Chapter 6: Market Segmentation, Positioning,

and Demand Projection

Exam-Ready Notes with Bangladeshi Context Examples

Chapter Outline
• General Market Segmentation Strategy
• Business Marketing Segmentation vs. Consumer Marketing Segmentation
• Market Strategies for Business Segmentation
• Approaches to Market Segmentation
• Segmenting Business Markets
• Evaluating Potential Market Segments
• Product Positioning Strategy
• Business Demand Projection
• Selecting Forecasting Methods

1. Why Segment Markets?

• To group customers with similar needs so ONE marketing mix can serve the whole group (instead of a separate
mix per customer) while still creating a differential advantage.
• Given limited resources, to strategically target which groups to serve.
• To better serve customer needs, as with all marketing activity.
🇧🇩 Bangladesh Example: Walton does not sell the same refrigerator model to every buyer — it segments
customers into budget households, urban premium buyers, and small-shop/commercial buyers, allowing one
tailored marketing mix (price, features, distribution) per group instead of trying to serve everyone with a single
model.

2. General Market Segmentation Strategy

The general process for segmenting a market:
• Analyze buyer behavior of each segment
• Analyze the buyer decision process of each segment
• Analyze the demographics of each segment
• Pick targets, forecast sales, calculate pro forma profitability, and design a marketing mix for each segment

2.1 A Good Market Segment Is...

• Measurable – size and purchasing power can be quantified
• Differentiable – distinguishable from other segments, responds differently to marketing mix
• Substantial – large/profitable enough to be worth pursuing
• Actionable – the firm can design effective programs to attract and serve it
• Accessible – the segment can be effectively reached and served
🇧🇩 Bangladesh Example: For an RMG accessories supplier, 'large export-oriented knitwear factories in
Gazipur and Narayanganj' is a good segment because it is measurable (known factory counts and volumes),
 differentiable (bulk buyers vs. small local tailors), substantial (represents big order volumes), actionable (can be
reached via trade fairs and direct sales visits), and accessible (concentrated in known industrial zones).

2.2 Segmentation Must Represent the Entire Market

Exhibit 6-2 (Segmentation for Small Precision Servomotors) makes an important point: the entire market must be
represented — not just present customers, and not just the attractive segments.
• Why? If you only segment part of the market, you are not really segmenting the market at all.
• If a segment isn't represented on the map, the firm will never even consider it as a future opportunity.
🇧🇩 Bangladesh Example: If a Bangladeshi cement company segments its market only by its current
customers (large real-estate developers in Dhaka), it would completely miss emerging segments like rural
infrastructure projects or small individual home-builders — potentially large, growing segments that never get
considered because they were left off the map.

3. Business Marketing Segmentation vs. Consumer Marketing

Segmentation
Business market segmentation helps with:
• Market analysis
• Market selection
• Marketing management
Important point: even companies that sell consumer products must segment business markets, because B2C
marketers still have to market to distributors and retail chains (a business/organizational sale).
🇧🇩 Bangladesh Example: A Bangladeshi FMCG company like PRAN or Akij Food, although its end
consumer is the household shopper, must also segment and market to its business customers — wholesalers,
supermarket chains (Shwapno, Meena Bazar, Agora), and small kirana/mudir dokan retailers — each requiring
a different trade marketing approach (credit terms, shelf-display support, bulk discounts).

4. Market Strategies for Business Segmentation

Strategy Description
Undifferentiated Marketing (Market Treats the total market as one homogeneous segment; a single
Aggregation) marketing mix is used for everyone.
Differentiated Marketing Develops a different marketing mix for each of several
different market segments.
Concentrated Marketing Selects one, or a relatively few, segments to pursue
intensively.

🇧🇩 Bangladesh Example: Undifferentiated: A basic commodity supplier like a local cement or steel-rod
distributor selling standard-grade rod to any construction buyer with one price list. Differentiated: Square
Toiletries offering separate product lines and marketing mixes for premium (Meril skincare) versus mass-
market (Joy soap) consumer segments. Concentrated: A niche exporter that focuses purely on supplying denim
fabric to a handful of large European jeans brands, ignoring the broader domestic market entirely.

5. Approaches to Market Segmentation

5.1 Macro / Micro Segmentation
• Macro segmentation – dividing the market by overall characteristics of the prospect organization (e.g., usage
rate, NAICS/industry category).
 • Micro segmentation – dividing the market by specific characteristics of the decision-making process and buying
structure (e.g., buying-center authority, attitudes toward vendors).
🇧🇩 Bangladesh Example: A machinery supplier could first macro-segment Bangladeshi buyers by industry
category (garments vs. pharmaceuticals vs. food processing), then micro-segment within the garment industry
by how centralized each factory's purchasing decision-making is, or how risk-averse their buying center tends
to be.

