MARKET SEGMENTATION,

TARGETING & POSITIONING

(MSTP)
MODULE - 2

Reference Book – Principles of Marketing (17 th edition- 2018)

Kotler
Armstrong
Agnihotri
Topics to be covered
✓Marketing Mix (elements)
✓Perquisites for sound segmentation
✓Target marketing strategies
✓Product positioning, meaning and steps involved
 COMPANY AND MARKETING STRATEGY
Designing customer value driven marketing strategies and constructing marketing programs

Like marketing strategy the company’s broader

Organization's overall strategic planning
strategy must also be customer focused

Engage customers and create value – market Value delivery network

partners

Examine market strategy and plan how to Customer value

choose target market, position market driven
offerings, develop marketing mix and manage marketing
market programs strategies and
programs
 MARKETING STRATEGY AND MARKETING MIX
The strategic plan defines the company’s over all mission and objectives
Major activities involved in managing a customer driven marketing strategy and the marketing mix
 Customer at the center – create value to the customers

Marketing strategy - WHICH customers we serve? ( segmentation and

targeting) & HOW? (differentiation and Positioning)

Guided by marketing strategy – company designs marketing mix – Product , Price,

Place, Promotion (4 Ps)

To find the best strategy and mix – marketing analysis, planning, implementation and control
MARKETING STRATEGY

The marketing logic by which the company hopes to create customer

value and achieve profitable customer relationships
CUSTOMER VALUE DRIVEN MARKETING STRATEGY

• In today’s marketplace, companies must be customer centered

• Win customers – engage them – grow them by delivering customer value

• For all this a company should first understand the need and want – CUSTOMER ANALSYSIS

• They cant serve all – not all as the same

• Therefore divide the total market into segments and design strategies for profitably serving the chosen
segment

Thus process involves Market Segmentation, Market Targeting, Differentiation and Positioning
To succeed in today’s competitive marketplace, companies must be customer-centered. Companies
must know how to create value for customers and build a profitable customer relationship. For this,
the customer-driven market strategy must be followed.
Let us understand the terms
Market segmentation: Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviours and who might require separate strategies or mixes

Example : Automobiles, range of electronic goods – segments based on income groups, range of cosmetic
products

Market targeting : evaluating each market segment’s attractiveness and selecting one or more segments to
serve

Example : automobiles concentrating on those segmented markets, clothing brands targets more than one
segment to serve
Image Source: Marketing 360
 What comes to your mind when you think of
these brands or products?

Image Source: Google images

Image Source: Google images
Image Source: Google images
Market positioning : arranging for a product to occupy a clear , distinctive, and desirable place relative to
competing products in the minds of target consumers

Market differentiation : actually differentiating the market offering to create superior customer value

Positioning is the battle for a place in the consumer’s mind. Positioning means owning a credible and profitable
position in the consumer’s mind, either by getting there first or by adopting a position relative to the
competition. Positioning depends on differentiation, by which we actually differ our product from competing
ones so that it gives consumers more value.
Marketing mix: the set of tactical marketing tools – product, price, place and promotion that the firm blends to
produce the response it wants in the target market. It includes 4Ps – Product, Price, Place and Promotion

Considered as pillars of marketing strategy

 4Ps – pillars of marketing strategy

Source: https://startupaplan.com/7ps-marketing-mix/
Source: https://startupaplan.com/7ps-marketing-mix/
Source: https://startupaplan.com/7ps-marketing-mix/
MARKETING MIX
External environment is beyond control therefore marketing manager has to thrive to control the internal
environment. Therefore he has control over 4 Ps – Product, Price, Promotion, Place

Marketing strategy is the link between product and the market

It is translated into an action plan through the tools of marketing management. These tools together we call
Marketing Mix
MARKETING MIX
Definition : “ the firm’s task is to find the best solution for its marketing decision variables; the settings
constitute its “marketing mix”

Marketing mix consists of everything that a firm can do to engage customers and deliver customer value.

ELEMENTS OF MARKETING MIX ARE:

1. Product Mix

2. Place Mix

3. Price Mix

4. Promotion Mix
 4Ps – pillars of marketing strategy

Source: https://startupaplan.com/7ps-marketing-mix/
 PRODUCT MIX
• The product line and product
range PRICE MIX
• Product design • Pricing strategy policy
• Product package • Basic price
• Product quality • Terms of credit Discounts
• Product labelling and allowances
• Product branding
• After sale services and
guarantees
4Ps Of MARKETING

PLACE MIX
1.Distribution Channels PROMOTION MIX
a. Wholesalers • Personal Selling
b. Retailers • Advertising
c. Mercantile agents • Publicity
2. Physical distribution • Sales promotion
a. Transport
b. Ware housing
Marketing mix is the set of controllable variables that the firm can use to influence buyer’s
response

