Lesson 7

Market segmentation, targeting &

positioning

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Lesson outline
 Mass marketing

 Target marketing

 Market segmentation

 Market targeting

 Market positioning

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Mass Marketing
 The seller engages in mass production, mass distribution,
& mass promotion of one product for all buyers
 E.g. Model –T Ford in one color
 Coca-Cola

 Motives for Mass marketing

(1) Reduced costs through economies of scale made possible by the
increased volume
(2) Expanded volume through lower prices

 Mass marketing is dying?

 Emergence of micromarketing

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Target Marketing
 A market segmentation and market coverage strategy
whereby a product is developed and marketed for a very
well-defined, specific segment of the consumer
population.

 Target marketing is particularly effective for companies

with limited resources because it enables the company to
achieve a strong market position in the specific market
segment it serves without mass production, mass
distribution, or mass advertising.

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 1. Identify segments
within the
product-market

Target Marketing

3. Design and
implement a 2. Decide which
positioning segment(s) to
strategy for each target
targeted segment
Steps in Segmentation, Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
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Market segmentation
 Dividing a market into smaller groups of
buyers with distinct needs, characteristics,
or behaviors that might require separate
marketing strategies or mixes

 Buyers in any market differ in their wants,

resources, locations, buying attitudes and
buying practices
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Requirements for Segmentation
Identifiable
segments

Response Actionable
differences segments
Segmentation
Requirements

Stability Favorable
over time cost/benefit
Bases for Segmenting Consumer
Markets

Geographic Demographic

Psychographic Behavioral

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Geographic Segmentation
 Division of the market into different geographical
units such as nations, states, countries, cities, or
neighborhoods.

 Region: Districts, provinces, or prefectures

 Rural or urban markets

 Climate conditions

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 Demographic Segmentation
 Divide the market into groups on the basis of
variables such as
Age Occupation
Family size Education
Family life cycle Religion
Gender Race
Income Nationality
Generation Social class

 Demographic variables are associated with

consumer needs & wants
 Demographic variables are used in combination
with non-demographic variables
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Psychographic Segmentation
 Buyers are divided into different groups on the basis of
psychological/personality traits, lifestyle, or values.

 Lifestyle: Culture-oriented, sports-oriented, outdoor-

oriented

 Personality: Compulsive (Irrational), gregarious

(outgoing), authoritarian, ambitious

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Behavioral Segmentation
 Marketers divide buyers into groups on the basis of their
knowledge of, attitude toward, use of, or response to a
product
 Occasions: Regular, special
 Benefits: Quality, service, economy, speed
 User status: Nonuser, ex-user, potential user, first-time user,
regular user
 Usage rate: Light, medium, heavy
 Loyalty status: None, medium, heavy
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Segmentation and market-driven strategy
 Market segmentation needs to be considered early in
the development of market-driven strategy

Determine segments

Explore customer value

opportunities in each segment

Match organizational capabilities to

promising segment opportunities

Select market target from segments

Develop positioning strategy and

implement for each market target 15
 Segmentation “Fit” for Implementation
Segment Attractiveness and Internal Compatibility

Internal Compatibility
High Low

Attractive segments Attractive segments

High that match with but with poor match
company with company
capabilities capabilities
Market Segment
Attractiveness
Unattractive segments Unattractive segments
Low but with match to that do not match with
company company capabilities
capabilities
Market targeting
 Evaluate various segments and decide how many and
which segments it can serve best

1. Evaluating market segments

 Segment size and growth
 Segment attractiveness
 Company objectives and resources

2. Selecting target market segments

 Target market: A set of buyers sharing common needs or
characteristics that the company decides to serve
 Market targeting can be carried out at several different levels

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Undifferentiated marketing
 Using an undifferentiated marketing (or mass
marketing) strategy, a firm might decide to ignore
market segment differences and target the whole
market with one offer.
 Such a strategy focuses on what is common in the
needs of consumers rather than on what is
different.
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Differentiated marketing
 Using a differentiated marketing (or
segmented marketing) strategy, a firm
decides to target several market segments
and designs separate offers for each.
 By offering product and marketing
variations to segments, companies hope for
higher sales and a stronger position within
each market segment.
 Developing a stronger position within
several segments creates more total sales
than undifferentiated marketing across all
segments.
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Concentrated marketing
 When using a concentrated marketing (or niche
marketing) strategy, instead of going after a small
share of a large market, a firm goes after a large share of
one or a few smaller segments or niches.

