Segmentation,

Targeting and
Positioning
 Segmentation, Targeting and
Positioning
• Levels of segmentation, identification of bases of
segmentation, evaluation of segment
attractiveness, targeting one or more segment
based on attractiveness, and positioning the
product through different positioning strategies.
What is the Role of a Marketing Department

Defining and managing your brand.

Conducting campaign management for
marketing initiatives.
Producing marketing and promotional
materials.
Creating content providing search engine
optimization for your website.
Monitoring and managing social media.
Producing internal communications.
Conducting customer and market research.
Overseeing outside vendors and agencies.
 What are marketing
tools?
Marketing tools are tools that companies use to develop and promote their
products and services. In this context, the word ‘tools‘ refers to techniques,
strategies, and materials.
The vast majority of businesses use several different marketing tools, such as
advertising, direct mail, and market research to boost their sales.

Companies have a range of marketing tools at their disposal. Some of them

are specifically for boosting sales, while others focus on gathering consumer
data
“Businesses use various marketing tools to communicate company
information, stimulate customer interest and motivate action. An integrated
marketing approach applies several tactics to engage customers and build
business.”
• What is the Need for a customer driven organization,?

• Why Branding a Product?

• Why to Build customer satisfaction value and Retention,

• Customer centric companies are 60% more profitable than
companies that don’t focus on customers.
60% of loyal customers will purchase more frequently from their
preferred companies.
• Your best customers don’t just buy one product or use your service
once. They come back again and again for more. Customer retention
increases your customers’ lifetime value and boosts your revenue.
• Additionally, at best, your probability of selling to an existing
customer is at least 40 percent more likely than converting someone
who has never bought from you before.
 Segmentation, Targeting, and
Positioning.
• The STP process demonstrates the links between an
overall market and how a company chooses to
compete in that market.
• It is sometimes referred to as a process, with
segmentation being conducted first, then the
selection of one or more target markets and then
finally the implementation of positioning.
• The goal of the STP process is to guide the
organization to the development and
implementation of an appropriate marketing mix.

9
 Definitions of segmentation,
targeting and positioning

• Market segmentation can be defined

as:
• The process of splitting a market into
smaller groups with similar product
needs or identifiable characteristics,
for the purpose of selecting appropriate
target markets.
10
No Market Segmentation
Segmented by Gender
Segmented by Age
Reasons why firms segment
markets

14
Criteria for Effective
Market Segmentation

15
16
17
 Market segmentation evaluation
criteria example
• We have considered two different furniture
manufacturers.
• Both of these firms have conducted a market
segmentation exercise and have created four
market segments.

18
 DEFINED MARKET
SEGMENTS FOR FIRM ONE
• First homers Young couples establishing their first
home, looking for a range of low-priced furniture
• Simply the best Consumers that are very focused on
their homes as a display of status, and prefer
expensive and high prestige brands
• Busy families Families with children at home, needing
furniture that is durable, functional and safe
• Design focused Consumers who are very attracted by
the look and style of furniture – may be attracted to
both expensive and budget furniture

19
 DEFINED MARKET
SEGMENTS FOR FIRM TWO
• Heavy users Consumers who regularly upgrade and
change their furniture
• Retirees Looking for either budget furniture
(because of limited income) or expensive furniture
to enjoy their retirement years
• Light users Consumers who only buy furniture
every few years
• Rural people People who live out of the city regions

20
Which segmentation is good….?

21
• why firm one’s segmentation outcomes
are more appropriate that firm two’s
approach,
• let’s work through each of the segments
against an evaluation criteria as shown
in the table:

22
 Do the task 1
EVALUATION FIRM ONE’S FIRM TWO’S
CRITERIA SEGMENTS SEGMENTS

Homogeneous

Heterogeneous

Measurable

Substantial

Accessible

Actionable/practical

Responsive

23
EVALUATION FIRM ONE’S SEGMENTS FIRM TWO’S SEGMENTS
CRITERIA

Homogeneous Seems to meet this Does not meet this first test. For
evaluation test quite well, as example, in their retirees market,
each segment appears to they have described the
have been grouped around consumers as either being budget
similar needs. conscious or possibly the
opposite. Therefore this segment
does not contain consumers with
similar needs.

Heterogeneous Looks good here as well, This test is a major concern as

with each defined segment well. For example, the ‘rural
appearing to be significantly people’ segment could also be
different in furniture needs. allocated to any of the other
segments, so there are
insufficient differences between
the segments.

24
Measurable Would probably meet Would probably meet
this test of being this test of being
measurable. measurable.
Substantial Most of these segments Most of these segments
would probably be would probably be
substantial enough. substantial enough
Accessible Would probably be able This may be of concern.
to utilize different media For example, it would not
and distribution channels be clear how you could
to access these different directly access heavy
segments users as opposed to light
users.
Actionable/practical We may assume this to We may assume this to
be the case, as we do not be the case, as we do not
know much about the know much about the
firms – typically we firms – typically we
would assess this point would assess this point
against the firm’s against the firm’s
capabilities. capabilities.

25
Responsive Given the needs of This would also be
each segment a concern as some
appear to be of the segments
distinct, then have been defined
different styles of quite generically,
furniture products such as rural
(and supporting people, so it is
marketing mix) unclear whether
could be they would
developed that respond to a
would be distinct marketing
more/less mix offering
attractive to each
of the segments.

