Chapter Three and Six (Compiled)

Chapter Three and Six (Compiled)
Strategic Market Segmentation, Targeting

and Positioning
1. Levels and Types of Market Segmentation
----Segmentation is an important capability in strategic

marketing, which is linked to choosing market targets and
positioning against alternatives to build competitive
advantage.
-----Segmentation may serve several purposes at levels

which ranges from the strategic to the operational.
Levels of Market Segmentation
• Vision
• Strategic Strategic
intent Segmentation
• Product
benefits
• Resource Managerial
Allocation Segmentation
• Alignment
• Planning
Marketing Programs Operational

-Advertising Segmentation
-Sales
- Distribution
2. Market-Driven Strategy and Segmentation
MARKET SEGMENTS
VALUE OPPORTUNITIES
CAPABILITIES/ SEGMENT MATCH
TARGET(S)
POSITIONING STRATEGY
3. Illustrative Segmentation Variables
Consumer Industrial/
Markets Organizational/ Business
Markets
Characteristics Age, gender, Type of industry,
of people/ income, size, geographic
Organizations family size, location, corporate
(Demographic and lifecycle stage, culture, stage of
Geographic geographic development,
Variable) location, producer/
lifestyle intermediary
Product Use Occasion, Application,
situation importance of purchasing
segmentation purchase, prior procedure
experience with (new task,
product, user modified rebuy,
status straight rebuy
Buyers’ needs/ Brand loyalty Performance
preferences status, brand requirements, brand
preference, preferences, desired
benefits sought, features, service
quality, proneness requirements
to make a deal
Purchase Size of purchase, Volume, frequency
behavior frequency of purchase of purchase
4. Requirements for Segmentation
Identifiabl
e
segments
Actionabl
Response
Segmentation e
differences
Requirements segments
Stability Favorable
over cost/benefit
time
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
but with match to that do not match with
Low company company capabilities
capabilities
5. Market Targeting and Strategic Positioning
Core dimensions of market-driven strategy:
Deciding which buyer’s to target and how to position the firm’s products
Identify segments
within the
product-market
TARGETING
& POSTIONING
Decide and implement Decide which

a positioning strategy segment(s) to
for each targeted target
segment
Market Targeting Alternatives
Segments Clearly Defined
Target Target
Selected Multiple
Niche(s) Segments
Selective Extensive
Targeting Targeting
Product Product
Specialization Variety
Differentiated But Segments

Not Clearly Defined
Strategies Emerging Market
Buyer Diversity
– Segmentation limited due to similarity of
buyers’ preferences
Industry Structure
– Typically small new organizations
– Limited access to resources
Capabilities and Resources
– Differentiation strategy rather than low-cost
– First-mover advantage
Targeting Strategy
– Single target or a few broad segments
Strategies for Growth Market
Buyer Diversity
– Segments should exist
Industry Structure
– Numerous competitors
– Survival requires aggressive actions by firms that seek large
market positions
– Otherwise select one or a few market segments
Targeting Strategy
– Three possible strategies
1. Extensive market coverage
2. Selective targeting
3. Very focused targeting strategies
Strategies for Mature Markets
Buyer Diversity
– Segmentation is essential for competitive advantage
Industry Structure
– Intense competition for market share
– Emphasis on cost and service, and pressures on profits
 Management’s objectives: cost reduction, product differentiation
Targeting Strategy
 Firms pursuing extensive targeting strategies may decide to exit
from certain segments
Strategies for Global Markets
Global Reach and Standardization

– Identify market segments that span global markets and serve
these needs with global positioning strategies
Local Adaptation
– Consider requirements of domestic buyers
– Buyers’ needs and preferences affected by social, political,
cultural, economic, and language differences
Industry Structure
– Restructuring, acquisitions, mergers, and strategic alliances
altering industries and competition
Targeting Strategy
– Targeting a single country, regional (multinational) targeting, or
global targeting
Strategic Positioning
POSITIONING
CONCEPT
The desired positioning of
the product (brand) by
targeted buyers
MARKET
POSITIONING POSITIONING
EFFECTIVENESS TARGET STRATEGY
The extent to The combination
which of marketing
positioning actions used to
objectives are communicate
achieved for the the positioning
market target concept to
targeted buyers
The Perception or Association that
Management Wants Buyers to Have Concerning
the Brand
Symbolic Functional
POSITIONING
CONCEPT
Experiential
DEVELOPING THE POSITIONING STRATEGY
Positioning Issues
1. The positioning concept applies to a specific brand

rather than all the competing brands that compose
a product classification
2. The concept is used to guide positioning decisions
over the life of the brand
3. Multiple concepts are likely to confuse buyers and
may weaken the effectiveness of positioning
actions
The positioning strategy indicates how (and why) the
product mix, line, or brand is to be positioned for each market
target.
This strategy includes:
•The product strategy, indicating how the product(s) will be positioned

against the competition in the product-market.
•The value chain (distribution) strategy to be used.
•The pricing strategy, including the role and positioning of price

relative to competition.
•The advertising and sales promotion strategy and the objectives

these promotion components are expected to achieve.
•The sales force strategy, direct marketing strategy, and the

Internet strategy, indicating how they are used in the positioning
strategy.
Positioning Errors
• Under-positioning – customers have only vague ideas
about the company and do not perceive anything
distinctive about it
• Over-positioning – Customers have too narrow an

understanding of the company, product, or brand
• Confused positioning – Frequent changes and

contradictory messages confuse customers
• Doubtful positioning – claims made for the product

or brand are not regarded as credible
Illustrative Impacts of Changes in Business Strategy Restructuring on
Targeting and Positioning Strategies
Changes in Market Targeting Impact Positioning Impact
Business Strategy
Rapid Market scope may not Substantial changes in
Growth/ change although targets resource allocation, (e.g.
Retrenchment may be increased or advertising expenditures
reduced.
Changing the No change is necessary Changes in product strategy,
Product Mix unless increase in product methods of distribution, and
scope creates opportunities promotional strategies may be
in new segments. necessary.
Changing the Targeting is likely to change Positioning strategy must be
Market Scope to include new targets. developed for each new
target.
Repositioning Should not have a major Product, distribution, price,
effect on targeting strategy. and promotion strategies may
be affected.
Value Chain Should have no effect on Primary impact on channel,
Integration targeting strategy. pricing and promotion
strategies.
Diversification Targeting strategies must be Positioning strategies must be
selected in new business developed (or acquired for the
areas. new business areas.
Strategic Alliance Targeting strategy may be Operating relationships and
affected based on the nature assignment or responsibilities
and scope of the alliance. must be established.
End of Chapter

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Chapter Three and Six (Compiled)

Strategic Market Segmentation, Targeting

----Segmentation is an important capability in strategic

-----Segmentation may serve several purposes at levels

Marketing Programs Operational

CAPABILITIES/ SEGMENT MATCH

Attractive segments Attractive segments

Decide and implement Decide which

Differentiated But Segments

Global Reach and Standardization

1. The positioning concept applies to a specific brand

This strategy includes:

•The product strategy, indicating how the product(s) will be positioned

•The value chain (distribution) strategy to be used.

•The pricing strategy, including the role and positioning of price

•The advertising and sales promotion strategy and the objectives

•The sales force strategy, direct marketing strategy, and the

• Over-positioning – Customers have too narrow an

• Confused positioning – Frequent changes and

• Doubtful positioning – claims made for the product

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