5.2 The Nested Approach

Stresses segmentation according to the amount of investigation required to identify and evaluate different criteria.
Layers of the 'nest' move from general/observable (macro) at the outside to specific/subtle (micro) at the center:
• Organizational demographics (outermost, most general) – industry, company size, location
• Operating variables – technology, user/nonuser status, customer capabilities (financial)
• Purchasing approaches – organization of the buying center (DMU), purchasing policies, purchasing criteria
• Situational factors – urgency, application, size of order
• Personal characteristics (innermost, most specific) – motivation, buyer-seller dyad, risk perceptions
🇧🇩 Bangladesh Example: A textile-machinery exporter targeting Bangladesh might nest its segmentation like
this: (1) organizational demographics — mid-sized knitwear factories in Narayanganj; (2) operating variables
— factories that already use modern computerized knitting machines; (3) purchasing approaches — factories
where the Managing Director personally approves all capital purchases; (4) situational factors — an urgent
replacement need due to a machine breakdown; (5) personal characteristics — an owner who is highly risk-
averse and prefers well-known brands over cheaper alternatives.

5.3 Other Approaches

• Segmenting on size, industry, or products alone (simpler, single-variable segmentation).

6. Segmenting Business Markets — Key Variables

Category Example Segmentation Variables
Type of Economic Activity Agriculture/forestry/fisheries, mining, construction, manufacturing,
transportation, communication, wholesale trade, retail trade
Size of Organization Number of establishments, number of employees, volume of
shipments, annual sales volume
Geographic Location Global regions, nations, national regions, states, counties, cities,
neighborhoods, terrain, population density, market density, climate
Product Usage How the product is used, usage rate
Structure of the Procurement Centralized vs. decentralized purchasing, buyer center, buyer
Function situation

🇧🇩 Bangladesh Example: A cotton yarn producer in Bangladesh could segment its buyers by economic
activity (weaving mills vs. knitwear factories vs. hosiery makers), by size (large export-oriented factories vs.
small local tailoring units), by geography (Gazipur/Narayanganj/Chattogram industrial clusters), by product
usage (high-volume daily usage vs. occasional small-batch usage), and by procurement structure (large groups
like Square with centralized purchasing vs. small family-run units with decentralized, owner-led buying).

7. Evaluating Potential Market Segments

• Market Profitability Analysis – estimating potential sales, costs, and profit from serving a given segment
• Market Competitive Analysis – assessing the intensity of competition and the firm's relative strength within that
segment
 🇧🇩 Bangladesh Example: Before entering the local pharmaceutical raw-material (API) supply business, a
chemical importer would run a profitability analysis (estimating volume and margins from supplying
companies like Square Pharma, Beximco Pharma, Incepta) and a competitive analysis (checking how many
existing importers already dominate that segment) before committing resources.

8. Product Positioning Strategy

8.1 Key Definitions
• Product Positioning – the way a product is defined by customers, i.e., how it is perceived relative to
competitors.
• Product Differentiation – meaningful differences in the product itself, the services offered, personnel, etc., that
support the desired position.

8.2 Why Strategically Position Products and Services?

• So the product/service is perceived as different from competitors' offerings in ways that represent value to target
customer segments.
• To help marketers visualize customers' perceptions of competing offerings along key variables (axes) of
importance.
🇧🇩 Bangladesh Example: Walton positions itself around 'affordable, locally-made, with strong after-sales
service network,' clearly distinct from Samsung/LG's positioning around 'premium imported technology' — this
positioning shapes how Bangladeshi consumers perceive Walton relative to foreign competitors.

8.3 How Product Positioning Can Be Misused

A common error: creating a perceptual map of where you WANT your product to be positioned (or where you
personally perceive it to be), then treating that map strategically as if it reflects the ACTUAL perceptions of real
customers in the market. Positioning decisions must be grounded in real customer research, not internal wishful
thinking.

8.4 Perceptual Mapping

A perceptual map plots competing brands/products along two or more axes representing attributes important to
customers (e.g., price vs. quality), visually showing where gaps or overlaps exist in the market.
🇧🇩 Bangladesh Example: A perceptual map of the Bangladeshi refrigerator market might plot 'Price' on one
axis and 'Perceived Technology/Prestige' on the other — placing Walton and Jamuna in the lower-price/local-
tech quadrant, and Samsung/LG in the higher-price/premium-tech quadrant, helping a new entrant identify an
underserved middle segment.

