Lecture 11 Market Segmentation, Targeting, Positioning

Seminar in Marketing
NGT-669
By
Mr. Ghulam Murtaza
Segmentation, Targeting & Positioning
Segmentation, Targeting & Positioning
Overview: Segmentation, Targeting & Positioning
Why do this?
Market Segmentation
Market segmentation is 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.
Market segments are known to respond somewhat predictably to a marketing
strategy, plan, or promotion. ... For example, common characteristics of a
market segment include interests, lifestyle, age, gender, etc. Common examples of
market segmentation include geographic, demographic, psychographic, and
behavioral.
Market Segmentation - Principles
• Segmentation Variables
– Geographic
– Demographic
– Psychographic
– Behavioral
– Other (anything!)
• No single best way to segment a market.
• Often best to combine variables and identify smaller, better-
defined target groups.
Geographic Segmentation
• Divide markets into different geographic units.
• Examples:
– World Region or Country: North America,
Western Europe, European Union, Pacific Rim,
Mexico, etc.
– Country Region: Pacific, Mountain, East Coast, etc.
– City or Metro Size: New York, San Francisco
– Population Density: rural, suburban, urban
– Climate: northern, southern, tropical, semi-
tropical
Demographic Segmentation
• Use Differences in:
– age, gender, family size, family life cycle, income,
occupation, education, race, and religion
– Most frequently used segmentation variable

• Ease of measurement and high availability.
Psychographic Segmentation
Psychographic segmentation
divides a market into
different groups based on
social class, lifestyle, or
personality characteristics.
People in the same demographic classification

often have very different lifestyles and personalities.
Behavioral Segmentation
• Occasion • Loyalty Status
– Special promotions & – Nonusers, ex-users,
labels for holidays. potential users, first-
– Special products for time users, regular
special occasions. users.
•
•
Benefits Sought Usage Rate
– Different segments – Light, medium,
desire different benefits heavy.
from the same products.
Loyalty Status Segmentation
Hard-core
Split loyals
Shifting loyals
Switchers
User & Loyalty Status Segmentation
Requirements for Effective Segmentation
Segments must be
– Measurable
– Accessible
– Substantial
“Lefties” are hard to
identify and measure, so
few firms target this
– Differentiable
segment.
– Actionable
Evaluating Market Segments
•
Segment Size and Growth Potential
– Sales, profitability and growth rates
•
Segment Structural Attractiveness
– Competition, substitute products,
– buyers & supplier power, new
entrants (Porter’s Five Forces)
•
Company Objectives and
Resources
– Core competencies
– “What business do we want to be in?”
Targeting Segments - Overview
Targeting in Marketing
Targeting in marketing is a strategy that breaks a large market into smaller

segments to concentrate on a specific group of customers within that
audience. ... Instead of trying to reach an entire market, a brand uses target
marketing to put their energy into connecting with a specific, defined group
within that market.
Small businesses often target customers by gender or age. For example, a women's
clothing retailer directs its promotional efforts at women. ... Similarly, some small
companies market to specific age groups. Companies selling life insurance for people
close to retirement age may target people 50 and over.
Market Preference Patterns
Undifferentiated (Mass) Marketing
– Ignores segmentation opportunities
Differentiated (Segmented) Marketing
– Targets several segments

and designs separate offers
for each.
– Coca-Cola (Coke, Sprite, Diet Coke,

etc.)
–
Procter & Gamble (Tide, Cheer,
Gain, Dreft, etc.)
–
Toyota (Camry, Corolla, Prius, Scion,
etc.)
Niche Marketing
– Targets one or a couple small segments
– Niches have very specialized interests
Flexible Marketing Offerings
• “Naked”/Core solution • Discretionary options

– Some segment
– Product and service
members value
elements that all
segment members – Options may carry
value additional charges
Socially Responsible Targeting
• Controversies and concerns

– Targeting the vulnerable and
disadvantaged
• Cereal, Cigarettes, Alcohol,
Fast-food
•
– The “Catch-22” of Targeting
•
Psychological Reactance
Failure to target seen as prejudice
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.
A positioning statement is about communicating how your brand is different
from the competing brands. The purpose behind positioning is to create an
appealing image that leverages a brand's unique strengths. Marketers may also
create positioning statements for companies and individual products
Positioning
The place a product occupies in consumers’

minds relative to competing products.
Positioning Example
eBay’s positioning: No
matter what “it” is, you
can find “it” on eBay!
Positioning Example
To (target segment and need) our (brand) is a

(concept) that (point-of-difference).
“To busy mobile professionals who need to

always be in the loop, Blackberry is a wireless
connectivity solution that allows you to stay
connected to people and resources while on
the go more easily and reliably than the
competing technologies.”
Positioning Maps: Luxury SUVs Price vs.
Orientation Dimensions
Positioning Strategy
• Competitive advantages
• Points of Parity
• Points of Difference => Differentiation
Positioning results from differentiation and

competitive advantages.
Positioning may change over time.

Sources of Differentiation
– Product Design
– Quality
– Additional Services
– Image
– People (Staff)
– Price
– Other
6-24
Choosing the Right Competitive Advantages
• The best competitive advantages are…
– Important
– Distinctive
– Superior
– Communicable
– Pre-emptive
– Affordable (to company and consumer)
– Profitable
Moral: Avoid meaningless

differentiation.
Generic Product Positions & Value
Propositions
In-class Activity
• Describe how each of the following brands,
companies, or products is positioned:

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Seminar in Marketing

– Most frequently used segmentation variable

People in the same demographic classification

Targeting in marketing is a strategy that breaks a large market into smaller

– Targets several segments

– Coca-Cola (Coke, Sprite, Diet Coke,

• “Naked”/Core solution • Discretionary options

• Controversies and concerns

The place a product occupies in consumers’

To (target segment and need) our (brand) is a

“To busy mobile professionals who need to

Positioning results from differentiation and

Positioning may change over time.

• The best competitive advantages are…

Moral: Avoid meaningless

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