WORKBOOK / PRESENTATION

ON
SEGMENTATION,TARGETING
& POSITIONING

PREPARED BY: Mr. PANDURANG SHINDE

ROLL NO:1011000501
IMT-CDL,GHAZIABAD
 Learning Objectives
 Learn the three steps of target marketing, market
segmentation, and market positioning.

 Understand the major bases for segmenting

consumer and business marketing strategy

 Know how companies identify attractive market

segments and choose target marketing strategy

 Realize how companies position their products for

maximum competitive advantage in the marketplace
 Steps in Market Segmentation,
Targeting,and Positioning
Market Market Market
Segmentation Targeting Positioning

1. Identify 3. Evaluate 5. Identify

segmentation attractiveness possible
positioning
variables and of each concepts for
segment the segment each target
market segment
4. Select the
2. Develop target 6. Select,
profiles of segments develop, and
communicate
resulting the choosen
segments positioning
concept
 Market Segmentation

 Dividing a market into groups of consumers

or segments with distinct needs and wants,
characteristics, or consumer behavior who
might require separate products or marketing
mixes.

 A company then needs to identify which

segments it can serve effectively.
 Mass Marketing

 Mass production, mass

distribution, and mass
promotion of one
product for all buyers.

 Ex. Ford’s Model-T;

Coka-Cola’s 6.5-ounce
bottle
 Mass Marketing
 Pros
 Create the largest potential market
 Lowest cost → lower price and higher margin
 Cons
 The increasing splintering of the market (malls, specialty
shops, mail-order catalogs, home shopping TV networks,
internet stores)
 The proliferation of advertising and distribution channel
 Segment Marketing
 Market segment: a group of customers who share a
similar set of needs or wants.
 The marketer’s task: identify the segments and decide
which one(s) to target.
 Flexible Market offerings : 1.Naked solution (basic value
offerings), 2. Discretionary options (added value offerings
dependent upon the specific customer) 
 Segment Marketing
 Pros
 More fine-tuned product or service and
appropriate price.

 More easily select the best distribution

and communications channel.

 Clear picture of the competitors.

 Niche Marketing

Niche: a more narrowly defined customer group

seeking a distinctive mix of benefits.
Determine the attractiveness of a niche
 Distinct set of needs
 Premium
 Size, profit and growth potential
 Competitors
 Specialization
 Local Marketing
 Themarketing programs are tailored to the
needs and wants of local customer groups.

 Local marketing is particularly important in

countries with strong regional differences, ex.
India, China. E.g.Movies, matrimony.
 Cons
 Reduce economics of scale

 Logistical problems

 Dilute a brand’s overall image

 Individual Marketing

 It leads to “segments of one”, “customized marketing”

or “one to one marketing”.
 Choice board :Online system to design products
 Mass-customization: (Collaborative customization,
Adaptive customization, Transparent customization &
cosmetic customization)
 Ex. Asian paints, Kansai Nerolac, Berger paints etc.
 Market Segmentation

 Market Segmentation is the process of identifying

group of buyers with different buying desires or
preferences.
 There may be three basic market preferences:
1. Homogeneous- same preferences, No
natural segments
2. Diffused -
3. Clustered
 Basic Market-Preference Patterns

(a) Homogeneous (b) Diffused (c) Clustered

preferences preferences preferences
Creaminess

Creaminess

Creaminess
Sweetness Sweetness Sweetness
 Top-down and Bottom -up
George Day (1980) describes model of segmentation as

 Top-down approach: start with the total population

and divide it into segments.

 Bottom-up approach. In this approach, start with a

single customer and build on that profile.

 Similar to Database marketing

 ADVANTAGES OF MARKET
SEGMENTATION
 It improves a company’s understanding of why
consumers do or do not buy certain products.
 Information gained from segmentation allows the
organization to plan a systematic and effective
marketing programme to satisfy the consumer
needs.
 Better assessment of the strengths and
weaknesses of the competition.
 Better allocation of marketing resources.
 Effective Segmentation
• Size, purchasing power,
Measurable
Measurable profiles of segments can
be measured.

• Segments must be large or

Substantial
Substantial profitable enough to serve.

• Segments can be
Accessible
Accessible effectively reached and
served.

• Segments must respond

differently to
Differential
Differential different marketing mix
elements & actions.

Product must be able to

Actionable
Actionable attract and
serve the segments .
 Bases for Segmenting
Consumer Markets
Geographic
Region, City or Metro
Size, Density, Rural & semi- Demographic
urban areas
Age, Gender, Family size
and life cycle, Race,
Occupation, or Income ...

