This document discusses market segmentation, targeting, and positioning. It defines market segmentation as dividing a market into distinct groups with distinct needs and characteristics. Markets can be segmented geographically, demographically, psychographically, and behaviorally. The key benefits of segmentation are meeting customer needs better and allowing companies to avoid direct competition. After segmentation, companies evaluate segments to select target markets based on segment size, growth, attractiveness, and fit with company objectives. Positioning develops a statement that expresses a brand's competitive advantage in the target market. Communicating and delivering the chosen position requires aligning all aspects of the marketing mix.

1. IDENTIFYING MARKET
SEGEMENTS
Segmentation, Targeting, and Positioning:
Building the Right Relationships with the Right Customers

2. INDIVIDUAL CUSTOMER
MARKETING
CUSTOMIZATION Vs CUSTOMERIZATION
CUSTOMIZATION:- ability of a company to design individual
products/ services to meet each customer requirements.
Eg. Dell computers invites customers to specify exactly what they
want in a computer and delivers a custom-built one in few days.
CUSTOMERIZATION:- company provides platform to customers
to design their own products.

3. Steps
Market Segmentation
1. Identify basis for
segmenting the market
2. Develop segment profiles
Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments
Market positioning
5. Develop positioning for
target segments
6. Develop a marketing
mix for each segment

4. Segmentation & Segments
Segment 1
Segment 3
Segment 2
Population
Market Segmentation:
Dividing a market into distinct groups with distinct
needs, characteristics, or behavior who might require
separate products or marketing mixes.

5. Market Segmentation
Levels of Market Segmentation
Through Market Segmentation, Companies Divide Large,
Heterogeneous Markets into Smaller Segments that Can be
Reached More Efficiently And Effectively With Products and
Services That Match Their Unique Needs.
Mass Marketing
Same product to all consumers
(no segmentation, i.e Coca-Cola)
Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Maruti)

6. Niche Marketing
Different products to subgroups within segments
(more segmentation, i.e. Standard or Luxury SUV’s)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Market Segmentation
Levels of Market Segmentation
Local Marketing
Tailoring brands/ promotions to
local customer groups, i.e Citibank
Individual Marketing
Tailoring products and programs to
the needs of individual customers,
i.e. Dell

7. 8/4/2013 2004 Pearson Education Canada Inc. 7
Mass marketing
Segment marketing
Niche marketing
Micromarketing

8. Density or Climate
City or Metro Size
World Region or Country
Market Segmentation
Geographic Segmentation

9. Market Segmentation
Demographic Segmentation
Dividing the market into groups
based on variables such as:
• Age
• Gender
• Family size or life cycle
• Income
• Occupation
• Education
• Religion
• Race
• Generation
• Nationality

10. Sega’s homepage: Not just games
SEGA MARKET LIES IN THE 10-TO-18 AGE RANGE

11. Market Segmentation
Psychographic Segmentation
Divides Buyers Into Different Groups Based on:

12. Behavioral Segmentation
Dividing the market into groups based on variables such as:
• Occasions
• Critical life events or transitions
• Benefits
 ROAD WARRIORS:- Premium products and quality service (16%)
 GENERATION F:- Fast fuel, fast service and fast food (27%)
 TRUE BLUES:- Branded products and reliable service (16%)
 HOME BODIES:- Convenience (21%)
 PRICE SHOPPERS:- Low price (20%)
• User status (non-users, ex-users, potential users, first time users, regular users.
• Usage rate (light, medium and heavy users)
• Loyalty status
• Hard-core loyals; Split loyals; Shifting loyals; Switchers
• Readiness stage
• Attitude toward product

13. www.dell.com
How does
Dell segment
the market for
computers?

14. Benefits of Segmentation?
Meet consumer needs better
Allows companies to avoid direct
competition
Allows small companies to compete
Often more profitable than Mass-Mktg.

15. Segments--Examples
Air Travel
• Business/Executive: Inflexible; relatively price
insensitive (Small number of people, but travel
often)
• Leisure Traveler/Student: Relatively flexible;
very price sensitive (other methods of travel--e.g.,
bus, car, train--are feasible; travel may not be
essential) (Very large segment)
• Comfort Travelers: Comfort (e.g., space, food)
important; willing to pay (Small segment)

16. Notes on Segments
Boundaries between product categories are
blurred--”soft drinks” or “non-alcoholic
beverages?”
Segments must
• differ meaningfully from others
• large enough to be profitable
• be serviceable (have need that can be met cost
effectively)

17. Market Targeting
Evaluating Market Segments
Segment Size and Growth
• Analyze current sales, growth rates and expected profitability for
various segments; demand, potential
Segment Structural Attractiveness
• Consider effects of: Competitive intensity: structure, entry,
rivalry ; availability of substitute products and, the power of
buyers & suppliers.
Company Objectives and Resources
• Market access: market knowledge, channel access, fit with
company strengths (SWOT…) ; Company skills & resources
needed to succeed in that segment(s).
• Look for Competitive Advantages.

18. Target Marketing Strategies
Mass Market
One size fits all
 Well defined mkts
 Different approach
for each
 Single mkt
 One approach
Undifferentiated Differentiated Concentrated

19. Single-segment
concentration
P1
P2
P3
M1 M2 M3
Product
specialization
M1 M2 M3
P1
P2
P3
Selective
specialization
M1 M2 M3
P1
P2
P3
M1 M2 M3
Full market
coverage
P1
P2
P3
Market
specialization
M1 M2 M3
P1
P2
P3
P = Product
M = Market
Patterns of Target Market Selection

20. Who’s being targeted?

21. Who’s being targeted?

22. Choosing a Positioning Strategy
Product’s Position - the way the product is
defined by consumers on important attributes -
the place the product occupies in consumers’
minds relative to competing products.
Product is compared with competing products.
Simplifies the buying process by helping
consumers organize products into categories.

23. Positioning
A position statement (or value proposition) is a 3-
part proposition that expresses a brand’s position:
To Target Market Brand X is the only
one in the Competitive Set that Point of
Difference
Example:
To Mothers, Pillsbury Toaster Strudel is the best tasting toaster
pastry because of its light flaky pastry, juicy fruit filling, and
creamy icing.

24. Choosing a Positioning Strategy
Step 1. Identifying
Possible Competitive
Advantages
Step 2. Selecting the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position

25. Identifying Possible Competitive
Advantages
Competitive advantage is an advantage over
competitors gained by offering consumers
greater value, either through lower prices or by
providing more benefits, that justify competitive
advantage,

26. Positioning: How many ideas to promote?
• Unique selling proposition
• Four major positioning errors
1. Under positioning ( Brand is seen as just another entry
in crowded market) E.g..:- CRYSTAL PEPSI IN 1993
2. Over positioning (Too narrow image of the brand)
E.g.:- TIFFANY DIAMONDS
3. Confused positioning (Confused image of the brand)
E.g.:- NeXT computer 1st for students, then for
engineers and then for business people.
4. Doubtful positioning (Buyers find hard to believe on
company claims) E.g.:- Maruti Baleno.
Developing and Communicating a
Positioning Strategy

27. Communicating and Delivering
the Chosen Position
Company must take strong steps to deliver and
communicate the desired position to target
consumers.
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.