Marketing

Plan
Lecture 4: “Segmenting,
Targeting, and Positioning”

Learning Objectives
1. Identify different ways to segment the market and
develops profiles of the resulting market segments.
2. Evaluate market segment’s attractiveness and selecting
one or more market segments to enter and target.
3. Differentiate the firm’s market offering to create superior
customer value.
4. Arranging a market offering to occupy a clear, distinctive,
and desirable position relative to competing products in
the minds of target consumers.

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 Analyzing the Current Situation

In this chapter, you’ll learn about scanning the internal environment, including the
organization’s mission, resources, product offerings, previous results, business relationships,
keys to success, and warning signs. You’ll also learn about scanning the external environment,
including competitive factors and political-legal, economic, social-cultural, technological, and
ecological trends. Finally, you’ll see how to use your insights about the current situation to

Part 3 of 6
prepare and refine a SWOT (strength, weakness, opportunity, and threat) analysis.

1
Research and
analyze the
current situation
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2
Plan metrics and
Understand markets
implementation
and customers
control

Marketing plan to:


 


 
   





 

5 3
Develop Plan
marketing strategies segmentation,
and programs targeting, positioning

4
Plan direction,
objectives, marketing
support

EXHIBIT 1 Marketing Planning: Step 1

APPLYING YOUR KNOWLEDGE

This is a good time to set up the structure of your marketing plan so that you can document the
outcome of your environmental scanning and analysis efforts. Answering the questions in “Your
Marketing Plan, Step by Step,” at the end of this chapter will help you navigate the scanning and
analysis process. Also review this chapter’s checklist, which includes key questions to ask as you
examine your current marketing situation.

Why segment?
Predict behaviour - similar segments behave and
respond to marketing stimuli in similar ways.

Stimuli Response
TV advert Purchase Intent

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The Need for Segmentation,
Targeting, and Positioning
1. A move away from mass marketing and towards
segment marketing.

2. Allows marketers to focus their resources on the

most promising opportunities.

3. Improves marketing efficiency and effectiveness.

4. Enables marketers to notice changes in the segment

and to respond more quickly.

Part of the Marketing Process

Differentiation
Segmentation Targeting
& Position

q 7-3

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Market Segmentation

Process of dividing large groups into small sub-groups

with similar needs and wants to market products and
services more effectively

Video Example: Coke vs. Pepsi

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Dimensions of Market Segmentation
Marketers can isolate groupings within consumer
markets using the following types of variables:

Geographic Demographic
Where? Who?

Psychographic Behavioural
Why? How?

Where? Geographic Segmentation

Divides the market into different geographical units: nations,

regions (Middle East), states, countries (Kuwait), or cities (Kuwait
city)
Woolly hats
Scarf
Gloves

Shorts
T-shirts

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Who? Demographic Segmentation

Divides the market into groups based on variables: age, gender,

family size, family life cycle, income, occupation, education,
religion, race, generation, and nationality

Most popular segmentation method: needs, wants, and usage

often vary with demographic variables and are easier to
measure.

Needs Proxy measure Demographics:

Wants Age, Gender,
Usage etc.

Age Segmentation & Lifestyle

Age and life-cycle stage segmentation is the process of offering
different products or using different marketing approaches for
different age and life-cycle groups
Age Demographics of Kuwait
60%
qExample of
52% accumulated
50% wealth/spending
power

40%

30%
25%

20%
15%

10%
5%
2%

0%
0-14 years 15-24 25-54 55-64 65+
q Age Demographics fro United Nations (2013)

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Gender Segmentation
Gender segmentation divides the market based on
sex (male or female)

Gender Split of Kuwait

females
40%

males
60%

Gender Spilt from United Nations (2013)

Video Example: Honda Fit

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Nationality Segmentation

Income Segmentation
Income segmentation divides the market into
affluent or low-income consumers

q Average adult
wealth, World
Bank(2012)

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 How? Behavioral Segmentation

More focused and aims to get under consumers skin.