26
• Firm one’s market segment development appears
to meet all the necessary criteria.
• This means that the segments are valid and the
process of evaluating the segments and then
selecting target market can continue.
• However firm two’s approach has failed a number
of evaluation tests, particularly in regards to be
homogeneous (generally similar in need) and being
heterogeneous (each segment having distinctive
needs).
• In this case firm two would need to repeat their
market segment development process in order to
find a more suitable set of segments for their
consideration.
27
Cola Wars in the 1980s between
Coca-Cola and Pepsi-Cola.

28
 Cola Wars in the 1980s
• Pepsi segmented the market into three
consumer segments only, namely:
• Consumers with a positive attitude to the Coke
brand and 100% loyal to Coke
• Consumers with a positive attitude to the Pepsi
brand and 100% loyal to Coke
• Consumers with a positive attitude to both Coke
and Pepsi, with loyalty to both brands, but
switching their purchases between these two
brands from time to time
29
Cola Wars in the 1980s

30
31
32
BMW’s marketing strategy

33
 BMW’s marketing strategy
• BMW produces various series of cars to absorb
most of market and give edge to the competitors.

• Initially it came with 3 Series, 5 Series and 7 series .

• Then came up with 1 series to absorb - “modern
mainstream” and then the luxurious X series -
modern SUV to absorb - “upper conservatives”

34
35
• A company victoria’s secret deals in designing and
marketing women lingerie and beauty products.
They focused on women and “women” is the
primary market segment in their marketing
strategy.
• Victoria’s secret is also segmenting their target
market with product differentiation as pink for
teenage girls.
36
Bases for Segmenting Consumer
Markets

Characteristics of individuals,
groups, or organizations used to
divide a total market into segments.

(variables)
Bases for Segmentation
Geography
Geography

Demographics
Demographics

Psychographics
Psychographics

Benefits
Benefits Sought
Sought

Usage
Usage Rate
Rate
Geographic Segmentation

39
Demographic segmentation

40
Psychographic segmentation

41
Benefits sought Segmentation

42
Behavioral Segmentation

43
Geographic Country/continent England, UK, Europe

Region/area of the country North India, West India, South India

City New York, Los Angeles, Dallas, Chicago

Measured by the area’s population

Urban/rural density

Climate Tropical, arid, alpine

Coastal/inland Measured by distance to the coast

44
 Pre-teens, teens, young adults, older
Demographic Age group adults
Generation Baby boomers, Gen X, Gen Y
Gender Male, female
Marital status Married, single, widowed
Young married no kids, married young
Family life cycle kids
Family size Couple only, small family, large family
Occupation Professional, trade, unskilled
Education High school, university, vocational
Ethnic background African-American, Hispanic, Asian
Religion Christian, Jewish, Hindu, Muslim

45
 Family, social, sporty,
Psychographic Lifestyle travel, education

VALS = values and

Values (VALS) lifestyles

Upper class, middle class,

Social class lower class

Personality/self- Ongoing, creative,

concept innovator, serious

Activities, interests, Various hobbies, sports,

opinions (AIO) interests
46
Benefits
Sought Needs/motivations Convenience, value, safety, esteem

