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COURSE TITLE : PRINCIPLES OF MARKETING

CHAPTER 3: Market Segmentation, Target Market and Market Positioning

 Explain the purpose of segmentation and targeting in marketing
 Describe common segmentation approaches
 Explain the process of selecting an appropriate segmentation approach
and deciding which customer segments to target for marketing activities
 Explain how targeting influences each element of the marketing mix
 Define positioning and differentiation, and why they are important to
marketing a product or service

CHAPTER 3: MARKET SEGMENTATION, TARGET MARKET and MARKET POSITIONING

MARKET SEGMENTATION
 Can be defined as subgroup of people or organization, sharing one or more
characteristics that cause them similar product needs.
 the process of dividing a market of potential customers into groups, or segments, based
on different characteristics. The segments created are composed of consumers who will
respond similarly to marketing strategies and who share traits such as similar interests,
needs, or locations.

WHY IS MARKET SEGMENTATION IMPORTANT FOR MARKETERS?

1. Market segmentation makes it easier for marketers to personalize their marketing
campaigns. By arranging their company’s target market into segmented groups, rather
than targeting each potential customer individually, marketers can be more efficient with
their time, money, and other resources than if they were targeting consumers on an
individual level. Grouping similar consumers together allows marketers to target specific
audiences in a cost effective manner.

2. Market segmentation also reduces the risk of an unsuccessful or ineffective marketing

campaign. When marketers divide a market based on key characteristics and
personalize their strategies based on that information, there is a much higher chance of
success than if they were to create a generic campaign and try to implement it across all
segments.

3. Marketers can also us segmentation to prioritize their target audiences. If segmentation

shows that some consumers would be more likely to buy a product than others,
marketers can better allocate their attention and resources.

THE NEED FOR MARKETING SEGMENTATION

 The marketing concept calls for understanding customer and satisfying their needs
better than competition.
 Different customers have different needs, and its rarely possible to satisfy all the
customers by treating them alike.

THE PROCESS OF SEGMENTING MARKETS

In segmenting markets, the following steps are necessary;

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1. Identification of market segments in terms of characteristics of prospective customers

they contain.
2. Determination of whether and to what extent there are differences in the needs of
benefits sought by customers in the various segments. If there are no differences in the
needs of the customers in the various segments, segmentation is not an option.
3. Evaluation of the present and future attractiveness of each segment. Important
indicators of attractiveness are sales growth, competition, and profitability. There is no
point in segmenting attractiveness is not established

BASES FOR MARKET SEGMENTATION

1. Geographic Segmentation requires dividing the market into different geographical units
like nation, regions, provinces, cities, towns, or barangays. A multi-national company for
instance, may segment its market into nations and treat each country as unique. The
product the company sells to one country is slightly altered when selling to another.
Some multi-national find a market segment of one country is much similar to a market
segment of another country. The company may it more profitable to serve similar
segments regardless of which individual country they are located.

2. Demographic segment refers to dividing the market into segments on the basis of
demographic variables like age, sex, family size, family life cycle, income,
occupation, education, religion, race, and nationality. A company may choose age
as a variable in segmenting its market, then use marketing programs appropriate to the
particular age group it wants to serve. A company may also segment its market
according to sex and pour money and effort toward serving the identified segment.

Family size is determined by the number of family members. The need of two family
member for instance, are different from those of a six family member. Family life cycle
refers to that stage in which a family is currently situated. A newly wedded couple is
regarded as in the first stage and the second stage commences after the first baby is
born. The succession of stages culminates into the last stage composing of an orderly
couple which all children living separate lives and having families of their own. These
provide companies for segmenting its markets.

In terms of income, a market may be subdivided into the following; (1) highly income
group, (2) middle income group, (3) low income group. The basis for this type of
segmentation rests on the premise that people with more or less similar income and
consequently have the same ability to spend will to tend to have more or less similar
needs.

Segmenting the market according to occupation may be useful to some type of

companies. Occupation may be classified according to the following; professional,

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technical, manager, proprietor, farmer, teacher, housewife, students, and others. People
with similar occupations tend to have more or less similar needs.

3. Psychographic Segmentation refers to the classification of buyers or consumers by

some psychological characteristics they process in common. They may be grouped
according to social class lifestyle. Segmentation on social class rests on the
assumption that the human components of one social class share similar values,
interests, behaviour, and economic positions.

Life style refers to a person’s pattern of living in the world as expressed in his or her
activities, interests, and opinions.

4. Behaviour Segmentation is a term refers to the grouping of the buyers on the basis of
their knowledge, attitude, used, response to a product. Buyer behaviour may be
segmented according to various categories, namely; (1) purchase occasion, (2)
benefits sought, (3) user status, (4) loyalty status, (5) readiness stage, (6) usage
rate, and (7) attitude toward product.

Occasion segmentation calls for grouping of buyers according to occasion when they
get the idea, make a purchase, or use a product.

Buyers may also be segmented according to the benefits they seek from a particular
product. Health maintenance is a type of benefit sought by millions of consumers and
they clearly belong to a particular market segment.

