Learning Objectives
 Market Segmentation
 Target Marketing
 Market Positioning
 Major bases for segmenting consumer &
business markets.

Learning Objectives
 How companies identify attractive
market segment & choose a target
marketing strategies.
 How companies position their products
for maximum competitive advantage in
the market place.

Market Segmentation
PREPARED BY
UMAIR

Market Segmentation
Dividing a market into smaller groups
of buyers with distinct needs ,
characteristics ,or behavior who
might require separate products or
marketing mixes.

Target Marketing
The process of evaluating each market
segment’s attractiveness and
selecting one or more segments to
enter.

Market Positioning
Arranging for a product to occupy a
clear, distinctive and desirable place
relative to competing products in the
minds of target consumers.

Segmenting Consumer Markets
 The major variables that might be used
in segmenting consumer market are
•Geographic
•Demographic
•Psychographic
•Behavioral

Geographic Segmentation
Dividing a market into different
geographical units such as nations ,
states, regions, cities or
neighborhoods.

Geographic Segmentation
 World region or Country:-
Pakistan, India, America
etc.
 Country Regions:-
 Cities:-
 Density:-
Urban, suburban, rural.
 Climate:-
Northern, southern.

Demographic Segmentation
Dividing a market into group based
on demographic variables such as
age, sex, family size, family life
cycle, income, occupation,
education, religion, race &
nationality.

Demographic Segmentation
•The consumer needs, wants & usage
rates often vary closely with
demographic variables.
•Easier to measure
•Even when market segments are
defined on some other bases their
demographic characteristics must be
known.

Age & life-cycle segmentation
Dividing a market into different age
& life-cycle groups.
Different age groups are
under 6 6-11 12-19 20-34
35-49 50-64 65+

Family Life-cycle Groups
–Bachelors
–Married with no children
–Married with children
–Older couples

Gender Segmentation
Dividing a market into different groups
based on gender.

Income segmentation
Dividing a market into different
income groups
 Lower income group
 Middle income group
 Upper class

Segmenting Variables
Psychographic Segmentation
Behavioral Segmentation
Using Multiple Segmentation Basis

Psychographic Segmentation
Dividing the market into groups
according to social class, life
style or personality
characteristics.

Lifestyle
A person’s pattern of living as
expressed in his or her activities,
opinions, and interest.
It involves measurement of AIO
dimensions.

Social Class
 Lower lowers
 Working class
 Upper middles
 Upper uppers
Upper lowers
Middle class
Lower uppers

Personality
Adventurous
Authoritarian
Risk Taking
Ambitious

Behavioral Segmentation
Dividing the market into groups on the basis of
consumer knowledge, attitude, use or response to
a product.

Behavioral Segmentation
Occasion
Segmentation
User Status
Loyalty Status
Benefit
Segmentation
Usage Rates

Occasion Segmentation
Dividing the market into groups
according to occasions when
buyers get the idea to buy,
actually make their purchases, or
use the purchased item.

Benefit Segmentation
Dividing the market into groups
according to the different benefits
that consumers seek from the
product.
 Procter &Gamble has identified different detergent
segments.

User Status
Dividing the market into the groups
according to user status .
 Non-users
 Ex-users
 Potential users
 First time users
 Regular users

Usage Rates
Market can be segmented
according to usage rate.
 Light
 Medium
 Heavy
 Fast food industry has only 20% heavy users but
eat up about 60% of all food served.

Loyalty Status
Market can be segmented according
to consumer loyalty.
Consumers can be loyal to
 Brands
 Stores
 Companies

Loyalty Status
Consumer can be grouped on the basis
of loyalty as
 Somewhat loyal
 Completely loyal
 Non loyal

Multiple Segmentation Basis
Using multiple variables for
segmentation analysis to
identify smaller, better
defined target groups.

Using Multiple Segmentation Bases
 One good example of multi-variable
segmentation is “Geodemographic”
segmentation.
 One of the leading life style
segmentation systems is the “PRIZM”.

“PRIZM” System
The PRIZM system combines
demographic factors with buying
transaction data and lifestyle
information taken from consumer
surveys, to paint a precise picture
of the consumer.

PRIZM System (cont’d)
 PRIZM classifies people into 62 unique
types or clusters. Like
 Blue Blood Estates (suburban areas
populated by elite families)
 Shotguns and pickups (populated by
rural blue collar workers and families)
 Hispanic Mix (highly brand conscious,
quality conscious, and brand loyal)

PRIZM System (cont’d)
With the availability of data and
computer power, geodemographic
marketers are continually refining
their techniques by tracking and
adding new segments and
adjusting the older ones.

Market Segmentation (cont’d)
Target Marketing (partially)

Market Segmentation
Segmenting Business Markets

Segmenting Business Markets
Major variables used for segmenting
business markets are:
 Demographic
1. Industry: Which industries should we
serve?
2. Company size: What size companies
should we serve?
3. Location: What geographical location
should we serve?

Segmenting Business markets (cont’d)
 Operating Variables
4. Technology: What customer technologies
should we focus on?
5. User or nonuser status: Should we serve
heavy users, medium users, light users,
or nonusers?
6. Customer capabilities: Should we serve
customers needing many or few
services?