Optimal mix involves creative blend of ingredients

Marketing mix evolves from time to time and not stagnant always changing in tune with external
environment
FOR MARKETERS 4PS FOR CUSTOMER 4 CS
• Product Consumer’s Needs and Wants
• Price Cost to the customer
• Promotion Communication
• Place Convenience
 Product - Mix deals with product variables . It means goods and services combination
offered to the target market
THE PRODUCT MIX VARIBALES
• The product line and product range
• Product design
THE PRODUCT MIX
• Product package
• Product quality
• Product labelling
• Product branding
• After sale services and guarantees
THE PRODUCT LINE AND PRODUCT RANGE
• Product line” is a group of closely related products which are able to satisfy a particular class of need.
Product line stands for the entire range of products manufactured by a firm.

• “Product range” on the other hand speaks of varieties offered based on customers’ purchasing capacity and
requirements.
PRODUCT LINE

Source Images : Google images (ITC Portal)

Source Images : Google images (ITC Portal)
 PRODUCT RANGE

Source Images : Google images

 PRODUCT DESIGN
• Marketing decisions start with designing the product in a way that is required by the target customers.
Products that are designed properly, increase their utility, attractiveness, ease of operation, safety and appeal.

• A good design increases sales volume, provides advertising and selling features, permits higher prices,
reduces manufacturing costs and reduces transportation charges

• Product design is influenced by : external appearance, construction, production capacity, available

capital, use or application, relationship to other products, service requirements and competition design
 PRODUCT PACKAGE
Package is the container or wrapper used to house the products. (A good package protects products,
provides convenience to customers, increases economy and helps in communication.

In self service stores, an attractive package helps consumers to identify the product, builds consumer confidence,
describes the merits and limits of a product, and encourages impulsive buying.)

It is a pride of merchandising. It acts like a silent salesmen

 PRODUCT QUALITY
Establishment and control of quality standards is a basic step in
merchandising
Once the standards are set up the merchandiser should conform to the
standards
PRODUCT LABELLING AND PRODUCT
BRANDING
Labels are fixed to the products to identify them, to describe their
ingredients, quantity, quality and other characteristics. The manufacturer is
also able to give details of date and place of manufacturer, expiry date, etc.

Product Branding : A brand is a single mark or name given to a product that

helps to identify the product. Branding helps to create loyalty to the
customers.
Labelling
Source Images : Google images
Source Images : Google images
AFTER SALE SERVICES AND GUARANTEES
• Manufacturers of mechanical and technical equipment have to
establish an after sales service policy.

• This will help in securing repeat sales, customer goodwill and word of
mouth advertising
Questions
• What does the customer want from the product/service? What needs does
it satisfy?
• What features does it have to meet these needs?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), colour(s), and so on, should it be?
• What is it to be called?
• How is it branded?
• How is it differentiated versus your
competitors?
Image Source: The Marketing Journalist
 PLACE - MIX or distribution mix speaks of logistics and change of hands

It arranges for smooth flow of goods and services from producer to the consumer. It is
concerned with the creation of place, time and possession utility. Getting the right
product to the right place at the right time involves the distribution system.
THE PLACE MIX
Signifies two things physical distribution and channels of distribution
THE PLACE MIX VARIBALES
▪ Transportation
▪ Warehousing
▪ Inventory
▪ Channels of Distribution – Wholesalers, Retailers
Transportation:

Transport creates place utility and widens the market for the products
of the firm. Choice of transportation is influenced by consumer demand,
plant location, warehousing facilities, competition and product value.

Warehousing:

It creates time utility by adjusting supply and demand, preserving or

conditioning the product and obtaining more favorable demand and
market price.
Inventory

Sufficient inventory of different sizes, colors, models, varieties etc. have to be stocked. The inventory
requirements are dependent on economic conditions, weather conditions, amount of advertising and
sales promotion, number of new or improved products, etc.

Every manufacturer has to choose the channels of distribution, i.e., wholesalers, retailers,
mercantile agents etc. It means determining the number of distributors and dealers to be employed.
The manufacturer should take into account factors such as type of product, nature and extent of
market, channels employed by competitors and the relative merits and demerits of each channel of
distribution.
Image Source: Google images
Image Source: Google images
Image Source: Google images
 Questions
• Where do buyers look for your product or service?
• If they look in a store, what kind? A specialist boutique or
in a supermarket, or both? Or online? Or direct, via a
catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs?
Or make online submissions? Or send samples to
catalogue companies?
• What do your competitors do,
and how can you learn from
that and/or differentiate?

