Unit 2 segmentation, targeting & positioning

UNIT 2
MARKET SEGMENTATION,
TARGETING & POSITIONING
Unit 2 – Market Segmentation, Targeting & Positioning 1

UNIT 2: MARKET SEGMENTATION,
TARGETING & POSITIONING
Market Segmentation:
Meaning; Importance; Bases
of Segmentation; Market
Targeting; Types of
targeting; Market
Positioning; Strategies for
positioning.Unit 2 – Market Segmentation, Targeting & Positioning 2

MARKET SEGMENTATION
Meaning:
Segmentation or sub division of the market is based upon the
modern marketing concept (i.e.) market oriented strategy
and philosophy.
Segmentation gives special emphasis on demand side of the
market.
It implies bending of supply to the will of demand as far as
feasible and desirable.
Market segmentation is a method for achieving maximum
market response from limited marketing resources by
recognizing differences in various parts of market.
Market segmentation is strategy of ‘divide’ and ‘conquer’.

Market Segmentation enables the marketers to give better
attention to the selection of customers and offer an
appropriate marketing mix for each segment.
Each segment can be selected as a market target to be
reached with a distinct marketing mix.
Sellers used to identify those who are most likely to buy
their goods and services.
Customer orientation makes market segmentation as
important pillar of marketing concept and modern marketing
process.
The purpose of segmentation is to prioritize segments of
market to improve marketing profitability and to provide to
choose appropriate communication media and messages for
each segment.

Definition:
“Marketing Segmentation is the process of subdividing
a market into distinct groups of customer with similar
needs, such that subset of market (segment) can be selected
as target market and reached with distinct marketing mix.”
“It is the division of the total market into smaller,
relatively homogeneous group.”
“Market segmentation is a
marketing concept which divides
the complete market set up into
smaller subsets comprising of
consumers with a similar taste,
demand and preference.”

CHARACTERISTICS OF MARKET
SEGMENTATION
Characteristics:
Segments must be internally homogeneous. (Consumers
within the segment will be similar).
Segments must be identifiable. (individuals are placed
within or outside each segment).
Segments must be accessible. (reached by media or
distribution channels).
Segments must have an effective demand. (segment consists
of large group of consumers).

RATIONALE FOR MARKET
SEGMENTATION
There are three reasons why firms use market
segmentations:
a) Because some markets are
heterogeneous.
b) Because market segments
respond differently to different promotional appeals.
c) Because market segmentation consider with the
marketing concept.

NEED FOR MARKET SEGMENTATION
Market segmentation helps the marketers to devise
appropriate marketing strategies and promotional schemes
according to the tastes of individuals of particular market
segments.
Market segmentation also gives the customers clear view of
what to buy and what not to buy.
Segmentation helps the
organization to know and
understand their customer better.

IMPORTANCE OF MARKET SEGMENTATION
It facilitates the matching of products with consumer needs
and satisfies them.
Firm can concentrate its efforts on most productive /
profitable segments of total market.
It facilitates the selection of the most suitable market.
It enables the marketer to utilize the available marketing
resources effectively.
Firm can avoid the markets which are unprofitable and
irrelevant for its marketing purpose and concentrate on
certain segments.
Advertising media can be more effective to reach the
segments.
It offers special benefits to small firms. 9

STRATEGIC OPTIONS FOR MARKET
SEGMENTATION
Marketer has three strategic options:
1. Concentrated Marketing (Niche Marketing):
- a firm may decide to concentrate all available resources
on chosen segment.
- it selects market area where there is no competition and
can do best in that area.
- firm can be monopoly in that area, if succeeds in matching
its resources.
(E.g.) Volkswagen concentrated on small car market, while
Ford and GE were interested only in big cars.

2. Differentiated Marketing:
- under this category, organization enters many market
segments but has unique marketing mix appropriate each
segment.
- it wants to do business successfully in several segments.
- the firm can develop brand preference and repeat sales.
- this strategy offers higher sales and higher customer
satisfaction.
The major advantage of differentiated marketing is –
- higher production and higher marketing costs.
(E.g.) Hindustan Lever has one brand of bath soap for each
market segment. (i.e.) Lux, Lifebuoy, Ponds and Dove.

