CHAPTER 5

Market Segmentation, Targeting and

Positioning for Market Competitive

Copyright 2012Pearson Education, Inc.

Copyright 2014 by Pearson Education 7- 1
Publishing as Prentice Hall
Chapter Outline:
Steps in Designing Customer-Driven Marketing Strategy
Market Segmentation
- Bases/Variables to segment Consumer Market
- Bases/Variables to segment Business Market
- Bases/Variables to segment International Market
- Criteria/Requirement for effective segmentation
Market Targeting
- Factors to evaluate market segment
- Market targeting strategies
- Factors to consider when choosing market targeting strategy
Market Positioning
- Choosing a Differentiation and Positioning Strategy
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 Steps in designing a customer-
driven marketing strategy (pg 215)
Select customers Decide on a value
to serve proposition

SEGMENTATION Create Value DIFFERENTIATION

for targeted
TARGETING
customers
POSITIONING

In summary:
Segmentation: Identify and describe market segments
Targeting: Evaluate segments and decide which one to pursue
Differentiation: Differentiate the firms market offering to create
superior customer value
Positioning: A market offering occupying a clear, distinctive, and
desirable place compare to competing products in
the minds of target consumers.
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 Market Segmentation

Market segmentation (pg 214):

divide large heterogeneous markets into small markets (with
well defined needs, characteristics or behavior) that can be
reached more efficiently and effectively with separate
marketing strategies or marketing mix.
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Bases/Variables to Segment Consumers Market
(pg 215)

Geographic Demographic

Psychographic Behavioral

Note: There is no single best way to segment a market,

hence marketer has to try different segmentation base
or variable, alone or in combination.

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Geographic segmentation calls for dividing the market into
different geographical units such as nations, regions, states,
counties, cities or zip codes.

Geographic
segmentation
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 Demographic
segmentation

Demographic segmentation divides the market into groups

based on variables such as age, gender, family size, family
life cycle, income, occupation, education, religion, race,
generation, and nationality.

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segmentation by age

Age
Consumer needs and expenditures change as
their age changes.
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 segmentation by life cycle

Family Life Cycle

Because family needs and expenditures change over
time, one way to segment consumers is to consider the
stage of the family life cycle they occupy.

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 segmentation by gender

Gender
Starting with diapers, segmenting by sex occurs at a very
early age. Many products appeal to men or women either
because of the nature of the product or because the
marketer chose to appeal to one sex or the other. In some
cases, manufacturers develop parallel products to appeal to
each sex.
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segmentation by
Psychographics Psychographic
segmentation divides
buyers into different
groups based on
social class, lifestyle,
or personality traits

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 segmentation by
Behavior
Behavioral segmentation divides buyers into groups based on
their knowledge, attitudes, uses, or responses to a product.

Occasion group buyers according to occasions when they

get the idea to buy, actually make their
purchase, or use the purchased item.
Benefit group buyers according to the different benefits
that they seek from the product.
User Status segment into nonusers, ex-users, potential
users, first-time users, and regular users
Usage Rate group markets into light, medium & heavy users
Loyalty Status divide buyers according to their degree of
loyalty.
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Bases/Variables to Segment Business Market (pg
222)
Consumer & business marketers use
many of the same bases or variables
to segment their markets.

Business marketers may use some

additional bases or variables:

CUSTOMER OPERATING
CHARACTERISTICS
PURCHASING APPROACHES
SITUATIONAL FACTORS
PERSONAL FACTORS

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Geographic factors:
Nations close to one another will have many common traits and
behaviors.
Economic factors:
Population income levels & overall level of economic development
Political and legal factors:
Type and stability of government, receptivity to foreign firms,
monetary regulations, and the amount of bureaucracy
Cultural factors:
Common languages, religions, values and attitudes, customs, and
behavioral patterns

Bases/Variables to Segment
International
Market
Copyright 2011 Pearson
(pg 223)
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Criteria or Requirement for
Effective Segmentation:
(pg 224)

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 (i)Measurable
The size, purchasing power, and profiles of the
segments can be measured

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Education, Inc. Publishing
as Prentice Hall
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(ii) Substantial
The market segments are large or profitable enough to serve.
Note: Marketers need to be careful because there is often
heavy competition for the larger segments.

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(iii) Accessible
The market segments can be effectively reached & served.
eg. brides are an accessible segment because of the many
bridal magazines. There are few media vehicles
targeted at men getting married, so their accessibility is
poor.

