Chapter Five :
Market segmentation, Targeting and
Positioning
1. Why do organizations segment the
market?
2. what is market targeting?
3. What is your understanding about
positioning?
Segmentation
It is the process of dividing the heterogeneous market in
homogeneous market.
The reason behind segmentations are:
The numbers of customers are large
The demand of the customers are various
Differ in their wants, resources, locations, buying
attitudes, and buying practices.
Level of segmentation
1. no segmentation (mass marketing),
2. complete segmentation (micromarketing)
3. Segmented
4. Niche market
something in between (segment marketing or niche marketing).
Market segments are normally large, identifiable groups within a market—for
example, luxury car buyers, performance car buyers, utility car buyers, and
economy car buyers.
Niche marketing focuses on subgroups within these segments.
A niche is a more narrowly defined group, usually identified by dividing a
segment into sub segments or by defining a group with a distinctive set of traits
who may seek a special combination of benefits.
Cont’d…
Micro marketing is the practice of tailoring
products and marketing programs to suit the
tastes of specific individuals and locations.
Micro marketing can be also segment in to:
1. local marketing and
2. Individual marketing
One -size -fit -all Segment Market Niche
market Micro market (local and individual)
Segmentation variables
Some of the variables used to segment the
market are:
1. Geographic Segmentation
2. Demographic segmentation
3. Psychographics segmentation
4. Behavioral segmentation
Cont’d..
1. Geographic segmentation divides the market into
different geographical units such as nations,
regions, states, counties, or cities
7-8
Cont’d…
2. Demographic segmentation divides the market into
groups based on variables such as age, gender,
family size, family life cycle, income, occupation,
education, religion, race, generation, and
nationality
7-9
Cont’d…
Age and life-cycle stage segmentation is the process of
offering different products or using different
marketing approaches for different age and life-
cycle groups
Gender segmentation divides the market based on sex
(male or female)
7-11
Cont’d…
3. Psychographic segmentation divides buyers
into different groups based on social class,
lifestyle, or personality traits.
7-13
Cont’d…
Behavioral segmentation divides buyers into groups
based on their knowledge, attitudes, uses, or
responses to a product
• Occasion
• Benefits sought
• User status
• Usage rate
• Loyalty status
7-14
Cont’d…
Occasion segmentation divides buyers into groups according
to occasions when they get the idea to buy, actually make
purchases, or respond to a product
Benefit segmentation requires finding the major benefits
people look for in the product class, the kinds of people
who look for each benefit, and the major brands that
deliver each benefit
7-15
Cont’d…
User status divides buyers into ex-users, potential users, first-
time users, and regular users of a product
Usage rate divides buyers into light, medium, and heavy
product users
Loyalty status divides buyers into groups according to their
degree of loyalty
7-16
6.1.3 Prerequisite for Effective Segmentation
1. Measurability is the degree to which the size, purchasing
power, and profiles of a market segment can be measured.
2) Accessibility refers to the degree to which a market segment
can be reached and served.
3. Substantiality refers to the degree to which a market segment
is sufficiently large or profitable.
4. Differentiation refers to the degree to which a market
segment can conceptually be distinguished and has the ability
to respond differently to different marketing mix elements and
programs.
5. Action ability is the degree to which effective programs can
be designed for attracting and serving a given market segment.
Market Targeting Strategies
marketers evaluate each segment to determine how
many and which ones to target and enter.
Evaluating Market Segments
In evaluating different market segments, the firm
must look at two factors: (1) the segment’s overall
attractiveness, and (2) the company’s objectives and
resources.
Selecting and Entering Market Segments
Having evaluated different segments, the company can
consider five patterns of target market selection.
Patterns of target market selection
3. Positioning
• Positioning is the act of designing the company’s offering and image
to occupy a distinctive place in the target market’s mind .
Communicating and Delivering the Chosen Position
Once it has chosen a position, the company must take strong
steps to deliver and communicate the desired position to target
consumers.
All the company's marketing mix efforts must support the
positioning strategy.
Positioning the company calls for concrete action, not just talk. If
the company decides to build a position on better quality and
service, it must first deliver that position.
Positioning Possibilities
A company can now choose from several different
positioning possibilities
1. Attribute positioning
A company position itself on an attribute such as size or
number of years in existence
•Example Coca Cola positioned itself as the largest soft
drink company or by number of years in existence St.
George beer positioned itself the first beer in Ethiopia.
2. Benefit positioning
•The product is positioned as the leader in certain benefit.
Dashen Beer –Sugar free beer
Cont’d…
3. Use or application Positioning
Positioning the product as the best for some use or application.
E.g. Finding the competitive positioning of the company.
Eg. Commercial Bank of Ethiopia is positioning it self by its reliability
of its service.
4. Product category positioning
The product is positioned as the leader in certain product category.
E.g. Dashen Bank is a leader in adopting the new technology such as :
visa service
•
Cont’d..
Thanks a lot !!