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 After this lecture you should be able to :

 Define the three steps of target marketing:
- market segmentation
- market targeting
- market positioning
 List and discuss the major levels of market
segmentation and bases for segmenting consumer
and business markets
 Explain how companies identify attractive market
segments and choose a market coverage strategy
 Explain how companies can position their products
for maximum competitive advantage in the market.


 

 ÷arket is a physical place where buyers and sellers gather to
exchange goods and services.

 To a marketer, market is the set of all actual and potential buyers of

a product or service.

 Organizations that sell to consumer and business markets recognize

that they cannot appeal to all buyers in those markets , or at least
not to all buyers in the same way.

 Buyers are too numerous and widely scattered , and too varied in
their needs and buying practices.

 Different companies vary widely in their abilities to serve different

segments of the market.

 Rather than trying to compete in an entire market , sometimes

against superior competitors, each company must identify the parts
of the market that it can serve best.
^

 

 
 Oellers have not always practiced this philosophy. Their thinking has
passed through three stages:

 ÷ass marketing ± the seller mass produces, mass distributes and

mass promotes one product to all buyers. Eg Coco-Cola produced
only µCoke¶ for the whole market.

 Product ± variety marketing ± seller produces 2 or more products

that have different features, styles, quality, sizes and so on.. Eg
Coco-Cola later produced different flavors, sizes and containers.

 Target marketing ± seller identifies market segments, selects one or

more of them, and develops products and marketing mixes tailored
to each. Eg: Coco-Cola now produces soft drinks for sugared-cola
segment, the diet segment«

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 Today, most companies are moving away from
mass marketing and practicing target marketing
± identifying market segments, selecting one or
more of them, and developing products and
marketing mixes tailored to each.

‰

  


 Dividing a market into distinct group of buyers

with different needs, characteristics, or
behaviour,who might require separate
products or marketing mixes



 
 

 The process of evaluating each market

segments attractiveness and selecting one or
more segments to enter.

 

 
 


 Îormulating competitive positioning for a

product and a detailed marketing mix

·
 
  

 

 


6. Develop marketing mix

for each target segment
÷arket Positioning
5. Develop positioning for each
Target segment

4. Oelect the target

segments ÷arket Targeting
3. Develop measures of
Oegment attractiveness
2. Develop profiles of
resulting segments
÷arket Oegmentation
|.Identify bases for segmenting
the market

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   !
 ÷arkets consists of buyers, and buyers differ in one
or more ways.
 They may differ in their wants, resources, locations,
buying attitudes and buying practices.
 Through market segmentation, companies divide
large , heterogeneous markets into smaller
segments that can be reached more efficiently with
products and services that match their unique needs
 Will discuss five (5) important segmentation topics:
x
x
  

,   

 
,   
, and


x
, and     
  


  



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|.0 Levels of ÷arket Oegmentation
 Because buyers have a unique needs and wants ,
each buyer is potentially a separate market.
 Ideally a seller might design a separate marketing
program each buyer
 Oome companies attempt to serve buyers
individually others face large numbers or look for
broader classes of buyers who differ in their product
needs or buying responses.
 Thus, marketing segmentation can be carried out in
many different levels : no segmentation (mass
marketing, complete segmentation
(micromarketing), or something in between
(segment marketing or niche marketing).
||
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ë

   

Oegment
÷ass ÷arketing Niche ÷arketing ÷icro-marketing
marketing

Complete
No Oegmentation
segmentation

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 Companies that practices segment marketing
recognizes that buyers differs in their needs,
perceptions and buying behaviors.
 The companies tries to isolate broad segments that
make up a market and adapt it offers to more closely
match the needs or more segments. e.g.
-General ÷otors has designed specific models for
different income and age groups.
- ÷arriott Hotel markets to a variety of segments:
business travelers, families, and others
 Oegment marketing offers several benefits over mass
marketing.

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 |
  
   
 The O  of segment marketing ± that company can
market more efficiently, targeting its products or
services, choosing the best channels, and
communication programs, towards only to consumers
that it can serve best.
 Company may face fewer competitors if fewer
competitors are focusing on this market segment

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|  
 
 ÷arkets segments are normally large identifiable groups within a
market.
 Niche ÷arketing (or niching) focuses on sub-groups within these
segments, a more narrowly defined group, usually identified by
dividing a segment into subsegments or by defining a group
within a distinctive set of traits who may seek a special
combination of benefits.
 Niches are smaller and normally attract only one or few
competitors.
 Niching offers small companies an opportunity to compete by
focusing their limited resources on serving niches that may be
unimportant to or overlooked by larger competitors
 In many markets today, niches are the norm

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|  
 
 Definition- the practice of tailoring products and marketing program to
suit the tastes of specific individuals and locations- includes, xx

 
x
.

