UNIT-3

MARKET SEGMENTATION, TARGETING

AND POSITIONING

Concept of Market:
The word market was derived in English from
Latin word Marcatus. Its meaning is trading
place of transaction. As the word marketing has
been formed from the word market it is
necessary to be clear about the concept of
market in the marketing subject. The following
concepts can be studied to be clear about the
meaning of the term market.

1. Place concept: Generally, the word market
refers to the place where buying and selling of
goods is performed. The comfortable place
where sellers and customers meet together
and exchange goods or service is called
market. Although the word market was
evolved from the place of transactions, it is
used for a broad meaning in economics. Now
a days , the term market does not represent
only a certain place.

2. Commodity concept: The commodity concept
of market places emphasis on buying and selling
of goods or services. The process of buying and
selling of goods or services that takes place
between a buyer and a seller is called market.
The economist Chapman has said, Economically
interpreted the term market refers not to place
but to a commodity or commodities and buyers
and sellers and they should be in direct
competition with one another. In this way, the
place is not important in economics for market.
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It needs commodities or services, buyers and
sellers and relations or interaction among them.
3. Exchange concept: Exchange concept of
market puts emphasis on mutual meeting
between the buyer and the seller and their free
relationship. To be market, this concept lays
emphasis on free relationship between buyers
and sellers and on equality of price of the same
goods from competition. But in practice,
competition of the same price for the same type
of goods cannot always be found in all goods. In
some products, monopoly of sellers can be
found.

4. Area concept: The area concept of market is
related with exchange concept. According to
area concept of market, the meaning of
market is the whole area where sellers and
buyers make exchange directly or indirectly
without direct contact or using modern means
of communication in free and open manner.
So in area where seller sell and buyers buy
goods or services in free and frank ways is
called market. Market area may be limited or
vast.

5. Demand or customer concept: According to
demand concept of market, the total demand of
actual and potential buyers for goods or services
is market concept. As it is fulfill the unlimited
human needs and wants through limited means,
buyers buy only necessary goods or services.
Todays very popular thing may be unpopular
tomorrow. Its demand may decrease to zero. So
market depends on consumers demand. So,
according to this concept, the total or aggregate
demand of consumers for goods or services is
called market.

6. Space or Digital concept: Space concept is
near concept of market. It is based on internet.
Producers or sellers put valuable information
about their goods and services. Customers can
select needed goods and services searching
internet. The digital communication media like
telephone, telex, computer, Internet etc have
made the direct contact between the customer
and the seller a minor matter. According to this
concept mentioned above there should be
buying and selling between buyers and sellers to
be market, but it is not compulsory to have a
direct meeting them.

Concept of Market Segmentation:
The process of exchanging goods or services is
called market. There may be different kinds of
customers in market. Only one type of firm cannot
fulfill /meet all the needs of all customers. So, a firm
should classify the market on different basis and
identify target market, in same is called market
segmentation. Consumer market can be segmented
on geographic and demographic levels, population,
psychographic and behavioral basis. Similarly,
industrial market can be segmented on the basis of
geographic, demographic , operation and
purchasing system.
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Customers may be of different types according to
their needs, want, interest, buying purpose,
buying habit, age, gender, education, religion,
income level and place. So, market segmentation
should be made deeply studying and analyzing
such factors.
According to Prof. Philip Kotler, Market
Segmentation is the act of identifying, profiling
distinct group of buyers who might require
separate product and /or marketing mixes.
According to Ronald W. Hasty and W.R. Ted,
Segmenting markets simply divides the
heterogeneous mass market into groups each of
which has one or more homogeneous
characteristics.

While segmenting market, very practical strategy
should be formed. The characteristics of the
customers of segmented market should be similar
while segmenting the total market. For instance, on
the basis of income level, middle income level and
high income level. On the basis of age, market can
be segmented in 4 categories such as childrens
market, teenagers market, youths market, elders
market. Similarly on the basis of gender, market can
be segmented in 2 categories like females market
and males market. Generally, the character of same
income level customers becomes same. Similarly,
the character of same aged customers becomes the
same. Generally, the character of the customers of
the same segmentation becomes same even
segmented on other basis.

In conclusion, the process of dividing total market
into several small parts on the basis of customers
need want, buying purpose, buying habit, age,
education, gender, religion, income, place etc is
called market segmentation. Market segmentation
is made in a way that generally, the characteristics
of all the customers within same segmentation are
similar. As it is difficult to satisfy all types of
customer by a firm, it should identify target
markets byt making market segmentation and
should develop proper marketing mix. Market
segmentation is customer oriented mission in
which total market is divided into several parts of
same characteristics by identifying customers
needs or wants to supply them with their demands.

