Chapter 4

Marketing Segmentation
Targeting, and positioning for competitive
advantage
 Introduction
• Companies that sell goods and services cannot
appeal to all buyers in those markets, or at
least to all buyers in the same way.
• Buyers too numerous, too widely scattered,
and too varied in their needs and buying
practices.
 Market segmentation
• It involves aggregating prospective buyers into
groups that:
– Have common needs
– Respond similarly to a marketing action
• The groups that result from this procedure are
known as Market Segments.
• When market segments happens, companies
are being more choosy about the customers
with whom they wish to build relationships.
• Companies moved away from mass marketing,
and towards market segmentation and
targeting.
• Instead using shotgun approach, firms are
focusing on the buyers who have greater
interest in the values (Rifle approach)
• Due to the increasing fragmentation from
mass markets into hundreds of micromarkets,
target marketing is increasingly taking form
of micromarketing.
• Micromarketing is where the companies tailor
their marketing programs towards the needs
and wants of narrowly defined characteristics
Types of Segmentation
– Geographic
– Demographic
– Psychographic
– Behavior segments
Steps in market segmentation,
targeting and positioning
Market Segmentation
• Market consist of buyers, and buyers differ in
one or more ways.
• Differ in what they wants, needs, resources,
locations, and others.
• Because of that, it will create a separate
market.

• So how would we
identify the separate
market?
Segmenting Consumer Markets
• There is NO SINGLE way to
segment a market.
• A marketer has to try different
segmentation VARIABLES, alone
and IN COMBINATION, to find
the best way to view the market
structure.
• The major variables are:
– Geographic
– Demographic
– Psychographic
– Behavioral
– Others
 Geographic Segmentation
• Dividing the market into
different geographical units as:
– Nations
– Regions
– States
– Districts
– Towns
• It also follow the density of the
population live in the place
– KL vs Dungun
 Demographic Segmentation
• Demography involves the statistical study of
human populations. As a very general science, it
can analyze any kind of dynamic living
population, i.e., one that changes over time or
space.
• Dividing the market into groups based on
variables such as:
– Age
– Gender
– Family size
– Race
– Nationality
Demographic Segmentation (Cont.)
• Multivariate Demographic Segmentation –
Combining two or more demographic
variables.
• Example: Age + Gender
 Psychographic Segmentation
• Psychographics is the
study of personality,
values, opinions,
attitudes, interests, and
lifestyles.
• Dividing buyers into
different groups based
on:
– Social class
– Lifestyle
– Personality
Characteristics
Social Class
• Social class (or simply "class"), as in a
society, is a set of concepts in the s
sciences and political theory centered
models of social stratification in w
people are grouped into a

set of hierarchical social

categories, the most common
being the upper, middle,
and lower classes.
 Lifestyle
• The way in which a person lives.
• The habits, attitudes, tastes, moral standards,
economic level, etc., that together constitute
the mode of living of an individual or group.
 Personality
• Personality has do with individual
to differences
among people in behavior
patterns, cognition and emotion
Behavioral Segmentation
• Divides buyers based on how
they behave or act toward
particular products.
• The common behavioristic
variables are:
– Occasions
– Benefit Sought
– User Status
– Usage rate
– Loyalty status
• Occasions; Buyers can be grouped according
to occasions when they get the idea to buy,
purchasing the product as well as using them.
• Benefit Sought; A powerful form of
segmentation Group the buyers according to
the different benefits that they seek from the
product.
• User Status; Non-users, Ex-users, Potential users,
First-time users, Regular users
• User rate; Light user, Medium user, Heavy user
groups
 Loyalty Status
• Market that had been
segmented based on loyalty.
• Example?
Market Targeting
• Market segmentation reveals the firm's
market segment opportunities.
• The firm now have to evaluate the various
segments and decide how many and which
ones to target.
• We now look at HOW companies evaluate and
select target segments.
Evaluate Market Segments
Segment size &
growth

Structural
attractivenes
s

Company objectives
& resources
 Selecting Market Segments

Undifferentiate Differentiated Concentrate

d Marketing Marketing d
Marketing

Selecting Market
Segment
 Undifferentiated Marketing

Company
Marke
Marketing Mix
t
 Undifferentiated Marketing
• The firm decide to IGNORE market segment
differences and go after THE WHOLE market
with one market offer.
• It focuses on what is COMMON in the needs
of the customers.
• Example: Hershey Company
• Pro – Cost Economies
• Cons – ?
Differentiated Marketing

Company
Segment 1
Marketing Mix 1

Company
Segment 2
Marketing Mix 2

Company
Segment 3
Marketing Mix 3
 Differentiated Marketing
• The firm decide to target several market
segments or niches and designs separate
offers for each.
• Creates more total sales than undifferentiated
marketing
• Pro - ?
• Cons – Increase cost (Why?)
 Concentrated Marketing

Segment 1

Company
Segment 2
Marketing Mix

Segment 3
 Concentrated Marketing
• Especially appealing when company
RESOURCES are LIMITED.
• Instead of going after a small share of a large
market, the firm goes after a large share of
one or a few submarkets.
• Example?
Market Positioning
• Once company has decided which market
segments it will enter, it must decide what
‘Positions’ it wants to occupy in those
segments.
• A product’s position is the way the product is
defined by consumers on important attributes
– the place the products occupies in
consumers’ minds relative to competing
products.
• How?
 Positioning Strategies
• Product Attributes
• Benefit
• Classes of users
• Against a competitors
• Away from competitors