Focusing

Marketing
Strategy with
Segmentation
Targeting and
Positioning.
Chapter 08

1
A Market is...

(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group of people that lacks any one of

these characteristics is not a market.
2
Definition
 Market Segmentation:
 Dividing a market into distinct
groups with distinct needs,
characteristics, or behavior who
might require separate products
or marketing mixes.

3
 FUNCTIONAL & NON-FUNCTIONAL MOTIVES
 BANDWAGON EFFECT.The consumer
have the desire to purchase those
goods,to consume or to follow such
pattern of life which their relatives
and friends are following.People have
craze to follow stylish way of life.In
this situation whosoever is in the
influence the consumer behavior is
given the name of BANDWAGON
EFFECTS.

4
FUNCTIONAL & NON-FUNCTIONAL MOTIVES

 SNOB EFFECTS.The consumer have the

demand that they should not use
those goods which are used by
ordinary persons so that they could
differentiate themselves from
others,or they could pass a distinctive
standard of living.Such effects are
called SNOB EFFECTS.

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FUNCTIONAL & NON-FUNCTIONAL MOTIVES

 VEBLEN EFFECTS.This situation is con

cerned with conspicuous and different
consumption.So many consumer purchase
a good just because its price is high.In
other words,who are prestige minded and
purchase those goods which have the
effect of increasing their dignity.In such
situation whosoever are the influences are
called veblen effects.

6
Bases for Segmentation

Geography
Geography

Demographics
Demographics

Psychographics
Psychographics

Benefits
Benefits Sought
Sought

Usage
Usage Rate
Rate
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 Market Segmentation
People
People or
or organizations
organizations with
with
Market
Market needs
needs or
or wants
wants and
and the
the ability
ability and
and
willingness
willingness to
to buy
buy
AA subgroup
subgroup of of people
people or
or
Market
Market organizations
organizations sharing
sharing one
one or
or more
more
Segment
Segment characteristics
characteristics that
that cause
cause them
them to
to
have
have similar
similar product
product needs.
needs.
The
The process
process ofof dividing
dividing aa market
market
Market
Market into
into meaningful,
meaningful, relatively
relatively similar,
similar,
Segmentation
Segmentation identifiable
identifiable segments
segments or or groups.
groups.

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The Importance of
Market Segmentation
 Markets have a variety of product
needs and preferences.

 Marketers can better define

customer needs.

 Decision makers can define objectives

and allocate resources more accurately

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 IMPORTANCE OF MARKET SEGMENTATION
 Leads to identification of marketing
opportunities.
 Competition can be better assessed in a
segment.
 Provides guidelines for the development of
separate marketing strategies-finer
adjustments.
 Allocate budget on a more rational basis.
 Greater consumer satisfaction can be attained
 Can argue that it is expensive,limited market
coverage and may lead to cannibalization.

10
 Criteria for
Segmentation
Segment
Segment must
must be
be large
large
Substantiality
Substantiality enough
enough to
to warrant
warrant aa special
special
marketing
marketing mix.
mix.
Identifiability
Identifiability Segments
Segments must
must be
be identifiable
identifiable
Measurability
Measurability and
and their
their size
size measurable.
measurable.
Members
Members ofof targeted
targeted segments
segments
Accessibility
Accessibility must
must be
be reachable
reachable with
with
marketing
marketing mix.
mix.
Unless
Unless segment
segment responds
responds to to aa
Responsiveness
Responsiveness marketing
marketing mix
mix differently,
differently, no
no
separate
separate treatment
treatment isis needed.
needed.
11
Business Marketing
Segmentation

Four segments of business

markets:
1.Producers / manufacturers.
2.Resellers.
3.Governments.
4.Institutions.

12
 Business Marketing
Segmentation
Segmentation
Segmentation
Bases
Bases

Company
Company Buying
Buying Customer
Customer
Characteristics
Characteristics Processes
Processes Relationship
Relationship

Location Satisfiers
Type Optimizers
Size 13
 Steps in Segmenting a
Business Market

Select Choose Select Profile Select Design,

a bases descri and target imple-
marke for p-tors analyze market ment,
t for segme segment s maintain
study nt- s mkting
tation mix

14
The 80/20 Principle
A principle holding that
20 percent of all customers
generate 80 percent
of the demand.
Target Share of
customers
Share of 20%
sales
customers

Target
customers
80%
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What Dimensions Are Used to Segment Markets?

