This document discusses market segmentation, targeting, and positioning for competitive advantage. It defines market segmentation as aggregating buyers into groups that have common needs and respond similarly to marketing. Companies segment markets based on geographic, demographic, psychographic, and behavioral variables. The key steps are to segment markets, evaluate segments, select target segments using undifferentiated, differentiated or concentrated approaches, and then determine a market positioning strategy.

1. Chapter 4
Marketing Segmentation
Targeting, and positioning for competitive advantage
Prepared by:
Nor Izzuddin bin Norrahman
Lecturer of management, banking & Islamic Finance
Astin College

3. Introduction
• Companies that sell goods and services cannot
appeal to all buyers in those markets, or at
least to all buyers in the same way.
• Buyers too numerous, too widely scattered,
and too varied in their needs and buying
practices.

4. Market segmentation
• It involves aggregating prospective buyers into
groups that:
– Have common needs
– Respond similarly to a marketing action
• The groups that result from this procedure are
known as Market Segments.

5. • When market segments happens, companies
are being more choosy about the customers
with whom they wish to build relationships.
• Companies moved away from mass marketing,
and towards market segmentation and
targeting.
• Instead using shotgun approach, firms are
focusing on the buyers who have greater
interest in the values (Rifle approach)

6. • Due to the increasing fragmentation from
mass markets into hundreds of micromarkets,
target marketing is increasingly taking form of
micromarketing.
• Micromarketing is where the companies tailor
their marketing programs towards the needs
and wants of narrowly defined characteristics
such as:
– Geographic
– Demographic
– Psychographic
– Behavior segments

7. Steps in market segmentation,
targeting an positioning

8. Market Segmentation

9. • Market consist of buyers, and buyers differ in
one or more ways.
• Differ in what they wants, needs, resources,
locations, and others.
• Because of that, it will create a separate
market.
•So how would we
identify the separate
market?

10. Segmenting Consumer Markets
• There is NO SINGLE way to
segment a market.
• A marketer has to try different
segmentation VARIABLES, alone
and IN COMBINATION, to find
the best way to view the market
structure.
• The major variables are:
– Geographic
– Demographic
– Psychographic
– Behavioral
– Others

11. Geographic Segmentation
• Dividing the market into
different geographical units as:
– Nations
– Regions
– States
– Districts
– Towns
• It also follow the density of the
population live in the place
– KL vs Dungun

12. Demographic Segmentation
• Demography involves the statistical study of
human populations. As a very general science, it
can analyze any kind of dynamic living
population, i.e., one that changes over time or
space.
• Dividing the market into groups based on
variables such as:
– Age
– Gender
– Family size
– Race
– Nationality

13. Demographic Segmentation (Cont.)
• Multivariate Demographic Segmentation –
Combining two or more demographic
variables.
• Example: Age + Gender

14. Psychographic Segmentation
• Psychographics is the
study of personality,
values, opinions,
attitudes, interests, and
lifestyles.
• Dividing buyers into
different groups based
on:
– Social class
– Lifestyle
– Personality Characteristics

15. Social Class
• Social class (or simply "class"), as
in a class society, is a set of
concepts in the social sciences
and political theory centered on
models of social stratification in
which people are grouped into a
set of hierarchical social
categories, the most common
being the upper, middle, and
lower classes.

16. Lifestyle
• The way in which a person lives.
• The habits, attitudes, tastes, moral standards,
economic level, etc., that together constitute
the mode of living of an individual or group.

17. Personality
• Personality has to do with individual
differences among people in behavior
patterns, cognition and emotion

18. Behavioral Segmentation
• Divides buyers based on how
they behave or act toward
particular products.
• The common behavioristic
variables are:
– Occasions
– Benefit Sought
– User Status
– Usage rate
– Loyalty status

19. Occasions
• Buyers can be grouped according to occasions
when they get the idea to buy, purchasing the
product as well as using them.
• Examples?

20. Benefit Sought
• A powerful form of segmentation
• Group the buyers according to the different
benefits that they seek from the product.
• Example?

21. User Status
• Can be segmented into
groups of:
– Non-users
– Ex-users
– Potential users
– First-time users
– Regular users

22. Usage Rate
• Markets can be segmented into:
– Light user
– Medium user
– Heavy user groups

23. Loyalty Status
• Market that had been
segmented based on loyalty.
• Example?

26. Market Targeting

27. • Market segmentation reveals the firm's
market segment opportunities.
• The firm now have to evaluate the various
segments and decide how many and which
ones to target.
• We now look at HOW companies evaluate and
select target segments.

28. EvaluateMarketSegments
Segment size &
growth
Structural
attractiveness
Company objectives
& resources

29. Selecting Market Segments
Selecting Market
Segment
Undifferentiated
Marketing
Differentiated
Marketing
Concentrated
Marketing

30. Undifferentiated Marketing
Company
Marketing Mix
Market

31. Undifferentiated Marketing
• The firm decide to IGNORE market segment
differences and go after THE WHOLE market
with one market offer.
• It focuses on what is COMMON in the needs
of the customers.
• Example: Hershey Company
• Pro – Cost Economies
• Cons – ?

32. Differentiated Marketing
Company
Marketing Mix 1
Segment 1
Company
Marketing Mix 2
Segment 2
Company
Marketing Mix 3
Segment 3

33. Differentiated Marketing
• The firm decide to target several market
segments or niches and designs separate
offers for each.
• Creates more total sales than undifferentiated
marketing
• Pro - ?
• Cons – Increase cost (Why?)

34. Concentrated Marketing
Company
Marketing Mix
Segment 1
Segment 2
Segment 3

35. Concentrated Marketing
• Especially appealing when company
RESOURCES are LIMITED.
• Instead of going after a small share of a large
market, the firm goes after a large share of
one or a few submarkets.
• Example?

36. Market Positioning

37. • Once company has decided which market
segments it will enter, it must decide what
‘Positions’ it wants to occupy in those
segments.
• A product’s position is the way the product is
defined by consumers on important attributes
– the place the products occupies in
consumers’ minds relative to competing
products.
• How?

38. Positioning Strategies
• Product Attributes
• Benefit
• Classes of users
• Against a competitors
• Away from competitors