Segmenting Business markets (cont’d)
 Purchasing Approaches
7. Purchasing-function organization: Should we serve
companies with highly centralized or decentralized
purchasing organizations?
8. Power structure: Should we serve companies that are
engineering dominated, financially dominated, and so on?
9. Nature of existing relationships: Should we serve companies
with which we have strong relationships or simply go after
the most desirable companies?
10. General purchase policies: should we serve companies
that? Service contacts? Systems purchases? Sealed
bidding?
11. Purchasing criteria: should we serve companies that are
seeking quality? Service? Price?

Segmenting business Markets (cont’d)
 Situational Factors
12. Urgency: Should we serve companies
that need quick sudden delivery or
service?
13. Specific application: Should we focus on
certain applications of our product rather
than all applications?
14. Size of order: Should we focus on large
or small orders?

Segmenting Business Markets (cont’d)
 Personal Characteristics
15. Buyer-seller similarity: should we serve
companies whose people and values are
similar to ours?
16. Attitudes toward risk: Should we serve
risk-taking or risk-avoiding customers?
17. Loyalty: Should we serve companies
that shoe high loyalty to their suppliers?

Segmenting Business Markets
 Additional Variables Used by Business
Markets
 Serving More Then One Markets
 American Express
 Separate system for dealing with larger or
multiple location customers.

Market Segmentation
Segmenting International
Markets

Segmenting International
Markets
 Usage of common variables (as described
before)
 The concept of Inter market Segmentation
 Examples

Market Segmentation
Requirement for effective
segmentation

Requirement for effective
segmentation
 Measurable
 Accessible
 Substantial
 Differentiable
 Actionable

Target Marketing

Target Marketing
The process of evaluating each market
segment’s attractiveness & selecting
one or more segments to enter

Evaluating Marketing Segments
Involvement of 3 factors
 Segment size and growth
 Segment structural attractiveness
 Company objectives and resources

Selecting Target Market Segments
 Defining Target Market
 Levels of Target Marketing
 Undifferentiated Marketing (very broadly)
 Differentiated Marketing (somewhere in between)
 Concentrated Marketing (somewhere in between)
 Micromarketing (very narrowly)

Undifferentiated Marketing
A market-coverage strategy in
which a firm decides to ignore
market segment differences & go
after the whole market with one
offer.

Differentiated Marketing
A market-coverage strategy in
which a firm decides to target
several market segments and
designs separate offers for each.

Target Marketing (cont’d)Target Marketing (cont’d)

Concentrated MarketingConcentrated Marketing
 A market coverage strategy in which a firm goes after aA market coverage strategy in which a firm goes after a
large share of one or a few segments or niches.large share of one or a few segments or niches.
 Normally used when company resources are limitedNormally used when company resources are limited
 Company gains a better understanding of the niches itCompany gains a better understanding of the niches it
caters & special reputation may be gained.caters & special reputation may be gained.
 Products can be “Fine-Tuned” to assure “effectiveProducts can be “Fine-Tuned” to assure “effective
marketing” focused upon specific customers.marketing” focused upon specific customers.
 Can be highly profitable but also involves higher riskCan be highly profitable but also involves higher risk
levels.levels.
 Examples:Examples: Tetra Sea Food, Oshkosh TrucksTetra Sea Food, Oshkosh Trucks

Micro MarketingMicro Marketing
• The practice of tailoring products andThe practice of tailoring products and
marketing programs to the needs ofmarketing programs to the needs of
specific individuals and local customerspecific individuals and local customer
groups.groups.
• Rather then seeing a customer inRather then seeing a customer in
every individual, micro-marketers seeevery individual, micro-marketers see
INDVIDUALS in every customerINDVIDUALS in every customer

Types of MicromarketingTypes of Micromarketing
Local MarketingLocal Marketing
Tailoring brands and promotion to the needsTailoring brands and promotion to the needs
and wants of local customer groups cities,and wants of local customer groups cities,
neighborhoods, and specific stores.neighborhoods, and specific stores.

Local MarketingLocal Marketing
DrawbacksDrawbacks
 Can drive up manufacturing and marketing cost byCan drive up manufacturing and marketing cost by
reducing economies of scale.reducing economies of scale.
 Create logistics problems as companies try to meet theCreate logistics problems as companies try to meet the
varied requirements of different regional and localvaried requirements of different regional and local
market.market.
 Brand’s overall image my be diluted if the product andBrand’s overall image my be diluted if the product and
message vary at different localities.message vary at different localities.

Local MarketingLocal Marketing
Benefits
 Helps a company to market more effectively in
the face of pronounced regional and local
differences in demographics and style.
 Meets the needs of company's first-line
customer.

Individual MarketingIndividual Marketing
 Tailoring productsTailoring products
and marketingand marketing
programs to needsprograms to needs
and preference ofand preference of
individual customerindividual customer
also labeled asalso labeled as
markets of-one,markets of-one,
customizedcustomized
marketing and one-marketing and one-
to-one marketing.to-one marketing.
• At the LEGO factory website, fans can designAt the LEGO factory website, fans can design
there own ultimate LEGO model, show it off, andthere own ultimate LEGO model, show it off, and
bring it to life.bring it to life.