Process of Market Segmentation
It is not possible to develop the marketing strategies
for every consumer. Rather the marketer attempts
to identify broad classes of buyers who have the
same needs and wants and will respond similarly to
a marketing action. Market segmentation is dividing
up a market into distinct groups that a) have
common wants b)will respond similarly to a
marketing action. The segmentation process
involves following distinct steps:-
1. Survey stage:
The researcher conducts interviews with the
consumer to take the responses from them relating
to their motivation, attitudes and behavior.
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For conducting the survey, the researcher
prepares the questionnaire and applies it to
some of potential customers.
2. Analysis Stage:
After collecting the responses from the
respondents the next stage is to turn them
into meaningful form through analysis using
factor analysis. After that the researcher
applies cluster analysis to make division of
homogeneous responses.

3. Profiling stage:
Each homogeneous cluster is now profiled in
terms of its distinguishing attitudes,
psychographic, geographic and demographic and
consumption habits. Each segment can be given a
differentiating name.
4. Segment Selection:
The last step of the segmentation process
involves segment selection. Once the market
segments are evaluated, marketer has to select
the market segments to enter. Segment selection
involves strategic decisions on segment analysis,
market coverage patterns, inter segment
relationships and segment invasion plan.


Objectives of Market Segmentation:
1. Identification of market opportunities:
It is also important objective/aspect of market
segmentation to identify market opportunities.
Size, development and wants of each segment
can be analyzed by dividing total market in
several segments. Besides, characters of the
customers of each segment and possible profit
also can be analyzed by segmenting the market.
Market opportunities can be identified from such
analysis. More profitable market segment can be
chosen leaving aside the less profitable one. As a
result, the business firm becomes able to achieve
its goal.

2. Effective use of marketing resources:
The other important aspect/objective of market
segmentation is to able to use marketing resources
effectively. Marketing resources can be effectively
used by using separate marketing mixes for each
segment. Goods or services can be produced
according to the demand of market segment. Price of
goods and services can be fixed according to the
purchasing power of the customers of each segment.
Promotional activities also can be conducted
according to the market segment. Proper distribution
channel can be selected according to the demand
and wants of the segment. If market is not
segmented, it becomes difficult to produce suitable
goods or services to all segments, fix price, conduct
promotional activities and select distribution
channel.

3. Evaluation of competitors:
The other important objective of market
segmentation is successful evaluation of
competitors. It is necessary to get all information
about competitors situation of each segment from
market segmentation. Their weak and strong
aspects can be identified through their evaluation.
True information about competitors strategy and
marketing mix can be obtained.
4. Strategic planning:
The other important aspects/objectives of market
segmentation is to help in making effective strategic
plans. Strategic plans can be made for each market
segment by segmenting market.

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Information about number of customers, purchasing
behavior of customers, their purchasing power and
purchasing purpose should be obtained for making
strategic plans. If a detail study is carried out of
market segment by segmenting market, information
about all these matters can be acquired.
5. Effective marketing mix:
The other important objective of market
segmentation is to be possible for effective marketing
mix. True information about customers interests,
their habit, custom, purchasing power, purchasing
behavior, buying motives etc can be acquired form
market segmentation. Proper marketing mix can be
prepared for each market segment on the basis of
such information and can be implemented effectively.

6. Environment adaptation:
Environment is an important component to affect
any business organization. If environment is
made favorable to the organization, business
success can be easily achieved. Environmental
components of small segments can also be
identified through market segmentation. The
quick changing environment can be anticipated.
As a result, business organization can be made
adaptable to the environment by marketing mix.

Need of market segmentation:
1. Divisible: Market should be made divisible for
market segmentation. Market should be divided
on the basis of purchasing power, purchasing
purpose, purchasing habit, lifestyle, living style,
gender, religion, place etc. While dividing market,
the customer having same wants and character
should be grouped. Doing so, it becomes easy to
form marketing mix strategy. If the total market is
not easy to divide and has no characters,
adopting market segmentation policy becomes
possible.

2. Measurable: Customers wants, purchasing
power and characteristics should be measurable.
Besides, the information necessary for market
segmentation also should be easily available.
Customers income, age, gender, etc can be easily
obtained and measured. But beliefs, perception
and attitude of the customers cannot be
measured. So, market segmentation should not
be made on the basis of the components which
cannot be measured because true information
cannot be obtained. From it. As a result, it
becomes difficult to make marketing mix.

3. Accessible: Market segmentation should be
made in a way that it becomes easy to reach
there and provide effective services. Market
segmentation should be made in a way that
marketing activities such as distribution,
advertisement media, selling efforts etc can reach
there easily. If market segmentation is made
beyond the access, it becomes difficult to reach
there, provide goods or services and market
segmentation becomes ineffective. So, these
factors should be well thought and considered
while segmenting market.

4. Substantial: Profit components should not be
missed while segmenting market. If profit cannot
be earned form providing goods or services to
the customers, a business firm cannot make
sustainable development. The main purpose of
market segmentation by target market is to each
profit. So, market should be segmented so that
profit can be clearly seen. For this, market
segments should be sufficient and satisfactory. If
the market segment is small, it becomes difficult
to earn profit.