8.5 Approaches to Positioning

• Technology
• Quality
• Price
• Distribution
• Image
• Service
🇧🇩 Bangladesh Example: A local paint company like Elite Paints might position on Service (fast delivery +
free color consultation to retail dealers) and Distribution (strongest dealer network in district towns) rather than
competing directly with Berger or Asian Paints on Technology or Image.
8.6 Successful Positioning — Key Questions to Ask
• What position does the firm presently own?
• What position does the firm want to own?
• Who must the firm outflank to gain that position?
• Does the firm have the necessary resources?
• Is the firm committed to achieving the objective?
• Can the firm create a marketing mix to achieve the desired position?
🇧🇩 Bangladesh Example: If Pran wanted to reposition one of its juice brands from 'everyday affordable drink'
to 'premium natural juice,' it would need to honestly assess its current position, identify which premium
competitor (e.g., a foreign juice brand) it must outflank, confirm it has the R&D/packaging resources, ensure
management commitment, and redesign its marketing mix (packaging, pricing, advertising) accordingly.

9. Business Demand Projection

9.1 Strategic Importance of Forecasting
• Companies must plan ahead to have materials/resources on hand to meet customer needs.
• Forecasting is required of marketing/top management just as engineers must design and accountants must add
numbers — it is a core management responsibility.
• It is a basic marketing function.
• Other functional areas (production, finance, HR) rely on demand forecasts to build their own forecasts, budgets,
purchase plans, and goals.
🇧🇩 Bangladesh Example: Before Ramadan and Eid, PRAN and other FMCG companies in Bangladesh must
forecast demand for items like semai, juice, and biscuits months in advance so factories can plan raw material
purchases, production schedules, and distribution — a wrong forecast risks either stockouts during peak
demand or unsold excess inventory afterward.

9.2 Common Forecasting Problems

• Mystique – forecasting seems mysterious to those untrained in it
• Accuracy – marketers tend to be optimistic, 'can-do' types, which can bias forecasts upward
• Inconsistency – continual subjective modifications undermine reliability
• Accountability – confusion between developing a forecast versus being held responsible for achieving it
• Implementation – mixing up forecasts, goals, and quotas as if they were the same thing
🇧🇩 Bangladesh Example: A sales team in a Bangladeshi consumer-goods company might inflate a forecast to
look ambitious to management, then later be unfairly blamed when the inflated number (really a goal, not a
genuine forecast) isn't achieved — a classic implementation/accountability problem.

10. Selecting Forecasting Methods

• The importance and nature of the forecast affects which method is chosen.
• Different methods suit long-term vs. medium-term vs. short-term forecasts.
• Different methods suit different data types (amount of cycle, trend, noise/randomness in the data).
• Matching the right method to the right situation and data improves accuracy — forecasting is not guessing.
• Forecasting requires a pattern or relationship present in past data that is expected to repeat.
• Forecasting is a serious academic discipline (its own theory, textbooks, journals) — far more than simple
averaging.
• Firms often hire expert consultants to improve forecast accuracy by just a percentage point or two, potentially
saving millions.
10.1 General Approaches to Forecasting
Method Description
Top-down method Management develops an aggregate measure of sales potential; sales
quotas are then developed, and a sales forecast is constructed from the
top.
Bottom-up (Build-up) method The sales force develops estimates by product line, geographic area, or
customer group; management adds these individual estimates together
to build the overall forecast.

🇧🇩 Bangladesh Example: Top-down: Square Pharma's head office sets an overall national sales target for a
new medicine based on total market size, then divides it into regional quotas. Bottom-up: Individual medical
representatives in Rajshahi, Khulna, and Sylhet each estimate expected sales in their territory based on doctor
visits, and head office sums these to get the company-wide forecast.