 Today, the low cost of setting up shop on the Internet

makes it even more profitable to serve seemingly
miniscule niches.

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Micromarketing
 Micromarketing is the tailoring
and marketing programs to the
needs and wants of specific
individuals and local customer
segments; it includes local
marketing and individual
marketing.
 Local marketing
 It involves tailoring brands and
promotions to the needs and wants of
local customer groups ─ cities,
neighborhoods, and even specific Rolls-Royce Bespoke design
stores.
 Individual marketing
 It is the tailoring products and
marketing programs to the needs and
preferences of individual customers.

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Factors Influencing Targeting Decisions
 Stage of product – market maturity

 Extent of diversity in preferences

 Industry structure

 Capabilities and resources

 Opportunities to gain competitive advantage

Market positioning
 A product position is the way a product is defined by
consumers on important attributes ─ the place the
product occupies in consumers’ minds relative to
competing products.
• Consumers are overloaded with information about
products and services.
• They cannot reevaluate products every time they
make a buying decision.
• To simplify the buying process, consumers
organize products, services, and companies into
categories and “position” them in their minds.
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Strategic Positioning Initiatives
POSITIONING CONCEPT
The desired positioning of the
product (brand) by targeted buyers

MARKET TARGET

POSITIONING POSITIONING
EFFECTIVENESS STRATEGY
The extent to which The combination of
positioning objectives marketing actions
are achieved for the used to communicate
market target the positioning concept
to targeted buyers
 Targeting and Positioning
Product Strategy

Positioning
Strategy
Promotion Distribution
Strategy Market Target Strategy

Price Strategy
Market positioning
 Positioning is the act of designing the company’s offering
and image to occupy a distinctive place in the minds of the
consumer

 The role of a good brand positioning:

 Guide the company’s marketing strategy
 Help the consumer to identify what goals to achieve
 Guide the consumer to achieve the goals in a unique way

 Positioning should create customer-focused value

propositions

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Examples of Value Propositions
Brand, product, & Target customers Benefits Value proposition
company
Scorpio, SUV, Life-style oriented Ruggedness, A vehicle that
Mahindra & customers luxury, & comfort provides the
Mahindra luxury & comfort
of a car, & the
adventure & thrill
of an SUV

Indica, Car, Tata Small-car Spaciousness A spacious, small

Motors consumers who car without extra
want a more costs
spacious vehicle

Domino’s、Pizza Convenience- Delivery, speed, & A good, hot pizza

minded pizza good quality delivered to your
lovers door within 30
minutes of
ordering
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Positioning strategy
 Positioning strategy can help communicate the firm’s
or the product’s value proposition

 Value proposition communicates the customer

benefits to be received from a product or service and
thereby provides reasons for wanting to purchase it

 Customer needs should be effectively met by the firm’s

benefits to create value proposition

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Positioning Strategy
 Deciding on a positioning strategy requires:
 Choosing a frame of reference by identifying the target
market and relevant competition
 Identifying the potential points-of-difference (POD) and
points-of-parity (POP)
 POD: attributes or benefits that consumers strongly associate with a
brand, positively evaluate and believe they could not find to the
same extent with a competitive brand
 POP: attribute or benefit associations that are not necessarily unique
to the brand but may in fact be shared with other brands
 Creating a brand mantra summarizing the positioning and
essence of the brand
 A brand mantra is a 3 - 5 word articulation of the heart and soul of
the brand
 Brand mantra should highlight the POD

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POD and POP
Apple Sony

Powerful in terms of online Powerful in retail stores

Point of distribution
difference
Design oriented Quality oriented
(POD)
Powerful in terms of Sony is a reader than media
communication device

Point of Communication tools

parity E-book content
(POP) Online and retail distribution
Perceptual Mapping
 Perceptual maps are visual
representations of consumer
perceptions and preferences
 They provide quantitative
pictures of market situations
and the way consumers view
different products, services,
and brands along various
dimensions

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Repositioning
 Changing consumers’ perceptions of a brand in
relation to competing brands.

Asiri
Hospitals

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Summary
 Mass marketing

 Target marketing

 Market segmentation

 Market targeting

 Market positioning

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