SEGMENTATION,

TARGETING AND
POSITIONING

Complied by: Meseret

T.
• Companies today recognize that they cannot
appeal to all buyers in the marketplace or at
least not to all buyers in the same way
• Thus, most companies have moved away from
mass marketing and toward market
segmentation and targeting- identifying
market segments, selecting one or more of
them, and developing products and marketing
programs tailored to each
• For most of the past century, major consumer
products companies held fast to mass
marketing- mass producing, mass distributing,
and mass promoting about the same product
in about the same way to all consumers
MARKET SEGMENTATION
TARGET MARKETING
MARKET POSITIONING

• The first is Market segmentation- dividing a

market into smaller groups of buyers with
distinct needs, characteristics, or behaviors
who might require separate products or
marketing mix
• The second step is target marketing-
evaluating each market segment’s
attractiveness and selecting one or more of
the market segments to enter
• The third step is market positioning- setting
the competitive positioning for the product
and creating a detailed marketing mix
6.1 MARKET
SEGMENTATION
• Markets consist of buyers, and buyers
differ in one or more ways
• 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
• In this section, we discuss segmenting
consumer markets and requirements for
effective segmentation
CONSUMER
MARKET
SEGMENTATION
VARIABLES Geographi Demograp
c hic

Psychogra Buying
phics Behavior
 • Subdividing markets into segments
GEOGRAPHIC based on different geographical
units –the regions, countries,
SEGMENTATION cities, and towns where people live
and work –is usually used
• Many firms market their products
in a limited number of geographic
regions, or they may market
nationally but prepare a separate
marketing mix for each region
• The regional distribution of
population is important to
marketers because people within a
given region generally tend to
share the same value, attitude and
style preference
 • In demographic segmentation, the
DEMOGRAPHIC market is divided into groups on the
basis of variables such as age, family
SEGMENTATION size, family lifecycle, gender, income,
occupation, education, religion, race,
generation, and nationality
• Demographic variables are the most
popular bases for distinguishing
customer groups
• Even when the target market is
described in non-demographic term ,
demographic characteristic is needed in
order to estimate the size of the target
market and the media that should be
used to reach it efficiently
• Marketers must be careful to guard
against stereotypes when using age and
lifecycle segmentation
• The automobile industry is beginning to
recognize Gender segmentation
DEMOGRAPHIC
SEGMENTATION
• Income segmentation is a long-
standing practice in such product and
service categories as automobiles,
boats, clothing, cosmetics, and travel
 • Some marketers regularly attempt to
BEHAVIORAL segment their markets on the basis of
product related behavior they utilize
SEGMENTATION •
behavioral segmentation
Many marketers believe that behavior
variables are the best starting point for
building segments
• Many companies credited with drawing
attentions to the notion of benefit
segmentation when they described a
hypothetical division of their product
market based on the benefits desired
• Markets can be segmented into groups
of nonusers, ex-users, potential users,
first time users, and regular users of a
product
• Marketer share leaders focus on
attracting potential users, whereas
smaller firms focus on attracting current
users away from the market leader
BEHAVIORAL
SEGMENTATION
• Marketers usually prefer to attract
one heavy user to their product or
service rather than several light users
Consumers have varying degree of
loyalty to specific brands, stores, and
others entities
PSYCHOGRAPHICS
SEGMENTATION
• Lifestyle: - People exhibit many more
lifestyle than are suggested by the
seven social classes
• Personality: - Marketers have used
personality variable to segment
markets
 Measurable-
Actionable-
the size,
effective
purchasing
programs can
power, and
be designed
profiles of the
for attracting
segments
and serving
can be
the segments
measured
REQUIREMENTS
FOR EFFECTIVE
SEGMENTATION
Substantial- Accessible-
the market the market
segments are segments
large or can be
profitable effectively
enough to reached and
serve served
EVALUATING
MARKET -Segment size and growth
SEGMENTS

-Segment structural
attractiveness, and

-Company objectives and

resources
6.2 MARKET Market Targeting is the process of
selecting one or more market
TARGETING segments to enter Let’s assume
that a company has segmented
the total market for its product

Target market consists of a set of

buyers who share common needs
or characteristics that the
company decides to serve

