Market Segmentation Targeting and

Positioning
Market Segmentation
The process of dividing a
potential market into
distinct subsets of
consumers and selecting
one or more segments as a
target market to be reached
with a distinct marketing
mix.

Copyright 2007 by Prentice Hall

INTRODUCTION
Companies cannot make a product or provide a service that will satisfy all customers in all markets. But they can
divide the markets into groups of customers or segments having different needs and wants. The company must then
identify which segment or segments it would like to serve. This decision requires an understanding of consumer
behaviour. Identifying and satisfying these market segments is the key to success.
Definition of market segmentation- Market Segmentation is dividing a heterogeneous market into homogeneous
sub units.
WHY IS MARKET SEGMENTATION NECESSARY?
If all consumers had the same needs, wants, desires and the same background, education and experience mass
marketing or undifferentiated market , a single product would be the offer. A single standardized product would
cost less. But a single product offer satisfies no one. For example if a single size refrigerator is manufactured and
offered to a large family and to a bachelor it would satisfy no one.
 Why Segmentation is Necessary
• Consumer needs differs
• Differentiation helps
products compete
• Segmentation helps
identify media

Not all consumers are alike – different customers have different needs. By segmenting the market and choosing target markets, companies can differentiate their products to
provide the benefits that the segments desire. Once a marketer has identified their segment, they can choose media that is targeted to that segment for their advertising.
 Criteria for Effective Targeting

Identifiable Sizeable Stable

Congruent with the

Accessible company’s objectives and
resources
First of all, the target must be identifiable. This means that the marketer must be able to see or find the characteristic they have chosen for segmentation. The segment must also be
sizeable. It must be large enough to be profitable to the marketer. A stable segment means that the consumers are not “fickle” and likely to change very quickly. A group of
consumers must be accessible to be targeted. The marketer must be able to reach that market in an affordable way. Finally, the target must be congruent with the company’s
objectives and resources.
1.Identifiable: The size, purchasing power ,and characteristics of the segment can be measured.
The marketer must be able to determine the size of the market; to determine how many prospective customers will
make the market. He must be able to measure the sales potential of the segment. A segment can be identifiable and
stable but not large enough for it to be viable example, very tall people or people having wide feet may not find a
ready market. To measure a segment’s size and profitability, marketers use information from secondary data, census
figures, and consumer surveys. This data can give information about consumer’s spending power, age, gender,
income levels.
2 Accessible: The segments can be effectively reached and served. With multiple ways of reaching the consumers
marketers are able to reach various segments. Emergence of wide range of TV channels, magazines, online versions
of newspapers, growth of new media like sending messages through mobile phones, and email are multiple ways to
access the consumer.
3.Sizable : A matter of concern for marketers is the extent to which the segments are large enough and worthy of
targeting and investing in. For a segment to be profitable it must have a large number of people having common
needs and interests. It should be large enough to be economically worthy.
4.Stabile: Ideally marketers would like a stable market segment. A segment where consumers behaviour are fairly
stable in terms of their psychological characteristics. A product which is a “fad” comes into the market all of a
sudden and disappears from fashion equally fast. Such market segments are not stable.
Bases for Segmentation
• Use-Related
Geographic
• Usage-Situation
Demographic
• Benefit
Psychological
Sought
• Hybrid
Psychographic
• Sociocultural
Segmentation Variables

Geographical Segmentation
 Region East, West, North, South
 Area Urban, Rural
 Climate Hot, Cold, Humid

Demographic Segmentation
 Age Below 5 years,6-20, 21-40,41-60,61 and above
 Gender Male , Female
 Income Affluent class, middle class and the poor class
 Occupation Employee, Businessman, Agriculturalist
 marital status Single, Married, Divorced, Widowed

Psychographic Segmentation
 Social Class The Rich,Aspirers
 Lifestyle The Strivers
Upper class,Middle class, lower class

Behavioural Segmentation Light user, medium user, heavy user

 UsageRate
 User Status Non- user,regular user, potential user
 Brand Loyalty Hard – Core Loyalists Split loyals Shifting loyals Switchers

Benefit Segmentation price, quality, image

 Demographic Segmentation

Age Gender Marital Status

Income,
Family Life-
Education, and
cycle
Occupation
Demographics are the core of almost all segmentation because they are easy and logical. In addition, they are a cost-effective way to reach segments and demographic shifts are
easier to identify than other types of shifts. When researching segmentation and media exposure, a consumer researcher will learn that media exposure is often directly related to
demographics. Age segmentation includes segments such as the baby boomers and generations X and Y. Family life-cycle is based on the premise that many families pass through
similar phases in their lives and share major life events such as moving, marriage, birth of a child, and retirement. Income, education, and occupation tend to tie together and lead to
segmentation based on social class.
Gender -Men and women generally have different likes, dislikes, needs, and thought processes.

Income and occupation

Many companies use this data to sell different tiers of the same product, based on income level. For instance, airlines
have three classes: economy, business class, and first class.

Occupation targeting is also important since certain resources are aimed at different industries and job titles.

Ethnicity and religion

With the tremendous increase in international business and global advertising brings an increase in segmentation based
on ethnicity, race, nationality, and religion. These groups have many individual cultures that come with conflicting
interests, preferences, attitudes, and beliefs.