Behavioral Occasion Birthday, anniversary, Valentine’s Day

Ready to buy, gathering information
Buying stage only

User status Regular, occasional, never

Usage rate Heavy, light

Loyal, occasional switcher, regular
Loyalty status switcher

Brand knowledge Strong, some, none

Shopping style Enjoys shopping, functional, avoids

Involvement level High, medium, low

47
 Market Segmentation Examples
• Demographics Segmentation
– Age
– Race
– Gender
– Income
– Marital Status
– Occupation
• For example, a company Victoria’s Secret deals
in designing and marketing women lingerie
and beauty products. They focused on women
and “women” is the primary market segment
in their marketing strategy.
• Victoria’s Secret is also segmenting their target
market with product differentiation as PINK
for teenage girls.
 Age
• Amul has segmented his product in different
age group
• For kids: Amul kool, chocolate milk, Nutramul
energy drink.
• For Youth: Amul cool kafe.
• For women’s and older people: Amul calci+,
Amul Shakti energy drink
 Gender
• Adidas targets women in India
• German shoe maker Adidas is trying to
develop the women segment in India for its
products.
• Emami segmented its product in gender
• Women’s: Naturally fair
• Men: Fair and handsome
 Purchasing capacity
• Samsung Mobile Below 5k
– Samsung Metro B350E Rs. 2,800
– Samsung Guru Plus B110E Rs. 1,375
– Samsung Metro B313 Rs. 1,981
– Samsung E1200 Rs. 1,100
Samsung Mobiles Between 5k to 10k (2019)
– Samsung Galaxy On7. Rs.8,490. ...
– Samsung Galaxy J2 2016. Rs.9,000. ...
– Samsung Galaxy J2 Pro (16GB) Rs.9,790. ...
– Samsung Galaxy On5 Pro 2GB 16GB. Rs.7,990. ...
– Samsung Galaxy J3 2016. Rs.7,490. ...
– Samsung Galaxy A3. Rs.8,189. ...
– Samsung Galaxy Core Prime 4G. Rs.7,944.
• Samsung Mobiles Between 10k to 20k (2019)
– Samsung Mobiles Between 10000 to 20000 Prices
– Samsung Galaxy A6 Plus Rs. 18,399
– Samsung Galaxy On8 2018Rs. 16,990
– Samsung Galaxy J6 64GB Rs. 11,990
– Samsung Galaxy J7 Prime Rs. 12,450
Samsung Mobiles Above 20k
– Samsung Leadership 8
– Samsung Galaxy A7 2018 128GB
– Samsung Galaxy S10 Plus
– Samsung Galaxy Note 9 512GB
 Budget car segment-
• Entry level starts from Rs 1.5 to 5 lakh.
Compact car segment-
Family car segment-
Cross Segment
Premium car segment-
Super luxury saloon segment-
 Geographic Segmentation
• Continent
• Country
• Region
• Population density
• Urban, Suburban, Rural
• Climate
• City
• Village
 Geographics- Example
• Geographic decides the product
consumption pattern.
• People in coastal areas of Konkan and
Goa relish rice, a staple grain there and
fish abundantly available from sea.
• Southern are found of coffee and north
Indians like Tea. People down south use
talc excessively, and apply it even on
face, perhaps aspiring to fairer like their
counter part in the north.
 Geographic- Example
• When we sale our product to international market.
Products are made according to their need.
• Rasna international gives instant syrup when
dissolves in glass of water, and does not contain a lot
of sugar.
• Complexion creams like fair and lovely sells only in
India.
• Victoria’s Secret is not only operating in America
but expended it to geographies like UK and
Europe. The currently have more than a dozen
stores.
• Victoria’s lingerie brand is operating in almost 75
countries with more or less 1000 stores globally.
It also has 990 sales points in USA. This company
also expanded its geographical segments to
China. It is expanding lingerie market.
 Socio-Cultural Factors
• Zee Televisions deals with
variety of channels regional
channel, sports channel, movie
channel.
• McDonald has both veg and
non veg burger. McDonald has
veg burger for vegetarian and
nonveg burger for non
vegetarian.
 Psychographic Segmentation
• Some of the variables of psychographic
segmentation are
– Social class
– Life style
– Culture
– Personality
– Attitude
– Interests
• Victoria’s Secret is segmented its customer
based on women personality and self-
confidence.
• Todays’ Female Personality traits Victoria is
targeting include looking sexy, fashionable,
trying new looks and styles and open minded.
 Café Coffee Day

• They choose lifestyle oriented, urban

consumers as target with youth.
• They make coffee an ‘experience’ and provide
a special experience to chosen segment.
• CCD has estimated that presently 60% of the
footfalls in its 300 outlets belong to students
between the ages of 15 to 24 years. The CCD
are targeting students and trying to establish a
space in their lives.
 Behavioral Segmentation
• Some of the behavioral segmentation
examples are

– Benefits sought
– degree of loyalty
– buyer readiness
– User rate
– Attitude
• Victoria’s secret, they have loyal customers
because Victoria feels them alive and
confident.
• Consumers purchase Victoria lingerie product
line for prestige. Customers also prefer this
brand during birthdays and holidays.
 Behavioral Segmentation
• Nestle has found a separate segment Atta
noodles as distinct from the Maida noodles.
Market Segmentation Examples
Coca-Cola
 Demographic Segmentation of
Coca Cola
• Age- Coca Cola targets youngster from 15 to
25 years old.
• Gender- Both Men and Women on the target
list of the company.
• Income- The income level segments include
different packing, for example, returnable
glass bottles, plastic bottles and Tins with
different pricing strategies.
Geographic Segmentation of Coca Cola
• Asia Pacific
• North America
• Latin America
• Europe
• Eurasia and Africa
• Fruktime Russia and Ukraine
• Minute Maid Pulpy Super Milky China
 Psychographic Segmentation of
Coca Cola
• Diet Coke for those who are health conscious
people
• Coke also provide a variety of energy drinks
who need energy specially in sport
• Real Gold targets busy people in offices
 Behavioral Segmentation of Coca Cola
• Occasions like wedding, festivals, birthdays
etc.
• Benefit sought. Drink to quench thirst and to
refresh
 Titan Watches
• Arrives in three broad Segments
– The Rich
– The Middle
– The Lower
• Titan Brings out a Wide Range of Offer to Serve the
Different Value Segments
– For the Gold lovers:

Titan offered to this segment an all gold watch-

the Aurum and Royal lines.
• For the More than One Segments:

Titan made those who wanted more

than one watches into a separate
segment ad tempted them by
offering a wide range of models.
It offered them matched one’s dress
and occasions.
• For the youth /the outdoor lovers:

Titan viewed them as a

lifestyle segment and
offered them the
fast track.
• For Designer Segment:

Titan also adopted the designer

segment and offered them all designer
and hand assembled watches, the
Euro collection, designed by European
designers.
• For the Children

Titan adopted children – those

between 6 to 14 years as o separate
segment ( Dash for Kids)
• For Women Seeking Fashion within the
Middle-income Group:

Titan offered the Raga Range

for this segment which was
meant exclusively for women.
STP models

82
• Targeting (or target market selection)
refers to:

• An organization’s proactive selection of a

suitable market segment (or segments) with
the intention of heavily focusing the firm’s
marketing offers and activities towards this
group of related consumers.