 Oegmenting marketing and niche marketing ± fall between the extremes

of mass marketing and micromarketing

 ÷icromarketing is the practice of tailoring products and marketing

programs to suit the tastes of specific individuals aand locations.

 ÷icromarketing includes :xx

 and 
x


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|.4.| Local ÷arketing
 Local marketing involves tailoring brands and
promotions to the needs and wants of local consumer
groups ± cities, neighborhoods, and even specific
stores. e.g
- retailers: Walmart & Oears ± routinely customize each
stores merchandise and promotions to match its
consumers.
- Citibank ±provide different mixes of banking services
in its branches depend on neighborhood
demographics
 Local marketing helps a company to market more
effectively in the face of pronounced regional and local
differences in community demographics and lifestyles.

|å
   !  " #
|.4.2 Individual ÷arketing
 Tailoring products and marketing programs to
the needs and preferences of individual
customers - also labeled µmarkets ±of ±one
marketing¶ µcustomized marketing¶ and µone-
to-one marketing¶
 Consumer marketers are now providing
custom-made products in areas ranging from
hotel stays and furniture to clothing and
bicycles.


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2.0 Bases for Oegmenting Consumer ÷arkets
 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 following are the variables that might be
used in marketing consumer markets:
  ,   ,  ,
and  
x variables.

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 $ %

 "
&

 

 
2.| Geographic Oegmentation
 Geographic segmentation - calls for dividing
the market into different geographical units
such as : nations, states, regions, counties,
cities or neighborhoods.
 A company may decide to operate in one or
a few geographical areas , or to operate in all
areas but pay attention to geographical
differences in needs and wants.

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2.2 Demographic Oegmentation
 Dividing the market into groups based on demographic variables such as :   x
   xx   x   
 
 x   and 
x


 Demographic factors are the most popular bases for segmenting customer groups , largely
because consumer needs, wants, and usage rates often very closely with demographic
variables.

   x  x   

  dividing a market into a different age and li-cycle groups.
Consumer needs and wants change with age. Oome companies use and life-cycle
segmentation , offering different products or using different market approaches for different
age and life-cycle groups.

- Gender segmentation ± dividing a marketer into different groups based on sex. Has long
being used in clothing, cosmetics, toiletries, and magazines.

^
   !  " #
 2.2 Demographic Oegmentation-cont¶d

- Income Oegmentation ± has long being used

by the marketers of products and services such
as automobiles, boats, clothing, cosmetics,
financial services, and travel.
÷any companies target affluent (wealthy)
consumers with luxury goods and convenience
services.

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    ±
divides buyers into different groups based on
social class, lifestyle, or personality
characteristics.
People in the same demographic group can
have very different psychographic makeups.e.g
- social class ± have a strong effect on
preferences in cars, clothes,
and etc.
- lifestyles, personality

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 Behavioral segmentation ± divides buyers into groups
based on their knowledge , attitudes, uses, or
responses to a product.
-
 |     ± dividing the market
into groups according to occasions when buyers get
the idea to buy, actually make their purchase, or use
the purchased item. e.g christmas cakes during
Christmas.
- - Oome holiday¶s such as mother¶s day & father¶s day,
Valentines day were originally promoted partly to
increase the sale of candy, flowers, cards, and other
cards


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-

    ± A powerful form of
segmentation is to group buyers according to the
different benefits that they seek from the product.
- That is, dividing the market into groups according to
the different benefits that consumers seek from the
product.
- Benefit segmentation requires finding the major
benefits people look for in the product class , the kinds
of people who look for each benefit , and the major
brands that deliver each benefit e.g in the toothpaste
market.
- Benefits are : economy (low price), medicinal ( decay
prevention), cosmetic (bright teeth), taste ( good
tasting).
- Demographics : men, Large families, teens , young
adults, children and etc.

 
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 Consumer and business marketers use many of the same variables to
segment their markets.
 Business buyers can be segmented geographically or by benefits
sought, user status, usage rate, and loyalty status.
 Within the chosen industry , a company can further segment by
customer size or geographic location e.g.
- Oteelcase company , a major producer of office furniture; first segments
its customers into ten (|0) industries: including banking, insurance &
electronics
- Again, company salespeople work with independent Oteelcase dealers
to handle smaller, local or regional Oteelcase customers in each
segment.
 Within a given target industry and customer size, the company can
segment by purchase approaches and criteria.
 As in consumer segmentation, many marketers believe that  
 
 and   
 provide the best basis for segmenting business
markets.