NO Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

YES 17
(iv) Actionable
Effective programs can be designed for attracting
and serving the segments

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(v) Differentiable
The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs

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 Market Targeting

Market Targeting (pg 224)

Process of evaluating each market segments attractiveness
and selecting one or more segments to enter

note:
Target market consists of a set of buyers who share
common needs or characteristics that the company decides
to serve
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 Evaluating segments

In evaluating different market segments, a firm must look at three factors:

i. Segment size and growth

- The largest, fastest-growing segments are not always the most attractive

ii. Segment structural attractiveness

- A segment is less attractive if it already contains many strong and
aggressive competitors
- The existence of many actual or potential substitute products may limit
prices and the profits.
- The relative power of buyers also affects segment attractiveness. A
segment may be less attractive if it contains powerful suppliers who can
control prices.

iii. Company objectives and resources. 21

Market Targeting strategies

MARKETING MIX All buyers in

1 segment

(i) Undifferentiated
essentially avoids segmentation, appealing to a wide-
spectrum of people. eg. sweets, candy bars, etc

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 MARKETING MIX 1 Segment 1

MARKETING MIX 2 Segment 2

MARKETING MIX 3 Segment 3

MARKETING MIX 4 Segment 4

(ii) Differentiated
design separate marketing programs & marketing mix
for each of several segments chosen.
ie. only big firms can afford eg. Nike, Toyota, etc
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 MARKETING MIX Segment 1

(iii) Concentrated/Micromarketing
a firm focuses its efforts on offering one or more
products to a single segment.
ie. often useful for smaller firms that do not have the
resources or the desire to sell all things to all people.

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 Micro marketing
Micromarketing is the practice of tailoring
products and marketing programs to suit the
tastes of specific individuals and locations

Micromarketing includes:
i) Local marketing
- involves tailoring brands and promotions to the needs and wants
of local customer groupscities, neighborhoods, and even
specific stores
- eg. WalMart customizes its merchandise and layout format store
by store according to neighborhood characteristics stores near
offices contain ready made meals for busy workers
ii) Individual marketing
- involves tailoring brands and promotions to the needs and
preferences of individual customers to the extreme
- a.k.a one-to-one marketing, mass customization & markets-
of-one marketing.
- eg. tailor custom-made suit, shoes, cabinet, databases, etc 25
Several factors to consider when choosing
which market targeting strategies to use:

COMPANY RESOURCES

PRODUCT VARIABILITY

PRODUCT LIFE-CYCLE

MARKET VARIABILITY

COMPETITORS MARKETING
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 Market Positioning

Market Positioning (pg 231)

Arranging for a market offering to occupy a clear, distinctive and
desirable place compare to competing products in the mind of target
customers.

note:
Product position is the way the product is defined by consumers on
important attributes compare to competing products.
eg. Automobile: Mercedes & Cadillac on luxury, Porsche & BMW on
performance, Volvo on safety
Airlines: AirAsia on economy & flexibility, MAS on premium

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 Positioning Map

Positioning maps show consumer perceptions of their

brands versus competing products on important buying
dimensions
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 Choosing a Differentiation and
Positioning Strategy
Step 1: Identify a set of differentiating competitive
advantages upon which to build a position

Step 2: Choose the right competitive advantage

Step 3: Select an overall positioning strategy

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Step 1:

Competitive advantage
the extent that a company can differentiate & position itself as
providing superior customer value, it gains competitive
advantage

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Differentiation based on:
ie. Identifying a set of possible competitive advantages to
build a position by providing superior value from:
i) Product differentiation
brands can be differentiated on features, performance,
style or design
ii) Services differentiation
through speed, convenient or careful
iii) Channel differentiation
through channel coverage, expertise and performance
iv) People differentiation
through trained workers
v) Image differentiation
through distinctive benefits
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Step 2:
If a company is fortunate to discover a few potential differentiations that
provide competitive advantages, it now must choose the ones on which it
will build its positioning strategy.

A difference is worth establishing if it satisfies the following criteria:

i) Important
The difference delivers a highly valued benefit to target buyers.
ii) Distinctive
Competitors do not offer the difference, or the company can offer it in a more
distinctive way.
iii) Superior
The difference is superior to other ways that customers might obtain the same
benefit.
iv) Communicable
The difference is communicable and visible to buyers.
v) Preemptive
Competitors cannot easily copy the difference.
vi) Affordable
Buyers can afford to pay for the difference.
vii) Profitable
The company can introduce the difference profitably.
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Step 3:

Value proposition
is the full positioning of a brand ie. the full mix of benefits
upon which a brand is positioned.

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Communicating
a position
- once the company has
chosen a position, the
company must take strong
steps to deliver and
communicate the desired
position to target
consumers.
ie. all the companys
marketing mix (4Ps) efforts
must support the
positioning strategy.

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