Segmentation and Targeting

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 Homogeneous and Heterogeneous Markets

Broadly markets can be divided into two categories

A homogeneous market, is a market where the products and services traded are similar with no
significant difference between them and the consumer usually has no special preference for products in
this type of market. For example, petrol, fruits and vegetables, wall nails, wire clips, bricks etc.

A heterogeneous market is a market where the products and services have attributes that are significantly different
from each other on the basis of which distinct and different customer needs can be identified. For example, soaps,
shampoos, clothes, cars, etc

A heterogeneous market is a market where the products and services have attributes that are significantly
different from each other on the basis of which distinct and different customer needs can be identified.
For example, soaps, shampoos, clothes, cars, etc
• mass marketing treats all buyers as a homogeneous group.
• In such marketing, the firm ignores segment differences and goes after the
whole market with one offer and it is appropriate when all the consumers
have the similar preferences
Let us start with understanding the meaning of the term ‘market’. It stands for a group of
buyers and their demands (and not the geographical area). So, the market for a product is
nothing but the aggregate of customers of that product. Mostly markets can be divided into
two categories:
Homogenous Markets: The customers are similar to each other with respect to their product
requirements (e.g., match-box, mineral water, petrol, bricks etc). Customers in such markets
require similar type of products, similar availability, price, and information requirements.
Heterogeneous Markets: In such markets customers differ widely from each other in terms of
their requirements and their characteristics (e.g., watch, hotel, apparels). The customers vary
with respect to price they want to pay, kind of product they want to have, where and how
they want to buy it etc. They also differ in their profile characteristics- income, life style etc.
A market consists of consumers who are rarely similar. They differ from one another on a
variety of aspects. It is these differences that prevents marketers to satisfy all consumers with
only one type of product or service.
 The STP Process
• Segmentation is the process of classifying
customers into groups, who seek similar
benefits from the product and have some
common characteristics like income or age
group etc. and who might require separate
products or marketing mix
• Targeting involves the process of evaluating
attractiveness of each segments and
selecting one or more segments to enter
• Positioning is arranging for a product to
occupy a clear, distinctive and desirable place
relative to competing brands in the mind of
the consumer
Market Segmentation The division of large market into smaller homogenous markets
on the basis of similarity of needs/ purchase preferences/criteria of the customers, into
different customer groups and developing the customer profiles of the segments.
▶ There are similarities among customers within a group with respect to what they are
seeking from the product.
▶ Each group is different from other groups with respect to what they are seeking from
the product.
▶ Groups are identified based on customers with similar needs/ purchase criteria and
other customer profile characteristics.
For example, car/motorcycle market is divided into different segments like: economy
car, compact car, mid-size car, luxury car, SUV and so on. There is similarity in
characteristics of consumers of economy cars and this group is different from
consumers for luxury cars.
For example, Maruti Alto is aimed at the segment, which needs lower priced compact
car. But different models of Alto are not for different segments. It is just giving a range
in offerings to that segment as it is not feasible to identify distinct segment for each of
Alto model and develop different marketing strategy for each.
 SEGMENTATION

PRODUCT: PRODUCT:
PRODUCT :A
B Z

Segment Segment B
A

Segment Z

Segmentation is the process of dividing a market into distinct groups of buyers

who have distinct needs, characteristics, or behaviour and who might require
distinct marketing mixes
 Segmentation
Different people have different needs, motives, characteristics and buying behaviour.
This act of dividing a market into numbers of sub-market, each relatively more homogeneous
in needs and characteristics of customers is known as “market segmentation”.