It divides buyers into groups based on their knowledge,
attitudes, uses, or responses to a product
• Occasion
• Benefits sought
• User status
• Usage rate
• Loyalty status

Behavioral Segmentation
Occasion segmentation divides buyers into groups according to
occasions when they get the idea to buy, actually make
purchases, or respond to a product

Benefit segmentation requires finding the major benefits people

look for in the product class, the kinds of people who look for
each benefit, and the major brands that deliver each benefit

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 Video Example: Tesco/Ramadan

“Ramadan boosts
Britain's big
supermarkets with
£100million sales uplift
as Muslims prepare
lavish sundown meals”
– Daily Mail

Behavioral Segmentation
User status divides buyers into ex-users, potential users, first-
time users, and regular users of a product

Usage rate divides buyers into light, medium, and heavy product
users

Loyalty status divides buyers into groups according to their

degree of loyalty

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Why: Psychographic Segmentation

Psychographic segmentation divides buyers into different

groups based on social class, lifestyle, or personality traits

Personality

Motivation

Self Perception

Beliefs

Video Example: Mountain Dew

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Business Segmentation Variables
Business markets can also be segmented and
usually include:

1. Behavioral and Attitudinal

2. Demographic

3. Geographic

Business Behaviour
• Purchasing patterns
and process

• User status

• Benefits expected

• Order size/frequency

• Buyer/influencer/user
attitudes

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 Business Demographics
Common business demographic variables used:

Suitable? More
What quantity
or less attractive? Industry Business size do they require?
What capacity
do you have?

More or less
attractive? More Business age Ownership
structure Easy to
or less risk (new penetrate?
vs. established) Public vs.
private?

Example: Pizza Sauce Business

Industry Age Size

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Business Geography
• Utilises such variables as
nation, region, state, city,
and climate.
• Allows for the grouping of potential businesses
according to:
• Concentration of outlets
• Location of headquarters – (London 70% of FTSE 100)
• Geography-related needs or responses

Sources of Data (US - Country Profiles)

https://www.export.gov/article?series=a0pt0000000PAuDAAW&type=Country_Commercial__kav

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 Effective Market Segmentation

Fit with company resources and mission

examples include the size,
purchasing power, and
Measurable profiles of the segments
what are the
companies
capabilities?

Actionable Substantial

enough to be profitable

Accessible Differentiable

refers to the fact that the

in relation to the competition
market can be effectively
reached and served

Multiple Levels of Segmentation

Multiple segmentation is used to identify smaller,

better-defined target groups

One level of
segmentation
(3 people)

Three levels Two levels of

of segmentation
segmentation (2 people)
(1 person)

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 Video Example: Just for Men

Putting it all together

Level 1: Level 2: Level 3: Level 4: Behavioral
Geographic Demographic Demographic Benefits
Country Gender Age

0-14

Male

15-24

UK

25-35
Female

Reduce Grays
36-56

57+

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Part of the Marketing Process

Differentiation
Segmentation Targeting
& Position

q 7-3

Selecting Target Markets

The Target Market is the segment of the overall market
that a company chooses to pursue. Each potential
segment must be evaluated based upon fit with the
firm’s:
• Resources – do we have what’s needed?
• Goals – does it help to meet our goals (financial, social?)
• Mission – does it fit with our mission?
• Priorities – is it a strategic priority?

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Segment Personas
• Detailed but fictitious profiles representing how
individual customers in their targeted segments
behave, live, and buy.
• Give marketers a deeper understanding of what
shapes each segment’s needs, preferences,
buying behavior, and
consumption patterns.

Part of the Marketing Process

Differentiation
Segmentation Targeting
& Position

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Positioning for Competitive Advantage

• Positioning is the differentiation on the basis of

attributes that customers find meaningful.

• Conveys the value that the brand provides and sets

the brand apart.

• Sets the tone for the marketing plan.

• Should be re-evaluated periodically.

Meaningful Differentiation
Consideration is also given to positions
being staked out by the competition.
Some sources of meaningful
differentiation:
• Product features - the features, quality, ergonomics etc.
• Service attributes – the experience?
• Channel attributes – how is it purchased?
• Pricing attributes – the cost?
• Other attributes

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 Summary
• Market segmentation is the process of grouping customers
within a market according to similarities.
• The purpose is to form groupings that are similar, yet
sufficiently different to predict behavior to stimuli.
• Once segments have been chosen, the company creates a
positioning strategy for effective differentiation on the basis
of attributes that are meaningful to the targeted segments.
• Each segment is evaluated and rank selected in order of
entry and how to target them through concentrated,
undifferentiated, or differentiated marketing.

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