Image Source: Google images

 PRICE - MIX deals with the price of the product or the service

Price is a powerful tool which both sellers and buyers are keenly interested. It is
equal to customer expectation.
THE PRICE MIX VARIBALES
THE PRICE MIX • Pricing Policies and Strategies
• Terms of credit
• Terms of Delivery
• Margin
• Resale price maintenance
• Discounts and allowances
PRICING POLICIES AND STRATEGIES

The pricing policies and strategies are the guidelines and the framework
within which the management administers prices to match the needs of
the market.

Every business is keen upon the pricing policy, its determination and
implementation
TERMS OF CREDIT

• Installment buying helps firms to increase the size of the market and thus
derive economies of large-scale production.

• Credit, by expanding market, can make a new firm’s production

economically worthwhile.

• The policies regarding the credit, depend on the nature of the product, its
marketability, class of customers, competitors’ terms and consumer credit
facilities made available by banks.
MARGIN

• Margin refers to the difference between the price paid by the consumer and
the total cost incurred in making the product or service.

• The extent of the margin depends on the nature of the product. Consumer
durable and non durables need lower margin because of mass consumption.

• On the other hand, industrial products requiring after sales service and
maintenance will need a higher margin.
RESALE PRICE MAINTENANCE

• It is a policy of establishing a minimum retail price below which a

wholesaler or retailer may not sell the manufacture’s products.

• Resale price maintenance is designed to prevent excessive price-cuttings by

wholesalers and retailers and consequent reduction in their profit.

• It discourages product substitution and maintains the prestige of the

advertised brand.
Source: Business insider India
Source: Google images
Questions
• What is the value of the product or service to the buyer?
• Are there established price points for products or
services in this area?
• Is the customer price sensitive?
• What discounts should be offered to trade customers?
• How will your price compare with your competitors?
Image Source : The Marketing journalist blog
 PROMOTION - MIX deals with personal and impersonal persuasive communication
between the markets and the prospects

promotional mix refers to the specific combination of the tools, channels, and processes
businesses use to promote market offerings.

It’s what you say, how you say it, who you say it to, what channels you use to reach them,
and how often you communicate.
THE PROMOTION MIX
THE PROMOTION - MIX VARIBALES
• Personal Selling
• Advertising
• Sales Promotion
• Publicity
• Trade fairs and exhibitions
A business may have the best of other Ps in the marketing mix—but a
carefully crafted strategy of the right promotional mix elements can
make the difference between success and failure.

Without effective promotion, customers can’t learn about your product

and service offerings, and sales will be stifled.
PERSONAL SELLING

The recruitment, selection, training, motivation and controlling of the sales force is an important
factor while taking decisions regarding personal selling. This is an expensive method of promotion
but very effective
ADVERTISING

It is a popular method of impersonal communication and different medias may be used to communicate the
message.

Marketers use advertising as a vital tool for increasing brand awareness. Advertisers show promotions to masses
of people using email, webpages, banner ads, television, radio, etc.
SALES PROMOTION

It deals with offering short term incentives such as coupons, premiums, contests for consumers, distribution of
free goods, discounts, gifts, sales contests etc. these offers are for a limited period only with a motive to achieve
higher sales.

Many companies make this a core component of their marketing efforts, though sometimes it’s the most
annoying type of communication for people.
PUBLICITY

It attempts to portray the image and personality of the organization. It is an art and science of developing
reciprocal understanding and goodwill

This type of promotional method determines the way people treat the brand. Companies using PR try to
build a firm and attractive brand image by planting interesting news stories about their activities in the
media.

Public relations are not fully controlled by the company, though, as some reviews and webpages may negatively
highlight the brand. If a company adequately solves these issues, people will reward them with positive word-of-
mouth consideration.
DIRECT MARKETING

Marketing directly to a person.

By communicating with a narrow group of potential customers, companies promote their offerings
through telephone marketing, snail mail, email, or catalogs and brochures.

Despite the abundance of offers from junk mail and telemarketers, direct marketing remains popular:
it gives companies a predictable and cost-effective way of reaching their target markets.
TARGET MARKETING
Target marketing consists of three major steps

1. Market Segmentation: Dividing the market into distinct groups

who might recognize spate products

2. Market Targeting: Evaluating each segments attractiveness and

selecting one or more marketing segments to enter.

