DPM20033
Fundamentals of
Marketing
Chapter 4 : Market
Segmentation,
Targeting and
Positioning
Chapter Outline
4.2 Explain targeting
4.2.1 Define market targeting
4.1 Explain segmentation 4.2.2 Describe the segment evaluation
a. Segment size and growth
4.1.1 Define market segmentation
b. Segment attractiveness
4.1.2 Identify the major bases for
c. Company objectives and resources
segmenting consumer market
a. Geographic segmentation
4.3 Explain positioning
b. Demographic segmentation 4.3.1 Define market positioning
c. Psychographic segmentation 4.3.2 Identify differentiation and
d. Behavioral segmentation positioning strategy
STP Marketing Model
S T P
SEGMENTATION TARGETING POSITIONING
Dividing the Determine Placed a product
market into which customer occupies in
smaller group(segment) consumers’
segments that to focus on. minds relative to
share similar competing
characteristics. products.
Define Market Segmentation
• Dividing a market into smaller groups of
buyers on the basis of needs,
characteristics or behavior who might
require separate products or marketing
mixes.
• In a simple words segmentation means
divide the total market into smaller
segments that share similar
characteristics.
Bases/Variables For
Segmenting Consumer Market
1. Geographic 2. Demographic [Link] [Link]
nation, states, age, gender, family lifestyle ,social knowledge,
regions, counties, life cycle, income, status and attitude, use or
cities ,population occupation and personality response to a
density or even religion characteristics. product
neighborhood
1. Geographic
• Dividing a market into different geographical units. Such as
nation, states, regions, counties, cities ,population density
or even neighborhood.
• A company may decide to operate in one or few
geographical areas or operate in all areas but pay attention
to geographical differences in needs and wants.
• For example, national newspapers are published and distrib
uted to different cities in different languages to cater to the
needs of the consumers.
• KFC also has a localized menu that caters directly to unique
local tastes and preferences. E.g KFC hot & spicy, KFC tom
yum crunch for ASEAN.
2. Demographic
• Dividing the market into groups based on demographic variables
such as age, gender, family life cycle, income, occupation and
religion.
• Demographic market segmentation variables are the most popular
bases for consumer market segmentation.
• Consumer needs, wants and usage rate soften closely with
demographic variables.
• Demographic variables are rather easy to measure in contrast to
many others.
• Age is one of the most common demographic variables used to
segment markets. Some companies offer different products, or use
different marketing approaches for different age groups
• For example clothes for babies, teenagers, and older adults.
[Link]
• Dividing the market into groups based on lifestyle, social status and
personality characteristics.
• People in the same demographic group can have very different
psychographic characteristics.
• Personality refers to a person’s individual character traits, attitudes
and habits.
• Lifestyle the manner in which people live and spend their time and
money
• Segments the markets into groups on the basis of activities,
interests, beliefs and opinions.
• E.g – Panera caters to healthy-eating lifestyle segment of people.
• E.g - NIKE also targeting not just the youth but also adults and
older individuals who are keen on staying active.
[Link]
• Dividing the market into groups based on consumer
knowledge, attitude, use or response to a product.
• Behavior variables :
a) occasion (occasions that move a consumer to buy or use
something, eg: kurma – Ramadhan , orange -Chinese New
Year)
b) benefits sought (benefit consumer seek, diff. people seek
diff. benefits)
c) user status (1 st time user, regular user, non user, ex-user)
d) usage rate (light, medium, heavy product user)
e) loyalty status (completely loyal, somewhat loyal, no loyalty)
Define market targeting
• The process of evaluating each market
segment’s attractiveness and selecting
one or more segments to enter.
• Target market is a set of buyers who
share common needs or characteristics
that a company decides to serve.
Describe The Segment
Evaluation
Company
Segment size Segment
objectives
and growth attractiveness
and resources
Segment size and growth
• The first criteria is the size and growth of the market
segment.
• You want to estimate how many customers are in the
segment, how much they spend, and how fast they
are growing.
• This will help you assess the current and future
revenue potential of the segment, as well as the level
of competition and saturation.
Segment attractiveness
• A larger market segment is more attractive than a
small one, basically because a larger market segment
offers more potential customers and more potential
conversions for a company.
• A segment is less attractive if it already contains
many strong and aggressive competitors. products
may limit prices and the profits that can be earned in
a segment.
• The relative power of buyers also affects segment
attractiveness.
Company objectives and
resources
• Even if a segment has the right size and growth and
is structurally attractive, the company must consider
its own objectives and resources.
• The available resources should have the capability of
catering to the need of the target market segment.
• For example , smaller company could lack the skills
and resources necessary to serve a large segment.
Target Market Strategies
Define market positioning
• Market positioning is a strategy placed a
product occupies in consumers’ minds
relative to competing products.
• It involves perceptions, impressions and
feelings that customers should have for
the product in comparison to competing
products.
• Once a company has decided which
segments to enter, marketers must
decide which comparative advantage
they will focus on.
• This step is called the positioning and
differentiation strategy. A product’s
position is the way the product is
defined by the consumers.
• To be relevant, a product or a brand
must be easily differentiated from its
competitors, mostly through its
comparative advantages.
Differentiation Strategies
For Positioning
• Product Differentiation
• Differentiation in the physical product takes place in different ways
such as features, performance, style or design.
• Service Differentiation
• When the physical product cannot be easily differentiated, success
often lies in adding more value- adding services and improving their
quality. Service differentiation through speedy, convenience such as
training, installation, and ease of ordering
• Personnel Differentiation
• This can be done by hiring and training better people than competitors
do. Better-trained people exhibit some characteristics. These are:
competence, courtesy, credibility, reliability, and responsiveness.
Differentiation strategies for
positioning
• Image Differentiation
• Buyers may respond differentially to the company image or
brand image by symbols, logo, color or events it sponsors.
E.g. Apple`s bite mark logo, provide strong brand
recognition and differentiation.
• Channel Differentiation
• Channels of distribution can also be an effective means of
differentiation. Distribution can provide coverage or
availability, immediate access to expertise, and greater ease
of ordering, and higher levels of customer or technical
service.
Positioning Strategies
Positioning strategies
a) MORE FOR MORE
• Providing most upscale product or service and charging higher price.
• Offers high quality and give prestige to the buyer.
• Symbolized status and a loftier lifestyle.
• E.g Starbucks coffee, Mercedes automobile.
b) MORE FOR THE SAME
• Company can attack competitors by positioning its brand as offering more fore the same price.
• E.g Target position itself as the upscale discounter with ‘expect more pay less’ tagline.
c) MORE FOR LESS
• Winning value proposition
• Company offer the best product selection, best service, lowest price
• E.g Home Depot
d) THE SAME FOR LESS
• Powerful value proposition
• Offering same product/brand at deep discount.
• Such as Walmart and Cotsco.
e) LESS FOR MUCH LESS
• Meeting consumers lower performance or quality requirement at a much lower price
• E.g ALDI grocery stores customer pay super low prices but company provide less selection and service, brings
their own shopping bag and pack their own groceries.
THE END
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