Fundamentals of Marketing
LESSON 11: Market
Segmentation Strategies
Lesson Objectives
Upon completion of the lesson, students will
be able to:
1. Explain how companies identify attractive
market segments and choose a target
marketing strategy
2. Discuss how companies position their
products for maximum competitive
advantage in the marketplace
Target Marketing
• Target Market
– Consists of a set of buyers who share common
needs or characteristics that the company
decides to serve
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Target Marketing
• Evaluating Market Segments
– Segment size and growth
– Segment structural attractiveness
•
•
•
•
Level of competition
Substitute products
Power of buyers
Powerful suppliers
– Company objectives and resources
Target Marketing Strategies
• Undifferentiated (mass) marketing:
– Market coverage strategy that ignores market segment
differences and targets the whole market with one offer
• Differentiated (segmented) marketing:
– Market coverage strategy that targets several market segments
and designs separate offers for each
• Concentrated (niche) marketing:
– Market coverage strategy in which a company pursues a large
share of one or a few submarkets
• Micromarketing:
– The practice of tailoring products and marketing programs to the
needs/wants of specific individuals and local customer groups
– Includes: local marketing and individual marketing
Choosing a
Target Marketing Strategy
• Considerations include:
– Company resources
– The degree of product variability
– Product’s life-cycle stage
– Market variability
– Competitors’ marketing strategies
Target Marketing
• Socially Responsible Targeting
– Some segments, especially children, are at
special risk
– Spillover from adult to children markets
– Many potential abuses on the Internet,
including fraud Internet shoppers
– Products of questionable benefit
– Controversy occurs when the methods used
are questionable
Positioning
• The way the product is defined by consumers on
important attributes - the place the product
occupies in consumers’ minds relative to
competing products relative to competing
products
• Involves implanting the brand’s unique benefits
and differentiation in the customer mind
• Perceptual positioning maps show perceptions
of brands on important buying dimensions
Choosing a Positioning Strategy
• Identifying Possible
Competitive
Advantages
• Choosing the right
competitive
advantage
• Selecting an Overall
Positioning Strategy
8-9
• Differentiation can be
based on:
–
–
–
–
–
Products
Services
Channels
People
Image
Choosing a Positioning Strategy
• Identifying Possible
Competitive Advantages
• Choosing the right
competitive advantages
• Selecting an Overall
Positioning Strategy
8-10
• How many differences to
promote?
– Unique selling proposition
– Several benefits
• Which differences to
promote? Criteria
include:
–
–
–
–
–
–
–
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Choosing a Positioning Strategy
• Identifying Possible
Competitive
Advantages
• Choosing the right
competitive
advantages
• Selecting an Overall
Positioning Strategy
8-11
• Value propositions
represent the full
positioning of the
brand
• Possible value
propositions:
–
–
–
–
–
More for more
More for the same
More for less
The same for less
Less for much less
WestJet’s Value Proposition:
“Less for Much Less”
• Founded in 1996 to provide low-fare air travel across
western Canada
• Specializes in serving the VFR market (people visiting
friends and relatives).
• Main competitor: the family car
• People would choose to fly rather than drive if offered
low fares
• One type of plane, offers basic in-flight service (no
meals, no movies), single class service, no baggage
transfer services with other airlines, etc.
• However: “less service for less money” is defined as
fewer amenities for a lower fare, not less customer
service.
• Generates $1 billion in revenues
8-12
Developing a
Positioning Statement
• A positioning statement summarizes the
company or brand positioning
• EXAMPLE: To (target segment and need)
our (brand) is (concept) that (point-ofdifference)
8-13
Communicating and Delivering the
Chosen Position
• Companies must take strong steps to
deliver and communicate the desired
position to target consumers
• The marketing mix efforts must support
the positioning strategy
• Positions must be monitored and adapted
over time to match changes in consumer
needs and competitor’s strategies
8-14