Marketing Management

Topic 8 -

Segmentation, Targeting and Positioning

Dr. Sweta Menon

Overview

 Market Segmentation
 Segmentation Methods
 Market Targeting
 Positioning

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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 Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market

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Market Segmentation

 Mass Marketing - a single marketing mix to everyone in

an undifferentiated manner
v/s
 Mass Customisation - providing a tailored product or
service to every customer

 Market segmentation is the process grouping

customers into smaller subgroups or segments that are
homogenous within (i.e. people in the segment are similar
to each other in their attitudes in behavior to certain
marketing stimuli).
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 Mass Customisation
 Mass customization promises us individually customized
products at the price of a mass-produced item.
 We get something that is customized to our needs but
doesn’t have the luxury price tag usually associated with
custom-made products.

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Mass Customisation - Examples

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Step 1. Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)

Segment Marketing
Different products to one or more segments
(some segmentation)

Niche Marketing
Different products to subgroups within segments
(more segmentation)

Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)

Local Marketing Individual Marketing

Tailoring brands/ promotions Tailoring products/ programs
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to local Menon
customer groups to individual customers
Step 1. Market Segmentation
Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

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

Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses
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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

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 Pampers
 This ad is an example of
geographic
segmentation.
 When visiting the web
site look for the different
countries Pampers
markets to.

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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.

 Usually the worst variable to use.

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Segmentation by Age and Gender

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Using Multiple Segmentation
Bases: Geodemographics

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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.
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VALS - Network

ACTUALIZERS Abundant Resources

8%
Principle Oriented Status Oriented Action Oriented

FULFILLED ACHIEVERS EXPERIENCERS

11% 13% 12%

BELIEVERS STRIVERS MAKERS

16% 13% 13%

STRUGGLERS Minimal Resources

12%
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 Jaguar
 Segmentation based on
income

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 Behavioral Segmentation
 Loyalty Status
 Occasion
 Nonusers, ex-users,
 Special promotions & labels
for holidays. potential users, first-time
users, regular users.
 Special products for special
occasions.

 Benefits Sought  Usage Rate

 Different segments desire  Light, medium, heavy.
different benefits from the
same products.

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Loyalty Status Segmentation

Hard-core

Split loyals

Shifting loyals

Switchers
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User & Loyalty Status Segmentation

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Step 1. Market Segmentation
Bases for Segmenting International Markets

Industrial Markets

Political/
Geographic Economic
Legal

Cultural Intermarket
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Step 1. Market Segmentation
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing
mix elements & actions.

Actionable • Must be able to attract and serve

the segments.
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Benefit Segmentation of
the Snack Food Market

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Target Market Selection
 A target market is the market segment which a
particular product is marketed to.

 Among the segments, which ones are we going to serve?

 Our Objectives
 Comparative Strengths and Weaknesses
 Resources Needed to Market Successfully to Target Segment
 Availability of Appropriate Collaborators
 Expected Financial Returns

 How many Products to each segment?

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 Step 2. Market Targeting
Evaluating Market Segments

 Segment Size and Growth

 Analyze sales, growth rates and expected profitability.

 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.

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Step 2. Market Targeting
Choosing a Market-Coverage Strategy

Company
Resources

Product
Variability

Product’s Stage
in the Product Life Cycle

Market
Variability

Competitors’
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Targeting Segments - Overview

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Market Preference Patterns
 Target Marketing Strategies

 Five basic strategies for target market selection:

 (1) Single Segment Targeting
 (2) Selective Targeting
 (3) Mass Market Targeting
 (4) Product Specialization
 (5) Market Specialization

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Basic Target Marketing Strategies

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Positioning
 Positioning is the technique by which marketers try to
create an image or identity in the minds of their target
market. It is the 'relative competitive comparison' your product
occupies in a given market as perceived by the target market.
 Trout & Ries (1986) suggest that positioning is not
something you do with the product but rather it is something
you do with the mind. In other words, you position the
product in the mind of the consumer

 How does the consumer see us?What distinguishes us in the

mind of the consumer?

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Step 3. Positioning for Competitive
Advantage

 Product’s Position - the place the product occupies in

consumers’ minds relative to competing products;
 Volvo positions on “safety”,
 Maruti on ‘Service’

 Marketers must:
 Plan positions to give products the greatest advantage
 Develop marketing mixes to create planned positions

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Steps to Positioning
1. Identify ‘Frame of Reference’ by identifying target market
and relevant competitors.
2. Identify optimal Points of Parity and Points of Difference
3. Create a Brand Mantra to summarize the positioning and
essence of the Brand

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 1. Frame of Reference
 A brand’s frame of reference is the context in which consumers view
it. The first thing consumers will try to figure out is the category the
brand belongs to.
 The process of marketing a new product or service begins when you
create a frame of reference.

