Chapter: 6
Objectives
Learn the three steps of target marketing,
market segmentation, target marketing, and
market positioning
 Understand the major bases for segmenting
consumer
 Know how companies identify attractive market
segments and choose target marketing strategy
 Realize how companies position their products
for maximum competitive advantage in the
marketplace

Marketing Process
Understan
ding the
market
place and
customer
needs and
wants
Research
customer and
the market
place
Managing
marketing
information
and customer
data
Design a
customerdriven
marketing
strategy
Select
customer to
serve: market
segmentation
and targeting
Decide on
value
proposition:
differentiation
and positioning
Construct
marketing
program
that
deliver
superior
value
Build
profitable
relationshi
p and
create
customer
delight
Product and
service design:
building a
strong brand
Customer
relationship
management:
build strong
relationship
with chosen
customers
Create satisfied
loyal customer
Partner
relationship
management :
build a strong
relationship
with marketing
partners
Increase share
of market and
share of
customer
Price Create
real value
Distribution
manage
demand and
supply chain
Promotion
Communicating
the value
Capture
value from
the
customers
to create
profits
Capture
customer life
time value
What Is A Market?
‘A market consist of all the potential
customers sharing particular needs and
wants who might be willing to engage in
exchange to satisfy their needs and
wants.’
Steps in market segmentation,
targeting and positioning
Market
Segment
ation
• Identify
bases for
segmenting
the market
• Develop
segment
profiles
Target
Marketin
g
• Develop
measure of
segment
attractivene
ss
• Select target
segments
Market
Positionin
g
• Develop
positioning
for target
segments
• Develop a
marketing
mix for each
segment
Market Segmentation
“Dividing a market into distinct groups with
distinct needs, characteristics, or behavior who
might require separate products or marketing
mixes.”
Segmentation

Why segment?
 Identifies opportunities and needs.
 Allows firm to focus on specific needs.
 Improves marketing mix for each segment.
 Allows small firm to exist.
Bases For Segmenting
Consumer Markets
Base
Variables
Geographical
segmentation
Marketing mixes are
customized geographically
•World Region or Country
•City
•Neighborhood
•City
•Density
•Climate
Demographic
segmentation
•Most popular segmentation
•Demographics are closely related to
needs, wants and usage rates
•Age & life cycle
•Gender
•Family life cycle
•Family size
•Income
•Occupation
•Education
•Race
•Generation
•Nationality
Bases For Segmenting
Consumer Markets
Base
Variables
Psychographic Lifestyle, social class, and
personality-based segmentation
segmentation
Behavioral
segmentation
Buyers are divided into groups on the
basis of their knowledge of, attitude
toward, use of, or response to a
product.
•Occasions
•Benefits
•User Status
•User Rates
•Loyalty Status
•Readiness Stage
•Attitude Toward the Product
Consumer Products Usage
Category
Light
users
Medium
users
Heavy
users
Benefits Of Segmentation
 To The Customer:
The obvious gain to customers is that they can find products
that seem to fit more closely with what they want.
 To The Marketing Mix:
Segmentation helps companies to better understand their
customers and to better allocate their resources.
 To The Competition:
Segmentation helps companies to position their product
toward competitors’ products.
 To The Economy
Allows small firm to exist.
Requirements for Effective
Segmentation
To be useful, market segments should be:
 Measurable: The size, purchasing power, and
characteristics of the segment can be measured.
 Substantial: The segments are large and profitable
enough to serve.
 Accessible: The segments can be effectively reached
and served.
 Differentiable: The segments are conceptually
distinguishable and respond differently to different
marketing-mix programs.
 Actionable: Effective programs can be formulated for
attracting and serving the segments.
Target Marketing
The segmentation reveals the firms segment opportunities.
The firm now has to evaluate the various segments and
diced how many and which segment it can serve best.
We now look at how companies evaluate and select target
segments
Target Market
Consists of a set of buyers who share
common needs or characteristics that the
company decides to serve
Evaluating Market Segments
 Segment size and growth (according to
company ability)
 Segment structural attractiveness
● Level of competition
● Substitute products
● Power of buyers
● Powerful suppliers
 Company objectives and resources
Target Marketing strategies
Undifferentiated
(mass
marketing)
Targeting
broadly
Differentiated
(segmented
marketing)
Concentrated
(niche
marketing)
Micromarketing
(local or
individual
marketing)
Targeting
narrowly
Selecting Target Market Segments

Undifferentiated (mass) marketing



The seller engages in the mass production,
mass distribution, and mass promotion of one
product for all buyers.
Focuses on what is common in the needs of
consumer rather then what is different
Henry Ford epitomised this marketing strategy
when he offered the Model T-Ford “in any
colours, as long as it is black.”
Selecting Target Market Segments

Differentiated (segmented) marketing
 A firm decides to target several market segments
and design separate offers for each.
 Developing a stronger position within several
segments creates more total sales then
undifferentiated marketing across all segments.
 Differentiated marketing increases the cost of
doing business.
 Vodafone target several segments with different
offers and services
Selecting Target Market Segments

