WEEK 06
SEGMENTATION, TARGETING
& POSITIONING STRATEGIES
Chapter Aims
At the end of this chapter, students will be able to:
1. Judge the importance of the role of market segmentation
2. Define market segmentation
3. Describe the concept of a market segment
4. Evaluate the criteria for effective segmentation
5. Identify the bases for segmentation
6. Assess the finer segmentation strategies
7. Identify the major areas of analysis of market segments
8. Gain knowledge about market targeting strategy
9. Explain the meaning of positioning and understand the
relationship between positioning concept and positioning
strategy.
Topics
THE MARKETING STRATEGY PROCESS
1. Market segmentation
– the company identifies bases for segmenting a market
– Forming a measurement for effective segmentation
2. Target marketing
– The company develops segment profiles of the selected
segments
– the company then selects target segments
3. Market positioning
– the company develops positioning for each target
segments and then develops a marketing mix for each
segment
Definition of Market, Market Segment & Market
Segmentation
Topics
Definition of Market, Market Segment & Market
Segmentation
A market is people or organizations with needs or wants
and with the ability and the willingness to buy.
Topics
Definition of Market, Market Segment & Market
Segmentation
A market segment is a subgroup of people or organizations
sharing one or more characteristics that cause them to have similar
product needs.
Topics
Market Segmentation
Definition of Market, Market Segment & Market Segmentation
Segmentation is the arts of segregating,
dividing, separating and grouping our
selected big market into a smaller size
market that has at least one similar
characteristic.
The main objective is to ease the
process of understanding the nature of
the market and easily target the
products with that particular market.
Market segmentation by
age group
Fully segmented market
No market segmentation
Topics
Market Segmentation
Segmenting Consumer Markets
Topics
Market Segmentation
Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behaviourial
Topics
Market Segmentation
Segmenting Consumer Markets
Geographic
 segmenting markets by region of a
country or the world, market size,
market density, or climate.
Market also can be segment using
state, province and city
Proton and Perodua cars exported to
United Kingdom will have a different
version of cars than that is offered in
Malaysia.
Example:
Johor Laksa
Asam pedas Melaka
Ipoh Hor Fun
Penang Fried Kuey Teow
Topics
Market Segmentation
Segmenting Consumer Markets
Demographic
 Divide
whole market into small groups based on
consumer characteristics such as by
Age (Foods, health product, clothes)
Gender (Magazine, clothes, cosmetics)
Income (Car, house)
Ethnic (Foods)
Family-Life Cycle (Car, house, food)
Topics
Market Segmentation
Segmenting Consumer Markets
Demographic
Age and life-cycle
 Markets can be segmented based
on age and life-cycle stage
differences.
Dutch Lady markets several brands
and products of its formula milk
targeted to different age segments.
Proton satria and Inspira are
targeted to young drivers
Anlene Milk Drink is targeted to
senior citizen and late adult
consumers
Topics
Market Segmentation
Segmenting Consumer Markets
Demographic
Gender
 Gender has long been used for
segmenting markets for clothing, hair
dressing products, cosmetics and
magazines.
“Wanita” magazines are meant for
women, “Maskulin” magazines are
meant for men.
 Men and women have different
preferences for such products.
Topics
Market Segmentation
Segmenting Consumer Markets
Demographic
Religion
 In international market, it is
extremely important for the
marketers to understand the cultures
and norms of a particular country in
their promotional campaign.
Kelantan has imposed a rule on
female artists to wear the hijab when
taking part in promotional activities.
 Local sensitivity must be taken
into account.
Topics
Market Segmentation
Segmenting Consumer Markets
Demographic
Income
 Income level influences
consumers’ wants and determines
their buying power.
 Income level indicates their
purchasing power.
In a huge shopping complex, there are
several types of shops targeting people
from different income levels, such as a
CK Boutique for high-income groups
and Reject shop for the middle-income
groups.
BMW is targeted to high income
consumers
Proton is targeted to middle
income and lower income consumer
Topics
Market Segmentation
Segmenting Consumer Markets
Psychographic
 Divide a market into various groups such as

Personality
Social class
Lifestyles
Examples:
KFC is targeted to consumers who nourish and appreciate family relationship
Nescafe is targeted to consumers who have happy lifestyle
Topics
Market Segmentation
Segmenting Consumer Markets
Psychographic
Personality
 Personality reflects a person’s
traits, attitudes, and habits.
Product for car drivers that
are thought to be
•
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•
•
•
•
•
•
Nationalistic
Economical
Conservatives
Modern
High status
Sporty
Feminine
Masculine
Topics
Market Segmentation
Segmenting Consumer Markets
Psychographic
Lifestyles
 Lifestyle segmentation divides
people into groups according to the
way they spend their time, the
importance of the things around
them, their beliefs, and
socioeconomic characteristics such
as income and education.