83
• Positioning (which is sometimes referred
to as product positioning) is:

• Positioning is the target market’s

perception of the product’s key
benefits and features, relative to the
offerings of competitive products.
84
STP models

85
 Type of Segmentation Base Possible Market Segments
Firm
Banking Demographic segmentation Young couples, young families,
older families, pre-retirement,
retired
Mobile phone Benefit segmentation Highly social, work-oriented, safety
carriers contact, status symbol

Frozen food A broad mix is used here: Single households, diet-conscious,

manufacturers Demographic segmentation family dining, parties, budget-
Psychographic segmentation conscious, variety seekers
Behavioral segmentation

Toothpaste Benefit segmentation Teeth whitening, sensitive teeth,

fresh breath, cavity protection,
tartar control
Restaurant Behavioral segmentation Regulars, special occasion, business
lunch, quick spot
 TYPE OF SUITABLE RATIONALE
FIRM SEGMENTATION
APPROACH
Cosmetics and Demographics (gender, Cosmetics and perfumes firms could
perfumes firms age) effectively use a variety of segmentation
(such as L’Oreal) OR variables. For example, males and females
Benefit would have different needs, as would
younger and older consumers.
Benefit segmentation could be used (some
possible could include: skin repair, remove
wrinkles, glowing skin, acne reduction,
attractive look, social status, celebrity
identification).

Car Psychographic Segmenting by social class makes sense for

manufacturer (social class) this product category, as cars are often a
OR reflection of a consumer’s lifestyle and used
Geographic as a social symbol of success.
Geographic segmentation (such as urban
versus rural) could also be an effective
approach
 Can firms use more than one
segmentation base?
• Yes, by using more than one approach for
segmentation organizations can have a much
stronger understanding of each of the
segments.
 What is hybrid (multivariate)
segmentation?
• Hybrid segmentation (which is also sometimes
referred to as multivariate segmentation) refers to
using multiple segmentation variables in the
construction of market segments.
• For example, using a demographic segmentation
variable together with a psychographic
segmentation variable in order to determine the
market segment.
Multi-level Segmentation
Multi-level Segmentation
 Which Segmentation Base?
• In this review exercise, you need to demonstrate
your understanding of the different consumer
segmentation bases. Listed below is a number of
firms and how they approach segmentation.

• You need to identify what type of segmentation

base that the firm is using (see list of segmentation
bases at the bottom).
 Activity/Task
• A bank that markets home loans to young married people and financial
planning services to retired people
• A mobile phone company that targets people who frequently holiday in remote
parts of the world
• A gourmet cheese company that targets people buying cheese platters for a
dinner party or function
• Computer software firm that is most interested in households with a high level
of software purchases
• Prestige car manufacturers who highlight the status associated with owning one
of their vehicles
• Smart phone manufacturers targeting those consumers who are interested in
purchasing their first smart phone in the future
• A plumber deciding to do letterbox drops his local area
• A book publisher that specializes in children’s books
• A home-delivered spring water company advertising in a ‘health’ magazine
• A travel package tour operator targeting retired people who want educational
travel experiences
Choose from the following segmentation bases:
• A= Geographic
• B = Behavioral
• C = Benefits
• D = Demographic
• E = Psychographic
• F = Occasion/situation
• Identify the type of segmentation base being used by
each firm.

• Are there any examples above where the approach used

could be classified as more than one of the
segmentation base options?

• A number of the firms use hybrid segmentation, what

would be the advantages of this approach?

• Do you think there is one best segmentation base that

most firms should utilize? Why?
Alternate Ways to Create
Market Segment
• There are multiple approaches to creating
market segments, from simple “guesswork” to
more scientific data-driven techniques.
• The two main market segmentation tools –
namely segmentation trees and cluster
analysis.
Main approaches to market segmentation

• Using management knowledge, expertise, experience

• Arbitrarily using segmentation bases, or some form of
generic market segmentation
• Using a segmentation tree – with or without consumer
data
• Using an internal customer database or a formal market
research study
• Visual means – using two variables only
• Copying/modeling competitor’s approaches to forming
market segments
• Market research firm segments
 USING MANAGEMENT KNOWLEDGE,
EXPERTISE, EXPERIENCE
• Utilizing existing management understanding of
the marketplace is a very acceptable way of
generating market segments.
– It is a very fast, efficient and cost-effective
approach, as it can be undertaken in a day or less,
– The market segments are more likely to be aligned
to the firm’s position and approach to marketing
strategy,
– It may leverage marketing insights gained by the
team over many years of experience.
ARBITRARILY USING SEGMENTATION BASES

• This approach to market segmentation simply

involves going through the standard list of
segmentation bases, and just selecting one or
more bases without any real justification.
• A common approach here would be to
segment the market on an age basis, or on a
geographic location basis, or even by
light/heavy users.
 USING A SEGMENTATION TREE – WITH OR
WITHOUT CONSUMER DATA
• The principle of a segmentation tree is to slowly
break the market into sets of consumers by
applying a different segmentation base one at a
time.
• These can be constructed with or without
consumer data. With the data, the sizes and
buying potential of each market segment can be
identified. Without the data, the various segments
are essentially “guesswork” – however, the data
may be applied at a later time to help validate the
segmentation structure.
SEGMENTATION TREES
 USING AN INTERNAL CUSTOMER DATABASE OR
A FORMAL MARKET RESEARCH STUDY
• Cluster analysis is the statistical technique used to group consumer data
points into related “clusters” – which we call market segments (essentially
groups of related data points).
• Cluster analysis has the advantages of:
– Being able to sort through a large amounts of consumer data,
– Quickly look for similarities across a range of marketing variables,
– Quickly consider different segmentation structural approaches and the
use of different bases,
– Provides an output of segment measures for each market segment.
• However, there are some limitations with its cluster analysis, which
include:
– The marketer needs to know how to interpret some of the output,
– Unfortunately, clustering relies upon access to consumer data – and
the more valuable data for segmentation – psychographic and
behavioral variables – may not always be available.
 Using Cluster Analysis for Market
Segmentation

