MARKET SEGMENTING,
TARGETING & POSITIONING
5th Lecture, 1st April 2015
LECTURE CONTENTS
 Target marketing
– Why is it not possible to satisfy all customers?
 Market segmentation
– How to choose potential customers?
 Market targeting
– How to reach customers?
 Market positiong
– How to create market offering for chosen targets?
INTRODUCTION
 Companies cannot connect with all customers in large, broad
or diverse markets
 Markets can be divided into groups of consumers or segments
with distinct needs and wants
 Companies need to identify which market segments it can serve
effectively
 Decision to choose market segments requires good understanding
of consumer behavior and strategic thinking
 To develop the best marketing plans, managers need to understand
what makes each segment unique and different
INTRODUCTION
 Target marketing is the process of identifying
customers and promoting products and services
via mediums that are likely to reach those potential
customers
 Target marketing is generally limited
in scope but is often more productive
than broader types of marketing
because it is designed around
specific customer preferences
 It is also called niche marketing
INTRODUCTION
INTRODUCTION
Target marketing includes three activities:
1) Identify and profile distinct groups of buyers who differ
in their needs and preferences
 market segmentation
2) Select one or more market segments to enter
 market targeting
3) For each target segment, establish and communicate
the distinctive beneıfits of the company's market offering
 market positioning
TARGET MARKETING
Companies can target the markets at four levels:
1) Segment - identifiable group of individuals, families, businesses
or organizations, sharing one or more characteristics or needs
in an otherwise homogeneous market
2) Niche - a small but profitable segment of a market suitable for focused
attention by a marketer.
 Market niches do not exist by themselves, but are created by identifying needs
or wants that are not being addressed by competitors, and by offering products
that satisfy them
3) Local areas
4) Individuals
TARGET MARKETING
An ideal market segment meets all of the following criteria:
1) It is possible to measure
2) It must be large enough to earn profit
3) It must be stable enough that it does not vanish after some time
4) It is possible to reach potential customers via the organization's
promotion and distribution channel
5) It is internally homogeneous (potential customers in the same segment
prefer the same product qualities)
TARGET MARKETING
An ideal market segment meets all of the following criteria:
6) It is externally heterogeneous (potential customers from different
segments have different quality preferences)
7) It responds consistently to a given market stimulus
8) It can be reached by market intervention in a cost-effective manner
9) It identifies the target customers surrogates
10) It provides supporting data for a market positioning or sales approach
MARKET SEGMENTATION
MARKET SEGMENTATION
Target markets are groups of individuals that are separated
by distinguishable and noticeable aspects:
1) Geographic
2) Demographic
3) Psychographic
4) Behavioral
MARKET SEGMENTATION
MARKET SEGMENTATION
1) Geographic segmentation – WHERE?
 Collecting and analyzing information according to the
physical location of the customer or other data source
 Dividing the market into different geographical units such
as nations, states, regions, counties, cities, or neighborhoods
 Where the products are being sold – where to increase
advertising and sales efforts?
MARKET SEGMENTATION
2) Demographic segmentation – WHAT?
 Market segmentation based on differences in demographic
factors of different groups of consumers
 Dividing markets into groups based on age, gender, income,
occupation, religion, race, etc.
 Demographic variables are popular because they are often
associated with consumer needs and wants and they are
easy to measure
MARKET SEGMENTATION
3) Psychographic segmentation – WHO?
 Buyers are divided into different groups on the basis
of psychological/personality traits, lifestyle, or values
 Dividing the market by studying the activities, interests,
and opinions (AIOs) of customers
 Lifestyle segmentation reflects on how the target subject
identifies themselves, or how they desire to identify
themselves in society
MARKET SEGMENTATION
4) Behavioral segmentation – HOW?
 A more focused form of market segmentation that groups
consumers based on specific behavioral patterns they display
when making purchasing decisions
 Dividing market according to consumers knowledge
of a product , attitude towards a product, usage rate
or response to a product
 Segmentation can take place according to
benefits sought by the consumer or according
to perceived benefits which a product/service
may provide
MARKET SEGMENTATION
MARKET SEGMENTATION
Example
– VALS framework:
MARKET SEGMENTATION
VALS framework (higher resources groups):
I.
Innovators - Successful, sophisticated, active, "take-charge" people with high
selfesteem. Purchases often reflect cultivated tastes for relatively upscale, nicheoriented products and services.
II. Thinkers –Mature, satisfied, and reflective people who are motivated by ideals
and who value order, knowledge, and responsibility. They seek durability,
functionality, and value in products.
III. Achievers - Successful, goal-oriented people who focus on career and family.
They favor premium products that demonstrate success to their peers.
IV. Experiencers - Young, enthusiastic, impulsive people who seek variety and
excitement. They spend a comparatively high proportion of income on fashion,
entertainment, and socializing.
MARKET SEGMENTATION
VALS framework (lower resources groups):
I.
Believers –Conservative, conventional, and traditional people with concrete
beliefs. They prefer familiar, national products and are loyal to established
brands.
II. Strivers - Trendy and fun-loving people who are resource constrained. They
favor stylish products that emulate the purchases of those with greater material
wealth.
III. Makers – Practical, down-to-earth, self sufficient people who like to work with
their hands. They seek national-made products with a practical or functional
purpose.