High range bicycle

Kids bicycle Low range bicycle
DIFFERENT LEVELS OF dividing a
market
Mass Marketing
Segment
Marketing
Niche Marketing Micromarketing

• Same product • Different • Different • Products to

to all products to products to suit the tastes
consumers one or more subgroups of individuals
• No segments within and locations
segmentation • Some segments • e.g.,
segmentation • Different
marketing in
different
localities by
Uber or mass
customization
 Benefits of Segmentation
➢ Helps Identity Less Satisfied Segments and Concentrates on them- helps the
marketer to assess to what extent offer in the market match the needs of different
customer segments and which are less satisfied segments.
➢ It Enables the marketer to crystallize the needs of each of the chosen segments
and make offer that matches them.
➢ The organisation gets to know its customer better. And thus it can design
appropriate marketing strategy
➢ It provides guidelines for resource allocation.
➢ Makes the Marketing Effort More Efficient and Effective- ensures that marketing
efforts is concentrated on well defined selected segments only.
 Benefits of Segmentation
• Benefits of segmentation are discussed below:
• 1) Identification of Gaps in the need- Identifying Attractive Segments
• Market segmentation helps the marketers to evaluate need satisfaction of various customer
segments by the existing products in the market. Such an exercise helps in better
identification of segments, whose needs are not being satisfied well or identifying segments
with no product offering to match their needs (e.g., Nirma identified the gap of no washing
powder being offered for lower income group in the market, Sensodyne identified the gap
of people with sensitivity problem
• 2) A marketer can have much clearer picture of market, if it is in smaller segment. By looking
at the market in the form of several segments, a firm can have better picture of available
opportunities, growth potential and competitive scenario of each segment (e.g., assessing
the market of TV viewers as different groups interested in watching different kinds of
channels as compared to assessing TV viewers as a whole, gives better and more useful idea
about the available opportunities).
 Benefits of Segmentation
3) best fit with the resources of the company.
As companies have limited resources, it is not feasible to produce all possible
products for all the people in the markets (e.g., it may not be possible/profitable
to produce all kinds of apparels, furniture required by all kinds of buyers in the
markets).
Market segmentation enables the company to pick up the best and most
suitable segments to pursue. The firm would be benefited, if it understands the
marketing efforts required for different segments and selecting the segments
which show the best fit with the resources of the company.
4)Developing Appropriate Marketing Mix: Market segmentation enables to get more clarity
about characteristics of customers, their needs, purchase behaviour and responses to
marketing activities. It helps in better identification of customers with detailed knowledge
about their similarities. By considering such information, marketer can take more appropriate
decisions about products, price, distribution and promotion. The purpose is to ensure best
possible match between marketing mix and requirements of its segments. Thus, market
segmentation gives advantage of increasing the effectiveness of marketing mix (e.g., various
segments of bicycle markets are being served with different marketing mix variables to cater
to the differences in the requirements of various segments).
5) Sharp focusing of Market Strategy on Target Customers: Market segmentation enables a
company to observe customers in smaller groups, which helps in better identification of
customers’ characteristics. Such information helps the companies in better focusing of
marketing efforts on its customers. It also prevents scattering away of marketing efforts, thus
improving the efficiency of marketing strategy (e.g., for informing business executives about a
management workshop through advertisements in business TV channels and financial
newspapers rather than through general TV channels and newspapers, a company can sharply
focus its message on its potential customers).
 Segmentation: Steps
▶ The market segmentation follows certain steps.
▶ Survey
Survey to identify customer groups with different needs and identifying the
groups not being satisfied with existing offerings. It will indicate need gaps.
Analyze
Identify the groups with many choices, groups with few choices and groups
with no suitable choice available. Analyze the groups for demand and profit
potential and check with firm’s capabilities for resource feasibility and meeting
firm’s objectives. Make decision about whether to drop or go ahead with the
segment.
▶ Profiling
Develop profile of consumers –details of their characteristics
 Characteristics of an effective
segment/GOOD SEGMENT
Measurable Accessible Substantial Differential Actionable
• Size, purchasing • Segments can be • Segments are • Segments must • Effective
power, profiles of effectively large or profitable respond programs can be
segments can be reached and enough to serve. differently to designed to attract
measured. served. different and serve the
marketing mix segments.
elements &
programs.