3. Undifferentiated Marketing:
- marketer may not prefer the idea of market segmentation
and differentiated marketing.
- in this case, it follows one marketing mix for several
market segments.
- if more specialized product in each segment will relatively
becomes weak position in all segments.
(E.g.) Coca Cola company followed such
strategy – one brand, one product, one
bottle for one big market.
- due to competition, they adopted
differential marketing and followed broad line
of products, multisized bottles and now follows differentiated
marketing. 12

LEVELS OF MARKET
SEGMENTATION

MARKET SEGMENTATION
PROCESS
Steps in Market Segmentation process:
Step 1: Identify Segmented Markets.
Step 2: Analyze each Segment.
Step 3: Evaluate Market opportunities.
Step 4: Select Target Segments.

BASES OF MARKET
SEGMENTATION
Bases for Market Segmentation
People – Oriented Approach
(Customer personal
characteristics)
Product – Oriented
Approach (Customer
response behaviour)
Geographic Characteristics
Demographic Characteristics
Socio - Economic
Characteristics
Psychographic
Characteristics
Use Pattern Benefits
Pattern
Brand
Loyalty Store
PatronageUnit 2 – Market Segmentation, Targeting & Positioning 19

1. People – Oriented Approach:
- it is also called customer personal characteristics
approach.
- it can classify the customer by many dimensions such as
geographic location, demography, socio-economic
characteristics and psychographic characteristics.
a) Geographic Location:
- it is the usual and popular basis for market
segmentation.
- difference between rural and urban
markets is great importance in Indian market.
- it divides based on local, urban, rural markets, regional or
state markets, national or international markets, climate,
weather & other atmospheric conditions.Unit 2 – Market Segmentation, Targeting & Positioning 20

b) Demographic characteristics:
- it is the study of population.
- it includes gender, age, marital
status, no. and age of children, religion,
nationality, income and occupation.
(i.e.) Age – teenage markets, old age, etc.
Gender – Male / Female.
Family Size – Single / Couple / Joint family, etc.
Income – higher / middle / lower.
Education – literates / illiterates.
Difference caste & religion.
Profession & occupation.

c) Socio – Economic Characteristics:
- it includes social class, religion, culture.
* Social Class – consumers may differ from one another in
terms of money, knowledge or skills.
- it describe the differences and it is a complex variable.
- it is relatively permanent homogeneous divisions in our
society.
- it indicates similar life styles, values, interests, etc.
- the three social classes are – upper class, middle class and
lower class in society.
* Religion, Race and Culture – it is also used as bases for
segmentation.
- it explains the regularities and diversities in human
behaviour.Unit 2 – Market Segmentation, Targeting & Positioning 24

d) Psychographic Characteristics:
- buyers are divided into different
groups based on personality, life style.
* Personality – it is the individual’s
consistent reactions to the world about him.
- it attempt to measure characteristics like dominant,
aggressive, objectivity, achievement, motivation, etc.
- this gives closer reason why people buy product.
* Life styles – it reflects overall manner in which person live
and spend time and money.
- it is interdisciplinary approach as it involves sociology,
culture, psychology and demography.
- it is measured how persons consumes, interests, opinions
and values. 25

2. Product – Oriented approach:
- it is also called customer response approach.
- customer response or buyer behaviour considered as relation
to product benefits, product usage, store patronage and brand
loyalty.
- it interested to know why consumers buy a certain product.
- it involves psychological factors like buying motives,
attitudes, perceptions and preferences.
a) Use pattern:
- use of total consumption of a family unit for a given product
act as a basis of segmentation.
- buyer may be classified as higher, medium, light users and
non – users.
- marketers concentrate on heavy users and segment the
market. 27

- usage information related with other characteristics like age,
income level, life cycle, education level, etc.
b) Benefits pattern:
- it gives emphasis on wants and desire of consumers.
- this is basic reason for existence of market segment.
- people buy a product to secure expected benefits.
- customer satisfaction directly depends on product benefits
(i.e.) economy, performance, style, durability, appearance,
taste, flavour, etc.
c) Brand / Store loyalty:
- it enables marketer to tailor the promotional content and
product appeal to retain loyal customers, to attract new
customers or convert non - loyal into loyal customers.
- it is not easy to measure brand loyalty, because some
customers buy a product due to habit or low price. 28

MARKET TARGETING
Definition:
“A set of buyers sharing
common needs or characteristics
company decides to serve.”
- a product focusing on a specific target market contrasts
sharply with one, following the market strategy of mass
marketing.
- it Involves evaluating each market segment’s
attractiveness and selecting one or more segments to enter.
- a target market is a group of people toward whom a firm
markets its goods, services or ideas with a strategy designed
to satisfy their specific needs and preferences.