Family structure

Single individuals tend to prioritize themselves, while newly married couples are likely prioritizing each other and their
homes. Couples with several children have different needs than those who just had their first child. Large families might be
more interested in low-cost household products, as compared to a couple with the same income, but without any children.
Family Life Cycle Advertising

Video cameras
are often
purchased by
young couples
with children.
Geodemographic Segmentation
• Based on geography and demographics
• People who live close to one another are similar
• “Birds of a feather flock together”

What company uses geographic segmentation?

Global companies like McDonald's and Starbucks use geographic segmenting
across the world. You'll see foods specially created for the cultures and people
in a certain geographic area.
Adidas had segmented their product in urban and urban cities that contains a certain
large size of population in order to make their target more successful.

Ch
Personality Traits
• People often do not identify these traits because they are guarded or
not consciously recognized
• Consumer innovators
• Open minded
• Perceive less risk in trying new things

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 17
Lifestyles
• Psychographics
• Includes activities,
interests, and opinions
• They explain buyer’s
purchase decisions and
choices

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 18
Psychographics is the study of consumers based on

1. Activities, Interests, and Opinions (AIOs). ... In contrast, a psychographic profile contains information
around a person's interests, hobbies, emotional triggers, and lifestyle choices

2. VALS Typology
Lifestyles
• Psychographics
• Includes activities,
interests, and opinions
• They explain buyer’s
purchase decisions and
choices

• Demographics will tell us the consumer’s ability to buy them and will work for the segmentation of basic products, but
psychographics or lifestyles are based on consumer’s values. These shared values, interests, activities, opinions, and interests
are an effective way to explain buyers’ purchase decisions.

20
The four groups with higher resources are:
Innovators- successful, sophisticated, active “take charge” people with high self esteem. Purchase best quality products, specially
designed products, niche products.
Thinkers- Mature, satisfied, reflective people motivated by ideals and who value order, knowledge and responsibility. They seek
value, functionality and value in their products.
Achievers- Successful goal oriented people who focus on career and family. They prefer premium products.
Experiencers- Young, enthusiastic, impulsive people who seek variety and excitement. They spend money on fashion,
entertainment and socialization.

The four groups with lower resources are

Believers- Conservative, conventional, traditional people with stable beliefs.
Strivers- Trendy and fun- loving people who do not have much resources. They copy the products purchased by the rich by way of
imitation products or substitute products.
Makers- Practical, down- to- earth, self sufficient people who like to work with their hands.
Survivors- Elderly passive people not comfortable with change, are loyal to their favourite brands.
Benefits Segmentation
• BENEFIT SEGMENTATION
• The benefits that consumers seek from products and services forms the benefit segmentation.
Benefits sought could be the price,quality, image etc. Benefit segmentation is used to develop
a positioning approach. LIC, ICICI Prudential, HDFC Life Insurance provide financial
benefits. Brands that position their product on instant fairness are creams like Fair & Lovely,
Garnier, Emami, Nivea etc. Benefit segmentation can also be extended to position various
brands in the same product category. This is most competitive in shampoo and toothpaste
markets.

Benefit Brand
• Economical Babool
• Mouthwash Close- up gel
• Freshness Close-up
• Prevents Tooth Decay Pepsodent, Colgate
• Brightness of Teeth Close-up, Colgate

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 28
In the shampoo market, marketers are communicating about various benefits associated
with different brands.
Brand Name Benefit Communicated

Dabur Vatika Root strengthening

Pantene Pro-vitamin B ( rich in proteins)

Head and Shoulders Anti- dandruff with extra conditioning

Himalaya Herbals Anti- dandruff

Sunsilk Nutra care (Vitamin & Protein)

Nyle Herbal
Clinic Plus Rich in proteins

Medicare Anti lice

 MARKET TARGETING

Identifying and catering to the needs of specific market segment or segments, is market targeting.
Once the company has identified its market segment opportunities, it must decide how many and
which ones to target. Marketers are combining several variables to identify smaller , better defined
target groups. A bank may identify its customers based on income, assets, savings and risk
preferences. It may target one or more segments and offer different products for different segments.
Evaluating and selecting the market segments for targeting

A segment must be viewed by seeing if it has characteristics that make it generally attractive, like size,
growth, profitability, economies of scale and low risk

•Mass marketing (undifferentiated marketing)

•Segmented marketing (differentiated marketing)
•Concentrated marketing (niche marketing)
•Micromarketing.
Implementing Segmentation Strategies

• Undifferentiated or mass markets One segment-The company attempts to serve all

customer groups with its products. This is possible only for big companies like Microsoft, Coca
cola etc.The undifferentiated or mass markets are where the company ignores segments and
makes only one product for the entire market. This leads to lower costs and higher profit margins.
• Differentiated Marketing-
• Several segments with individual marketing mixes. A company may operate in more than one segment,
sharing some similarity.With product specialization the firm sells a product to many different market
segments. A software manufacturer may be selling his product to universities, government, libraries,
modifying the product according to the needs of the consumer.With market specialization the company
sells varieties of products only to educational institutions.

Concentrated marketing usually involves only one segment, whereas a differentiated marketing strategy is targeting several segments with individual marketing mixes.
Differentiated marketing is usually used by financially strong companies that are well established in their market sector. Countersegmentation involves combining existing
segments for a company to become more efficient and profitable.

28
 Positioning
The value proposition,
expressed through
promotion, stating
the product’s or
service’s capacity to
deliver specific
benefits.

Positioning is the unifying element of each marketing mix. Product, place, price, and promotional strategies must work to state the
product or service’s ability to deliver benefits to the consumer. Positioning is important to think about the concept as it is closely
tied to the choice of a target market.
33