Segmentation, Targeting and

Positioning
Marketing Management I
 Segmentation
 Dividing the market into distinct group of buyers
who have different needs, characteristics or
behavior, and who need separate marketing
programs.

 A market segment consists of a group of customers who share a

similar set of needs and wants.

 Ex: Rural people between the age group of 18 – 35.

Basis/ Variables of Segmenting the Market

 Geographic

 Demographic

 Psychographic

 Behavioral
Basis/ Variables of Segmenting the Market

 Geographic
Nation, States, Region, City, Town, Density, Climate
 Demographic
Age, Gender, Family Size, Family Life Cycle, Income, Occupation,
Education, Religion, Nationality.
 Psychographic
Social Class, Lifestyle, Personality
 Behavioral
Decision Roles, Occasions, Benefits, User Status, User Rates, Loyalty
Status, Attitude
Major Segmentation Variables:

 Geographic –
Climatic Zones, Nations, States, Regions, City, Town,
Density (urban, suburban, rural).
 Demographic –
Age, Gender, Family Size, Family Life Cycle, Income,
Occupation, Education, Religion, Nationality.

Age
Babies, kids,
tweens(8-14), teens,
youth(upto 29)
working age (above
30), senior citizens
 Psychographic –
Use of psychology and demographics to better
understand consumers.
Social Class (working class, upper class) [Education and
Occupation] [Influence clothing, home furnishing, reading
habits, eating habits ] [Vegetarian], [halal and jhatka]
Lifestyle (achievers, strivers)
Personality (ambitious, compulsive)
Social Class

Social classes are society’s relatively permanent and

ordered divisions whose members share similar
values, interests and behavior. Indian marketers use
socioeconomic classification, which is a combination
of education and occupation of the main earning
member of a household
Lifestyle
Life Style is a person’s pattern of living in the world
as expressed in activities, interests and opinions
(AIO).

Activities (work, hobbies, shopping, social events,

sports).
Interest (food, fashion, family recreation) and
Opinions (about themselves, social issues,
business, products)
Personality
Personality refers to the unique psychological
characteristics that lead to relatively
consistent and lasting responses to one’s
own environment.

It may be described as
self – confidence, sociability, independence,
dominance, adaptability, defensiveness,
aggressiveness, sincerity.
VALS – Values and Lifestyle Segmentation

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MOTIVATION
VALS – Values and Lifestyle Segmentation
 Consumers are inspired by one of the three primary
motivations: ideals, achievement, and self – expression.
 Those motivated by ideals are guided by knowledge and
principles.
 Those motivated by achievement look for products and
services for demonstrating their success.
 Those motivated by self – expression desire social or physical
activity, variety and risk.
 Resources is determined by personality traits such as – energy,
self confidence, intellectualism, novelty, and innovativeness.
 Different level of resources enhance or constraint primary
motivations
 Innovators: spend more on upscale or niche products.
 Thinkers: seek functionality, durability, value in products.
 Achievers: seek premium products to show success.
 Experiencers: impulsive people. Fashion, entertainment
 Believers: loyal to established brands.
 Strivers: emulate the purchase of achievers.
 Makers: Practical. Seek functional benefits.
 Survivors: Elderly people. Loyal to their brands.
 Major Segmentation Variables:
Behavioral –

 Decision Roles (initiator, influencer, decider, buyer, user) –

[kitchen appliances]
 Occasions, Benefits [Festivals, Wedding Season, Greeting cards,
Gym, Toothpaste]
 User Status (user/ non - user), - [baby products, blood donors]
 User Rates (light, medium, heavy) - [mobile, Cabs, Fr Flyer]
 Loyalty Status (medium, strong)
 Attitude - [political parties – voters]
Benefit Segmentation
 By purchasing and using products, consumers are
trying to satisfy specific needs and wants.
 In essence, they look for products that provide specific
benefits to them.
 Identifying consumer groups looking for specific
benefits from the use of a product or service is known
as benefit segmentation and is widely used by
marketers
Attitude
 Attitude, a person’s consistently favorable or
unfavorable evaluations, feelings, and tendencies
towards an object or idea.
 Five attitudes about products are:
 Enthusiastic, Positive, Indifferent, Negative, Hostile.

 Education, Money, FaceBook, Consumerism, Movie,

Medicine, Ayurvedic Drug
 Benefit segmentation of toothpaste market
Principal benefit Psychographics Behavioural Demographic Brands much
sought Characteristics Characteristics Characteristics favoured

Brightness of Outgoing, Smokers Teenagers Close-up,

teeth active, fun Youngsters Aquafresh
(cosmetic) loving, high
sociability

Decay Health Heavy users Large families Pepsodent,

prevention conscious Colgate total
(medicinal)

Taste (good Self-indulgent, Mint lovers Children Aquafresh,

taste, flavour) hedonic Colgate

Low price Price- Heavy users Men, Neem, Babool,

(economy) conscious, traditional Vicco
independent Vajradanti
Geodemographic Segmentation
 Based on geography and demographics

 People who live close to one another are similar

 Geodemographic segmentation is a popular use of

geography in targeting.