• Cluster analysis is a tool that is used in lots of

disciplines – not just marketing – basically
anywhere there is lots of data to condense
into clusters (or groups) – what we call market
segments in marketing.
A simple example of how cluster analysis
works
VISUAL MEANS – USING TWO VARIABLES
ONLY
VISUAL MEANS – USING TWO VARIABLES
ONLY
 COPYING/MODELING COMPETITOR’S
APPROACHES TO FORMING MARKET
SEGMENTS
• The same approach can be used for market
segmentation purposes, particularly in a situation of
competitive rivalry – where the competing firms
look to attack/defend each other.
• It is also a good approach for a smaller firm that may
not have the need to be overly sophisticated with
their approach to segments – so mirroring the
approach of the major players should work well for
them.
 MARKET RESEARCH FIRM SEGMENTS
• The final approach to be considered is using
the “standard” market segments that have
been identified (and studied) by market
research firms and other marketing and
analytical consulting firms.
• An example of this – which is commonly found
in marketing textbooks – is the Values and
Lifestyle segmentation (VALS) approach.
 A Step-by-step Guide to Segmenting a
Market
• Step One – Define the market
• Define markets, sub-markets and product-
markets
 Why do firms define markets?
REASONS TO RATIONALE
DEFINE MARKETS

Business definition Most businesses prefer to have a clear

understanding of what business they are in.
Defining the scope of their markets provides a
framework for their operations
Strategy The long-term success of an organization is highly
development dependent upon their business strategy and its
effective implementation. Clear market descriptions
and boundaries provides significant guidance in
their strategy and planning process
Search for Clearly mapping out the range of markets they are
opportunities pursuing may help identify opportunities and unmet
needs
 Why do firms define markets?
REASONS TO RATIONALE
DEFINE MARKETS

Define competitors Defining markets will enable the firm to more effectively
identify its direct and indirect competitors

Focus resources Clear market definitions will ensure that management and other
resources are continually focused on the identified market/s,
rather than considering a range of other potential opportunities

Market Organizations need to define markets as the first step in

segmentation their market segmentation process
What are the main approaches to defining
a market?
• A market can be effectively defined in a
number of ways, with the most common ones
being:
• By industry classification (as with the
categories used in government statistics)
• By product category (for example, cars, food,
retailing, publishing, professional services)
• By country (or other major geographic area)
• By Yellow Pages directory listings
 Why is defining a product-market
important?
• A firm needs to define their scope of
operations – both current and future.
• The firm’s definition of the markets and in
which product categories that they will
compete in is a key market strategy decision.
• Essentially it answers the key strategy
question of ‘where to compete?’
Understanding markets
 What are markets, sub-markets and
product-markets?
• A market is the overall set of buyers
(consumers) and sellers (firms) for a broad
market need, such as the banking market, or
the education market, or the ready-to-eat
food market.
• A sub-market forms part of an overall market,
but tends to have some unique operating
characteristics.
• For example, the banking market could be
split into the sub-markets of credit cards,
home loans, online savings, and so on. Large
financial institutions would probably operate
in all these sub-markets, whereas smaller and
specialist players may only operate in one or
two sub-markets. This means that in each sub-
market there would be a different competitive
set and market structure.
Step Two – Create market segments
 Step Three – Evaluate the proposed market
segments for viability
• It required to evaluate them to ensure that they
are useable and logical. This would happen in a
real-life firm, but it may not form part of your
particular task.
– Homogeneous
– Heterogeneous
– Measurable
– Substantial
– Accessible
– Actionable/practical
– Responsive
Step Four – Construct segment profiles
• KEY MEASURES
– Segment size measures
– Segment growth rate
– Proportion of the overall market
Step Four – Construct segment profiles

• CONSUMER BEHAVIOR
– Main consumer needs
– Usage level
– Level of brand loyalty
– Price sensitivity
– Product involvement levels
– Retailer preferences
Step Four – Construct segment profiles

• DESCRIPTION
– Geographic spread

– Demographic description

– Psychographic description

• COMPETITION/COMMUNICATION
– Main competitive offerings

– Main media choices

 Step Five – Evaluate the attractiveness of
each segment

• Financial Issues
– Segment size
– Segment growth rate
– Profit margins

• Structural Attractiveness
– Competitors
– Distribution channels
 Step Five – Evaluate the attractiveness of
each segment