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 Frame of Reference
 Pepsi belongs to the carbonated soft drink category.
 Pepsi recently announced Pepsi 1, the company’s first Android-based
smart phone that will retail in China for approximately $205.

 The frame of reference should support your brand

positioning.
 It will determine the points of parity the brand has to meet in order
to be considered a legitimate player, and highlight opportunities to
differentiate.

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2. Points of Parity and Points of Difference
 When deciding upon a brand’s/product’s positioning in the
marketplace, the organization must ensure that end
positioning has both sufficient points-of-parity (POP) and
points-of-difference (POD).
 What this means is that you want the brand/product to be
consider equal/similar (on par with, hence the word ‘parity’)
with the major offerings in the category for the key attributes
(POP),
 But the brand/product also needs to have a number of
unique or differentiated attributes (POD

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 Points of Parity and Points of Difference
Points-of-difference (PODs) Points-of-parity (POPs)

 Attributes or benefits  Associations that are not

consumers strongly associate necessarily unique to the
with a brand, positively brand but may be shared
evaluate, and believe they could with other brands.
not find to the same extent
with a competitive brand
Antiseptic
Ease of use, technology

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Points of Parity and Points of Difference
 To achieve the goal of changing established purchasing behavior, the
firm has both meet the core need of product, as well as bring
something new to the marketplace.
 The following diagram demonstrates this in visual terms. As you can
see, the large circle in the middle of the diagram represents the core
needs of the market (points-of-parity) and the smaller circles
represent new features or benefits (points-of-difference).

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Consumer Desirability Criteria for PODs

Relevance

Distinctiveness

Believability

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Deliverability Criteria for PODs

Feasibility

Communicability

Sustainability

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 3. Brand Mantra

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 Positioning Examples

eBay’s positioning: No
matter what “it” is, you can
find “it” on eBay!

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Absolut’s Advertising – Positioning example

The concept of using the bottle

shape and the two-word concept
has not changed till date.

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Absolut’s Advertising Represents Synergy Between
Creative and Media

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 boredom can be eliminated by
slightly varying the content of ads
around a common theme

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 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.”

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Identifying Possible Competitive
Advantages
 Key to winning target customers is to understand their
needs better than competitors do and to deliver more
value.

 Competitive advantage – extent to which a company can

position itself as providing superior value.

 Achieved via Differentiation.

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Step 3. Positioning for Competitive
Advantage: Strategies

Product Product
Class Attributes

Away from Benefits

Competitors G Offered
H
C

D
Against a E
B
Usage
Competitor F
Occasions

Users

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Steps to Choosing and Implementing
a Positioning Strategy

 Step 1. Identifying a set of possible competitive

advantages: Competitive Differentiation.

 Step 2. Selecting the right competitive advantage.

 Step 3. Effectively communicating and delivering the

chosen position to the market.

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4. Identifying Possible Competitive
Advantages through Differentiation

Product Services
Differentiation (Bose) Differentiation (Dominos)
i.e. Features, Performance, i.e. Delivery, Installation,
Style & Design, Attributes Repair Services, Customer
Training Services
Channel
Differentiation
(Amazon)
Image People
Differentiation (Taj Hotels) Differentiation (Disney)
i.e. Symbols, Characters i.e. Hiring, Training Better
People Than Competitors
Do
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Selecting the Right Competitive
Advantages

Important

Profitable Distinctive
Criteria
for
Determining
Which
Differences
Affordable to Superior
Promote

Preemptive Communicable

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Positioning Errors
 Underpositioning:
 Failing to really position the company at all.

 Overpositioning:
 Giving buyers too narrow a picture of the company.

 Confused Positioning:
 Leaving buyers with a confused image of a company.

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 Overall Positioning Strategy
 Full positioning of the brand is called the brand’s value proposition.

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 Communicating and Delivering the
Chosen Position
 Company must take strong steps to deliver and
communicate the desired position to target consumers.

 The marketing mix efforts must support the positioning

strategy.

 Must monitor and adapt the position over time to match

changes in consumer needs and competitors’ strategies.

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Perception Maps
 Perceptual mapping is a diagrammatic technique used by
asset marketers that attempts to visually display
the perceptions of customers or potential customers.
 Typically the position of a company's product, product line,
or brand is displayed relative to their competition.

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Perception Mapping

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In-class Activity
 Describe how each of the following brands, companies, or
products is positioned:

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In-class Activity, Part 2
 Choose one of the companies/brands and…
 Identify relevant direct competitors
 Choose the two dimensions that are most important to
consumers
 Develop a perceptual positioning map
 Are there any opportunities in this category?

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 Thank You

Dr. Sweta Menon