Concentrated (niche) marketing
 Niche marketing is especially appealing when
company resources are limited.
 Instead of going after small share of a large market,
then firms goes after a large share of smaller
segments or niche.
 A niche is a more narrowly defined group, typically a
small market whose needs are not well served.
 The customers in the niche have a distinct set of
needs and they will pay a premium to the firm that best
satisfies their needs.
Selecting Target Market Segments

Micromarketing (local or individual)
●
The practice of tailoring products and marketing
programs to the need and wants of specific individuals
and local customer groups – includes local marketing
and individual marketing.
●
Local marketing:
Tailoring brands and promotions to the needs and wants
of local customer groups – cities, neighborhood, and
even specific stores.
● Individual marketing:
tailoring products and marketing programs to needs and
preferences of individual customers – also labeled
“markets-of-one marketing”, “customized marketing”,
“one-to-one marketing”, and “mass customization”
Selecting Target Market Segments

Product specialization-
the firm specializes in a particular product and
tailors it to different market segments.

Market specialization
the firm specializes in serving a particular market
segment and offers that segment an array of
different products.
Selecting Target Market Segments
Company
Marketing
Mix
Market
(mass marketing) Undifferentiated Marketing
Company Mix 1
Segment 1
Company Mix 2
Segment 2
Company Mix 3
Segment 3
(segmented marketing) Differentiated Marketing
Company
Marketing
Mix
Segment 1
Segment 2
Segment 3
(niche marketing) Concentrated Marketing
Buyer Preference Patterns
Homogeneous
preferences:
 The figure shows a market where all the consumers
CREAMINESS
have roughly the same preference. The market
shows no natural segments.
-no natural segments
-all buyers have same
preference
- Mass marketing is
more suitable
SWEETNESS
Buyer Preference Patterns
Clustered
preferences:
 The figure shows a market where with distinct
CREAMINESS
preference clusters, called natural market segments.
-natural segments
-increases as number of
competitors increases
-segmented marketing is
more proper
SWEETNESS
Buyer Preference Patterns
Diffused
preferences:
 The figure shows a market where consumers preferences
CREAMINESS
are scattered throughout the space, indicating that
consumers vary greatly in their preferences.
-no pattern (or poor
research)
-take center position
- niche marketing is more
appropriate
SWEETNESS
Choosing Target Market Strategy

Considerations include:
 Company resources
○ Concentrated marketing makes the most since with
limited resources.
 The degree of product variability
○ Undifferentiated marketing more suited for uniform
products
○ Differentiated marketing suited products that vary in
design more.
 Market variability
○ If most buyers have the same tastes, and react the same
way to marketing effort undifferentiated marketing is
appropriate.
Choosing Target Market Strategy

Considerations include:
 Product’s life-cycle stage
○ New products with only one version,
undifferentiated marketing or concentrated
marketing make the most sense
○ In the mature phase of the product life cycle
differentiated marketing begin to make more
sense.
 Competitors’ marketing strategies
○ When competitors use differentiated or
concentrated marketing undifferentiated marketing
can be suicidal.
Product Life – Cycle
INTRODUCTION
GROWTH
MATURITY
DECLINE
Dollars
Sales Volume
Profit
0
Loss
Time in years
Positioning
“The place the product occupies in consumers’ minds
relative to competing products.”
 Typically defined by consumers on the basis of
important attributes.
 Involves implanting the brand’s unique benefits
and differentiation (the complex set of
perceptions, impressions, services and the
tangible product) in the customer’s mind.
“products are created in the factory, but
brands are created in the mind”
Choosing a positioning strategy
Each firm must differentiate its offer by building
a unique bundle of benefits that appeals to
substantial group within the segment.
 The positioning steps:

Identifying possible competitive
advantage
“competitive advantage is an advantage over competitors
gained by offering consumers greater value, either
through lower price or by providing more benefits that
justify higher price”

Marketers must think throw the customer’s entire
experience with the company’s products or service

Differentiation can be based on





Products
Services
Channels
People
Image
Choosing the right competitive
advantage
 How many differences to
 Unique selling proposition
 Several benefits
 Which differences
 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
promote?
to promote? Criteria include:
Selecting an overall positioning
strategy
The full positioning of a brand - the full mix of
benefits upon which it is positioned, called the
brand’s value proposition.
It is the answer to the customer question
“why should I buy your brand”
Selecting an overall positioning
strategy

Possible value proposition
Price
Benefits
More
More
The same
Less
More
for
more
More
For
the same
More
for
less
The same
The same
for
less
Less
Less
for
much less
Selecting an overall positioning
strategy
 More for More
 More for the Same
 More for Less
 The Same for Less
 Less for Much Less
Communicating the Positioning

Companies must be certain to DELIVER
their value propositions.

Positions must be monitored and
adapted over time.