Market Segmentation, Target and Positioning

Levels of Market Segmentation

 Segment Marketing; Niche Marketing; Local Marketing
Bases for Segmenting Consumer & Business Market
 Geographic; Demographic; Psychographic; Behavioral
Marketing Targeting
 Effecting Segmentation Criteria; Evaluating and Selecting the
Market Segments
Developing and Communicating a Positioning
Strategy
 Competitive frame of reference; POD and POP; Establishing
Category Membership; Choosing POPs and PODs; Creating
POPs and PODs
Differentiation Strategy

Marketing Management 1
Introduction
How to divide up markets into meaningful customer groups
(Marketing Segmentation)

How to choose which customer groups to serve (Market

targeting)
How to create marketing offers that best serve targeted
customers (Positioning)

Market segmentation Market targeting Market Positioning

Identify bases for Develop measure of Develop positioning for

segmenting the market segment attractiveness target segments

Develop segment profiles Select target segments Develop a marketing mix

for each segment

Marketing Management 2
Market Segmentation
Marketing segmentation is “dividing up a market into
distinct groups that (1) have common needs and (2) will
respond similarly to a marketing actions.

 Segment might require separate products or marketing mixes.

 The company identifies different ways to segment the market.
 Market consists of buyers, and buyers differ in one or more
ways. They may differ in their wants, resources, locations,
buying attitudes and buying practices.
 Through market segmentation, companies divide large,
heterogeneous markets into smaller segments that can be
reached more efficiently and effectively with products and
services that match their unique needs.

Marketing Management 3
Market Segmentation
Levels of Market Segmentation
Mass Marketing
Segment Marketing
Niche Marketing
Local Marketing
Individual Marketing

Marketing Management 4
Market Segmentation
MASS MARKETING
 Mass production, mass distribution and mass promotions
about the same product in the same way to all consumers.
 Under the mass marketing companies view the entire
market as homogenous in need and characteristics and
applies same marketing mix.
 The argument for mass marketing is that it creates the
largest potential market, which leads, to the lowest costs
that in turn can lead to lower prices or higher margins.

Marketing Management 5
Levels of Market Segmentation
SEGMENT MARKETING
Isolating broad segments that make up a market and
adapting the marketing offer to match the needs of one or
more segments.

The market can be approached efficiently by targeting its

products or services, channels, and communications
programs towards only consumers that it can serve best and
more profitably.
And it can also be approached effectively by fine tuning its
products, prices and programs to the needs of carefully
defined segments.

Marketing Management 6
Levels of Market Segmentation
NICHE MARKETING
 Focusing on sub-segments or niches with distinctive traits
that may seek a special combination of benefits.
 Niche provides opportunity to serve customer in better
way and probably have less competition.
 Niche marketers aim to understand their customer's need
so well that the customers willingly pay a premium.

Marketing Management 7
Levels of Market Segmentation
LOCAL MARKETING
 Brands and Promotions being tailored to the needs and wants
of local customer groups in trading areas, neighborhoods,
even specific stores. E.g. Retail branches of banks, local
language promotional schemes etc.
Local marketing reflects a growing trend called grassroots
marketing.

INDIVIDUAL MARKETING
 Ultimate level of segmentation; customized marketing.
 Tailoring products and marketing programs to the needs and
preferences of individual customers.
 Customization is certainly not for every company. Difficult for
complex products; raise the cost of goods; some customers
even may not know what they really want in the product.
Marketing Management 8
Bases for Segmenting
Consumer Markets
Neither one product can satisfy the needs of all customers
nor it is possible to tailor-make a different product for each
customer.
There is no single way to segment the market. A marketer
has to try different variables, alone and in combination, to
find the best way to view the market structure.

