Segmentation, Targeting & Positioning for Competitive Advantage

Nathan George, M.S., J.D.

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Marketing Process Involves

• • • • •

Market orientation as philosophy Market segmentation Targeting market Positioning

Marketing mix
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Marketing Strategy
• • • • • • Select base for segmentation and identify appropriate market segments.
Evaluate and appraise the market segments resulting from the first step. Select an
overall market targeting strategy and specific target segments. Tailoring a
distinct position in selected markets Developing marketing mixes that serve
desired positioning strategy in the marketplace Auditing marketing environments
and efforts

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Importance of Segmentation and Targeting

• The focus of a successful marketing program is the customer. Effectively

marketing must fully understand the needs. • Customers with decent life and
individualism have Heterogeneous demands, This has given rise to need segmenting.
• The process of understanding the customer and choosing a group of customer you
can serve best is targeting. • So target a segmentation is core of the marketing
process.
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Identify the Total Market
Identify Total Market Effective Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Identify the Total Market

The first step in the target market selection process is to specifically define
the total market of all potential customers for a product category.

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Segmentation and Effectiveness
Identify Total Market

Effective
Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Segmentation
• • • Segmenting means dividing a heterogeneous demanding markets into homogenous
groups based on similar characteristics or traits Heterogeneous demand- different
groups of customers have differing needs from specific products. Homogeneous
segment- the separation of markets into distinctive groups based on homogeneous
characteristics.
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Criteria for successful segmentation

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Criteria for successful segmentation

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•Clear differences in consumer preferences for a product must exist.

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Criteria for successful segmentation
•Difference preferences for a product must be identifiable and capable of being
related to measurable variables.
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Criteria for successful segmentation

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•The proposed market segment must have enough size and purchasing power to be
profitable.
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Criteria for successful segmentation
•Companies must be able to respond to difference preferences with an appropriate
marketing mix.

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Criteria for successful segmentation
•The proposed market segment must be readily accessible and reachable with market
programs.

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Determine Bases for Segmentation
Identify Total Market

Effective Segmentation
Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Bases for Segmentation

To divide a market into segments, firms use segmenting criterion that describe the
characteristics of each part of the market.

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

Life-cycle

Income Level Social class

Education

Ethnic
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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base
• Localizes its marketing efforts to specific geographic regions

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

• Grouping customers together based on social class, lifestyles and psychological

characteristics (attitudes, interests and opinions)
• Useful but more difficult to identify and measure compared to demographic
variables
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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

• Markets can be segmented based on the benefits that consumers desire from using
a specific product

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base

• Purchase situation or occasion – Physical surroundings – Social surroundings –

Temporal perspective

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Segmentation Base

Demographic Segmentation Geographic Segmentation

Psychographic

Benefits-Sought

Segmentation Situation Segmentation

Behavior/Usage

Segmentation

Segmentation
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Segmentation Base
• Markets can be segmented by how often or how heavily consumers use a specific
product
– Pareto’s Principle or 80/20 Principle - 80% of revenue generated by 20% of
customers

Light Users 80%

Heavy Users 20%

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Segmentation Base

Information for segmenting markets may be obtained from database such as Census,
State Statistics, ACORN

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Segmenting Business Markets
• While the steps in the target market selection process are essentially the same
for business markets, there are three major differences: – The purchasing process,
which differs greatly from the household consumer market. – The use of different
segment variables – Standard Industrial classification is often employed
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Segmenting Business Markets
• Segmentation variables used to segment business markets: – – – – – – Size
Industry Purchasing approaches Product usage Situational factors (seasonal trend)
Geographic
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Select Segments for Targeting
Identify Total Market Determine Need for Segmentation Determine Bases for
Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Targeting
• • Targeting: choose the specific segment toward which a firm directs its market
efforts. Niche Marketing: the process of targeting a small market segment with a
specific, specialized marketing mix. Micromarketing- the process of targeting
smaller, more narrowly defined market segments. On the individual consumer end of
the continuum, a firm may decide to target individual consumers and personalize
marketing efforts 34