 People who live close to one another are likely to be

similar in tastes, incomes, lifestyles and consumption.
They might eat similar foods, like the same movies,
and take the same types of vacations.
Requirements for effective segmentation:

 Measurable. (Left hander)

 Accessible. (Can be reached and served)

 Substantial. (large and profitable enough)

 Differentiable. (respond differently to different

marketing mixes and strategies)

 Actionable. (the company must have resources to

attract and serve the segment)
 Why Segmentation is Necessary

 Consumer needs differs

 Differentiation helps
products compete

 Segmentation helps
identify media
 Differentiating
Designing unique market offerings to create superior
market value is known as differentiating.

 Targeting
The process of evaluating each market segment’s
attractiveness and selecting one or more segments to
enter is known as targeting.
Target Market:
A set of buyers sharing common needs or
characteristics that the company decides to serve.

Three factors:

•Segment size and

growth rate
•Segment structural
attractiveness
•Company resources
Selecting Target Market:

 Undifferentiated Marketing (Mass Marketing)

 Differentiated Marketing (Segmented Marketing)
 Concentrated Marketing (Niche Marketing)
 Micro Marketing (Local or Individual Marketing)
 Determining How Many Segments to Enter

 Undifferentiated Marketing: This strategy of mass

marketing focuses on what is common in the needs of
consumers rather than what is different. Undifferentiated
marketing provides cost economies.

 Differentiated Marketing: These companies expect higher

sales volumes by offering product versions and a stronger
position within each segment. Differentiated marketing
strategy increases costs considerably.

 Concentrated Marketing: The company targets a segment

and goes for a large market share instead of a small share
in a larger segment. Concentrated strategy involves more
than normal risks
Selecting Target Market:

 Undifferentiated Marketing (Mass Marketing):

targeting the whole market with one offer.

 Differentiated Marketing (Segmented Marketing):

The firm targets several segments and designs separate
offers for each.
Selecting Target Market:
 Differentiated Marketing
(Segmented Marketing):
Selecting Target Market:
 Concentrated Marketing (Niche Marketing):
A large share of one or few smaller segments.
Whereas the segments are large and normally attract
several competitors, niches are smaller and may attract
only one or a few competitors.
Niching lets smaller companies focus their limited
resources on serving niches that may be unimportant to or
overlooked by larger competitors.
Selecting Target Market:

 Micromarketing (Local or Individual Marketing):

tailoring products and marketing programs to suit the
tastes of specific individuals and locations.

Local Marketing: involves tailoring brands and

promotions to the needs and wants of local customer
groups – cities, neighborhoods, and specific locations.
(Real Estate,)
Individual Marketing – tailoring products and
marketing programs to the needs and preferences of
individual customers. (Chartered Financial Analyst,
Architects). Also referred as mass customization.
Factors to be considered for choosing a
market – targeting strategy.
 Company Resources: With limited resources
concentrated marketing is more convenient.
 Degree of Product Variability: Undifferentiated marketing
is more suited to uniform products.
 Product Life Cycle: When a firm introduces a new
product only one version may be practical.
 Market Variability: If most buyers have same tastes, react
to the same way to marketing efforts undifferentiated
marketing is appropriate.
 Competitors Strategy: If competitors use differentiated
marketing, using mass marketing strategy will be futile.
Brand Positioning:

 Creating a brand offer in such a manner that it occupies a

clear, distinct and desirable place and value in the
minds of consumer as delivering some central or unique
benefit(s).

Successful Positioning includes:

 Communicating the benefits of the product
 Communicating a unique selling proposition
Positioning
Positioning Maps

 Perceptual Positioning Maps:

It shows consumer perceptions of their brands versus

competing products on important buying dimensions
Positioning
What is your USP?
Unique Selling Proposition

According to some experts

 A company should develop a unique selling proposition
for its each brand and should stick to it.
 Each brand should pick an attribute and promote itself as
number one in it.
 People tend to remember number one better.
Selecting an overall positioning strategy:
Price
More Same Less

More for More for More for

More More the same Less

Same for Benefits

Same less

Less for
Less much less

Value Proposition Model

Selecting an overall positioning strategy
 More for more: more services or better product for
more prices. (Five Star Hotel)

 More for the same: more services or better product for

the same price. (Toyota Lexus and BMW)

 The same for less: same service or product for less price.
(Big Bazaar)
 Less for much less: less service or product features for
much less price. (Ginger, Mobile Brands – economy
segment)

 More for less: ‘More car per car’ – Tata Indica