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 Îew companies have either the resources or the will to operate in
all or even most of the countries that dot the globe.
 Operating in many countries presents new challenges.
 Countries in the world vary dramatically in their economic
cultural, and political makeup.
 ÷arketers, as they do within their domestic markets, need to
group their world markets into segments within distinct buying
needs and behavior.
 It can be grouped by geographical locations, or by regions such
as :Western Europe, The Pacific Rim, ÷iddle East, Africa.
 Oome countries have organized geographically into market
groups or µfree trade zones¶ such as the µEuropean Union¶
European Îree Trade Association and the North American free
Trade Association.

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 These association reduce trade barriers between
member countries, creating larger and more
homogenous markets.
 Geographic segmentation assumes that nations
close to one another will have many common traits
and behaviors e.g
Ô although United states and Canada have many
common traits and behavior both differ culturally and
economically from neighboring ÷exico.

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5.0 Requirements for Effective Oegmentation
 There are many ways to segment a market,
but not all segments are effective. To be
useful market segments:
   O ±the size, purchasing power,
and profiles of the segments can be
measured but certain segmentation variables
can not be measured e.g. left-handed people
 3 O ± the market segment can be
effectively reached and served.
 O  ± the market segments are large
or profitable enough to serve.
^|
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5.0 Requirements for Effective Oegmentation
 
l  O ± the segments are
conceptually distinguishable and respond
differently to different marketing mix elements
and programs.
l 3 O ± Effective programs can be
designed for attracting and serving the
segments.

   ! 
 Whilst segmenting the market , this has revealed
the firms market segment opportunities
 The firm now has to evaluate the various
segments and decide how many and which ones
to target.

 
  
The firms look at three factors :
- segment size and growth
- segment structural attractiveness
- company objectives and resources

^^
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 After evaluating the market the firm must now decide which and
how many segments to serve.
 A target market consists of set of buyers who share common
needs or characteristics that the company decides to serve.
 And there are three types of market ±coverage strategies:
   


,    

 
, and
 


.

|   
 
 A market-coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market with
one offer.
 The company designs product and marketing program that will
appeal to the largest number of buyers.

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2.0 Oelecting ÷arket Oegments -cont¶d

|   
 
 It relies on mass distribution and mass advertising

 Undifferentiated marketing provides cost economies

 The narrow product line the company has , keeps

down production, inventories, and transportation
costs.
 The advertising costs is also minimal

 The absence of segmenting marketing research and

planning lowers the costs of marketing research and
product management.

^‰
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2.2   
 
 A market-coverage strategy in which a firm decides to target
several market segments or niches and design separate offers
for each e.g.
- General ÷otors ±designs car for µprize, purpose, and
personality¶.
- Nike design shoes for different sports ±running, fencing,
aerobics, bicycling, and baseball
2.3 ÿ    
 
 A market-coverage strategy in which firms goes after a large
share of one or a few submarkets.
 Is especially appealing when company resources are limited.
 It provides an excellent way for small new business to get a
foothold against larger, more resourceful competitors
 This particular market segment can turn sour, when large
competitors decide to enter the same segment.

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 Once a company has decided which segments of
the market it will enter, it must decide what 

it wants to occupy in those segments.
     - the way the product is
defined by consumers on important attributes ± the
place the product occupies in the consumers mind
relative to competing products.e.g
- Tide (washing Powder) is positioned as a
powerful, all purpose family detergent
- Toyota, tercel, Oubaru ± positioned on economy
- mercedes , cardilac ± positioned on performance
- B÷W,Volvo ± positioned on safety

^ 
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#( )" #

     
 ÷arketers can follow several positioning strategies.
 Can position products on    O e.g. in
the case of tide, Toyota, B÷W and Volvo
 A product can also be positioned  a a
a 


e.g. in the banks between VIOA cards and American Express
 A product can also be positioned for    a


- margarine: some are positioned against butter, others against
cooking oil.

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ÿ 
3
  ±
 An advantage over competitors gained by offering consumers
greater value, either through x    or by providing more
benefits that justify higher prices.
 Consumers typically choose products and services that give
them the  

x
 The key to keep and winning customers is to  
 their
     better than competitors do and to
deliver more value.
 If company positions its product as    the best quality and
service, it must than deliver the promised quality and service.
 Note: that solid positions can not be built on empty promises.

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