Source : http://www.dasma.dlsu.edu.ph
Segmentation, Targeting and Positioning
Objectives:
1. To identify and define the three steps in target marketing: segmentation,
targeting, and positioning.
2. Understand bases for segmenting consumer markets.
3. To know how to identify attractive market segments.
4. To understand how to position products to gain competitive advantage.
Topics for Discussion:
1.
2.
3.
4.
5.
6.
Steps in market segmentation, targeting and positioning
Bases for segmenting consumer markets
Evaluating and selecting market segments
Choosing a positioning strategy
Developing a positioning statement
Communicating and Delivering the Chosen Position
Introduction
Companies are recognizing that they cannot serve all buyers in the marketplace. There
are various types of customers with different needs and buying behavior. Rather than
competing in the entire market (mass marketing) companies identify parts of the market
that they can serve well and profitably (market segmentation and targeting).
Let’s Define the Terms
Market Segmentation – dividing a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate products or marketing mixes
Target Marketing – the process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter
Market Positioning – arranging for a product to occupy a clear, distinctive, and desirable
place relative to competing products in the minds of target consumers.
Market
Segmentation
1. Identify bases for
segmenting the market
2. Develop segment
profiles
Target Marketing
3. Develop measure
of segment
attractiveness
4. Select target
segments
Market Positioning
5. Develop
positioning for target
segments
6. Develop a
marketing mix for
each segment
Bases for Segmenting Consumer Markets
1. Geographic – dividing a market into different geographical units such as nations,
states, regions, countries, cities, or neighborhoods.
2. Demographic – dividing the market into groups based on demographic variables
such as age, gender, family size, family size, family life cycle, income,
occupation, education, religion, race, generation, and nationality.
3. Psychographic – dividing a market into different groups based on social class,
lifestyle, or personality characteristics.
4. Behavioral – dividing a market into groups based on consumer knowledge,
attitude, use, or response to a product.
a. Occasion – dividing the market into groups according to occasions when
buyers get the idea to buy, actually make their purchase, or use the
purchased item.
b. Benefit – dividing the market into groups according to the different
benefits that consumers seek from the product.
Requirements for Effective Segmentation
1. Measurable – the size, purchasing power, and profiles of segments can be
measured
2. Accessible – can be effectively reached and served
3. Substantial – large or profitable enough to serve
4. Differentiable – conceptually distinguishable and respond differently to different
marketing mix elements and programs
5. Actionable – effective programs can be designed to attract and serve the segments
Evaluating Market Segments
There are three factors that a firm can use in evaluating different market segments. These
are size and growth of the segment, segment structural attractiveness, and company
objectives and resources. Segments that should be chosen are those with the right size
and growth characteristics. However, the largest and fastest growing segments are not
always the most attractive. The structural factors that affect attractiveness of a potential
segment must also be examined. For example if there are already many companies
serving the same segment then it becomes less attractive.
Selecting Target Market Segments
After evaluating the different segments the company decides which and how many
segments to target.
Target market - a set of buyers sharing common needs or characteristics that the company
decides to serve
The following are different levels of target marketing:
1. Undifferentiated Marketing or Mass Marketing – ignore different market
segments and target the whole market with one offer
2. Differentiated Marketing or Segmented Marketing – a firm decides to enter
different market segments and designs separate offers for each.
3. Concentrated Marketing or Niche Marketing – smaller than segments and may
attract only one or few competitors
4. Micromarketing – tailoring products and marketing programs to suit the tastes of
specific individuals and locations.
Socially Responsible Target Marketing
Controversy and concern arise when there are issues involved in targeting the vulnerable
and disadvantaged segments such as children, the elderly, and the less educated with
potentially harmful products such as cigarettes, liquor, and pornography. Bad case on
targeting children was done by the telecoms while good case was done by Hapee
toothpaste.
Choosing a Positioning Strategy
After deciding which segment/s to serve, the company must decide what positions it
wants to occupy in the minds of those segments. Positioning involves implanting the
brand’s unique benefits and differentiation in consumers’ minds.
According to Al Ries and Jack Trout, positioning starts with a product. It is a piece of
merchandise, a service, a company, an institution, or even a person. Positioning is not
what you do to a product. It is what you do to the mind of the prospect. It is how you
want your prospect to perceive your brand.
According to Philip Kotler there are seven positioning strategies which are as follows:
1. On the specific product attributes. For example Toyota Corolla’s positioning
strategy is “superior performance”, while Mitsubishi Lancer is “advance
engineering”, and Nissan Sentra has “all power options
2. On the benefits offered. For example Colgate has “germ-killing action that fights
gingivitis, Crest “reduces cavity”
3. According to usage occasions. Example: Motolite battery “good for the wet and
dry season”, “tough and durable to long trips”, “pangmatagalan”
4. For certain classes. Example: J & J Baby shampoo “as one for adults makes your
hair soft and gentle like a baby”
5. Directly against a competitor. Example: AVIS to Hertz – We’re no. 2 but we try
harder
6. Directly away from competitors. Example: 7up the uncola
7. For different product class. Example: Margarine against butter and cooking oil
Some cases of successful positioning strategies are Coca-Cola’s the Real Thing and
Marlboro’s masculine position.
Communicating the Positioning Strategy
After you have decided on the positioning strategy for your brand you should
communicate this to your target audiences: internal and external. The following are the
important elements of communication:
1. The Message – must be in touch with reality. Nowadays advertisers use realitybased advertising. For instance never before were the words kili-kili, mabaho
were used in TV commercials. It must be appealing to your target. If your target
is teen don’t use kundiman jingles.
2. The Communicator – must be credible, must have a good reputation with no
involvement in any scandal. Must not necessarily be a celebrity because
oftentimes the focus is not centered on the product but on the celebrity
3. The Media – traditional such as TV, print, radio, are no longer the only options
available. Non-traditional media such as billboards, transit, internet, etc. which
are less expensive can be alternatives.
4. The Budget – should be proportionate to your expected sales