For example, if we were For example, if an For example, a For example, men For example, a
to segment a particular FMCG company company and women want tobacco
group of customers for wants to launch manufacturing musical different watches, manufacturing
purchasing a car based products for the rural instruments will not footwear, therefore company cannot
on their income and customers , it must produce guitars for left the groups should be directly promote its
their family size, the finds ways and means handed people on a different from each products through
data collected from to communicate their regular basis as this other to form a advertisements but
these demographic products to them. segment is too small segment. can do so by
factors should make the This may be in the and not large enough If respond similarly to sponsorships n sports
segment selected form of posters and for the company to gain a particular perfume events, concerts, etc
 Effective Segmentation Criteria
▶ For a segmentation scheme to be useful, the segments must be:
Measurable – to allow the size, characteristics and purchasing power of segment to be measured
Reachable – the segments should be effectively reached and served
Substantial – segments should be large enough to meet company objectives of profits.
Differentiable –segment should be distinct from other segments in its needs, marketing mix required
and their response to it.
Actionable - allows effective programs to be formulated and implemented
Stable-existence of segment to be there for long run
Profitable-profitable enough to meet company objectives
Responsiveness -if people would want to shift their preference to my brand
 Targeting--Selection of segments

• Choosing the right segment(s) out of all the market segments is called market
targeting and the segment selected is called “target market”.
• Once the firm has developed various market segments, it needs to decide: how
many segments to cover and which ones.
• Choosing the market segment requires evaluating different segments on the criteria
Criteria for Attractiveness of market segments—
Size, growth and profitability of segment
• Current and future market growth rate.
• Market access costs.

• Companies’ Objectives and Resources--Company objectives, competencies and resources

• Market competitiveness- Nature of Competition- Number of competitors, strength of competitors

• Risk-how much risk is present and how much risk I can take
Market Segmentation
• Bases for Segmenting Consumer Markets

BEHAVIORAL
DEMOGRAPHIC
PSYCOGRAPHIC Occasions,
GEOGRAPHIC Age, gender,
Social class, benefits sought,
Nations, states, family size and
lifestyle, or user status,
regions or cities life cycle,
personality usage rate,
income
loyalty
 Segmentation: Basis
▶ The market can be divided on the following basis:
▶ Geographic segmentation (i.e., region, city size, density of
population, and climate)

▶ Demographic segmentation (i.e., age, gender, marital status,

income, education, occupation, family size, family life-cycle
stage)

▶ Psychographic segmentation (motivation, personality, attitude,

lifestyle)

▶ Behavioral segmentation (i.e., benefit sought, usage rate,

loyalty, usage occasion)
 Geographic Segmentation
Different flavors of noodles for different regions
Geographic segmentation by region

Northern India Southern India

More demand as More demand of

a white drink chocolate flavour
Geographical segmentation by terrain

High terrain areas

Coats and winter gear
 Geographic Segmentation
Geographic segmentation organizes customers into groups on the basis of where
they live. For instance, markets are likely to be different in extreme cold and hot regions.
Even within India there is variation among preferences of consumers across different states.
When consumer needs of one geographical unit differ from the other geo. unit on
the basis of culture, climate, language differences, Coffee, spices, motorcycles,
McDonald’s
It involves segregating the market into different geographical units
➢ Examples:
– World Region or Country : India, China, Europe, Africa
– Country Region : North, East, South, West
– City or Metro Size : Metropolitan, Tier 1, Tier 2, Tier3
– Population Density : Rural, Suburban, Urban
– Terrain : High terrain, low terrain
Ability to identify and understand regional preferences of people can define need
gaps of different geographical segments to decide target market and design
 Demographic Segmentation

➢ Affluent ➢ Male
➢ Middle ➢ Female
class

➢ High
➢ Hindu
➢ Medium
➢ Sikh
➢ Low

➢ Joint ➢ Illiterate
➢ Nuclear ➢ Literate
In demographic segmentation, we divide the market into groups on the basis of variables such as age, family size,
family life cycle, gender, income, occupation, education, religion, race, generation, nationality and social class.