10.2 Qualitative (Judgmental) Forecasting Techniques

Technique Approach Key Advantage Key Best Used
Disadvantage For
Jury of Combines and averages Low cost; Risk of 'ivory- New product
Executive opinions of top executives executives are tower' thinking; forecasts;
Opinion experienced with no standard medium-to-
customer feel procedure long range
Sales Force Combines salespeople's Uses field-level Salespeople Short- to
Composite estimates of future sales knowledge; good untrained in intermediate-
reliability forecasting; may range
be too forecasts
optimistic/pessimi
stic
Survey of Buyer Anticipates what buyers are Keeps a continual Buyers may not Well-defined/
Intentions likely to do under given feel for the market know or reveal limited
conditions and competition true intentions markets with
important
intermediaries
The Delphi Group forecasting using Good accuracy; Time consuming; Intermediate-
Method iterative feedback from limited budget some guesswork to long-term
experts until near-consensus and new-
product
forecasts

🇧🇩 Bangladesh Example: A Bangladeshi telecom operator launching a brand-new 5G-based service

(something with no historical sales data) would likely use the Delphi Method — gathering rounds of
anonymous input from telecom experts and refining estimates until consensus — since Sales Force Composite
or trend-based methods wouldn't work for a truly new offering.

10.3 Quantitative Approaches — Time-Series Techniques

Technique Approach Key Advantage Key Best Used For
Disadvantage
Trend Fitting Estimates the trend from past Low cost; quick; Needs many Products in the
data and projects it forward excellent short- observations; maturity phase
term accuracy misses turning of the life cycle
points
Moving Average recalculated as the Low cost; quick; Doesn't forecast Inventory
Average earliest period is dropped and easy short-term turning points; control for
Technique Approach Key Advantage Key Best Used For
Disadvantage
latest is added accuracy poor for long- standard/low-
term volume items
Exponential A moving-average technique Low cost; quick; Doesn't forecast Highly stable
Smoothing giving more weight to recent easy to use turning points; sales series
data poor long-term
accuracy
Adaptive Like smoothing, but adds More sensitive Costly; more Forecasting
Control optimum weights that reduce to historical time-consuming monthly sales
statistical error data; good short- demand
term accuracy
Box-Jenkins A mathematical technique Good short-term Costly; time- Production/
where the computer selects the accuracy; easy to consuming; poor inventory
best-fit statistical model use once set up long-term control of
accuracy large-volume
items; cash-
balance
forecasts

🇧🇩 Bangladesh Example: A cement company forecasting next month's bag sales (a mature, stable product)
could simply use a moving average of the last few months' sales — low cost and reasonably accurate for such
short-term, stable-demand planning.

10.4 What Is NOT Time-Series Forecasting

• A 'series' (e.g., 2, 5, 7, 3, 9, 2, 6, 3, 8) is just a series of numbers — not forecasting.
• A 'time series' (e.g., sales by month: Feb $5M, Mar $7M, Apr $3M, May $9M, June $2M) is just historical
numbers organized by time period — also NOT forecasting.
• You can graph a time series, but a graphed time series is still not a forecast — a forecast requires projecting
forward using a proper method.
🇧🇩 Bangladesh Example: Simply listing PRAN's monthly juice sales for the past year in a spreadsheet is not
a forecast — it only becomes a forecast once a technique (e.g., trend fitting or moving average) is applied to
project next year's expected sales.

10.5 Quantitative Approaches — Causal Techniques

Technique Approach Key Advantage Key Best Used For
Disadvantage
Regression Relates sales predictions to Low cost; easy; Only as good as Predicting overall
elements of the good short-term underlying data; market demand
internal/external accuracy weak for long- for a generic
environment term product type
Econometrics A system of interdependent Good for short-, Costly; time- Predicting overall
regression equations intermediate-, consuming market demand
describing an and long-term for a generic
economic/profit area forecasting product type
Leading A time series whose Identifies turning Questionable Forecasting
Indicators movement precedes the points; forecasts accuracy; limited changes in overall
movement of another series overall business application; costly business
in the same direction conditions conditions
Diffusion Index The percentage of a group Identifies turning Costly; time- Forecasting sales
of economic indicators points; fair-to- consuming; poor of overall product
moving up or down good short-term long-term classes
Technique Approach Key Advantage Key Best Used For
Disadvantage
accuracy accuracy
Input-Output Concerned with Identifies turning Costly; time- Forecasting sales
Analysis interindustry/interdepartme points; good for consuming; poor of business
ntal flow of goods or intermediate/lon short-term products/services
services g-range accuracy over long periods
Life-Cycle Analyzes phases of product Good for Limited accuracy; Forecasting new
Analysis acceptance forecasting new- won't identify product sales
product sales; turning point;
good for costly
intermediate
range

