attention when being serviced, so products can
be tailor-made for their exact needs. They purchase
materials in bulk.

33. MARKETINGTO BUSINESS MARKETSVS
MARKETINGTO CONSUMER MARKETS
On the other hand, marketing to consumer markets
requires more creativity as their attention must be
captured mostly through non-personal means. As
learned earlier, consumers with similar needs and
preferences have to be grouped together so a company
can serve them.

34. ACTIVITY #1