Age- Consumers’ wants and capabilities change with age. Some companies offer different products and different
marketing approaches for different age groups (e.g., different types of toys, games, clothes, footwear, books)

Gender- Gender segmentation is necessary to be used as a base for number of products (e.g., clothing, cosmetics, foot
wear, wristwatch etc.) HUL offers Fair and Lovely for women and Fair and Handsome for men.

Income: It is one of the most commonly used and important bases for segmenting the market for large number of
products and services. People with in a same income class are likely to have similar purchase preferences(e.g., hotels,
mobile phones)

Education: As the level of education influences consumer’s preference, it can be used for segmenting the markets for
certain products (e.g., books, calculators, coaching centers of different subjects)

Occupation: People with different occupations like farmers, technical, students, housewives etc. vary with the kind of
products they require (e.g., supplement health drinks for sports people, magazines for doctors)

Family size and Family life cycle stage: Product requirements vary for different sizes of the family and stages of family
life cycle. Different kinds of bank loans, insurance policies use occupation as primary base for segmentation. Family
vacation packages, insurance policies as different from other travelers.
 Demographic Segmentation
Demographic Segments Example
Characteristic

Age Infants, kid, teens,

young, adults, old

Kids Teenagers

Gender Male, female

Men Footwear Women Footwear

Family Life Bachelor, Married,

Cycle stage Parenthood, Post-
parenthood, Solitary
Insurance Policy for Tanishq Wedding
Survivor married couple Jewelry, loans
 Demographic Segmentation
Demographic Segments Example
Characteristic
Income low income, middle
income, high income,
superrich

Occupation Students, Self

employed,
Businesspersons,
Corporates,
Homemakers,
Unemployed
Education 10th grade pass, 12th Coaching Centres
grade pass, College
graduate, Post
graduate,
 Demographic Segmentation
Demographic Segments Example
Characteristic

Religion Hinduism, Islam, Sikhism,

Christianity, Buddhism
Incense sticks for Hindus

Race African, Hispanic, Caucasian,

Native Americans

For African Americans For Native Americans

Generation Generation X, Y, Z
Music, fashion

Older generation Youth

 Demographic Segmentation
Demographic characteristics are closely related to consumer needs, wants, and
preferences. It is:

• Most common segmentation strategy.

• Easy to identify.

• Easy to measure (age, gender, income, education).

• demographically segmented markets are easy to reach.

▶ Even when the target market is described in non-demographic terms, link back to
demographic characteristics is necessary in order to know the size of the target
market and how to reach it efficiently.
 Demographic Segmentation
Demographic characteristics are closely related to consumer needs, wants, and
preferences. It is:

• Most common segmentation strategy.

• Easy to identify.

• Easy to measure (age, gender, income, education).

• demographically segmented markets are easy to reach.

▶ Even when the target market is described in non-demographic terms, link back to
demographic characteristics is necessary in order to know the size of the target
market and how to reach it efficiently.
 Psychographic segmentation
• Variables like personality, lifestyle or values, self concept significantly affect
product and brand choice of customers.
• Psychographic segmentation is division of market on the basis of psychological
characteristics in terms of:
• Lifestyle.
• Personality
• Self values, Self-concept
• Even when using other demographic variables as primary basis for segmentation,
psychographics are used for help in designing appropriate marketing strategy.

• These are often used in designing ads.