• Strategic Direction
– Fit with firm’s strategy

– Fit with firm’s goals

• Marketing Expertise
– Resources

– Capability

– Branding
 Step Six – Select target market/s
• Using the assessment information you have just
constructed, you can select the most appropriate target
market for the firm.
• While there are many factors to consider, you should at
least take into account: the firm’s strategy, the
attractiveness of the segment, the competitive rivalry
of the segment, and the firm’s ability to successfully
compete.
 Brand Persona
• A brand persona is a representation or
description of a consumer in the firm’s
selected target market.
• The brand persona describes the consumer
quite broadly, both in terms of their personal
situation and lifestyle, as well as their
purchasing behavior and attitudes.
 What is a target market

• A target market is a market segment that has

been deliberately selected by an organization
in order to focus their marketing efforts and
offerings.
Main evaluation criteria for target markets

• Financial Issues
– Segment size
– Segment growth rate
– Profit margins
• Structural Attractiveness
– Competitors
– Distribution channels
• Strategic Direction
– Strategy
– Goals
• Marketing Expertise
– Resources
– Capability
– Role of brand
• Opportunity Cost
– Growth options
Example of How to Select a Target Market
MARKET
SEGMENT DESCRIPTION OF THE SEGMENT

These are professional sports people or consumers who compete in sports

at a top level. There are after the latest technology and features in a
Elites sports shoe for specifically designed for their chosen sport.

This is the firm’s current target market. This segment consists of

consumers who regularly exercise or play sports at a social level. They
Keeping fit want a good quality shoe that provides reasonably good value.

These are people who wear sports shoes on an everyday basis, simply
because they are comfortable. They do not generally participate in sports.
They sports shoes for walking, going to the shops, around the house, and
Daily comfort so on. They are interested in the comfortable shoes at a fair price.

This group of consumers are very interested in the fashion elements of

sports shoes. They generally do not participate in regular sports, but do
like shoes that have an unusual design, color, features and so on. They
Fashion wear the shoes as part of their fashion and dress sense.
 Segment
Assessment Elites segment Daily comfort segment Fashion segment
Factor

Financial Issues

Likely to be a relatively small Would be the largest segment of Probably a small to

Segment size segment the three under consideration medium-sized segment
Rating: Poor Rating: Good Rating: Fair

Probably has
Segment Would be a fairly stable segment reasonable growth
growth rate with limited growth prospects Would be a mature market as well prospects
Rating: Poor Rating: Poor Rating: Good

Moderate profit margins, as Likely to have higher

Higher profit margins are likely, as significant competition exist, with profit margins, as price
Profit consumers would not be overly a reasonable number of budget is a minor attribute in
margins price sensitive offerings the purchase decision
Rating: Good Rating: Poor Rating: Good
 Structural Attractiveness

Would have a number

of specialist This segment would be Fairly competitive
competitors, who targeted by an array of segment as well,
would have a strong competition including mainly from
brand and loyal many indirect traditional fashion
Competitors customers competitors shoe providers
Rating: Poor Rating: Poor Rating: Poor

Would be able to meet

Would have a good this shopping
degree of channel preferences of some of May have some
overlap with current the target market, it exposure to the
target market, but would probably have to target market, but
would need to access move into Department would have to look
Distribution some specialty stores and discount at more fashion
channels retailers stores to a large extent oriented stores
Rating: Good Rating: Fair Rating: Poor
 Strategic Direction

Would assume that the Is a move into an

brand reputation of unrelated market
competing in this target Probably a relatively easy segment and may
market would align to market development not be part of
Strategy strategy approach for the firm their core strategy
Rating: Good Rating: Good Rating: Poor
Access to the
target market
would help the
company grow,
Would assume that they Would assume growth but it is quite
have growth goals and goals, but they may be divergent from
enhancing the credibility of concerned about being their current
Goals their brand seen as a generalist shoe operations
Rating: Good Rating: Good Rating: Fair
 Marketing Expertise

Would require new products,

potentially new designers in the
Would require is new products to be Could market to this segment with your firm, and the establishment of new
designed and developed, so a existing product range and some existing distribution channels so relatively
Resources reasonable level of cost retailers, so relatively low-cost high-cost
Rating: Fair Rating: Good Rating: Poor

May be concerned whether they The major skill set challenge here is
have the technical ability to produce Minor concern of the challenge of accessing their ability to produce fashionable
Capability a range of elite sports shoes department stores and discount channels designs on a regular basis
Rating: Poor Rating: Good Rating: Poor

Brand reputation is important and

they will be competing against Leveraging the brand into a fashion
established specialists. They may Their existing brand would be easily leveraged segment may dilute the value of
have trouble in gaining credibility into this more general market, but there is a their existing brand equity, or
with some of the target market concern that their existing brand equity may alternatively they would need to
Role of brand audience be eroded in their traditional target market build a new brand for this segment
Rating: Fair Rating: Fair Rating: Poor

Opportunity Cost

As little is known about the other growth prospects, we would need make the assumption, across the three market
segments, that a market development approach is the best choice at this stage for the firm
Growth options
Rating: Good Rating: Good Rating: Good

OVERALL
ASSESSMENT Rating: Fair-Good Rating: Good Rating: Poor
 How many target markets?
• How many target markets can a firm have?
• As a general rule of thumb, the larger an
organization is the more target markets they
would be likely to have.
• For example, BSNL has stated that they have
around 15 to 20 different target markets,
ranging from individuals, households, small
businesses, large corporations, government
departments, and international markets.
 Target market strategy