Based at descriptive characteristics: Geographic,

demographic, and psychographic
Based at Behavioral characteristics: such as consumer
responses to benefits, use occasions, or brands

Marketing Management 9
Bases for Market Segmentation
Geographic Segmentation
Dividing a market into different geographical units
such as nations, states, regions, counties, cities, or
neighborhoods.
 AREA (Country, Region, Cities, Districts, Towns etc.)
 TOPOGRAPHY OR CLIMATE (Mountains, Hilly & Terai)
 DENSITY OF POPULATION (Urban, Suburban, Rural etc.)

One of the major factor in geographic segmentation of developing

economies is Rural and Urban markets as they differ on number
of important parameters (literacy levels, income, spending power,
and availability of infrastructure, social and cultural orientations,
buying patterns and habits).
Marketing Management 10
Bases for Market Segmentation
Demographic Segmentation
Dividing a market into groups based on the
demographic variables such as age, sex, family size,
family life-cycle, income, occupation, education,
religion, race, and nationality.

Consumer needs, wants, usage rates, and product and brand

preferences are often associated with demographic variables.
Demographic variables are easy to measure.

Marketing Management 11
Bases for Market Segmentation
Psychographic Segmentation
Dividing a marketing on the basis of psychological/personality traits, lifestyles, or
values. People within a same demographic group can exhibit very different
psychographic profiles.
Psychographic segmentation is based on the AIO (Activities, Interest, and
Opinion) of the people.

Values and lifestyles significantly affect product and brand choice.

VALS (Value and Life Style) Segmentation framework

(Developed in 1978 by social scientist and consumer futurist Arnold Mitchell)
Dimensions are consumer motivation and consumer resources.
Resources: Higher and Lower
Groups under Higher resources: Innovators; Thinkers; Achievers; and Experiencers
Groups under Lower resources: Believers; Strivers; Makers; Survivors

Marketing Management 12
 The VALS Segmentation Systems
With Higher Resources
Innovators: Successful, sophisticated, active
people with high self esteem.
Thinkers: Mature, satisfied, and reflective
people motivated by ideals and have value
order, knowledge, and responsibility.
Achiever: Successful, goal-oriented focusing
on career and family.
Experiencers: Young, enthusiastic, impulsive
seeking variety and excitement

With Lower Resources

Believers: Conservative, Conventional, and
traditional.
Strivers: Trendy and fun-loving but having
resource constrained.
Makers: Practical, down-to-earth, self-
sufficient.
Survivors: Elderly, passive people and
concerned about change. More loyal to their
favorite brands.
Marketing Management 13
Bases for Market Segmentation
Behavioral Segmentation
Dividing a market into groups based on consumer knowledge,
attitudes, use or response to a product. The behavioral
segmentation is based on the:
 Awareness and knowledge of the product or brand
 Attitude toward the product or brand
 Use of the product or brand
 Response to the marketing inputs

Behavioral Variables
Decision Roles  Occasions
 Initiator
 Benefits
 Influencer
 User Status
 Decider
 Usage Rate
 Buyer
 Buyer-Readiness
 User
 Loyalty Status
 Attitude
Marketing Management 14
Bases for Market Segmentation
Behavioral Segmentation
Buyer Readiness Stage
Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used Ha
rd
co
Loyalty Status re
loy
Hard-core Loyals als
Split loyals

Splits Loyals
Shifting loyals
Shifting Loyals
Switchers Switchers

Marketing Management 15
Behavioral Segmentation Breakdown

Marketing Management 16
The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable

Marketing Management 17
Bases for Business Market Segmentation
Consumer and business marketers use many of the same variables to
segment their markets. However business marketers use some additional
variables, such as operating variables, purchasing approaches, situational
factors, & personal characteristics.

Demographic
Industry; Company size; Location

Operating Variables
Technology; user or non-user status; customer capabilities

Purchasing Approaches
Purchasing function of organization; power structure; nature of existing relationship;
general purchasing policies; purchasing criteria
Situational Factors
Urgency; specific application; size of order

Personal Characteristics
Buyer-seller similarity; attitude towards risk; loyalty

Marketing Management 18
Market Targeting
Market segmentation reveals the firm’s market segment
opportunities. The firm now has to evaluate and select the target
segments.
For better targeting, Roger Best proposed seven-step approach
"need based segmentation approach"
1. Need based segmentation
2. Segment identification
3. Segment attractiveness
4. Segment profitability
5. Segment positioning
6. Segment "Acid test"
7. Marketing mix strategy
Marketing Management 19
Effective Segmentation Criteria
Market segmentation is required to have some basics features in the market,
then only it will be effective.

