IMM FUNDAMENTALS OF MARKETING M.

MUDIMU
CHAPTER 5

SEGMENTATION TARGETING AND POSITIONING

Introduction
Since the objective of marketing is to achieve customer satisfaction, it is important for marketers
to identify specific needs of consumers. Grouping consumers according to similarities that exist
is key to customer satisfaction. This is achieved through the concept of market segmentation.
Definition
Market Segmentation is the process of subdividing a total market into distinct sub groups so as to
select one or more segments to target, with a unique marketing mix. Segmentation is necessary
since consumers are different in terms of their needs and wants.
Advantages and disadvantages of Market segmentation

a) Marketing effort becomes more effective as it is directed at specific segments as opposed to

widespread scattering.
b) Specific needs and wants of consumers are identified.
c) It enables the formulation of tailored marketing mix to meet specific needs.
d) It enables effective allocation and utilisation of limited resources.
e) Enables the select6ion of the most profitable segments
f) Enables increased customer satisfaction and thereby leading to increased sales and profits.
g) It is costly and time consuming to address diverse needs and wants of a large market.
h) A one (size fits all) product can be costly and time-consuming.
Disadvantages of Market Segmentation

a. The development and marketing of separate marketing models and offerings for different
segments is expensive.
b. Limited market coverage is reached since marketing programs are directed at specific
segments.
c. The need to differentiate may lead to the proliferation of several variations and cannibalization
where some products may take away market share of other products.

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IMM FUNDAMENTALS OF MARKETING M. MUDIMU
Pre-requisites for market segmentation
a) Accessibility – To what extend can the segment be reached easily and communicate to.
b) Actionable – to what extent can meaningful action be taken in that segment.
c) Tangibility/ Large enough – To what extend is the target segment of sufficient size to be
profitable to the business.
d) Distinctiveness/ Differentiation – To what extend is the segment different from other
segment so as to allow a differential product.
Bases for segmenting consumer markets
Customer markets are subdivided on the basis of the following:
a. Geographic Segmentation
Entails subdividing a market on the basis of area, location, city, country etc. The assumption is
that consumers within the same geographic area are most likely to respond in the same way to a
given marketing mix. Marketers can therefore design a marketing mix according to the
geographic aspects of consumers.
b. Demographic
This entails subdividing a market on the basis of population variables such as income,
occupation, age, sex, family size, family Life Cycle, Social class etc. the assumption is that
consumer of the same demographic group are most likely to respond in the same way to a given
marketing mix.
c. Behavioural
This involves subdividing the market on the basis of how the consumer behaves towards the
products or service. Behavioural segmentation will include subdividing a market based on
variables such as benefit sort, thought, usage role, usage situation, etc. the assumption is that
consumers who behave in the same way are most likely to respond in the same way to a given
marketing mix.
d. Psychographics
Entails subdividing a market on the basis of AIO’s (Activities, interest and opinions). In other
words the market is subdivided on the basic of lifestyles of consumers.

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IMM FUNDAMENTALS OF MARKETING M. MUDIMU
e. Living Standards Measures
This involves subdividing the South African population using their living standards which
uses a combination on non-personal variables such as level of urbanisation, or the ownership
of certain durables and these are LSMI, LSM2, LSM3, LSM4, LSM5, LSM6, LSM7, LSM8,
LSM9, and LSM10). Assets and variables owned are manly used in CSM’s.
Bases for segmenting industrial products

Demographic
- On which industries should we focus?
- What size company must we target?
- How many employees are n the company?
- Which geographical areas must we target?
- How long has the company been in business?
- Does the company have one/multiple establishment(s)?
- Is it a local/national/international company?
Operating variables
- On what technologies should we focus?
- On what user types should we focus (heavy, medium, light, non-users)?
- On what product types must we focus?
- How frequently does the customer require delivery?
- Should we focus on customers requiring many/few services?
Purchasing approaches
- How centralized / decentralized is the purchasing
- Should we focus on companies that seek quality/ service/lower price?
- Should we focus on companies that demand quick delivery/convenience/
reputation/economy?
- Should we focus on the companies with which we have strong links, or should we go after
the most desirable ones?
- Should concentrate on organizations that prefer leasing/service contracts/systems
purchases/sealed bidding?

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IMM FUNDAMENTALS OF MARKETING M. MUDIMU
- Should we focus on business that are financial/marketing/production/engineering
dominated?
Situational factors
- Should we focus on customers who require periodic quick delivery or on those that require
regular steady delivery?
- Should we focus on a specific application of our product or on all applications?
- Should we be focusing on small/medium/large orders?
Personal characteristics
- Should we focus on companies that have values similar tours?
- Should we concentrate on organizations that are risk takers or risk avoiders?
- Should we focus on companies that show high loyalty towards their suppliers?
Compiling of profile of the industrial market

Step 1 - Identify major industrial market segments

Step 2 - Profile each segment based on its characteristics

Step 3 - Identify the major needs of each segment

Step 4 - Design products and service specifications according to

specific needs

Criteria for selecting potential target markets

1. Segment size and growth possibilities

2. Attractiveness and potential profitability
3. Resources and skills of the enterprise
4. Compatibility with company’s objectives
5. Cost of reaching the target market

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IMM FUNDAMENTALS OF MARKETING M. MUDIMU
TARGETTING
Once markets have been segmented, it is important to select or choose those segments that the
organisation will serve. There are 3 strategies used the select segments and these are:
The Multiple Target Market Approach / Differentiated
This involves choosing two or more segments and then providing a unique marketing mix. This
approach focuses on differences that exist among segments.
The single target market approach / Focus / Concentrated
This involves segmenting the market and then selecting one of the homogenous segments to
serve. In other words all other segments are excluded. The company goes after a narrow market
as opposed to the broad market.
The combined target market approach / undifferentiated
This involves segmenting the market and then combine two or more sub-markets into one larger
target market to serve. This can also be referred to as mass marketing.
POSITIONING
A products position refers to the place the product occupies in the mind of the consumer relative
to competing brands. Positioning therefore entails designing a marketing offer in such a way that
it is perceived as unique in terms of how it satisfies customer needs. Positioning is therefore a
competitive tool that marketers should make use of. Marketers make use of an attribute matrix,
positioning map, or positioning matrix to determine how competitive their product are. The
diagram shows a positioning matrix.
Step 1 - Identify all major competing brands

Step 2 - Identify which variables are most relevant to consumer

needs and wants

Step 3 - Determine the consumer’s perceptions of your brand

and competition brands

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IMM FUNDAMENTALS OF MARKETING M. MUDIMU

Step 4 - Analyse the strength of major brands

Step 5 - Analyse the brands current position

Step 6 - Determine which variables consumers prefer

Step 7 - Develop positioning strategy that best satisfies

consumer preferences

Bases for positioning include the following:

Product attribute – where a company positions its product / service based on unique attributes.
Eg. 360 degree camera on a vehicles

a) Product benefit – where a company positions its product on the basis of the benefits
consumers derive e.g Gillette – best shave and long lasting performance
b) Price vs quality – where a product is positioned based on superior quality or value for
money or lowest price
c) Use/ application positioning – where a product is positioned based on how it is used.
Consider a floor polish positioned on how easy to use it.
d) Product user - where a product or service is positioned based on its user. Consider a
perfume positioned as one for the elegant woman
e) Competitor positioning – this involves positioning a product directly against its competitor
f) Origin – where a product is positioned on the basis of the country of its origin. Consider hair
product positions as coming from Brazil, Fabric positioned as from Italy?

End

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