Segmentation, Targeting and

Positioning
Segmentation
• Segmentation is the process of dividing a heterogeneous market into
several homogeneous sub markets or segments
• 50% of rural people are engaged in agriculture but they cant be
clubbed into one category.
• Remaining 50% who are engaged in non-farm sectors can also not be
clubbed into one strata.
Segmentation, Targeting,
Positioning Process
Step 1 • Strategy or Objectives

Segmentation

Step 2 • Segmentation Methods

Step 3 • Evaluate Segment Attractiveness

Targeting

Step 4 • Select Target Market

Step 5 • Identify and Develop Positioning Strategy Positioning

Basis of segmentation
Geographic Region: East, West, North, South
Population size: <0.5 million to 1 million, 1-5 million, 5-10 million
Density: Low, Moderate, High
Climate: Summer, rainy, winter
Rural and Urban

Demographic Age and life cycle: Children, teens, young adults, elders, seniors
Family structure: Joint, nuclear, individualized joint family
Gender: male, Female
Income: High, middle, low
Landownership: Landless, Marginal, Small, Large farmers
Education: Illiterate, semi-literates, literates
House type: Pucca, Semi-pucca, Kuccha
Occupation: Unskilled, skilled, petty traders, shop owners,
industrialist
Religion: Hindu, Muslim, Christian, Sikh, Parsi
Psychographic Social class: Upper, lower, middle
Lifestyle: Trendsetters, followers/adopters, traditionalists
Personality: authoritarian, introvert etc.
Culture: 56 Socio-cultural regions
Behavioural Occasions: Festivals, melas, jatras, weekly haats
Benefit sought: Quality, Convenience, Value for money, service,
speed
User status: Non user, ex user, first time user, regular user, potential
user
Usage rate: Light user, medium user, heavy user
Loyalty status: hardcore, split, shifting, switchers
Readiness stage: Unaware, aware, informed, interested, desirous,
intending to buy
Attitude towards the product: Enthusiastic, positive, indifferent,
negative, hostile
Bases of segmentation of business market..
Demographic Industry: Automobile, Banking, FMCG, CG
Company size: Small, medium, Large
Location: local, regional, national, international

Operating variables Technology-traditional, modern

User status: Non user, heavy, medium
Customer capabilities: Needing many of few services
Purchasing Purchasing function organization-highly centralised/ decentralised
Approaches
Power structure: Engineering dominated, marketing dominated
Nature of existing relationship: Strong relationship v/s most desirable
company
General purchasing policies: Leasing, service contract, sealed bidding
Purchasing criteria: Quality, Service, Price

Situational Urgency: Need quick and sudden delivery

factor
Size of order: Large v/s small orders

Personal Buyer-seller similarity: values are similar to ours

characteristics
Attitude towards risk: risk taking v/s risk avoiding customers
Loyalty: High loyal v/s non loyal
Important question while targeting a
segment..
• Overall attractiveness?
• Company’s objective?
• Company’s resources?
• Size, growth, profitability, scale of economies, low risk.
Evaluate Segment Attractiveness
Substantial

Identifiable Reachable

SEGMENT ATTRACTIVENESS

Profitable Responsive
Identifiable
• Who is in their market?
• Are the segments unique?
• Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic
Liquidlibrary/Dynamic Graphics/Jupiterimages
Comstock Images/JupiterImages
Graphics/Jupiterimages
Substantial
• Too small and it is insignificant
• Too big and it might need it’s
own store

©Jerry Arcieri/Corbis
Reachable
Know the product
exists

Understand what it can

do

©Digital Vision/PunchStock

Recognize how to buy

Responsive
Customers must:
React positively to firm’s
offering

Move toward the firms

products/services

Accept the firm’s value

proposition
Profitable Segments
• Segment size = 60 million (<15 yrs)
• Segmentation Adoption Percentage
= 35%
• Purchase Behavior = $500 x 1 time
purchase
• Profit margin % = 10%
©Comstock/PunchStock • Fixed Cost = $50M
Is this segment profitable?
Targeting Strategy
Differentiated

Undifferentiated
or
Targeting Concentrated
mass marketing Strategies

Micromarketing
or
one-to-one
Evaluating market segments
• Market factors
• Segment size, growth rate, profitability and price sensitivity
• Bargaining power of customers and suppliers
• Barriers to entry and exit
• Competitive factors
• Nature of competition
• Threat of new entrants
• Competitive differentiation
• Political, social and environmental factors
• Political issues, social trends and environmental issues
Company’s capability to compete
Positioning
• Positioning is the act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target market
• A good positioning has a “foot in the present” and a “foot in the
future.”
• A cogent reason why the target market should buy the product.
How positioning is done?
• (1) determining a frame of reference by identifying the target market
and relevant competition,
• (2) identifying the optimal points of parity and points of difference
brand associations given that frame of reference,
• (3) creating a brand mantra to summarize the positioning and essence
of the brand.
Competitive frame of reference
• Identifying competing brands
• Industry competition
• Market competition
• Analysing competitors
• Objectives
• Drivers
• Size, history, current management, financial situation
• Formally define competitive frame of reference
Identifying points of differences
• Strong brands may have multiple points of differences
• Apple (design, ease of use, image)
• Nike (Performance, innovative technology, winning)
• Jet airlines (Sincere, reliable, experienced)
• POD should be
• Desirable to consumer
• Deliverable by the company
• Differentiating from competitors
Points of parity
• Necessary but not sufficient conditions for brand choice
• Designed to overcome perceived weaknesses of the brand.
• Competitor’s PODs will, in turn, suggest the brand’s POPs.
Multiple frames of reference-Starbucks
• Quick-serve restaurants and convenience shops (McDonald’s and
Dunkin' Donuts). Intended PODs might be quality, image, experience,
and variety; intended POPs might be convenience and value.
• Supermarket brands for home consumption (NESCAFÉ). Intended
PODs might be quality, image, experience, variety, and freshness;
intended POPs might be convenience and value.
• Local cafés. Intended PODs might be convenience and service quality;
intended POPs might be quality, variety, price, and community.
Choosing POPs and PODs-Perceptual maps
Brand mantra
• Reflects brand’s essence and core brand promise
• Usually short three to five words phrases that capture irrefutable
essence or spirit of the brand positioning.
Establishing brand positioning: Bull’s eye
Where is the hole for camel milk?