Measurable:
 Information on the buyer’s needs and wants should be obtainable and measurable like age,
income level, life style. However, some of the variables may not be measurable in absolute
term like desires, attitudes, preferences etc.
Accessible:
 Market segment should be accessible through existing marketing institutions such as,
channels of distribution and advertising media and the sales force.
Substantial
 The market segment should be large or profitable enough to serve.
Differentiable
 Market must have significant difference in the buyer’s need and characteristics.
Actionable
 The market segment should have environment and opportunity to design an effective
programs for attracting and serving the customer needs.
Marketing Management 20
Market Targeting
Evaluating and Selecting the Market Segments
The company must collect and analyze data on current segment
sales, growth rates, and expected profitability.
While evaluating the market segments, a firm must look at
two factors; segment's overall attractiveness and
company’s objective and resources.
After evaluating different segments, the company can consider
five patterns of target market selection.
1. Single-segment concentration
2. Selective specialization
3. Product specialization
4. Market specialization
5. Full market coverage

Marketing Management 21
Five Patterns of Target Market Selection

Marketing Management 22
Market Targeting
Additional Consideration
Segment-by-segment invasion plan
 It is wiser to enter into the one segment at a time. Having long-term
invasion strategy will be more beneficial and competition will also feel
less vulnerable from the strategy. Under this strategy, the marketer takes
cautious move from one segment to another on a gradually and
strategically.
Ethical choice of market targets
 Market targeting generates public controversy. The public is concerned
when marketers take unfair advantage of vulnerable groups or promote
potentially harmful products. Marketers must target segments carefully
to avoid consumer backlash (adverse reaction).
 While targeting some customers groups may have ethical problem
(cigarette adv targeting to youth, moreover students).

Marketing Management 23
Market Positioning
Positioning is the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the
target market.
Positioning strategies generally focus on either the consumer or the
competition. Both are associated with product benefits.
 Brand image to the consumer: benefits of product derived by the consumer.
 Competition: comparison of benefits with competitor’s product benefits.

Positioning involves implanting the brand’s unique benefits and

differentiation in customer’s mind.
A product’s position is the complex set of perceptions, impressions, and
feelings that consumers have for the product compared with competing
products.
Marketers must plan positions that will give products the greatest
advantages in the selected target markets and must design marketing
mixes to create the planned positions.

Marketing Management 24
Developing and Communicating a Positioning Strategy
Everyone in the organization should understand the
brand positioning and use it as context for making
decisions.
The result of positioning is the successful creation of
customer focused value proposition.
Positioning requires similarities and differences
between brands be defined and communicated.
Deciding on positioning requires determining frame of
reference by
 Identifyingthe target market and the competition, and
 Identifying the ideal points-of-parity and points-of-difference.

Marketing Management 25
Developing and Communicating a Positioning Strategy
Towards development and communication a
positioning strategy, a marketers must have
understanding of followings:
Competitive Frame of Reference
Point-of-Difference (POD) and Points-0f-Parity
(POP)
Establishing Category Membership
Choosing POPs and PODs
Creating POPs and PODs

Marketing Management 26
Developing and Communicating a Positioning Strategy
Competitive Frame of Reference
For brand positioning, it is necessary to determine Category Membership
- the products or sets of products with which a brand competes and which
function as close substitutes.
To determine the proper competitive frame of reference, markets need to
understand consumer behavior and the considerations sets consumers use
in making brand choices.
Value Proposition: market offerings and the way of communication. The
examples:
Scorpio, Mahindra and Mahindra
A vehicle that provides the luxury and comfort of a car, and the adventure and thrills of
an SUV
Domino’s
A good hot pizza, delivered to your doorstep within 30 minutes of ordering, at a
moderate price
Moov: Aahat se Rahat tak (pain to relief, targeted to Housewife)
Marketing Management 27
Developing and Communicating a Positioning Strategy
Point-of-Difference (POD) and Points-0f-Parity (POP)
PODs
Attributes or benefits consumers strongly associate with a
brand, positively evaluate, and believe they could not find to
the same extent with a competitive brand