3. Market Positioning: Formulating a competitive positioning for the

product and a detailed marketing mix
MARKET SEGMENTATION
 MARKET SEGMENTATION
Generally market consists of different types of consumers having varied tastes, preferences, needs and
wants

The marketer must determine which is the best segment which gives him an opportunity to capture

For this, marketer should group the consumers

This grouping can be done based on demographic, geographic, psychographic and behavioral
factors
According to Philip Kotler “ Is the subdividing of a market into homogenous sub-sects of customers
where any sub-sect may conceivably be selected as a market target to be reacted with a distinct marketing
mix”

The process of dividing a market into distinct groups of buyers who have a different needs, characteristics
or behaviours who might require separate strategies or mixes is called market segmentation

Every market has segments but not all ways of segmenting is useful

Ex: pharma – low and high income groups may respond the same way
A Market segment consists of similar consumers who respond very
similarly for given set of strategies

Ex: when a new iPhone is out in the market, when end of season sale
starts

Companies are wise to focus their efforts and strategies for distinct
needs of individual
In reality market demand is heterogeneous and not homogenous

Benefits of segmentation

• A more precise definition of a market

• Effective marketing program

• Better assessment of competition

• Better allocation of resources

 Pre requisites for sound segmentation

Measurable Accessible Substantial

Pre requisites
of sound
segmentation

Market
responsiveness Differentiable Actionable
BASIS OF MARKET SEGMENTATION
Image source: Alexa Blog
https://blog.alexa.com/types-of-market-segmentation/
Demographic Segmentation

• Age
• Gender
• Income
• Population density
• Occupation and Annual Income
• Education
• Ethnicity
• Religion
Geographical Segmentation
The company decides to operate in one or a few geographical areas.
• ZIP code
• State and City
• Country
• Radius around a certain location
• Climate
• Urban or rural
Psychographic Segmentation
• Personality traits
• Values
• Attitudes
• Interests
• Lifestyles
• Psychological influences
• Subconscious and conscious beliefs
• Motivations
• Priorities
• Social Class
Behaviour Segmentation
• Purchasing habits
• Spending habits
• Brand interactions
• Occasions
• Benefits Sought
• User Status
• Usage Rate
• Loyalty Sales
• Buyer’s readiness stage
Image Source : LinkedIn (MOM)
MARKETING TARGETING STRATEGIES
How to attract customers? Strategy? One segment?
Multiple segments?
MARKETING TARGETING STRATEGIES

UNDIFFERENTIATED DIFFERENTIATED

CONCENTRATED
 UNDIFFERENTIATED
• Attracts all buyers with single market strategy
• They focus on what is common among customers than
the differences
• Product differentiation has lot of importance to
compete
• Mass marketing, high advertising, universal themes
• They do not produce different products for different
segments
• It lacks segmentation marketing
• Very narrow product line

Image source : google images

 DIFFERENTIATED
• Firm operates in all segments but designs
marketing strategy for each of the segment
• More tailored market efforts
• More brand identification and customers base
• They move to new segments once they succeed
• Promotion cost is high

Image source : google images

Image source : google images
CONCENTRATED
• Focuses only on one segment
• Company becomes more specialized in a particular
product
• Achieves a stronger market position
• Deeper knowledge about customers and preferences
• Company’s future depends on that segment

Image source : google images

 MARKET POSITIONING
“ Positioning is the act of designing the company’s offer and image so that it
occupies a distinct and valued place in the target customer’s mind ”-Philip
Kotler.
The objective of positioning is to have the brand favorably perceived by the people
in the target market.

Positioning is the attempt on the part of marketer to impart a distinct identity to his
own brand and make it stand out among competitors.
 ELEMENTS OF POSITIONING

PRODUCT COMPANY COMPETITION CONSUMERS

• Perception of
• Strong • Comparison
• Product the consumers
company • Any form of
differentiation • Know the
profile competitive
• Brand parity profile of the
• Goodwill advantage
• Brand loyalty target customer
• Reputation
IMPORTANT STEPS IN PRODUCT POSITIONING
FIND OUT THE COMPETITIVE DIFFERENCES

SELECT MAJOR DIFFERENCES

DEVELOP POSITIONING STRATEGY

COMMUNICATE THE POSITIONING STRATEGY

WITH RIGHT MEDIA

FOLLOWUP
FIND OUT THE COMPETITIVE DIFFERENCES

Differences could be – product , service, brand, experience

SELECT MAJOR DIFFERENCES

Product benefits, price, packing, brand, warranty

DEVELOP POSITIONING STRATEGY

Positioning using the differences – creating an image in the mind of the people
COMMUNICATE THE POSITIONING STRATEGY WITH
RIGHT MEDIA

Communicate the differences and edge to the customers through

various media

FOLLOWUP

Assess the impact – through sales, views, brand awareness,

loyalty etc.
Source – LinkedIn, MOM
PREPARING AN INTEGRATED MARKET PLAN AND
PROGRAM

Target market – Integrated Marketing mix First create need

how to create marketing 4Ps and create satisfying market
value? program value proposition offering (product)

Decide how to Firm should blend

Then decide how Engage target
make market M mix tool that
much to charge? customers
offering available? communicates
(Price) (promotion)
(place) and delivers value