Market Segmentation :PSYCHOGRAPHIC
WOODLAND IS KNOWN TO BE ASSOCIATED WITH
PATANJALI IS ASSOCIATED WITH PEOPLE WHO ARE PEOPLE WHO FOLLOW AN ADVENTUROUS
INCLINED TOWARDS A HEALTHY LIFESTYLE LIFESTYLE

ROLEX WATCHES ARE ASSOCIATED WITH THE

AFFLUENT AND THE LUXURIOUS CLASS OF THE
SOCIETY
Life style: Way of living-The goods that people buy to express their life-style.
Modern, conservative, fashionable, simple, traditional, stylish etc.
Lifestyle is caused by the psychological make up - It manifests in what a person
does (i.e., activities), prefers (i.e., interests), and thinks (i.e., opinions).
It is used commonly for Luxury products.
(e.g. Products for modern or traditional women, ads of Nerolac paints, Raymond
ads, Starbucks ads emphasize the lifestyle of their consumers. Thumbs up ads,
Harley Davidson ads.
Personality: Marketers try to endow their products with brand personality that
corresponds to consumer personality. Matching the personality of the brand with
personality of customers makes the marketing strategy more effective.
Companies may use celebrities to convey their brand personality
For example, people who ride Royal Enfield motorcycles tend to portray a rough,
adventurous personality. They feel it suits with their personality.
Thumbs Up for adventurous people, Woodland for outdoor activity lovers
 Psychographic segmentation

• Self-concept- Some marketers prefer to segment the market on the basis of core-
values, the belief systems that underlie consumer’s attitudes and behavior Seller
of organic products are taking this variable into consideration to understand and
differentiate the market segment.
• Firms can target consumers based on consumers’ self-values. From a marketing
point of view, self-values help determine the benefits the target market may be
looking for from a product.
 Psychographic Segmentation Example Lifestyle - Titan

In India, Titan watches have a wide

range of sub-brands within their Titan
range – Edge, Regalia, Nebula, Raga to
appeal to different lifestyle segments.

Some of these models are ornate Regalia Nebula

watches with gold plated bracelets and
some with leather straps each
appealing to different lifestyle Fastrack
segments.
 Segmentation on the basis of Personality

https://www.youtube.com/watch?v=DKzLvdJjXgU
 Segmentation on the basis of Personality

Bentley – Luxury Car Lamborghini – Luxury Sports Car

Psychographic Segmentation AIO- Activities, Interests Opinions
➢ We can understand psychographic makeup of customers by
studying the Activities, opinions, interests of customers
➢ Activities:
➢ The way a person carries out his work or the type of hobbies
he has tells a lot about a person. Thus depending on the
activities of an individual, we can determine what would be
his travelling habits, his working habits, media habits and so
on and so forth.
Behavioral Bases
 Behavioral bases for Segmentation

Benefit segmentation groups consumers on the basis of the benefits they seek
from products or services. Because marketing is all about satisfying consumers’
needs and wants, dividing the market into segments whose needs and wants are
best satisfied by the product benefits can be a very powerful tool.
It is related with purchase behavior-Why buying, how much, Loyalty, online vs
offline purchases, how pay for it
Examples-Banks, types of toothpastes, Hotels, TV channels, Hospitals for
different segments based on usage
Benefits sought: It is classification of buyers according to benefit they seek from
products because marketing is all about satisfying consumers’ needs and wants.
It is effective and also relatively easy to portray a product’s benefits in the firm’s
communication strategy. It can be economy, convenience, status etc. (e.g., diet
ice-cream for caloric watchers, lower price mattresses for people seeking
economy, benefits sought from toothpaste, vegetable oil etc.)
 Behavioral bases for Segmentation
• Usage rate -Frequency of use. Marketers conduct research to distinguish the
characteristics of a heavy user from those of a medium or light user.
• The trick is to identify profile of heavy users and to attract more of them.
• For example, frequent fliers and non-frequent fliers, beer market, Health Apps--
younger adults account for higher consumption and it declines for older
consumers. Banks- types of credit cards for different segments based on usage
pattern.
• Occasions: based on when a product or service is purchased or consumed is
called occasion segmentation. It can indicate relevant market segment for a
product to focus in its efforts.
• (holiday packages by travel agencies during vacations, gift packs during festival
seasons) Snack food companies such as Frito-Lay also make and promote
snacks for various occasions—individual servings of potato chips for a snack
on the run but 16-ounce bags for parties.
 Behaviourial Segmentation
Benefits
benefit based segmentation is a widely used approach because it identifies distinct
market segments with clear needs and marketing implications.
A shampoo, for dandruff control, or other benefits suitable for different reason.