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Target the Mass Market versus the Individual Consumer
Mass Market Niche Micromarketing The Individual

entation Size Market Segm f Continuum o PersonalStandardized Marketing Mix

Niche

Micromarketing

ization
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Advantage of Targeting Efforts
• Cannot effectively serve all the segments, must target marketing efforts to a
segment or segments. Marketing opportunities and unfilled ‘gaps ’ are more
accurately identified Marketing mix is created strategically to meet potential
customer’s needs Offers the greatest potential to achieve profit or relationship
goals
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• • •
Targeting Strategy

1.Undifferentiated marketing 2.Differentiated marketing 3.Concentrated marketing

4.Custom marketing

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Targeting Strategy
Undifferentiated targeting strategy Concentrated strategy Differentiated strategy

• Companies might develop one marketing mix strategy that is appropriate for all
members of the total market.

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Targeting Strategy
Undifferentiated targeting strategy Concentrated strategy Differentiated strategy

• Only one marketing mix is developed and directed toward a few, or perhaps one,
profitable market segments.

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Targeting Strategy
Undifferentiated targeting strategy Concentrated strategy Differentiated strategy

• Exists when a firm develops different marketing mix plans specially tailored for
each of two or more market segments.

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Alternative of Targeting Strategy

1. Single segment 2. Multi segment 3. Product specialized 4. Market specialized 5.

Full market coverage
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Select Positioning Strategy
Identify Total Market

Effective
Segmentation Determine Bases for Segmentation
Targeting Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Positioning
Positioning • Kotler defined: “designing an offer so that it occupies a distinct
and valued place in the minds of the target customer.”
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Positioning

Positioning Image that customers have about a product in relation to the product’s
competitors

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Positioning Strategy

• Key to developing the appropriate marketing mix is the positioning strategy of

the product.

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Presumptions of Positioning

• All products have object and subject attributes • Recognizable • Comparable

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Select Positioning Strategy
• Effective positioning – What consumers currently think about the product,
especially in relation to competing products – What the marketer wants consumers
to think about the product – Which positioning strategy will elevate the
consumers’ current product image to the desired product image.
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Select Positioning Strategy

• Position Mapping- creating a visual description about consumer perceptions of a

product on two or more dimensions in relation to competitors.
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Select Positioning Strategy

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Select Positioning Strategy

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Select Positioning Strategy
• • The positioning strategy must determine where a company wants to go And how to
get there by positioning the product according to any of the following ways:
– – – – – – Price/Quality Product Attributes Product User Product Usage Product
Class Competition

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Marketing Mix
Identify Total Market Segmentation Bases for Segmentation
Select Target Segment

Positioning Strategy
Marketing Mix

Monitor, Evaluate and Control Objective 3

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Marketing Mix
• The final steps are to develop and a marketing mix matched to the needs of the
target market This must support the chosen positional strategy in the selected
target markets Therefore determine the ‘4Ps ’ or “7Ps” of its marketing mix as a
tool to achieve the desired position

• •

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Recognize 4Ps and the 7Ps • • • • • • • Product customer value Price cost
Placeconvenience Promotioncommunication Peopleconsideration Processesco-
ordination Physical evidenceconfirmation
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Marketing Strategy and the Marketing Mix Place (Distribution)
Marketing Mix

Product

Promotion

Price
Objective 4

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Marketing Strategy and the Marketing Mix Product

Refers to goods, services, people, places and ideas – Household consumers –

Business-to-business customers
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Marketing Strategy and the Marketing Mix Place (Distribution)
•

Marketing channel is the network of organizations that create time, place and
ownership utilities for household consumers and business customers.
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Marketing Strategy and the Marketing Mix
• • Integrated Marketing Communication (IMC) System of management and integration
of marketing communication elements
– Advertising, publicity, sales promotion, personal selling, sponsorship
marketing, and point-of-purchase communications

Promotion
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Marketing Strategy and the Marketing Mix
• Pricing decisions are complex and are driven by a variety of considerations
including: – Customer demand, costs, information availability, competition, profit
motives, product considerations, and legal considerations

Price
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