Market Segmentation, Targeting, and

Positioning
Learning Objectives:
• Learn the three steps of marketing, market segmentation, target
marketing, and market positioning.

• Understand the major bases for segmenting consumer and

business marketing strategy.

• Know how companies identify attractive market segments and

choose market strategy.

• Realize how companies position their products for maximum

competitive advantage in the marketplace.
Target Market

A market is a set of all actual and potential buyers

A target market is a group of people toward whom
a firm markets its goods, services, or ideas with a
strategy designed to satisfy their specific needs
and preferences.
Any marketing strategy must include a detailed
(specific) description of this.
STEPS:
The STP Process
Segmentation is the process of classifying
customers into groups which share some common
characteristics.
Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter.
Positioning is arranging for a product to occupy a
clear, distinctive and desirable place relative to
competing products in the mind of the consumer.
- dividing a market into distinct groups with distinct
needs, characteristics, or behavior who might require
separate products or marketing mixes.
 Advantages of Segmentation
1. The process of breaking up a homogeneous market
into heterogeneous segments forces the marketer
to analyse and consider both the needs of the
market and the company’s ability to competently
serve those needs – thereby making the company
better informed about its customers
2. Competitor offerings and marketing positioning
must also be analysed in this context so the
company must consider what its competitive
advantages and disadvantages are, helping it to
clarify its own positioning strategy
3. Limited resources are used to best advantage,
targeted at those segments that offer the best
potential
Requirements for Effective Segmentation

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.

Accessible
Accessible • Segments can be effectively
reached and served.

Substantial • Segments are large or

Substantial
profitable enough to serve.

Differential • Segments must respond

Differential
differently to different marketing
mix elements & programs.

Actionable
Actionable • Effective programs can be
designed to attract and serve
the segments.
Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Selection Criteria
Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Step 1. Market Segmentation
Levels of Market Segmentation
Mass
MassMarketing
Marketing
Same
Sameproduct
productto
toall
allconsumers
consumers
(no
(nosegmentation)
segmentation)

Segment
SegmentMarketing
Marketing
Different
Differentproducts
productsto
toone
oneor
ormore
moresegments
segments
(some
(somesegmentation)
segmentation)
Niche
NicheMarketing
Marketing
Different
Differentproducts
productstotosubgroups
subgroupswithin
withinsegments
segments
(more
(moresegmentation)
segmentation)
Micromarketing
Micromarketing
Products
Productsto
tosuit
suitthe
thetastes
tastesof
ofindividuals
individualsand
andlocations
locations
(one
(onecomplete
completesegmentation)
segmentation)
Local Marketing Individual Marketing
Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
Mass Marketing:
1. Mass Marketing, Mass producing, mass distributing
and mass promoting the same product in the same
way to all consumers.
2. Largest potential market helps lower costs equaling
lower prices or higher margins.
3. Difficult to access fragmented markets.
4. Problems in selecting from multiple ad media and
distribution channels.
Segment Marketing:
1. Marketing recognizes buyers differ in needs,
perceptions, and buying behaviors Isolate broad
segments comprising a market.
2. Adapt offers to best match segment needs.
3. Market more efficiently and effectively.
4. More focus and less competition.
Niche Marketing:
1. Marketing that focuses on subgroups within large
identifiable groups in a market.
2. Dividing a segment into subsegments.
3. Defining group with distinctive set of traits seeking
special combination of benefits.
4. Price premium.
5. Few or no significant competitors
6. Improves focus of limited resources.
Micro Marketing:
1. Tailoring products and marketing programs to suit the
tastes of specific individuals or locations.
2. Local marketing: i)Local tailoring of brands and
promotions; ii)Overcomes regional differences –“First-line
customers”; iii)Dilutes brand image and operation
efficiency; iv)Logistical problems.
3. Individual marketing: i)Tailoring products and marketing
programs to the needs and preferences of individual
customers; ii)Mass customization; iii)Custom-made
products; iv)Self-marketing.
 Step 1. Market Segmentation
Geographic Bases for Segmenting
Nations, states, Consumer Markets
regions or cities