• Undifferentiated marketing or mass marketing

• Concentrated (niche) marketing-
• Differentiated marketing-
 Niche Marketing
• “A small market that is not served by
competing products.” (Keegan, Moriarty, &
Duncan, 1992)
• “A method to meet customer needs through
the tailoring of goods and services for small
markets.” (Stanton, Etzel, & Walke, 1991)
 Examples of Niche Marketing
• Consultants
• Websites
• American Express
• Engineering firms
• Medical tourism
Divvies Vegan and Nut Free
Lefty’s: The Left Hand Store
 One-to-one Marketing
• “One-to-one marketing advocates tailoring of
one or more aspects of the firm’s marketing
mix to the individual customer. One-to-one
marketing represents an extreme form of
segmentation, with a target segment of size
one.” (Arora, et al., 2008)
• Examples, hairdresser, Banks
Why mass marketing is so difficult to
successful implement

Production 1908–1927
Model T Ford,
 Introduction to Positioning
• Positioning (or product positioning) is how the
product is designed to be perceived in the
marketplace by the target market against its
main competitors.
• In other words, it’s basically how consumers
understand the product offering and how it
differs from similar competitive offerings.
• “Positioning can be defined as how a product or a
company’s offer appears in the mind of the target
customer with respect to other brands in the
market.
• Positioning is critical to brand building because it is
responsible for projecting the brand identity and
creating the perception and image of the brand in
people’s mind.”

• Positioning is a battle for the mind of the consumer.

 Examples of Brand Positioning
• Colgate is positioned as protective.

• Patanjali can be trusted as it is fully

organic.
 Examples of Brand Positioning
• Woodland is tough and perfect for outdoors.
• Coca-Cola brings happiness.
• Axe deodorants have a sexual appeal.
 ROLE OF POSITIONING
• Support overall strategy
• Differentiate offerings
• Competitive position
• Increase sales and customer loyalty
• Clear communication and consistency
• Reduce price sensitivity
• Good for low-involvement purchases
• Guide marketing mix development
• Avoid cannibalization
• “If you don’t cannibalize yourself, someone else will.”
- Steve Jobs
i Phone
Tayota
 What are the main ways to position a
product?
• The major positioning categories include:
– positioning by product attribute (product
feature and/or benefit),
– positioning by user, (the ideal or
representative target consumer)
– positioning by product class, “we are the
best in our field”
 What are the main ways to position a
product?
• positioning versus competition, (a comparison
against certain well-known competitors)
• positioning by use/application, (the product is
the best solution for that particular task/use)
• positioning by quality or value (based on
relative high quality, or based on the claim
that they represent significant value.)
• By using a combination of the above options
 Which positioning approach to use?
• One of the key goals of positioning is to be
able to enter an existing competitive market,
by highlighting some unique features,
benefits, and advantages to the end-
consumer, with the goal of winning market
share (often from selective demand).
• With this task in mind, the following table of
questions can act as a guide to the selection of
an appropriate positioning statement.
 Which positioning approach to use?
AREA TO
CONSIDER QUESTIONS TO ASK
Where are their gaps in the target market? Why does the gap
Market gaps exist? Can we fill the gap?

Do we have the capability to deliver on this positioning promise?

Can we really produce high quality products or compete on price?
Substance/support How we will compare to our competition when we get to market?

Would this positioning space appeal to the target market? Which

Market need features/benefits are of most interest to target market?
Will this be a long-term positioning? How easily could this position
Competitive barrier be duplicated by our competitors?
What level of sales/profits is likely to flow from this positioning?
Can we develop a supportive marketing mix on a cost-effective
Profitable basis?
Is the positioning statement easy to communicate via media? Will
Communication it be simply understood by the target market?
 Positioning Category Examples
TAGLINE/SLOGAN BRAND HOW IS IT POSITIONED?
Finger lickin’ good KFC By product attribute
Focuses on the enjoyable taste of the product

No battery is Duracell Batteries By product class and by product attribute

stronger longer Indicates that the battery is the leading product in
its product class for durability

The un-cola 7-up Against competition and by user

Suggests a clear alternative to cola drinks and was
designed to appeal to certain attitudes held among
the target market

Everything is easier Apple Computer Against competition

on a Mac Is targeting IBM style computers, highlighting that
the Mac is much simpler and easier to use

Impossible is Adidas By user

nothing Taps into the self-identity and motivation of
serious sportspeople
 Don’t leave home American By use/application
without it Express States that the product is vital when you
are traveling

Have it your way Burger Against competition

King Highlights the flexibility of their menu
choices, implied against McDonald’s
offerings
Always Coca-Cola By user
Targeted at regular consumers who feel
connected to Coke

Eat fresh Subway By product class

Highlights their fresh menu items, against
the range of fast food options available