POPs
Associations that are not necessarily unique to the brand but
may be shared with other brands
 Category POPs: essential to legitimate and credible offering within a
certain product or service category.
 Competitive POPs: In the eyes of consumers, a brand can "break

even' in those areas where the competitors are trying to find an

advantage and achieve advantages in other areas.
Marketing Management 28
Developing and Communicating a Positioning Strategy
Establishing Category Membership
Marketers must inform consumers of a brand’s category membership;
sometimes consumers know a brand’s category membership but may
not be convinced that the brand is a valid member of that category.
E.g. HP produces digital cameras, but customer may not be certain whether HP
cameras are in the same class as Sony, Olympus, Nikon, Samsung. HP might find it
useful to reinforce category membership in such circumstances.
Brands are sometimes affiliated with categories in which they do not hold
membership. The typical approach to positioning is to inform consumers of
a brand's membership before stating its point-of-difference.
Communicating Category Membership:
Announcing Category Benefits
Comparing to exemplars
Relying on the product descriptor

Marketing Management 29
Developing and Communicating a Positioning Strategy
Choosing POPs and PODs
POPs are driven by the needs of category membership (to create
category POPs) and the necessary of negating competitors' PODs
(to create competitive PODs).
While choosing PODs, two important considerations are
consumers desirability and deliverability.
Consumer desirability criteria for PODs
 Relevancy; Distinctiveness; Believability
Deliverability criteria for PODs
 Feasibility; Communicability; Sustainability
Marketers must decide at which level to anchor the brand's points-
of-differences.
The lowest – brand attributes, next – brand benefits, and top – brand
value.
Marketing Management 30
Developing and Communicating a Positioning Strategy
Creating POPs and PODs
The common difficulty in creating strong, competitive brand
positioning is that many of the attributes or benefits that make
up the POPs and PODs are negatively correlated. For example,

 Low-price vs. High quality  Powerful vs. Safe

 Taste vs. Low calories  Strong vs. Refined
 Nutritious vs. Good tasting  Ubiquitous vs. Exclusive
The best approach
 Efficacious is to develop a 
vs. Mild Varied vs.
product Simple that performs
or service
well on both dimensions.
Other approach is to address attributes or benefits trade 0ff:
launching two different campaign and attempting to convince
consumers.

Marketing Management 31
Differentiation Strategy
To have sustainable growth in the market and brand
positioning a product/service must differentiate.
Competitive advantage: a company's ability to perform in
one or more ways that competitors cannot or will not match.
Customers must see competitive advantage as a customer
advantage.
Differentiation Strategy
Product: creating differentiation in product and service.
Personnel: having better trained employees.
Channel: distribution channels' coverage, expertise, and
performance.
Image: companies can craft powerful, compelling images (e.g.
Marlboro cowboys image).

Marketing Management 32
Product Differentiation
Product form Style
Features Design
Performance Ordering ease
Conformance Delivery
Durability Installation
Reliability Customer training
Reparability Customer consulting
Maintenance

Marketing Management 33
Personnel Differentiation:
Singapore Airlines

Marketing Management 34
 Channel
Differentiation

Nature's Basket:
Focusing on high-
end consumers,
differentiated itself
from other mass
retail outlets.

Marketing Management 35
Image Differentiation

Marketing Management 36
Thanks
Class Discussion:

 Is mass marketing dead?

Take a position:
1. Mass marketing is dead.

or

2. Mass marketing is still a viable way to build

a profitable brand.

Marketing Management 37