Because buyers have unique

needs and wants, a seller could
potentially view each buyer as a
separate target market
 • Using an undifferentiated
UNDIFFERENTIATED marketing strategy, a firm might
MARKETING decide to ignore market
segment differences and target
the whole market with one offer
• This mass marketing strategy
focuses on what is common in
the needs of consumers rather
than on what is different
• Moreover mass marketers often
have trouble competing with
more focused firms that do a
better job of satisfying the
needs of specific segments and
niches
DIFFERENTIATED
MARKETING
• Using differentiated marketing strategy, a firm
decides to target several market segments
and designs separate offers for each
• A firm usually finds it more expensive to
develop and produce, say, 10 units of 10
different products than 100 units of one
product
• Developing separate marketing plans for the
separate segments requires extra marketing
research, forecasting, sales analysis,
promotion planning, and channel
management
 • A third market coverage strategy,
CONCENTRATED concentrated marketing , is
MARKETING especially appealing when
company resources are limited
• Through concentrated marketing,
the firm achieves a strong market
position because of its grater
knowledge of consumer needs in
the niches it serves and the
special reputation it acquires
• Niching offers smaller companies
an opportunity to compete by
focusing their limited resources on
serving niches that may be
unimportant to or overlooked by
larger competitors
MICROMARKETING
• Local marketing- involves tailoring
brands and promotions to the needs
and wants of local customer groups-
cities, neighborhoods, and even
specific stores
• Individual Marketing- in the extreme,
micromarketing becomes individual
marketing tailoring products and
marketing programs to the needs and
preferences of individual customers
CHOOSING A TARGET
MARKET STRATEGY
• Companies need to consider many
factors when choosing a target
marketing strategy
• The best strategy also depends on the
degree of product variability
• Undifferentiated marketing is more
suited for uniform products such as
grapefruit or steel
• When a firm introduces a new product, it
may be practical to launch only one
version, and undifferentiated marketing
may make the most sense
6.3 MARKET A product’s
POSITIONING Beyond deciding
position is the way
the product is
which segments of defined by
the market it will consumers on
target, the important
company must attributes- the
decide what place the product
positions it wants occupies in
to occupy in those consumers’ minds
segments relative to
competing
products
A products
position is the
Positioning
complex set of
involves
perceptions
implanting the
impressions, and
brand’s unique
feelings that
benefits and
consumers have
differentiation in
for the product
customers’ minds
with competing
products
PRODUCT
DIFFERENTIATION

Differentiation of physical In the other extremes we

products takes place along find products capabilities
a continuous process of high differentiation,
such as automobiles,
commercial holdings, and
furniture

The main product

differentiations are
features, performance,
conformance, durability,
reliability, reparability,
style and design
SERVICE
DIFFERENTIATION

In addition to When the physical product

differentiating its physical cannot easily be
products, a firm can also differentiated, the key to
differentiate its services competitive success often
lies in adding more value,
adding service and
improving their quality

The main service

differentiations are
ordering easily, delivery,
installation, customer
training, customers
consulting, maintenance
and repair, and a few
others
PERSONNEL
DIFFERENTIATION

Competence –The Courtesy –The Credibility –The

employees possess the employees are employees are trust
required skill and friendly, respectful and worthy
knowledge considerate

Reliability –The Responsiveness –The Communication –The

employees perform the employees respond employees make an
service consistently quickly to customer’s effort to understand
and accurately requests and problems the customer and
communicate clearly
 • Companies can achieve
CHANNEL differentiation through the way
DIFFERENTIATIONS they design their distribution
channel, particularly these
channels coverage, expertise,
and performance
• For example, caterpillar’s success
in the construction equipment
industry is based partly on its
superior channel development
• Its dealers are found in more
locations than competitor’s
dealers and caterpillar’s dealers
are typically better trained and
perform more reliably
IMAGE
DIFFERENTIATIONS

EVEN WHEN COMPETING A COMPANY OR BRAND

OFFERS LOOK THE SAME IMAGE SHOULD CONVEY
BUYERS MAY RESPOND THE PRODUCT’S
DIFFERENTLY TO THE DISTINCTIVE BENEFITS AND
COMPANY IMAGE OR POSITIONING
BRAND IMAGE

A COMPANY CAN NOT

DEVELOP AN IMAGE IN THE
PUBLICS MIND OVERNIGHT
USING ONLY A FEW
ADVERTISEMENTS
DEVELOPING COMPANIES USE
SEVERAL TACTICS TO
DIFFERENTIATE THEIR
EACH DIFFERENCE HAS
THE POTENTIAL TO
CREATE COMPANY COSTS

A PRODUCTS AND BRANDS AS WELL AS CUSTOMER

BENEFITS

POSITIONING
STRATEGY
THEREFORE THE
COMPANY MUST
CAREFULLY SELECT THE
WAY IN WHICH IT WILL
DISTINGUISH ITSELF
FROM COMPETITORS
IMPORTANT
• The difference delivers a highly
valued benefit to a sufficient number
of buyers
• The difference either is not offered by
others or is offered in a more
distinctive way by the company
SUPERIOR
• The difference is superior to other
ways of obtaining the same benefits
COMMUNICABLE
• The difference is communicable and
visible to buyers
PREEMPTIVE
• The difference cannot be easily
copied by competitors
AFFORDABLE
• The buyers can afford to pay for the
difference The company will find it
profitable to introduce the difference
Each firm will want to promote those
few differences that will appeal most
strongly to its target markets
• In other words, the firm will want to
develop a focused positioning
strategy
DIFFERENT POSITIONING
STRATEGIES
• This occurs when a company
positions itself on an attribute such
as size, number of years in existence
and so forth
BENEFIT Here the product is
POSITIONING positioned, as the
leader in a certain
benefit
This involves
positioning the
product as best for
some use or
application
I.e. AutoCAD
software can best be
positioned as
suitable to
Architectural
drawings
PRODUCT CATEGORY
POSITIONING
• Here the product positioned as the
leader in a certain product category
• Here the product positioned as
offering the best value i.e., high
quality / high price, or lowest price