Market segmentation involves dividing a market into distinct subgroups of customers with common needs or characteristics. It allows companies to target specific segments with tailored marketing strategies. Key steps include identifying segmentation bases, developing segment profiles, selecting target segments, and developing positioning and marketing mixes for each segment. Common bases for segmenting consumers include geographic, demographic, psychographic and behavioral factors. Effective segmentation creates segments that are measurable, accessible, substantial and differential in their response to marketing strategies.

1. Market Segmentation, Targeting and
Positioning
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2. Segmentation, Targeting, and Positioning
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1. Identify Bases
for Segmenting the Market
2. Develop Profiles
of Resulting Segments
3. Develop Measures
of Segment Attractiveness
4. Select Target
Segment(s)
5. Develop Positioning
for Each Target Segment
6. Develop Marketing
Mix for Each Target Segment Market
Positioning
Market
Targeting
Market Segmentation

3. Market Segmentation
• In market aggregation, the total market is viewed as
a single unit as one mass, aggregate market.
• To the contrary, there is an approach that views a
market as being composed of many smaller,
homogenous units.
• Markets consist of buyers with different
– wants,
– resources,
– geographical locations,
– buying attitudes, and
– buying practices.
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4. Continued…
 Market segmentation is the process of dividing the total,
heterogeneous market for a product in to distinct and
meaningful groups of buyers, each of which tends to be
homogenous in all significant aspects.
• Management then selects one or more of these market
groups or segments as the organization's target market.
– The objective of aggregation is to fit the market to the product;
– whereas the objective of segmentation is an attempt to fit the
product to the market believing that each segment calls for a different
product, promotional appeal, or other element in the marketing mix.
• The focus of segmentation is enhancing a separate program in
a pin pointed market.
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5. Why Segmentation?
• Market segmentation is a customer - oriented philosophy.
• Specifically, it has the following benefits
– Investing money and effort to most profitable market.
– Designing and developing products, which match with
the market demand as it focuses on selected target
markets;
– Choosing the best promotional activity and channel of
distribution at a relatively lower cost
– It helps to determine an appropriate marketing mix
strategy for a segment.
– Flexibility of organizational resources and programs in the
time of fierce competition can be done at a lower cost.
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6. Levels of Market Segmentation
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Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)
Niche Marketing
Different products to subgroups within segments
( more segmentation)

7. Bases for Segmenting Consumer Markets
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Geographic
Demographic
Age, gender,
family size and life
cycle, or income
Psychographic
Social class, lifestyle, or
personality
Behavioral
Occasions, benefits, uses, or
responses
Nations, states,
regions or cities