•
•
•
•
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•
Product for Single customers
Product for Married customers with no
children
Product for Married customers with
children
Product for Newly married customers
Product for Middle-aged married
customers
Product for Older-aged married
customers
The new Satria Neo advertisement
that seems to appeal to young and
active people as well as to the
trendsetters.
Topics
Market Segmentation
Segmenting Consumer Markets
Behavioural
 Divides buyers into group according to their knowledge,
attitudes, response, and uses towards a product based
on several variables:
Toothpaste Product for customers that concerned about
Social occasions
the clean white teeth, fresh breath and maximum
Value & benefit
protection against cavities (benefit segmentation).
Consumption level
Products for first time users, former users, potential users,
user status
medium users and heavy users (volume segmentation)
brand loyalty
Cigarettes for heavy smokers, moderate smokers, new
smokers and quitting smokers
Telecommunication services package for heavy caller,
heavy SMS user.
Price charges on regular customers, members, and nonmembers
Topics
Market Segmentation
Segmenting Consumer Markets
Behaviouristic
Special Occasions
 Divide the market into groups
according to special occasions when
buyers get the idea to buy, actually
make their purchase, or use the
purchased item.
Valentine’s Day and Mother’s Day
are actually designed and
promoted to increase the sale of
flowers, cards, and other gifts.
Topics
Market Segmentation
Segmenting Consumer Markets
Behaviouristic
Value & Benefit
 value & Benefit segmentation is
the process of grouping customers
into market segments according to
the benefits and value they seek
from the product.
Huggies introduced Huggies PullUps Pants, a diaper designed to
help mummies catch up with active
and growing babies.
Topics
Market Segmentation
Segmenting Consumer Markets
Behaviouristic
Consumption Level
Consumption level segmentation
divides a market by the amount of
product bought or consumed.
Such categories used to differentiate
its consumers are former users, firsttime users, light or irregular users,
medium users, and heavy users.
Topics
Market Segmentation
Segmenting Consumer Markets
Behaviouristic
User status
Markets can be segmented into nonusers, ex-users, potential users, firsttime users, and regular users.
A beauty centre :
- needs to come up with an
advertisement that appeals to be safe
to potential users.
- focuses on attracting current users
from slipping away from their products
and services.
Topics
Market Segmentation
Segmenting Consumer Markets
Behaviouristic
Brand loyalty
Brand loyalty often is defined based
solely on consumers' patterns of
repeat purchase behavior.
“Rotators or soft-core” may stick to
two or more brands.
In Indonesia, Unilever has received
Indonesia Best Brand Award (IBBA)
2009 organized by SWA magazine
and MARS marketing research
institution for its variety of products.
The survey conducted by SWA and
MARS also considers five aspects
which also includes brand loyalty.
Topics
CRITERIA FOR EFFECTIVE SEGMENTATION
1
4
MEASURABLE
REACHABLE
5
2
DISTINGUISHABLE
SUBSTANTIAL
3
6
ACTIONABLE
REASONABLE
CRITERIA FOR EFFECTIVE SEGMENTATION
1
MEASURABLE
It should be possible to identify customer
groups by measuring size and purchasing
power of the segments.
Data about the customers must be available
to further target them.
These market segments should be large
and profitable enough to serve.
2
SUBSTANTIAL
Worth paying attention to, and being
addressed to with a tailored marketing
programs
CRITERIA FOR EFFECTIVE SEGMENTATION
3
ACTIONABLE
Effective marketing program can be
designed to attract and serve these
market segments.
Too small and too big could bring trouble
and ineffectiveness due to failure to
implement the actions.
It should be possible to effectively reach
and serve market segments.
4
REACHABLE
If we fail to reach them or they failed to
get us, the segmentation is not effective
especially during the promotional
activities.
CRITERIA FOR EFFECTIVE SEGMENTATION
The market segments are diverse and
therefore, distinguishable.
5
DISTINGUISHABLE
They respond differently to different
marketing actions
Too small and too big segmentation is
ineffective.
6
REASONABLE
Don’t be greedy to serve the big size
segment.
Don’t be too stingy to serve small segment
because it will be not worthy.
Market Targeting
Targeting is the act of evaluating and
comparing the identified segments, and
then selecting one or more of them as the
prospects with the highest potential
Topics
Market Targeting
Evaluating the Target Market
Three factors must be considered:
segment size and growth
segment competitiveness
company objectives, goals and resources
Topics
Market Targeting
Selecting Target Market Segments
A target market consists of a set of buyers who
share common needs or characteristics that the
company decides to serve.
Topics
Market Targeting
Target Market Strategy
 Four
basic categories of target marketing strategy are:
 Non-differentiated
marketing
Differentiated marketing
Focused & Concentrated marketing
Micro marketing
Topics
Market Targeting
Target Market Strategy
Non / Undifferentiated marketing
 A market-coverage strategy in which a firm decides to ignore market
segment differences and go after the whole market with one offer.