Clinic Plus is for people Chik Shampoo is Pantene is for Sunsilk is for benefits who
who desire long hair as for people who people who seek desire long black hair as the
the benefit
desire benefits at the benefit of soft benefits
low price hair
User Status – Case of baby products

• Non user

Ex user

• First time user

Potential
user
• Regular user
Usage Rate – The case of mobile plans

• Light usage Heavy Usage

• Medium Usage
Market Segmentation :Behavioral
BENEFIT SEGMENTATION IN TOOTHPASTE MARKET OCCASIONS – CUSTOMERS TEND TO SHOP
MORE DURING FESTIVALS
THE TOOTHPASTE MARKET UTILIZES BENEFIT – BASED
SEGMENTATION WITH DIFFERENT TOOTHPASTE BRANDS
PROPOSING DIFFERENT BENEFITS TO THE CUSTOMERS

CLOSEUP – CLOSEUP IS THE ONLY PACK WITH A WARM CLOSEUP

COUPLE, MAKING IT STAND OUT IN THE SHELF EVEN IN THE
MOST CLUTTERED INDIAN RETAIL ENVIRONMENT.

USAGE RATE – CUSTOMERS ARE SEGMENTED

DEPENDING ON THE USAGE RATE OF THE PRODUCT
SENSODYNE – MOST RECOMMENDED TOOTHPASTE BY DENTISTS FOR SENSITIVE
Mobile phone services segmented on this basis
TEETH

DABUR TOOTHPASTE – A HERBAL SOLUTION TO GET RID OF DENTAL PROBLEMS

 Behavioral Segmentation
▶ As the name indicates, behavioural segmentation is about dividing the market on
the basis of purchase and consumption behaviour of consumers

Bases Segmentation Examples

Use quantity Light users, medium users and
heavy users (heavy users generally
the most attractive segment)

Sachet Pump Bottle

Use occasion Time of the day- like morning

breakfast, lunch or dinner;
everyday use or special occasion

Normal Crockery Designer Crockery

everyday use for parties
 Behavioral Segmentation
▶ (contd.)
Bases Segmentation Examples
Loyalty Hard loyal, divided loyal,
indifferent (relationship
marketing focuses targeting
loyal consumers) Frequent
fliers, credit cards
Coupons to customers to get
repeat purchase
Free trial packs to get brand
switching of competitors’
customers

Benefit People may be style seekers,

sought functionality seekers,
economy seekers, prestige
seekers Toothpastes, watches
Usage Rate – The case of mobile plans

• Light usage Heavy Usage

• Medium Usage
• Usage status- Status of customers as ex- users, potential user,
current user, competitor’s brand user can be used as one of the criteria
for segmenting the market.
• It is used for designing suitable promotion strategy.
• For example, a company may consider the group of people not
consuming the product as an attractive market segment to aim its
marketing plans to convert them into buyers (e.g. potential customers.
Non users of Netflix-big market
• Tactics such as trial coupons, free trial packs are employed to attract
new users and user of competitive brands. Much marketing activity is
devoted to building brand loyalty.