Target Marketing:
Concept:
A target market is a group of customers that the
business has decided to aim its marketing efforts
and ultimately its merchandise towards.[1] A well-
defined target market is the first element to a
marketing strategy. The marketing mix variables of
product, place (distribution), promotion and price
are the four elements of a marketing mix strategy
that determine the success of a product in the
marketplace.
Under target marketing, customer groups or market
segments having similar needs and characteristics
are identified and appropriate marketing mixes are
developed for each market segment.
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Here, the organization does not try to meet the
specific needs of individual buyers; rather its
efforts are concentrated on meeting the general
needs of the customer groups.
Target marketing is the most popular form of
segmentation. After evaluating different
segments, the company must now decide which
and how many segments it will target. A target
market consists of a set of buyers who share
common needs or characteristics that the
company decides to serve. Because buyers have
unique needs and wants, a seller could
potentially view each buyer as a separate target
market.
Ideally, then, a seller might design a separate
marketing program for each buyer. However, although
some companies do attempt to serve buyers
individually, most face larger number of smaller buyers
and do not find individual targeting worth while .
Instead, they look for broader segments of buyers.
Types of Target Market:
1. Age Target Marketing
Targeting a product to a particular age group or
generational cohort is a way to concentrate your
marketing efforts and generate product interest
within that particular group. According to
"Entrepreneur's website, extensive research is
necessary for age or generational marketing to
determine the status and living situations of
consumers in your potential target group.



For example, a middle-aged woman in the modern
era may still be on the dating circuit and not looking
to settle down any time soon just as easily as a
woman in the same age group could have a family.
2. Income-Sensitive Marketing
Income-sensitive marketing seeks to target your small
business's services or products to consumers of
particular income and economic status. This strategy
also shapes the prices you charge for your goods and
services as well as the marketing campaign itself. For
example, products marketed to consumers with
higher incomes will usually have higher prices while
those products marketed to consumers with lower
incomes will usually have correspondingly lower
prices. This allows more consumers in your target
market group to afford your products.



3. Gender-Specific Marketing
Gender-specific marketing shapes an advertising
campaign toward one gender or specific group
within that gender. For example, target marketing
toward pregnant women seeks to generate more
interest in your small business's goods and
services within that particular group. How your
small business accomplishes this task depends on
the outcome of your market research and gender
needs within your local marketplace. This
research may influence the types of images,
colors and language you use in your marketing
campaign to attract your target gender or gender
group to your company's products or services.

4. Geographic Target Marketing
Geographic areas across the country have
different product needs. Targeting a marketing
campaign to meet the signature geographic
demands of consumers in your marketplace can
boost your company's importance and necessity
in the minds of consumers. This strategy also
works with seasonal marketing campaigns to take
advantage of shifting consumer moods as the
weather turns hot or cold. For example, many
beverage companies roll out pumpkin-flavored
hot drinks during the fall to catch consumers
turning attention toward Thanksgiving and colder
weather.

Introduction to Market Positioning
Market positioning is the manipulation of a brand
or family of brands to create a positive
perception in the eyes of the public. If a product
is well positioned, it will have strong sales, and it
may become the go-to brand for people who
need that particular product. Poor positioning, on
the other hand, can lead to bad sales and a
dubious reputation. A number of things are
involved in market positioning, with entire firms
specializing in this activity and working with
clients to position their products effectively.

When a product is released, the company needs
to think beyond what the product is for when it
comes to positioning. It also thinks about the
kinds of people it wants to buy the product. For
example, a luxury car manufacturer might be less
interested in promoting reliability, and more
interested in promoting drivability, appealing to
people who are looking for high-end cars which
are enjoyable and exciting to drive. Conversely, a
company making mouthwash might want to go
for the bottom end of the market with an
appealing low price, accompanied by claims
asking consumers to compare to the leading
brand so that they can see that the product
contains the same active ingredients as a famous
brand, at a much lower price.

Market positioning is a tricky process. Companies
need to see how consumers perceive their
product, and how differences in presentation can
impact perception. Periodically, companies may
reposition, trying to adjust their perception
among the public. For example, a company might
redesign product packaging, start a new ad
campaign, or engage in similar activities to
capture a new share of the market.
Companies also engage in depositioning, in which
they attempt to alter the perception of other brands.
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While outright attacks on rival brands are frowned
upon and may be illegal unless they are framed
very carefully, companies can use language like
compared to the leading brand or we're not like
those other brands. A television ad, for example,
might contrast two paper towels: the brand being
advertised, and a generic with a package which
looks suspiciously similar to a popular brand of
paper towels, but isn't quite identical.
Developing a market positioning strategy is an
important part of the research and development
process.
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The marketing department may provide notes
during product development which are designed
to enhance the product's position, and they also
determine the price, where the product should
be sold, and how it should be advertised. Every
aspect of the product's presentation will be
carefully calculated to maximize its position, with
the goal of market positioning being domination.
Focusing Marketing Programme