1. The better a company is at identifying their potential
consumers; the more successful they will be in delivering
products and services that are in demand.
2. Your target consumers are those who are most likely to buy
from you.
3. Focusing on a target market makes it easier to develop
products people want.
WHY TARGET MARKET
IMPORTANT?

HOW TO TARGET MARKET?
1. Evaluating and Selecting the Market Segments:
2. Segment Size and Growth:
- analyze sales, growth rates and expected
profitability for various segments.
3. Segment structural attractiveness:
- consider effects of
competitors, availability of
substitute products and power
of buyers and suppliers.

4. Company objectives and Resources:
- company skills & resources relative to the
segment.
- look for competitive advantage.
5. Selecting target market segments:
- the firm must decide which and how many
segments it will target.
- it consists of a set of buyers who share common
needs or characteristics that the company decides to
serve.

WHO IS THE TARGET MARKET?

STEPS FOR MARKET TARGETING
Step 1: Identify and profile distinct group of potential buyers
who differ in their needs and preferences:
- it is going to target the particular group based on
demographic, economic, social, etc.
Step 2: Select the one or more market segment to target
audiences:
- it includes internal & external environment with adoption
of 4P’s based on potential buyers.
Step 3: For each target segment, establish and communicate
key distinctive benefit by proper positioning of the product:
- it enables the firm to create a positive image, gain
competitive advantage and place the brand in customers
mind to enhance their goodwill. 34

PROCESS OF TARGET MARKET
SELECTIONStage 1
Identify key
product
characteristics
Stage 2
Draw
perceptual map
Stage 3
Decide on
competitive
strategy
Stage 4
Design product
attributes and
associated
imagery
Stage 5
Sustain a
competitive
advantageUnit 2 – Market Segmentation, Targeting & Positioning 35

There are four types of target marketing which takes
advantage to generate interest with customers. They are:
1. Age Target Marketing:
- targeting a product to a particular group and to
concentrate marketing efforts and generate product interest
to the group.
2. Income – sensitive Marketing:
- it seeks to target small products to consumers of particular
income and economic status.
- it shapes the prices charge for products.
- this allows more consumers in target market group to
afford the products.
ING

3. Gender – Specific Marketing:
- it shapes and advertising campaign toward one gender or
specific group within that gender.
- it influence types of images, colors and language to attract
target gender or gender group.
4. Geographic Target Marketing:
- across the country have different products needs.
- targeting a market to meet the geographic demands of
consumers and it boost company’s importance and image in
customer minds.
- seasonal marketing is the strategy that works to take
advantage of shifting customer minds due to changes in
environment conditions.

Other types:
1. Target marketing based on demography:
* Age * Gender * Race
* Income * Religion * Occupation
* Family Size * Geographic location
2. Target marketing based on Psychographic segmentation:
a) Consumer activities. (sports person, professional, etc).
b) Interests. (interested in collecting stamps, antiques, etc).
c) Opinions. (opinion from people, other sources).
3. Target marketing based on products usage:
a) Use on Occasions. (cakes, food items during season).
b) Use on situations. (usage of umbrella during rainy).
c) Usage type. (heavy user, light users).

4. Target marketing based on Brand preference:
a) Brand loyal customers. (customers stick to brand and don’t
keep changing).
b) Brand aware customers. (customers needs to keep on
changing brand at all times).
c) Unaware customers. (some brand which is unaware among
customers).
5. Target marketing based on Decision process:
- decision process is completely different and might take
some time.
- planning needs to be in place so that it can capture target
market.
- positioning and future strategy should be spot to keep
growing over time.

MARKET TARGET STRATEGIES
a) Single – Segment concentration:
- firm selects a single segment and through concentrated
marketing the firms achieves a strong market position in
segment.
b) Selective Specialization:
- the firm selects a no. of segments, each objectively
attractive and appropriate, given firm’s objectives and
resources.
c) Product Specialization:
- firm concentrates on making a certain product that it sells
to several segment.
(E.g.) Microscope manufacturer sells microscopes to
40

d) Market Specialization:
- the firm concentrates on serving the needs of
particular customer group.
- it gains strong reputation for specializing in serving
this customer group.
e) Full Market Coverage:
- the firm attempts to serve all customer groups with all
products that they might need.
- only large firms can undertake a full market coverage
strategy.
- it covers large market in two ways, namely
Undifferentiated marketing and Differentiated
marketing.