Demographic
Age, gender, family size
and life cycle,
or income

Psychographic
Social class, lifestyle,
or personality

Behavioural
Occasions, benefits
sought, user status,
usage rate, loyalty
Step 1. Market Segmentation
Bases for Segmenting Business Markets

Personal Demographics
Characteristics

Bases
Bases
for
for Segmenting
Segmenting
Business
Business
Situational Operating
Factors Markets
Markets Characteristics

Purchasing
Approaches
Segmenting Business Markets
• Demographic Segmentation
- industry, company size, location

• Operating Variables
- technology, usage status, customer capabilities

• Purchasing approaches

• Situational factors
- urgency, specific application,
size of order

• Personal characteristics
- buyer-seller similarity, attitudes
toward risk, loyalty
Step 1. Market Segmentation
Bases for Segmenting International Markets
Industrial
Industrial Markets
Markets

Political/
Political/
Geographic
Geographic Economic
Economic Legal
Legal

Cultural
Cultural Intermarket
Intermarket
Segmenting International Markets

• Geographic segmentation
- location or region
• Economic factors
- population income or level of economic development
• Political and legal factors
- type/stability of government, monetary regulations, amount of
bureaucracy, etc.
• Cultural factors
- language, religion, values, attitudes, customs, behavioral patterns
Consists of a set of buyers who share common needs or
characteristics that the company decides to serve
Step 2. Market Targeting
Evaluating Market Segments (developing
selection criteria)
Segment Size and Growth
Analyse sales, growth rates and expected profitability for
various segments.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s).
Look for Competitive Advantages.
Step 2. Market Targeting
Market Coverage Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix

A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
C. Concentrated Marketing
Step 2. Market Targeting
Choosing a Market-Coverage Strategy
Company
Resources

Product
Variability

Product’s Life-Cycle
Stage

Market
Variability

Competitors’
Marketing Strategies
Step 3. Positioning for Competitive
Advantage
Market Positioning/Product’s Position - the way the
product is defined by consumers on important attributes
the place the product occupies in consumers’ minds relative to
competing products.
• Involves implanting the brand’s unique benefits and differentiation in
the customer’s mind
• Positioning maps that plot perceptions of brands are commonly used

Marketers must:
Plan positions to give their products the greatest advantage in
selected target markets,
Design marketing mixes to create these planned positions.
Step 3. Positioning for Competitive
Advantage: Strategies
Product
Product Product
Product
Class
Class Attributes
Attributes

Away
Away from
from Benefits
Benefits
Competitors
Competitors HH
GG
Offered
Offered
CC

AA

DD
Against
Against aa EE
BB
Usage
Usage
Competitor
Competitor
FF
Occasions
Occasions

User
User Class
Class
Steps to Choosing and Implementing
a Positioning Strategy
Step 1. Identifying Possible Competitive
Advantages: Competitive Differentiation.

Step 2. Selecting the Right Competitive

Advantage: Unique Selling Proposition (USP).

Step 3. Communicating and Delivering the

Chosen Position.

Step 4. Support the positioning strategy with a

unique marketing mix
 Step 1. Identifying Possible Competitive Advantages: Competitive
Differentiation

Product
Product Service
Service

Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation

Channels
Channels Image
Image People
People
Step 2. Selecting the Right Competitive Advantage: Unique
Selling Proposition (USP)

Important
Important

Profitable
Profitable Criteria
Criteria Distinctive
Distinctive
for
for
Determining
Determining
which
which
Differences
Differences
Affordable
Affordable to
to Superior
Superior
Promote
Promote

Preemptive
Preemptive Communicable
Communicable
Step 3. Communicating and Delivering the Chosen Position

Companies must be certain to DELIVER their

value propositions.
Positions must be monitored and adapted over
time.
Step 4 – Supporting the positioning
strategy

At this stage the company has decided on its

positioning strategy and must now design a

marketing mix to support this strategy.