Psychographic
Lifestyle or Personality
traits , values
Behavioral
Occasions, Benefits,
Uses, or Attitudes
 BASIS OF SEGMENTATION
 CONSUMER CHARACTERISTICS
1. Geographic: ( Region, city, rural and semi-urban areas )
2. Demographic: (Age, life cycle stage, generation, family size,
gender, income, occupation, education, socio-economic
classification )
3. Psychographic: ( life style, psychological/personality traits,
values)
 CONSUMER RESPONSES
4. Behavioral Segments: (Buyer
readiness stage, Benefits sought,
Usage rate, Attitude, Loyalty, Occasions, User status)
Geographic Segmentation
The market is divided
by location. The
strategy is that
people who live in
the same area have
similar needs, wants,
and that these needs
and wants differ from
those of people living
in other area.
Demographic Segmentation

Demographic
characteristics,
such as age, sex,
marital status,
income, occupation,
and education are
most often used as
the basis for
market
segmentation.
Psychological Segmentation

The buyers are

divided into
different groups on
the basis of
psychological
,personality traits,
lifestyle or values.
 Sociocultural Segmentation

Sociocultural
variables such as
family life cycle,
social class, core
cultural values, sub-
cultural memberships
and cross-cultural
affiliation can be
used for
segmentation.
Use-Related Segmentation

The market can

be segmented on
the basis of
product, service,
or brand usage
characteristics,
such as usage
rate, awareness
status, and
degree of brand
Use-Situation Segmentation

Marketers recognize
that the occasion or
situation often
determines what
consumers will
purchase or
consume. For this
reason, they
sometimes focus on
the usage situation
Benefit Segmentation

Consumers
search for
benefits such as
convenience,
prestige,
economy, value-
for-money etc.
Based on the
benefits ,the
 Hybrid Segmentation

Marketers are
increasingly
segmenting markets
by combining several
segmentation
variables rather than
relying on a single
segmentation base.
 Segmenting Business Markets
Demographic
• Industry: Which industries should we serve?
• Company size: What size companies should we
serve?
• Location: What geographical areas should we
serve?

Operating Variables
• Technology: What customer technologies should
we focus on?
• User or nonuser status: Should we serve heavy
users, medium users, light users, or nonusers?
• Customer capabilities: Should we serve
customers needing many or few services?
 Segmenting Business Markets
Purchasing Approaches
• Purchasing-function organization: Should
we serve companies with highly
centralized or decentralized purchasing
organizations?
• Power structure: Should we serve
companies that are engineering
dominated, financially dominated, and so
on?

Situational factors
 Urgency, specific application, size of order

Personal characteristics
 Segmenting International Markets
 Geographic segmentation
 Location or region
 Economic factors
 Population income or level of economic
development
 Political and legal factors
 Type / stability of government, monetary
regulations, amount of bureaucracy, etc.
 Cultural factors
 Language, religion, values, attitudes, customs,
behavioral patterns
 TARGET MARKETING

It consists of a set of buyers who

share common needs or
characteristics that the company
decides to serve
 TARGET MARKETING
 Evaluating Market Segments
Firms must look at two factors:
 Company objectives and resources
 Structural Attractiveness
. Level of competition
. Power of Buyers
. Power of suppliers
. Substitutes
. Potential entrants
 Structural attractiveness

Potential
Entrants
(Threat of
mobility)

Industry
Suppliers Competitors Buyers
(Supplier (Segment ( Buyers
Power) Rivalry) power)

Substitutes
(Threat of
substitutes)
 TARGET MARKETING

 Selecting Target Market Segments


Undifferentiated (mass) marketing
 Differentiated (segmented) marketing

 Concentrated (niche) marketing


Micromarketing (local or individual)
 Five Patterns of Target Market Selection

Single-segment Selective Product

concentration specialization specialization
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3
Market Full market
specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P = Product
M = Market P2 P2
P3 P3
 Single-segment strategy or
concentration strategy
- Involves selecting one segment from within the total market
as the target market
- One marketing-mix is developed to reach this single segment
- A single-segment strategy enables a seller to penetrate one
market in depth and to acquire a reputation as a specialist
or an expert in this limited market
- Niche marketing and niche markets
- A single-segment strategy can often be initiated with limited
resources
- However, single-segment strategies can be risky
 Multi-segment Strategy

- Two or more different groups of

potential customers are identified as
target markets

- A separate marketing mix is developed

to reach each targeted segment
 SEGMENT-BY-SEGMENT INVASION PLAN

Customer Groups

Airlines
Passenger transport
Goods transpor
Large
Product Varieties

computers

Mid-size
computers

Personal
computers
Company A Company B Company C
FACTORS CONSIDERED IMPORTANT IN THE
SELECTION OF TARGET MARKET STRATEGY

 1. Company’s Resources
 2. Product Homogeneity
 3. Product Stage in the Life Cycle
 4. Market Homogeneity
 5. Competitive Marketing Strategy
 POSITIONING

Designing the company’s

offering and image to occupy
a distinctive place in the minds of
the target market.
 POSITIONING
 Positioning:

The place the product occupies in
consumers’ minds relative to
competing products.
 Typically defined by consumers on

the basis of important attributes.