• Adults for Cadbury chocolates (non-users), campaign by Airtel for

getting back ex customers mobile service
 Combination and Multilevel segmentation
Combination of bases may be used for segmenting the market.
Any combination of demographic, psychographic, geographic and behavior
information may be used to segment a market.
Most important base may be applied first to be followed with less important
Thus, firms often employ a combination of segmentation methods, using benefits or
lifestyles as basis and then demographics and geography to identify their target
customers. Wrist watch, Gym users, hospital rooms for segments of different life-
styles-combined with income group.
Use of segmentation bases varies across different products.
Depending upon the type of product, marketer needs to decide the suitable
variable/bases to segment the market.
Demographic bases are commonly used for large number of products.
For example, usage rate base will not apply to salt, toothpaste, a stationary item but
can be applied to air travellers, cigarette smokers.
 Evaluation Criteria for selecting good target market
Relative Attractiveness of market segments--Segment Size, growth and profitability
• Current market growth rate.
• Future growth rate.
• Market competitiveness.
• Market access costs.

Companies’ Objectives and Resources--Company objectives, competencies and

resources

Nature of Competition-Number of competitors, strength of competitors

Risk-how much risk is present and how much risk I can take
 Targeting--Selection of segments

• Choosing the right segment(s) out of all the market segments is called market
targeting and the segment selected is called “target market”. Once the firm has
developed various market segments, it needs to decide: how many segments to
cover and which ones.
• Choosing the market segment requires evaluating different segments on the criteria
Criteria for Attractiveness of market segments—
Size, growth and profitability of segment
• Current and future market growth rate.
• Market competitiveness.
• Market access costs.
• Companies’ Objectives and Resources--Company objectives, competencies and
resources
• Nature of Competition- Number, strength of competitors
• Risk-how much risk is present and how much risk I can take
Targeting Segments - Overview
Option 1 Undifferentiated Marketing
Undifferentiated Marketing is marketing that does not target a particular segment of the market. Instead the firm adopts
one marketing strategy and hopes that it will appeal to as many people as possible. Sometimes referred to as mass
marketing, Undifferentiated Marketing usually involves targeting the whole market with one product. Coca Cola's original
marketing strategy was based on this format when they offered one product, which they believed had universal appeal.
However now that Coca Cola has introduced other products, it has changed its marketing strategy to Differentiated
Marketing. An Undifferentiated Marketing strategy can be cheaper than the other strategies because their is only one
product to produce, distribute and market. It can also be cheaper because the firm is not targeting multiple market
segments. The disadvantage is the challenge involved in producing a product (and marketing campaign) which
is universally appealing enough to make it profitable.

The Undifferentiated Marketing Diagram below shows that Undifferentiated Marketing, which targets the entire market
and not particular segments of the market.
 Option 2 Differentiated Marketing Strategy
If a firm decides to target several segments of the market, it is engaging in a differentiated
marketing strategy. Under a Differentiated Marketing Strategy, a firm will develop products
and services with separate marketing mix strategies for each of the segments chosen by
the firm. An airline company offering first (segment 1), business (segment 2) and
economy class tickets (segment 3) , with separate marketing programs to attract
customers for each of the ticket types is an example of differentiated marketing strategy.
A company offers low priced detergent, medium price and premium priced detergent for 3
different segments.
The Differentiated Marketing Diagram below shows that a Differentiated Marketing
Strategy, which targets marketing at different segments of the market
Option 3 Concentrated Marketing
Concentrated Marketing occurs when a business concentrates its marketing effort on one segment of the market.
The firm will develop a product that caters for the needs of that particular group. For example Rolls Royce cars and
the Harrods Group target the premium segment of the market. Concentrated Marketing can have lower costs than
the other two options. It can be a good option for small or new businesses. The disadvantage is that it reduces the
number of customers that the firm is targeting. It also means that the firm needs to be sure that they have selected
the correct segment of the market.
The Concentrated Marketing Diagram below shows that Concentrated Marketing targets just one segment of the
market
Undifferentiated (Mass) Marketing

Undifferentiated targeting occurs when the marketer ignores

the apparent segment differences that exist within the market
and uses a marketing strategy that is intended to appeal to as
many people as possible.
The firms have different types of target marketing options to choose from. These have been broadly classified as follows:

Undifferentiated Target Marketing (Mass marketing): Under this strategy, a firm chooses not to recognize the
different market segments making up the market. It treats the market as an aggregate, focusing on what is
‘common’ in the needs of people rather than on what is ‘different’. It tries to design a product and marketing
program that appeals to the largest number of buyers.
It uses the policy of same 4Ps- product, distribution channels, pricing, mass advertising and advertising themes,
for entire market.
This strategy has the advantage of keeping costs low because it develops and applies only one type of marketing
mix. It is a suitable strategy when the firm aims to target largest market segment. But, when several firms in the
industry do this, the result is hyper competition in the largest target segment selected.
Marketers for commodities like sand, wheat, and petrol use this strategy. Broadly the same product is being
bought by masses at the same price and at the same places.
• For customers buying Coke in a bottle or in a can or getting it from dispensing
machine are not looked at as separate segments as these are not very distinct
groups in terms of what they are seeking from the product. It is difficult to
identify a group buying Coke bottle as a distinct group from the group which buys
Coke in can. It is overlapping behavior. So, they are not being aimed at with
distinct marketing strategies. The same customer may sometimes buy a bottle, at
other time may settle for a can or may buy from shop, may order online, may buy
it at a vending machine. So, these may not be looked at as separate segments. Or,
Walmart, while positioned as a discount department store, Walmart offers
everyday low prices and product selection that attracts a wide cross-section of
customers. Mass marketing is proving to be successful for it.
 Market Targeting Strategies Undifferentiated Strategy

• Undifferentiated marketing treats all buyers, or potential buyers, as a

homogeneous group. Another term for undifferentiated marketing is mass
marketing
• In such marketing, the firm ignores segment differences and goes after the
whole market with one offer and it is appropriate when all the consumers
have the same preferences
• Differentiated Target Marketing: Under this strategy a firm looks at the market as different
segments decides to operate in more than one segments of the same market and designs separate
product and marketing programs for each. It brings more total sales volume in a product category.
• For example- HUL is offering different soaps for different customers segments in soap category.
Offering product in more segments will build more sales volume of soap category as a whole for
the company.
• It results into better matching of customers’ needs with the products thus resulting in satisfying
different customer segments and much larger number of total customers.
• However, it is expensive strategy. requires high costs.
• The net effect of differentiated marketing is to create more total sales and profits than
undifferentiated marketing. (e.g., different cars for different segments by Maruti, different soaps
from HUL (e.g., different cars for different segments by Maruti, different soaps for different
segments by HUL).

• Its deep position in several segments will strengthen the customers’ overall identification of the
company with product category.

• It helps block the competitors.

• . But, at the same time,

Differentiated Targeting at Madura Fashion & Lifestyle

Louis Philippe – Van Heusen

This brand is targetted at This brand is targeted
the ultra modern male specifical at the
with impeccable taste. IT corporate workforce
reflects fashion, style
and is targeted at people
who prefer a grand and
lavish lifestyle Peter England –
This brand provides
Allen Solly value for money.It is
This brand combines targeted at
individuality with style individuals who look
and fashion. It is for casual, formal and
targetted at young occasional dressing.
professionals who have
a lucid dressing style
Selective/Differentiated Targeting

Selective Targeting or Differentiated Targeting is selected

different segments and serving them different marketing
strategies.

Titan serving different segments of market with different

marketing strategies developed for each of them.
 Single segment concentration
• Zodiac brand concentrates on formal shirts for executives and
professionals
• Mahindra tractors concentrate on tractors for primarily targeting
agricultural markets

Single Segment
targeting
Matrimonial service
only for super rich
Event planning
company serving clients
of academic
conferences only
Mercedes Benz-only
luxury cars
Full Market Coverage-Targeting

HUL serves almost all segments of soap market