IV. Survivors - Elderly, passive people who are concerned about change. They are
loyal to their favorite brands.
MARKET SEGMENTATION
Example – Needs based market segmentation approach:
 Select the target audience – the customers are grouped based on similar needs
and benefits sought by them on purchase of a product
 Identify clusters of similar needs – demographics, lifestyle, usage behaviour
and pattern used to differentiate between segments
 Apply a valuation approach – market growth, barriers to entry, market access,
switching, etc. are used
 Test the segments – A segment storyboard is to be created to test the
attractiveness of each segment’s positioning strategy
 Modify marketing mix – expanding segment positioning strategy to include all
aspects of marketing mix
MARKET SEGMENTATION
Industrial market segmentation (Bonoma & Shapiro Model)
 Demographics: industry, company size, customer location
 Operating variables: company technology, product/brand use status,
customer capabilities
 Purchasing approaches: purchasing function, power structure, buyerseller relationships, purchasing policies, purchasing criteria
 Situational factors: urgency of order, product application, size of order
 Buyers’ personal characteristics: character, approach
MARKET TARGETING
MARKET TARGETING
Market targeting - identifying a target market after
detailed research, and developing specific marketing
campaigns focused at it
MARKET TARGETING
Marketers have outlined four basic strategies to satisfy
target markets:
1) Mass marketing
2) Differentiated marketing strategy
3) Concentrated marketing
4) Direct marketing / Micromarketing
MARKET TARGETING
1) Mass marketing:
 An attempt to appeal to an entire market with one basic
marketing strategy utilizing mass distribution and mass
media
 It is the type of marketing of a product to a wide audience
 Traditionally mass marketing has focused on radio,
television and newspapers as the medium used to reach
this broad audience
MARKET TARGETING
2) Differentiated marketing strategy:
 Company decides to provide separate offerings to each
different market segment that it targets
 Also called multisegment marketing and as is clearly seen
that it tries to appeal to multiple segments in the market
 Each segment is targeted uniquely as the company provides
unique benefits to different segments
 It increases the total sales but at the expense of increase in
the cost of investing in the business
MARKET TARGETING
3) Concentrated marketing:
 A strategy which targets very defined and specific segments
of the consumer population
 It is particularly effective for small companies with limited
resources as it does not believe in the use of mass
production, mass distribution and mass advertising
 There is no increase in the total profits of the sales as it
targets just one segment of the market
MARKET TARGETING
4) Direct marketing / micromarketing:
 Contacting and influencing carefully chosen prospects with
means such as telemarketing and direct mail advertising
 This is done by buying consumer database based on the
defined segmentation profiles
 These databases usually comes with consumer contacts
(e.g., email, mobile no., home no.)
MARKET TARGETING
MARKET POSITIONING
MARKET POSITIONING
Market positioning - identifying and attempting to
occupy a market niche for a brand, product or service
utilizing traditional marketing placement strategies
 Strategy angles: price, promotion, distribution,
packaging, competition
Also - the way by which the marketers attempt to
create a distinct impression in the customer's mind
MARKET POSITIONING
Product positioning process (1):
1) Defining the market in which the product or brand will
compete
2) Identifying the attributes that define the product 'space'
3) Collecting information from a sample of customers about
their perceptions of each product on the relevant attributes
4) Determine each product's share of mind
MARKET POSITIONING
MARKET POSITIONING
Product positioning process (2):
5) Determine each product's current location in the product
space
6) Determine the target market's preferred combination
of attributes
7) Examine the fit between the product and the market
MARKET POSITIONING
MARKET POSITIONING
Positioning statement is a written description
of the objectives of a positioning strategy. It states:
 How the firm defines its business or how a brand
distinguishes itself?
 How the customers will benefit from its features?
 How these benefits or aspects will be communicated
to the intended audience?
MARKET POSITIONING
MARKET POSITIONING
Harley Davidson positioning statement:
 The only motorcycle manufacturer
 That makes big, loud motorcycles
 For macho guys (and “macho wannabes”)
 Mostly in the United States
 Who want to join a gang of cowboys
 In an era of decreasing personal freedom
Brand tagline:
American by birth. Rebel by choice.
MARKET POSITIONING
Positioning statement – tagline form:
 Mercedes-Benz: Engineered like no other car in the world
 BMW: The ultimate driving machine
 Volvo: For life
 Microsoft: A computer on every desk and in every home
MARKET POSITIONING
What makes a good positioning statement?
 It is simple, memorable, and tailored to the target market
 It provides an unmistakable and easily understood picture of your
brand that differentiates it from your competitors
 It is credible, and your brand can deliver on its promise
 Your brand can be the sole occupier of this particular position in the
market. You can “own” it
 It helps you evaluate whether or not marketing decisions are
consistent with and supportive of your brand
 It leaves room for growth
CONCLUSION
Target marketing is the process of identifying customers
and promoting products and services via mediums that are
likely to reach those potential customers and it includes:
1) Identify and profile distinct groups of buyers who differ
in their needs and preferences
 market segmentation
2) Select one or more market segments to enter
 market targeting
3) For each target segment, establish and communicate
the distinctive beneıfits of the company's market offering
 market positioning