Coca-Cola uses the appeal youthful fun in
its global advertising. Its sponsorship
programme is global and is adapted to
events that are popular in specific
countries such as soccer in other parts of
the world versus football in the United
States.
Topics
Market Targeting
Target Market Strategy
Differentiated marketing
 A market-coverage in which a firm decides to target several market
segments and designs separate offers for each.
Procter and Gamble markets six
different laundry detergent brands,
which compete with each other on
supermarket shelves.
Topics
Market Targeting
Target Market Strategy
Concentrated marketing
 Offers smaller companies an opportunity to compete by focusing their limited
resources on serving niches that may be unimportant to or overlooked by larger
competitors.
In cosmetics, the Chanel and other
cosmetic brands that target upscale
prestige segment of the market have used
this approach successfully.
Topics
Market Targeting
Target Market Strategy
Micro marketing
 Offers customisation and modification on products as well as the marketing
mix strategies to cater the specific requirements of individual customers or
segments.
Local marketing
Change and modified the products according
to the local needs like KFC, MC D
One-to-one marketing
The customization of products according to
individual customers such as Dell but it is
difficult and expensive.
Topics
Market Positioning
What is Market Positioning?
Topics
Market Positioning
What is Market Positioning?
 Positioning is arranging for a
product to occupy a clear, distinctive,
and desirable place relative to
competing products in the mind of
target market consumer.
Dynamo is positioned as an
effective detergent in removing
stubborn stains.
4 criteria to select positioning strategies
1.Recognize own product competitive edges
(strengths) – product, service, reputation,
people
2.Select most appealing edges (strengths)
3.Choose an overall positioning edges
(strengths)
4.Communicate the positioning (IMC usage)
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
The product can be separated
from its competitors based on
attributes, features, or benefits.
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
The price and quality ladder
is the most effective of all
eight-attribute ladders.
Price
Quality
Price
Quality
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
The product is marketed as
when or how it can be used
as a strategy to win an empty
slot in the customers’ mind.
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
This strategy indicates that
the company clearly can
identify and know the
consumers and their needs.
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
Click on each positioning base to
know more.
The product class
dissociation ladder implies
that:
a product or company
can be positioned as
superior to its competitors
the product is so
different compared to its
competitors
it almost not fit the same
product category
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
This strategy indicates that
the company clearly can
identify and know the
consumers and their needs.
Click on each positioning base to know more.
Topics
Market Positioning
Positioning Bases
A variety of bases for
positioning are:
 Product features
 Price and Quality
 Use or application
 Product user
 Product class
 User
 Competitor
This strategy to position a
product is done by
positioning directly against or
away from the competitors’
position.
Click on each positioning base to know more.
Topics
CONCLUSIONS
• This chapter recognizes the role of market segmentation
in the development and implementation of market-driven
strategy.
• We examine the concepts of market segmentation and
market segment.
• We also discuss the issues that concern the segmenting
of a market requiring us to identify the bases for
segmentation, forming segments, describing each
segment, and analyzing and evaluating the identified
segment (s).
• We also learned about market targeting and positioning
strategies.
List of References
Subash C. Jain (2004) Marketing: Planning & Strategy, 7th Edition, Thomson.
Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley &
Sons, Inc.
Cravens, D.W. (2000), Strategic Marketing, 6th Edition, McGraw Hill.
Kotler P& Armstrong.G., (2004) Principles of Marketing, 10th edition, Pearson.
Kotabe, Masaki & Kristian Helsen (2001). Global Marketing Management 2nd
Edition John Wiley & Son. Inc New York.
Topics
List of References
Ebert, R., & Griffin, R. (2003). Business Essential, 4th Edition. New Jersey:
Prentice Hall.
Ferrel, O., Hirt, G., & Ferrel, L. (2009). Business: A Changing World. New York:
McGraw Hill.
khalid, K. e. (2008). Business Management: A Malaysian Perspective. Kuala
Lumpur: Oxford University Press.
McDaniel, C., & Gitman, L. (2008). The Future of Business. Ohio: ThomsonSouth Western.(2008). The Future of Business. Ohio: Thomson- South
Western.
Topics
List of References
(n.d.). Retrieved April 13, 2009, from BuckInvestor.com:
http://www.buckinvestor.com/basics/economic_systems.shtml
(n.d.). Retrieved April 13, 2009, from EconGuru Economics Guide:
http://www.econguru.com/econ/production-factors.shtml
(n.d.). Retrieved April 13, 2009, from tutor2u:
http://tutor2u.net/economics/gcse/revision_notes/basics_factors_of_production
.htm
Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley &
Sons, Inc.
Topics