Involves implementing the brand’s
unique benefits and differentiation in
the customer’s mind.
 Positioning maps that plot perceptions

of brands are commonly used.

 Competitive Frame of Reference

 The competitive frame of reference

defines the associations that consumers
use to evaluate points of parity and
points of difference.
 The frame of reference often includes
other brands in the same category, but
could also include brands in other
related categories. Ie to determines
category membership.
 To determine proper competitive frame
 Defining Associations
Points-of-difference are
(PODs)- attributes
consumers strongly associated with a
brand, positively evaluate, and believe
they could not find to the same extent
with a competitive brand. Ex. Apple
( design), Nikes (Performance),Lexus
(Quality)

Points-of-parity (POPs)-are
associations that are
not necessarily unique to the brand but
may in fact be shared with other
brands.
 POD (Point of Difference)

POD (Point of Difference)

 Strong, favorable, unique brand
associations
 May be any kind of attribute or benefit
Two types of PODs
 Attribute Based
 Functional, performance related
differences
 Image Based

 POP (Point of Parity)

 For an offering to achieve a POP on a

particular attribute or benefit, a sufficient
number of consumers must believe the
brand is ‘good enough’ on that
dimension.

 There is a zone or range of tolerance or

acceptance with POP. The brand does
not literally need to be seen as equal to
competitors, but consumers must feel
that the brand does well enough on that
Consumer Desirability Criteria

Relevance
Relevance

Distinctiveness
Distinctiveness

Believability
Believability
Deliverability Criteria for PODs

Feasibility
Feasibility

Communicability
Communicability

Sustainability
Sustainability
Important considerations in choosing Points
of Difference (PODs)

(1) PODs are desirable by the customer

- Relevant and important to the customer
– e.g. price of HP Laptop
 - Distinctiveness – Service backup is not a
common feature
of all foreign made laptops in India
 - Believable – HP has been in the electronic
business for
decades
 (2) PODs are deliverable to the customer

- Feasibility – HP has the required

organization to make the service
deliverable and the required technology to
offer a value for money product
 - Communicability
- HPs products are not known as very
expensive
 - Sustainable
- HP has the required R&D to continue
making product upgrades
 POSITIONING STRATEGIES
 Competitive advantages- it is ability of
company’s to perform in one or more
ways that competitors can not or will not
Differentiation
match. strategies
can be based on
 Products
 Services
 Channels
 People
 Image
 Product Differentiation
 Form- size, shape or physical structure

 Features- supplement to basic function.

 Performance Quality-the level at which the

product’s primary characteristics
operates.

 Conformance Quality- the degree to which

all the produced units are identical and
meet the promised specifications.
 Durability- a measure of the product’s
expected operating life under natural or
stressful conditions.
 Reliability- a measure of the probability
that a product will not malfunction
within a specified time period.

 Reparability- a measure of the ease of

fixing a product when it fails
 Services Differentiation

 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Personnel Differentiation

 Competence
 Courtesy
 Credibility
 Reliability
 Responsiveness
 Communication
 Channel Differentiation

 Coverage
 Expertise
 Performance
 Image Differentiation

 Image is the way the public perceives

the company or its products.
 Identity is the way a company aims to
identify or position itself or its products.
 Symbols, colours, slogans, atmosphere,
 Events and employee behavior
 Developing and communicating a
positioning strategy
 All products can be differentiated to some extent. But
not all differences are meaningful or worthwhile. A
difference is worth establishing to the extent that it
satisfies the following criteria :

 Important : The difference delivers a highly valued

benefit to a sufficient numbers of buyers.
 Distinctive : The difference is delivered in a distinctive
way.
 Developing and communicating a
positioning strategy

 Superior : The difference is superior to other ways

of obtaining the benefit.
 Preemptive : The difference cannot be easily
copied by competitors.
 Affordable : The buyer can afford to pay for the
difference.
 Profitable : The company will find it profitable to
introduce the difference.
 References:

Books:
 Marketing Management- 13th Edition,
A south Asian Perspective….Written
By..Mr.Philip Kotler,Mr.Kevin Lane
Keller,Mr.Abraham Koshy,Mr.Mithileshwar
Jha.
THANK YOU