Qualifying
Qualifying Determining
Determining
Dimensions
Dimensions Dimensions
Dimensions

• Relevant to • Affect the

including a customer’s
customer type in purchase of a
OR
a product market product or brand
• Can be further
• Help identify
segmented
“core features”

16
Target Market
A group of people or
organizations for which an
organization designs,
implements, and maintains a
marketing mix intended to
meet the needs of that group,
resulting in mutually satisfying
exchanges.

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Target Marketing
 Evaluating Market Segments
 Segment size and growth.
 Segment structural attractiveness.
1. Level of competition.
2. Substitute products.
3. Power of buyers.
4. Powerful suppliers.
 Company objectives and
resources.

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Strategies for Selecting
Target Markets

Undifferentiated Concentrated Multisegment

Strategy Strategy Strategy
19
Undifferentiated
Targeting Strategy

Marketing approach that views

the market as one big market
with no individual segments
and thus requires a single
marketing mix.

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Undifferentiated
Targeting Strategy
Advantages:
 Potential savings on
production and marketing
costs

Disadvantages:
Disadvantages
 Unimaginative product
offerings
 Company more
susceptible to competition

21
Concentrated
Targeting Strategy

A strategy used to select one

segment of a market (a niche)
for targeting marketing efforts.

22
Concentrated Targeting
Strategy
Advantages:
Advantages
 Concentration of resources.
 Meets narrowly defined
segment.
 Small firms can compete.
 Strong positioning.

Disadvantages:
Disadvantages
 Segments too small, or
changing.
 Large competitors may
market to niche segment.

23
Multisegment
Targeting Strategy

A strategy that chooses

two or more well-
defined market
segments and develops
a distinct marketing
mix for each.

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Multisegment
Targeting Strategy
Advantages:
Advantages
 Greater financial
success
 Economies of scale

Disadvantages:
Disadvantages
 High costs
 Cannibalization

25
MULTI-SEGMENT TARGETING
 BENEFITS.
1.Potentially greater sales
volumes.
2.Higher profits.
3.Larger market share.
4.Economies of scale.

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MULTI-SEGMENT
TARGETING
 COSTS.
1. Production design costs.
2. Production costs.
3. Promotion costs.
4. Inventory costs.
5. Market research costs.
6. Management costs.
7. Cannibalization.

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Target Marketers Aim at Specific Targets
In a product-market area

A segmenter A combiner
Using single target Using multiple target Using combined target
market approach – market approach – can market approach – can
can aim at one aim at two or more aim at two or more
submarkets with different submarkets with the
submarket with one
marketing mixes same marketing mix
marketing mix

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Target Marketing
 Target Marketing Strategies
1.Undifferentiated (mass)
marketing
2.Differentiated (segmented)
marketing
3.Concentrated (niche) marketing
4.Micro marketing (local or
individual) marketing

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Target Marketing
 Choosing a Target-Marketing
Strategy Requires Consideration of:
1.Company resources.
2.The degree of product variability.
3.Product’s life-cycle stage.
4.Market variability.
5.Competitors’ marketing
strategies.

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Cannibalization
Situation that occurs
when sales of a new
product
cut into sales of a
firm’s existing
products.

31
Position
The place a product,
brand, or group of
products occupies in
consumers’ minds
relative to competing
offerings.

32
Positioning
 Positioning:
 The place the product occupies
in consumers’ minds relative to
competing products.
 Typically defined by consumers
on the basis of important
attributes.

33
Positioning Bases
Attribute
Attribute

Price
Price and
and Quality
Quality

Use
Use or
or Application
Application

Product
Product User
User
Positioning
Positioning
Product
Product Class
Bases
Bases Class

Competitor
Competitor

34
Positioning
 Choosing a Positioning Strategy:
 Selecting an overall positioning strategy

1.More for More Value Proposition

2.More for the Same Value Proposition
3.The Same for Less Value Proposition
4.Less for Much Less Value Proposition
5.More for Less Value Proposition

35
Repositioning
Changing consumers’
perceptions of a brand
in relation to
competing brands.

36
Naming Product Markets and Generic Markets

Product Type Customer

Customer
Customer
Customer
Product
Product Type
Product Type
Type Needs
Needs

Product-Market
Product-Market
Definition
Definition

Geographic
Geographic Customer
Customer
Customer
Customer Type
Type
Area
Area Type
Type

No Product Type in Generic Market Definition

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