Mass CustomizationMass Customization
Mass customization is the processMass customization is the process
through which firms interact one-through which firms interact one-
to-one with masses of customers toto-one with masses of customers to
create customer-unique value bycreate customer-unique value by
designing products and servicesdesigning products and services
tailor-made to individual needs.tailor-made to individual needs.

Socially Responsible TargetSocially Responsible Target
MarketingMarketing
 Some segments are atSome segments are at
special risk :special risk :
• ChildrenChildren
• Inner-city minoritiesInner-city minorities
consumersconsumers
• Internet shoppersInternet shoppers
 Controversy occursControversy occurs
when the methodswhen the methods
used areused are
questionable.questionable.
• Most targeting market benefits bothMost targeting market benefits both
the marketer and the consumer.the marketer and the consumer.
Nacara Cosmetiques marketsNacara Cosmetiques markets
cosmetics for “ethnic women whocosmetics for “ethnic women who
have a thirst for the exotic”have a thirst for the exotic”

Choosing a Target- Marketing
Strategy
requires consideration of :
 Company resources
 The degree of product variability
 Products life-cycle stage
 Market variability
 Competitors’ marketing strategies

Positioning for Competitive
Advantage

Positioning
The way the product is defind by consumers on
important attributes ---- The place the product occupies
in consumers’ minds relative to competing products.

Product Position
The way the product is defined by
consumers on important attributes-the
place the product occupies in
consumers’ minds relative to
competing products.

Positioning Maps
Positioning maps are a useful tool for
giving you a graphical idea of where
your product stands vis-à-vis other
products in the market at a given
time.

Orientation
Positioning Map: Large Luxury SUVs
Range
rover
High Lincoln Navigator
Escalade
Hummer H1
Hummer H2
Price Lexus LX470
Land Cruiser
Low
Luxury Performance

Choosing a Positioning Strategy
The positioning task consist of three steps.
 Identify Possible Competitive
Advantages
 Choosing the Right Competitive
Advantages
 Selecting an overall Positioning
Strategy

Identify Possible Competitive
Advantages
An advantage over competitors gained by
offering consumers greater value either
through lower prices or by providing
more benefits that justify higher prices.
 A company or market offer can be differentiated along the lines
of Product, Services, Channels, People or Image

Identify Possible Competitive
Advantages

Product Differentiation
i.e.
Features,
Performance,
Style,
Design or Attributes.

Service Differentiation
i.e.
Delivery,
Installation,
Repair Service,
Customer Training Services.

Image Differentiation
i.e.
Symbols,
Atmospheres,
Events.

Personnel Differentiation
i.e.
Hiring and training better people
than others do.

Choosing the Right Competitive
Advantages

 How many differences to promote?
Unique Selling Proposition (USP)
USP is to promote only one benefit to the target market
for each brand and stick to it.
e.g. Crest Toothpaste (Anticavity Protection)
Wall-Mart (Always Low Prices)
Choosing the Right Competitive Advantages

Cont’d
• Others think that company should
position themselves on more than one
differentiator.
e.g. Unilever (Three-in-one bar soap)

 Under positioning:-Buyers have only a
vague idea of the brand.
 Over Positioning:-Buyers may have
too narrow an image of the brand.
 Confused Positioning:- Leaving
buyers with a confused image of a
company.
Positioning Errors to Avoid

Which differences to promote?
 A company should carefully select the
way in which it will distinguish itself
from competitors.
 A difference is worth establishing to
the extent that it satisfies the following
criteria…

Cont’d
 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable

Selecting An Overall Positioning
Strategy

Value Proposition
The full Positioning of a brand.
In simpler words, the full mix of
benefits upon which a brand is
positioned.

Major Value Propositions
More for more
More for the same
The same for less
Less for much less
More for less

More for More Proposition
Providing the most upscale product or
service and charging a higher price
to cover the higher costs.
e.g. Mercedes-Benz auto mobiles

More for The Same Proposition
Providing a brand offering comparable or
even better quality to that of
competitor/s’ upscale one but at a Lower
or The Same Price.
e.g. Toyota’s Lexus line vs. Mercedes-Benz

The Same for Less Proposition
Providing equivalent quality products
at a Lower Price. It can be a
powerful value proposition.
e.g. Wall-Mart

Less for Much Less Proposition
Providing lower performance or
quality products as required by the
consumers at a Much Lower Price.

More for Less Proposition
Providing even better or the best products
or services compared to the competitor/s
at Lower or the Lowest Prices.
e.g. Dell Computers
Procter & Gamble

Developing a Positioning
Statement
A Positioning Statement summarizes
company or brand positioning by
targeting the segment, developing a
need, delivering the brand name and
its concept, and pointing out the
competitive advantage or difference.

Communicating and Delivering
the Chosen Position
Keeping a permanent channel to
Communicate the desired position
to target consumers and taking
actions in order to Deliver the
position the company wants to build
relative to competing products.