BAA 120
5. Segmentation, Targeting, and Positioning
Companies today recognize that they cannot cover all buyers in the marketplace or
at least not all buyers in the same way.
Because buyers vary in their needs and companies vary in their abilities to serve
them.
Therefore, companies must identify the parts of the market that it can serve best and
most profitably.
1. Market Segmentation
Market segmentation: Dividing a market into distinct groups with distinct needs,
characteristics, or behaviors who might require separate products or marketing
mixes.
Segmenting consumer market:
1. Geographic Segmentation: Dividing the
market into different geographic units such
as
regions,
countries,
cities,
or
neighborhoods.
2. Demographic Segmentation: Dividing the
market into groups based on demographic variables such as age, sex, family
size, family life cycle, income, occupation, education, religion, and nationality.
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a. Age and life-cycle segmentation: offering different products or using
different
marketing
approaches
for
different age and life-cycle groups.
b. Gender Segmentation: has been used in
clothing,
cosmetics,
toiletries
(soap,
toothpastes) and magazines.
c. Income segmentation: has long been
used by marketers of products such as, cars, boats, clothing,
cosmetics, financial services and travel.
3. Psychographic Segmentation: Dividing a market into different groups based
on social class, lifestyle, or personality characteristics.
People in the same demographic group can have different psychographic
makeup.
4. Behavioral Segmentation: Dividing market into groups based on consumer
knowledge, attitude, use, or response to a product.
Occasion(‫المناسبة‬:): Dividing the market into groups according to
occasions when buyers get the idea to buy, actually make their
purchase, or use the purchased item. Example: father’s day, mother’s
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day, valentine day were originally promoted partly to increase the sales
of specific gifts.
Benefit (‫)صالح‬: Dividing the market into
groups according to the different benefits
that consumers seek from the product.
Ex: many benefits we can obtain (get)
from using same product, like tooth past,
some look for whitening, some fresh
breath, and some smoking tartar control.
User Status : market can be segmented into: nonusers, Ex-users,
potential users, first time users, and regular users.
Usage rate: segmentation as light, medium, and heavy product users.
Loyalty status: segmentation by consumer loyalty as: loyal to brand
(Colgate), loyal to store (Debenhams), loyal to companies (Apple).
Using multiple segmentation Bases: Many marketers are using multiple
segmentation bases in an effort to identify smaller, better-defined target groups.
Example is the “Geo-demographic” segmentation.
2. Target Marketing
Target Market: A set of buyers sharing common needs or characteristics that the
company decides to serve.
In this stage the firm has to evaluate the various segments and decide how many
and which segments it can serve best.
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Evaluating market segments
The firm must look at three factors:
1- Segment size and growth.
2- Segment attractiveness.
3- The company objectives and resources.
Selecting Target Market Segments
Because buyers have unique needs and wants, a seller could potentially view each
buyer as a separate target market. Then, a seller might design a separate marketing
program for each buyer. More generally, target marketing can be carried out at
several different levels shown in the below figure.
Undifferentiated
(mass)
Marketing.
Differentiated
(segmented)
marketing.
Concentrated
(niche)
marketing
Micromarketing
(Local or
individual
marketing)
1. Undifferentiated (mass) marketing:
A market-coverage strategy in which a firm decides to ignore market
segment differences and go after the whole market with one offer.
Disadvantages:

it is difficult to develop a product that satisfies all consumers.

‘mass marketing’ cannot easily compete with other focused
firms.
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2. Differentiated (segmented) marketing:
A market-coverage strategy in which a firm decides to target several market
segments and designs separate offers for each. Example: Colgate
Advantage:

Developing a stronger position within several segments creates more
total sales than undifferentiated marketing across all segments.
Disadvantages:

increases the cost of doing business, and marketing promotions.

requires extra marketing research, forecasting, sales analysis,
promotion, and planning.
3. Concentrated (Niche) marketing:
A market-coverage strategy in
which a firm goes after a large
share of one or a few segments or
niches. This strategy used when
company resources are limited,
instead of going after a small
share of a large market, the firm
goes after a large share of one or
a few smaller segments or niches. Example: Tractors
Advantages:

the firm achieves a strong market position because of its greater
knowledge of consumer needs in the niches it serves and the
reputation it acquirers.

The firm can market more effectively and more efficiently by tuning
its marketing mix.

Niches are smaller and may attract only one or a few competitors.

concentrated marketing can be highly profitable.
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Disadvantages:

Concentrated niche marketing involves higher-than-normal risks.

it might suffer greatly if the segment turns bad.

might suffer if larger competitors may enter the same segment.
Many companies prefer to diversify in several segments (Niches).
4. Micromarketing:
The Practice of tailoring products and marketing programs to the needs and
wants of specific individuals and local customer groups- Includes local
marketing and individual marketing.
Local Marketing: Tailoring brands and promotions to needs and wants of
local customer groups-cities, neighborhoods, and even specific stores.
Example: Fuddruckers Skheer branch offers discounts to students.
Individual Marketing: Tailoring products and marketing programs to the
needs and preferences of individual customers- also labeled “markets-of-one
marketing”, ”customized marketing”, and “one-to-one marketing”.
Earlier, a tailor used to make custom-made
suits, and a carpenter used to make furniture
to order. Now the new technologies are
permitting many companies to return to such
customized marketing. Example: Nike has a
website Nikeid where you can personalize
sneakers by choosing of colors and many
other things.(www.nikeid.nike.com)
Disadvantages:

Local marketing can increase costs.

It can create logistics problems.

Brand’s image might be diluted if the product and message vary too
much in different locations.
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Choosing a Target Marketing Strategy
Factors used in choosing the right target marketing strategy:
1. Company resources:
when the firm’s resources limited, concentrated
marketing is more suitable.
2. Product Variability: undifferentiated marketing is more suitable for uniform
products such as steel or grapefruit. But products that can vary in design like
cars are more suited to differentiated marketing.
3. Product’s life cycle stage: we use undifferentiated marketing for new
products released, but one the product reach the mature stage, we more
require differentiated marketing.
4. Market variability: if consumers have the same tastes, have the same
response, we use undifferentiated marketing.
5. Competitor’ Marketing strategy: we have to follow the competitor’s strategy.
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