🇧🇩 Bangladesh Example: Bangladesh Bank or a large conglomerate's economic research team might use
Leading Indicators (e.g., import LC openings, remittance inflows) to anticipate an upcoming shift in overall
consumer demand — a rise in remittance inflows ahead of Eid, for instance, often precedes a jump in retail and
FMCG sales.
 Practice Questions
A. Multiple Choice Questions (MCQs)
1. Which of the following is NOT one of the five characteristics of a good market segment? (a) Measurable (b)
Profitable to every competitor (c) Differentiable (d) Actionable
2. A strategy that treats the total market as one homogeneous segment and uses a single marketing mix for everyone
is called: (a) Concentrated marketing (b) Differentiated marketing (c) Undifferentiated marketing (market
aggregation) (d) Micro segmentation
3. Segmenting a market based on overall characteristics like industry (NAICS) category or usage rate describes: (a)
Micro segmentation (b) Macro segmentation (c) The nested approach (d) Life-cycle analysis
4. In the Nested Approach, which layer sits at the innermost, most specific/subtle level? (a) Organizational
demographics (b) Operating variables (c) Purchasing approaches (d) Personal characteristics
5. Which qualitative forecasting technique uses iterative rounds of expert feedback until a near-consensus is
reached? (a) Sales Force Composite (b) Jury of Executive Opinion (c) The Delphi Method (d) Survey of Buyer
Intentions
6. A time series of an economic activity whose movement precedes the movement of another series in the same
direction is called a: (a) Diffusion index (b) Leading indicator (c) Moving average (d) Regression coefficient
7. Which forecasting approach has the sales force estimate sales by product line or territory, with management
summing these estimates? (a) Top-down method (b) Bottom-up (build-up) method (c) Delphi method (d) Box-
Jenkins method
8. A common misuse of product positioning occurs when a firm: (a) Surveys real customers to build a perceptual
map (b) Treats its own desired/perceived position as if it were the actual customer perception (c) Considers price
and quality as positioning variables (d) Repositions after losing market share

B. Short-Answer Questions
1. List and briefly explain the five characteristics of a 'good' market segment.
2. Why must even a company selling purely consumer (B2C) products still segment business markets? Give an
example.
3. Differentiate between undifferentiated, differentiated, and concentrated marketing strategies.
4. Explain the difference between macro segmentation and micro segmentation with one example each.
5. What is product positioning, and how does it differ from product differentiation?
6. Explain why 'a time series is not a forecast,' using an example.
7. List any four common problems associated with business forecasting.

C. Broad / Essay Questions

1. Describe the general market segmentation strategy process (analyzing behavior, decision process, and
demographics; picking targets and designing a marketing mix). Illustrate each stage using a hypothetical
Bangladeshi company entering the ready-made garment accessories market.
2. Explain the Nested Approach to segmentation in detail, describing each of its five layers from organizational
demographics to personal characteristics. Apply it to a real or hypothetical Bangladeshi B2B seller (e.g., an
industrial machinery supplier).
3. Discuss the key variables used to segment business markets (economic activity, size, geography, product usage,
procurement structure). Using these variables, propose a segmentation scheme for a Bangladeshi textile chemical
supplier.
4. Compare qualitative and quantitative forecasting approaches. Discuss at least three qualitative and three
quantitative techniques, explaining when each would be most appropriate for a Bangladeshi FMCG company like
Pran or Akij Food forecasting Eid-season demand.
5. What is product positioning, and why is it strategically important? Explain the six approaches to positioning
(technology, quality, price, distribution, image, service) with an example of a Bangladeshi brand for each.
6. Explain how product positioning can be misused, and outline the six questions a firm should ask when developing
a successful positioning strategy. Apply these questions to a hypothetical Bangladeshi company trying to reposition
an existing product.

D. Mini Case Study Question

A Bangladeshi company that manufactures industrial packaging materials currently sells to whoever approaches
them, using the same pricing and service terms for every customer — from small local bakeries to large
multinational FMCG exporters. Sales growth has stagnated, and management is considering a formal segmentation
and positioning strategy.
1. What marketing strategy is the company currently using (undifferentiated, differentiated, or concentrated), and
what are its risks?
2. Suggest at least three segmentation variables (from Section 6 above) the company could use to divide its market,
and explain why each is relevant.
3. Recommend a positioning approach (technology, quality, price, distribution, image, or service) for the company
to pursue with its most attractive segment, and justify your choice.

Tip: For forecasting-method questions, always be ready to state the technique's approach, one advantage, one
disadvantage, and its best application — examiners frequently ask for exactly this four-part breakdown. Pairing
each with a Bangladeshi example (Pran, Walton, Square, Grameenphone) will help you recall and apply the
concept under exam pressure.