Another useful way of segmenting a market is by grouping product users according to

status. User status may be classified as follows; (1) non-users, (2) ex-users, (3)
potential users, (4) first time users, and (5) regular users.

Segmentation by usage rate is also a way of market segmentation. It is done by

classifying the buyers into light users, medium users, and heavy users.

Buyers may also be grouped according to their loyalty to particular brands. They may
be classified as follows; (1) those who buy only one brand product, (2) those who
buy two to three brands, (3) those who shift from one brand to another, (4) those
who have no brand preference.

Another way of segmenting the market is to classify buyers according to their readiness
to buy. In this regard, they may be categorized into the following stages; (1) people
who are unaware of the product, (2) people who are aware of the product, (3)
people who are informed about the product, and (4) people who are interested in
the product.
People’s attitude toward the product may also be classified according to the degree
of enthusiasm. These are the following; (1) enthusiastic attitude, (2) positive attitude,
(3) indifferent attitude, (4) negative attitude, and (5) hustle attitude.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

To be useful and effective, market segmentation must meet the following requirements;
1. Measurable
The variable of a particular segment must be measurable. For instance, if a segment is
defined as men who are college graduates and are currently employed, it would be
relatively easy to find information about the number of such men in the population. It
may also be easy to obtain their information their number per age bracket.

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2. Substantial
The segment must be large or wide enough to be economically feasible. A narrow
segments consists of members with highly identical needs, making it easier to design an
appropriate marketing program. A narrow segment however, will have fewer members
and sales potential will be lower.

3. Accessible
Segmentation will be useful only if the segment members can be reached economically
by a pre-designed marketing effort. This is possible if the segment members are
concentrated in certain geographic areas, buy their needs at particular stores, and is
exposed to certain media.

4. Actionable
For segmentation to be useful, the firm must have the ability to serve the various
segments. It must be able to develop and implement separate marketing program for
each segment. Firms without efficient resources from not benefit from segmentation.

TARGET MARKET
 A specific group of consumers at which a company aims its products and services.
 The buyers of the goods.
 They can be the present product users or they can be the prospective buyers being
targeted by the marketing organizations.

WHY IS DETERMINING A TARGET MAREKT IMPORTANT?

 The better a company is at identifying their potential consumers; the more successful they
will be in delivering products and services that are in demand.
 Your target consumers are those who are most likely to buy from you.
 Focusing on a target market makes it easier to develop products people wants.

TWO CLASSIFICATION OF TARGET MARKET

1. Consumer Market - are those who buy goods for their own personal use or purpose
such as buying personal computer to accomplish one’s academic requirements.
2. Industrial Market – are those institutions or people who buy industrial goods either for
the purpose of using in business operations, such as buying the units of computer
assembly for a recruitment agency business; or for re sell purposes, like buying the
same product for re-selling to clients or companies. The objective of the industrial market
is to gain profit out of the purchased industrial goods.

MARKET POSITIONING
In marketing and business strategy, market position refers to the consumer’s perception of
a brand or product in relation to competing brands or products. Market positioning refers to the
process of establishing the image or identity of a brand or product so that consumers perceive it
in a certain way.

For example, a car maker may position itself as a luxury status symbol. Whereas a battery
maker may position its batteries as the most reliable and long-lasting. And a fast-food restaurant
chain may position itself as a provider of cheap and quick standardized meals. A
coffee company may position itself as a source of premium upscale coffee beverages. Then a
retailer might position itself as a place to buy household necessities at low prices. And a
computer company may position itself as offering hip, innovative, and use-
friendly technology products.

POSITIONING OF A BRAND

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The positioning of a brand or product is a strategic process that involves marketing the brand or

product in a certain way to create and establish an image or identity within the minds of the
consumers in the target market. Market positioning of a brand or product must be maintained
over the life of the brand or product. Doing this requires ongoing marketing initiatives intended
to reinforce the target market’s perceptions of the product or brand.

REPOSITIONING DEFINITION
Repositioning a brand or product means altering its place in the minds of the consumer, or
essentially changing the brand’s or product’s image or identity. When you are repositioning, or
trying to change the consumers’ perception of a brand or product after it has already been
solidified, may confuse or alienate consumers in the target market.

For example, if a premium luxury car maker suddenly slashed the prices of its vehicles and
began selling them at the same prices as cheaper brand-name vehicles, consumers would no
longer perceive the vehicles made by the luxury car maker as prestigious status symbols, even
though the car features may remain unchanged.

ACTIVITY

Questions:

1. What is the combined income level of your family?

2. Where does your family do their main grocery shopping?
3. How many times a month does your family go shopping for non food items?
4. What are your family’s five favorite non-food shops?
5. Does your family have an internet connection?
6. Where does your family live?
7. How many are you in your family?
8. Does your family own their own home?
9. What is the age range of your family?
10. What sporting and leisure activities do your family enjoy?

Deadline: TBA

REFERENCES

Armstrong, G., & Kotler, P. (2018) Principles of Marketing 17th Edition

Medina, R., (2007) Principles of Marketing

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