Choice of a new Pepsi By user and against competition

generation Tapping into the youth market; this is your
drink and clearly targeted against Coca-
Cola
Characteristics Of A Good Brand Positioning
Strategy
• Relevant
– The positioning strategy you decide should be
relevant according to the customer. If he finds the
positioning irrelevant while making the purchase
decision, you’re at loss.
• Desirable
– The unique feature should be desirable and should
be able to become a factor which the customer
evaluate before buying a product.
• Clear
– Your message should be clear and easy to
communicate. E.g. Rich taste and aroma you won’t
forget for a coffee product gives out a clear image
and can position your coffee brand differently
from competitors.
• Deliverable
– The promise should have the ability to be
delivered. False promises lead to negative brand
equity.
Characteristics Of A Good Brand Positioning
Strategy
• Points of difference
– The customer should be able to tell the difference
between your and your competitor’s brand.
• Recognizable Feature
– The unique feature should be recognizable by the
customer. This includes keeping your positioning
simple, and in a language which is understood by
the customer.
Characteristics Of A Good Brand Positioning
Strategy
• Unique
– A strong brand positioning means you have a
unique credible and sustainable position in the
customers’ mind. It should be unique or it’s of no
use.
Validated by the Customer
 Types of Positioning
• A positioning strategy depends on many
factors which include current market
conditions, your product, USP of your product,
competitors, their products and the USPs of
their products.
Lifestyle Positioning
The Problem Solver
Parent Brand
Product Specific
Feature Specific
 How to create a strong brand positioning
strategy?
• Before you decide your brand
positioning, ask yourself these three
questions.
– What does my customer want?
– Can I promise him to deliver it better and/or
differently than my competitors?
– Why will they buy my promise?
What is under-positioning and over
positioning?
Connecting positioning and the
marketing mix
How is positioning created?
Example of an inconsistent marketing mix
 The following outcomes would be
expected:
• Overall sales would be quite poor as the product does
not appeal to it any particular target market
• Consumers who do buy the product would probably
be very dissatisfied and would be very unlikely to
rebuy the shoes
• The retailers themselves might be disappointed with
the consumer feedback and may discontinue stocking
this particular product
• Negative word-of-mouth is likely
• Negative media and Internet reviews are also likely,
further brand equity
 How to fix this problem?
• This problem is easily rectified by simply
aligning the marketing mix to a consistent end.
• If the firm does want to position the shoe for
serious runners, then they need to invest in
product improvement with higher quality
materials, they would need to access sporting
and specialty shoe stores, and the product is
to be priced higher.
 How to fix this problem?

• Alternatively, they could change their

communications mix and position the shoe as a
budget running shoe.
• Either approach would align the positioning with
the marketing mix elements and will generate
better sales and enhanced profitability.
 Student Task for
Developing a Segment
Profile
 Below is a list of potential market segments
(please see diagram), the task for this activity
is to develop a segment profile for a few of
the segments.
 Convenience driven consumers

• These are consumers that are looking to simplify

the purchase, or its process, and are primarily
seeking the benefit of convenience.
 Budget conscious shoppers

• These consumers may make their purchase decision

based on the lowest price, or select the product
that represents the best value for money.
 Focus on quality

• This is a segment of consumers who are interested

in higher quality products and services. Many
consumers in this segment believe that buying
higher quality represents better value over time.
 Rational, value for money

• The consumers in this market segment are more

involved in the purchase decision and look to make
decisions on a “best product solution” basis.
 Attracted to strong brands

• This market segment is less involved in their

purchase decision, and will rely upon a strong brand
to guide their purchase decision.
 Environmentally aware

• This is an emerging segment consisting of people

who take into account the environmental impact of
their purchases.
 Family focused

• This market segment is a family or household unit

has one main grocery buyer who is purchasing on
behalf of themselves and other people in the family
unit.
 Health and diet conscious

• In various markets, particularly food, beverages,

medicines, vitamins, health centers – this is a
growing market segment that is quite interested in
the health and well-being aspects of the product.
 Service/relationship focus

• Particularly in service industries, there would be a

market segment that would be interested in quality
of service provided and/or developing a relationship
with the firm and its staff.
 Flexibility is important

• The tailoring of a product offer is becoming more

important to some groups of consumers, as
highlighted by the needs of this market segment.
 Social status

• Consumers in this segment use brands and products

as a means to signal their self-identity and social
status. This would be quite common in markets
such as cars, alcohol, cigarettes, holiday
destinations, restaurants, clothing, jewelry, and so
on.
 Variety seekers

• Many markets will have a group of consumers who

seek out variety. Some consumers simply like
change and choice, whereas others like to
experience new things.
 Benefit seekers

• In some markets, there are usually multiple

segments that are seeking a particular benefit from
a product. The brand should be positioned around a
specific product attribute – common in fast moving
consumer goods.
 Just for me

• The “just for me” market segment of those

consumers interested in their own needs and
pleasures. They will seek out product solutions that
make them feel good, even though they may be
expensive or not necessarily healthy.
 Existing customers

• The final market segment provided in this list of

potential market segments is simply the
firm’s/brand’s existing customer base. Although this
would need to be segmented down further, as per
the above market segments, it is highlighted here as
it is sometimes overlooked.
 Discussion Questions
• Choose three different market segments from the above list and
descriptions. You should also select a market or a product
category for this exercise.
• In your group, discuss both consumer segments and how the
consumers probably make purchase decisions in the
market/product that you have also chosen.
• Develop a brief segment profile for these three consumer
segments. Note: You should consider their main needs, are they
light or heavy users, what retailers they use, their likely
demographics, are they brand loyal or switchers, what media do
they consume, are they price sensitive, which brands are they
most attracted to, and so on.
• Compare your segment profiles in class.
• How helpful, do you think, is it to develop a segment profile
before determining the brand’s marketing mix?