Tema 4: Market segmentation

1. Market segmentation
2. Market targeting
3. Market positioning

The term “market” has acquired many meanings over the years. In it’s original meaning, a market
was a location where buyers and sellers met to exchange goods and services. To a marketer a market is
the set of all actual and potential buyers of a product. The market, in it’s evolution has passed through 3
stages:
1) Mass marketing – During this stage the seller mass produces, mass distributes and mass
promotes one product to all buyers. The advantage of mass marketing is that it should lead to cost
economies and create the largest potential market.
2) Product variety marketing - - The seller produces 2 or more products that have different
features, style, quality or size.
3) Target marketing, the seller identifies, selects on or more of them and develops products
and marketing mixes for each of them.
Today’s companies are moving away from mass marketing and product variety marketing to target
marketing because it can help the sellers better find the marketing opportunities and develop the right
product for each target market.
Target marketing calls for 3 steps:
a) Market segmentation
b) Market targeting
c) Market positioning
Market segmentation means dividing a market into different groups of buyers who might require
separate products or marketing mixes. There are different market segmentation variables(factors)
1) Geographic variables – These variables include: region, City size. Country size, density or
climate
2) Demographic variables – These variables include: Age, Gender, family size, income,
occupation, education, religion, race, nationality and family life cycle(1)young, single, 2)Young married
no children 3) young married child under 6 4)young married child over six, 5) old married no children 6)
Old single no children, 7) Old married no children under 18)
3) Psychographic variables – They include: Lifestyle, personality and social class(1) Lower
lowers(cersetori, vagabonzi) 2) Upper lowers(nu au lucru stabil) 3)Working class(nu le ajunge de
satisfacerea necesitatilor suplimentare) 4)Middle class(salarii stabile, au economii) 5) Upper
middles(independent business people, middle managers, au reserve mai mari, nu repartizeaza veniturile)
6) Lower uppers (foarte multi bani,) 7) Upper uppers(familii ku dinastii, banii nu sunt kistigati ci
mosteniti, nu exteriorizeaza, sunt eruditi)
4) Behaviorist variables – Include: Purchase occasion(Regular, special), usage rate(light, medium,
high rate user), loyalty status, attitude towards the product, benefits.

Requirements for an effective segmentation

- Measurability – the degree to which the size and purchasing power of segments can be
measured.
- Accessibility – the degree to which segments can be reached and served.
- Substantiality - the degree to which segments are large and profitable enough
- Action ability – The degree to which effective can be designed for attracting and serving
segments

=2=
Market targeting (diferit de target marketing)
Market targeting means evaluating each segment’s attractiveness and selecting one or more of the
market segments to enter. Market targeting has 3 strategies:
 1) Undifferentiated strategy –
Product marketing mix >>>>> market
Using this strategy the company might 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
consumers. It designs a product and marketing program that appeal to the most buyers. This
strategy relies on mass distribution and mass advertising. It provides cost economies but
most modern marketers have strong doubts about this strategy because it is difficult to
develop a product or a brand that will satisfy all consumers.

2) Differentiated market
Product 1, Product 2, Product 3 >>>> Segment 1, segment 2, segment 3
Using this type of strategy the firm decides to target several market segments and designs
separate offers for each. This strategy hopes for higher sales and a stronger position within
each market segment. Differentiated marker typically creates more total sales than
undifferentiated marketing(1) but it also increases the costs of doing business.

3) Concentrated strategy
Product market mix >>>> Segment 1, segment 2, segment 3
This strategy is especially appealing when the company resources are limited. Instead of
going after a small share of a large market. The firm goes after a large share on or a few
small submarket. Through this strategy the company achieves a strong market position and a
special reputation. It enjoys many operating economies because of specialization in
production, distribution and promotion. If the segment is chosen well the company can
obtain a high rate of return on it’s investments. But this strategy also involves some risks:
a) The particular market segment can become too small
b) Larger competitors may decide to enter the same segment

Factors that influence of choosing marketing strategy:

1) Company resources – If the company resources are limited >>> concentrated strategy
recommended or undifferentiated
2) Product variability – Undifferentiated strategy is more suitable for uniform goods such as
agricultural products
3) Product’s stage in it’s life cycle – When the company introduces a new product an undifferentiated
marketing is recommended. In the maturity stage differentiated strategy is most recommended.
4) Market variability – Means the common characteristics and behaviors of buyers.
5) Competitor’s marketing strategies – When competitors use segmentation, differentiated strategy is
recommended

=3=
Market positioning
A product’s position is the way the product is defined by consumers on important attributes. Positioning
means the place the product occupies in consumer’s minds relative to competing products. A product’s
position is the complex set of perceptions, impressions and feelings that consumers hold for a certain
product. Marketers usually plan positions that will give their products the greatest advantage in selected
target markets and they design marketing mixes to create the planned positions.
There are several positioning strategies:
1) The product may be positioned on it’s specific attributes.
2) Products can be positioned don the needs they feel or the benefits they offer.
3) The product can be positioned according to usage occasions.
4) Product can be positioned for a certain class of users
5) It can be positioned against a competitor
6) Product can be positioned away from competitors