M A R K E T S E G M E N T A T I O N, T A R G E T I N G A N D P O S I T I O N I N G

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Market Segmentation,

Targeting, and Positioning for

Competitive Advantage

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Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profiles

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

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Step 1. Market SegmentationLevels of Market SegmentationThrough Market Segmentation, Companies Divide

Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match

Their Unique Needs.Mass Marketing

Same product to all consumers (no segmentation, i.e Tomato Seller)

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Marriot)

Marketing Debate

Is mass marketing dead?

Take a position:1. Mass marketing is dead.

or

2. Mass marketing is still a viable way to build a profitable brand.

Ford’s Model T Followed a Mass Market Approach

Pepsi India

Toyota Scion Targets Gen Y Consumers

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FERRARI

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Generation X

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Niche MarketingDifferent products to subgroups within segments

(more segmentation, i.e. Standard or Luxury Cars)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation,boutiques)

Step 1. Market SegmentationLevels of Market Segmentation

Local Marketing

Tailoring brands/ promotions to local customer groups, i.e

KFC

Individual Marketing

Tailoring products and programs to the needs of

individual customers, i.e. Dell

Limousine

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Density or Climate

City or Metro Size

World Region or Country

Step 1. Market SegmentationGeographic Segmentation

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Step 1. Market SegmentationDemographic Segmentation

Dividing the market into groups based on variables such as: Age Gender Family size or life cycle Income Occupation Education Religion Race Generation Nationality

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Baby Boomers: A profitable Market

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Step 1. Market SegmentationPsychographic Segmentation

Divides Buyers Into Different Groups Based on:

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Step 1. Market SegmentationBehavioral Segmentation

Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward

product

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

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & programs.• Effective programs can be designed to attract and serve the segments.

Step 1. Market SegmentationRequirements for Effective Segmentation

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Step 2. Market TargetingEvaluating Market Segments

Segment Size and Growth Analyze current 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 needed to

succeed in that segment(s). Look for Competitive Advantages.

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Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 2. Market TargetingMarket Coverage Strategies

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Company ResourcesCompany Resources

Product VariabilityProduct Variability

Product’s Stage in the Life CycleProduct’s Stage in the Life Cycle

Market VariabilityMarket Variability

Competitor’s Marketing StrategiesCompetitor’s Marketing Strategies

Step 2. Market TargetingChoosing a Market-Coverage Strategy

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Socially Responsible Target Marketing

Smart targeting helps companies and consumers alike.Target marketing sometimes generates controversy and concern. Disadvantaged and vulnerable can be

targeted. Cigarette, beer, and fast-food marketers

have received criticism in the past. Internet has come under attack because of

the loose boundaries and lack of control in marketing practices.

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Step 3. Choosing a Positioning Strategy

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.Marketers must: Plan positions to give their products the

greatest advantage in selected target markets,

Design marketing mixes to create these planned positions.

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Step 3. Choosing a Positioning Strategy

Step 1. Identifying Possible

Competitive Advantages

Step 2. Selecting the Right

Competitive Advantage

Step 3. Communicating and

Delivering the Chosen Position

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Identifying Possible Competitive Advantages

Key to winning and keeping customers is to understand their needs and buying processes better than competitors do and deliver more value.Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage,

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ServicesDifferentiationi.e. Delivery, Installation,

Repair Services, Customer

Training Services

Product Differentiationi.e. Features,

Performance, Style & Design, or Attributes

ImageDifferentiationi.e. Symbols, Atmospheres,

Events

Personnel Differentiation

i.e. Hiring, Training Better People Than

Competitors Do

Identifying Possible Competitive Advantages

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CriteriaFor Determining

Which DifferencesTo Promote

AffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable

Choosing the Right CompetitiveAdvantages

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Selecting an Overall Positioning Strategy

Price

More The same Less

More

The Same

Less

Ben

efi

ts

MoreforMore e.g: mont blanc, mercedes

Morefor theSame e.g: lexus

MORE FOR LESS e.g: zong,

maggi vsknorr

The same for less e.g: dell, wal mart, imtiaz store

Less for much less e.g:

marriot vs. resturants, emirates vs.

PIA

Selecting an Overall Positioning Strategy

The five green cells represent winning value propositions-differentiation and positioning that gives the company competitive advantages.The red cells represents losing value propositions. The center yellow cell represents at best a marginal proposition.

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Communicating and Delivering the Chosen Position

Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.All the company’s marketing mix must support the positioning strategy.Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies.

Positioning statement vs tagline

they are two branding components.The positioning statement is usually longer and more detailed than a tagline. It will quite often borrow from the mission statement, the value statement, the vision statement

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It is an integral part of the brand platform, and drives the direction of the creative process when developing brand elements – name, tagline, logo, graphic standards, trade dress, brand messaging and packaging. It is possible for some positioning statements to be voiced as a tagline as well, but this will be a rare occurrence. the positioning statement precedes the development of brand elements It is usually a paragraph in length rather than a short phrase. The tagline crystallizes and is usually connected to the name and logo as part of the company/product identification.

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Positioning statement vs tagline

Marketing Discussion

Think of various product categories. How would you classify yourself

in terms of the various segmentationschemes?

How would marketing be more or lesseffective for you depending upon the

segment involved?