8. Psycho-graphic Segmentation
• In psycho-graphic segmentation consumer markets can be divided
in to different groups on the basis of
– social class, life style or personality characteristics.
• Even if consumers are on the same demographic characteristics,
they can have different psycho-graphic profiles.
• These social class, life style and personality characteristics result
from psychological and sociological aspects of the individual;
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9. Geographic Segmentation
• Many organizations segment their market on some geographic
basis such as nations, states, regions, countries, cities, urban-
suburban-rural, topography or climate depending on the notion
that consumer needs or responses vary geographically.
• Here it should be considered that the marketing costs and
potentiality of each segment varies depending on the geographic
needs and preferences.
• A firm can decide to operate in one or a few geographic areas or
operate in all but pay attention to variations in needs and
preferences of the specific location.
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10. Demographic Segmentation
• Probably the most widely used basis for segmenting consumer
market is demographic characteristics.
• In demographic segmentation, the market is divided into different
customer groups on the basis of demographic variables such as age,
sex, family size, family life, cycle, education, occupation, religion
ethnic background, income and nationality.
• Demographic variables have long been the most popular bases for
distinguishing customer needs and preferences for certain reasons.
– customer wants, preferences and usage rates are highly
associated with demographic variables.
– they are easily quantifiable and accessible than most other types
of variables.
• Even when the target market is described in non-demographic
factors, the link to demographic variables is vital to know the size of
the target market and how to reach it efficiently.
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11. Behavioral Segmentation
• Some organizations try to segment their consumer markets on the basis of a
consumer behavioral characteristics related to the product.
• The variables used in behavioral segmentation include the consumer's
knowledge, attitude, use or response to an actual product or its attributes.
• Behavioral segmentation can be done with respect to the following factors:
– Purchase occasion with regard to time such as regular and special occasion.
For example, air traveler for vacation, family or business.
– Benefits sought from the product in relation to individual interest such as
low price, durability, general product quality and so on.
– User status with respect to the existence and potentiality of customers such
as non-users, ex-users, potential and regular users of a product.
– Usage rate with respect to the size of purchase such as light users, medium
users or heavy users.
– Readiness stage of the customers to buy a product depending on their
information, interest, intention and degree of awareness of a product.
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12. Segmentation of organizational markets
• Organizational size
• Industry sector
• Geographical location
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13. Organizational size
• Annual sales turn over
• Number of employees
• Volume of production
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14. Industry sector
• Banking (service)
• Manufacturing
• Mining
• Assembly
• Government
• others
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15. Geographical location
• Domestic and
• Export markets
• Each can also be further subdivided
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16. Requirements for Effective Segmentation
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• Size, purchasing power, profiles
of segments can be measured.
• Segments must be effectively
reached and served.
• Segments must be large or
profitable enough to serve.
Measurable
Accessible
Substantial
Differential
Actionable
• Segments must respond
differently to different marketing mix
elements & actions.
• Must be able to attract and serve
the segments.

17. 5.2 Targeting and Positioning
• Targeting is the process of assessing the relative worth of different market
segments and selecting one or more segments in which to compete- these
become the target segment
• Positioning is the identification of a particular appeal that the firm can
make to customers in each target segment, which is designed to
convenience customers to choose that firm over its rivals
• Target market
– A group of customers at which the seller directed the marketing programs
• Marketing for the targeted market
– Marketing strategy (positioning)
– Marketing mix (Product, Promotion, Price, Distribution)
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18. Evaluating Market Segments
• Segment Size and Growth
– Analyze sales, growth rates and expected profitability.
• Segment Structural Attractiveness
– Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.
• Company Objectives and Resources
– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
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19. Market Coverage Strategies
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Segment 1
Segment 2
Segment 3
Segment 1
Segment 2
Segment 3
Company
Marketing
Mix
Company
Marketing
Mix
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 3
Market
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing

20. Choosing a Market-Coverage Strategy
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Company
Resources
Product
Variability
Product’s Stage
in the Product Life Cycle
Market
Variability
Competitors’
Marketing Strategies

21. Positioning the Product
• Product’s Position - the place the product
occupies in consumers’ minds relative to
competing products; i.e. Volvo positions on
“safety”.
• Marketers must:
– Plan positions to give products the greatest advantage
– Develop marketing mixes to create planned positions
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22. Positioning for Competitive Advantage: Strategies
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Against a
Competitor
Usage
Occasions
Away from
Competitors
Product
Attributes
Product
Class
Benefits
Offered
Users
B
A
E
D
C
H
G
F

23. Steps to Choosing and Implementing
a Positioning Strategy
• Step 1. Identifying a set of possible competitive
advantages: Competitive Differentiation.
• Step 2. Selecting the right competitive advantage.
• Step 3. Effectively communicating and delivering the
chosen position to the market.
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24. Developing Competitive
Differentiation
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Product Service
Personnel Image
Areas for Competitive
Differentiation

25. Selecting the Right Competitive
Advantages
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Criteria
for
Determining
Which
Differences
to
Promote
Affordable Superior
Profitable
Preemptive
Distinctive
Important
Communicable

26. Generic product Positioning map
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Standard Brand
Budget Brands
Exceptional Brands
Cowboy Brands
Premium Brands
Low High
High
Low
Q
u
a
l
i
t
y
Price