MARKET POSITIONING
Definition:
“The process by which marketers try
to create an image or identity in the
minds of their target market for its product, brand or
organization.”
- creating an image of product in the minds of target
customers.
- positioning is not what company physically does to the
product – it is what company does to the target customer’s
mind.
- tool that help marketers place products in a market by
graphically illustrating consumer’s perceptions of competing
products within an industry. 42

A product can be positioned in market based on two main
platforms:
1. Consumer.
2. Competitor.
* When the positioning is on the
basis of CONSUMER, the
campaigns and messages are always
targeted to the consumer himself.
* When its based on COMPETITION, these campaigns
are targeted towards competing with other players in the
market. Unit 2 – Market Segmentation, Targeting & Positioning 43

Product positioning:
- refers to the way in which the product or service is
presented to the market.
 The factors in positioning the products could be:
performance, quality, packaging, price, characteristics,
and more.
(E.g.) Toyota is positioned on economy.
 Mercedes and Cadillac on luxury.
 Porsche and BMW on performance.
 Volvo positioned on safety.
 In all the above four stated examples, the product is car.
But each company is positioning their product in a
different way.

Some other products and how they are positioned in the
market:-
 Dettol Soap: - Antiseptic soap.
 Maggie noodles: - Instant food.
 Dove: - Beauty soap.
 Pepsi: - soft drink for fun.
 Diet Pepsi: - less sugar.
 Air India Express: - low price.
Objective:
i) Product positioning is the process that marketers use to
determine how to communicate their product’s to their
target customers based on customer needs.

STEPS IN MARKET
POSITIONING
Step 1: Know your target audience well.
Step 2: Identify the product features.
Step 3: Unique selling propositions.
Step 4: Know your
competitors.
Step 5: Ways to promote
brands.
Step 6: Maintain the
position of the brand.

Developing a positioning strategy:
Positioning is the act of designing the companies
offer and image. So, that it occupies a distinct and
valued place in the target customer’s mind.
- Philip Kotler
When we develop:
1. Best quality
2. Best service
3. Lowest price
Positioning strategies:
Single benefit positioning.
Double benefit positioning. 47

Avoid four major Positioning Errors:
1. Under positioning.
2. Over positioning.
3. Confused positioning.
4. Doubtful positioning.
The following criteria is useful, when positioning strategy is
made:
The positioning should be important.
It should be distinctive.
It should be superior.
The strategy should be communicable.
Affordable.
Profitable.

SEVEN POSITIONING
STRATEGIES

1. By Product Attributes and Benefits
Examples……
Positioned on its durability and
style for its cycle.
Strategy consists in associating an object with a
product characteristic or customer benefit. (E.g.)
ENO, Toothpaste,

2. BY PRICE AND QUALITY
Example:
Certain product categories where high price is
automatically associated with quality, or where
low price is often considered to be synonymous
with inferior quality.

3. BY USE AND APPLICATION
Example….
Used during cold
and Flu…..
Associating the product with a specific use.

4. BY PRODUCT CLASS
Example….
Airlines companies has
to compete with other
modes of transport.
Some brands need to compete against
products of similar class.

CD Players must compete with
cassette Industry as well as with
the I- pods and the latest
Gadgets who serve similar
purposes.

5. BY PRODUCT USER
Example….
AXE targets men
Specifically the Youth.
Strategy of associating the product with a
particular type or class of user. (Male, Female,
Kids, etc)

6. BY COMPETITOR
Example….
Nimbooz…..
Ekdum Asli
Indian
Ekdum
Ghar
Jaisa
Positioning strategy consists in making consumers
think that your brand is better than, or as good as
the competitors

7. BY CULTURAL SYMBOLS
Example….
Maharajah of Air India has
become a world figure
It lays Emphasis on the royal
Indian Comfort
Positioning strategy consist in identifying
something that is very meaningful to people.

PARACHUTE BRAND – S T P PROCESS
58

MARKETING ENVIRONMENT
1. Macro Environment (External, Uncontrollable):
a) Demography.
b) Economic Environment.
c) Social and Cultural Environment.
d) Political and Legal Environment.
e) Science and Technology.
f) Competition.
g) Ecology (Nature).
h) International Environment.
i) Customer Demand.

2. Micro – Environment (Controllable, Internal):
a) Organization.
b) Corporate Resources.
c) Marketing Mix. d) Markets.
e) Supplies. f) Market Intermediaries.
g) Employees.
Problems in Indian Market:
i) Over Population.
ii) Low production.
iii) Capital Formation.
iv) Effective Distribution System.
v) Consumption Pattern.

Unit 2 segmentation, targeting & positioning

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