UNIT 4

MARKET SEGMENTATION,
TARGETING & POSITIONING
Overview: Segmentation, Targeting
& Positioning
Why do this?
MARKET SEGMENTATION
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The process of
dividing a large
market into smaller,
distinct groups of
buyers with different
needs, characteristics
or behaviours who
might require
different products or
marketing mixes.
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Bases for Segmenting Consumer
Markets
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Occasions, Benefits,
Uses, or Attitudes
Behavioral
Geographic
Region, City or Metro
Size, Density, Climate

Demographic
Age, Gender, Family size
and Life Cycle, Race,
Occupation, or Income ...
Social Class, Lifestyle or
Personality
Psychographic
Figure 8.4 Segmentation for selling salty snacks in the workplace
Source: Adapted from Barron, J. and Hollingshead, J. (2002) Market segmentation work: successful marketing really does begin with effective segmentation, Marketing Management, JanuaryFebruary:
248. Reproduced with permission from J. Barron, J. Hollingshead and the Monitor Group
Segmenting
Business
Markets

The nested
approach to
segmentation
Source: Bonoma, T. V. and Shapiro, B. P.
(1983) Segmenting the Industrial
Market, D.C. Heath and Co., Lexington.
Reproduced with permission from
Rowman and Littlefield Publishing
Group
Effective Segmentation Criteria
Size, purchasing power, profiles
of segments can be measured.
Segments can be effectively
reached and served.
Segments are large or profitable
enough to serve.
Measurable
Accessible
Substantial/Profitable
Differential



Actionable
Segments must respond
differently to different marketing
mix elements & programs.
Effective programs can be
designed to attract and serve
the segments.
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STUDENT ACTIVITY:
Which variables or descriptors might be most
appropriate for segmenting the market for the
following products? Justify your answer.
1. Breakfast cereals
2. Personal computers/ laptops
3. Lawnmowers
4. Printers
5. Soft Drinks/ Juices
6. Hotels
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MARKET TARGETING
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The process of
evaluating each market
segments
attractiveness, and
selecting one or more
segments to enter, using
criteria such as
profitability,
sustainability, level of
competition, market size
etc.
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TARGETING
Choosing a Target Market
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Depends on:
Company resources
Product variability
Product life-cycle stage
Market variability
Competitors marketing
strategies
Segment size and growth
Segment structural
attractiveness (see Porters
5-forces Model)
Organizational objectives
and resources


Five Patterns of Target Market Selection

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Single-segment
concentration
Product
specialization
M1 M2 M3
P1

P2

P3


Selective
specialization
M1 M2 M3
P1

P2

P3


M1 M2 M3
P1

P2

P3
M1 M2 M3
P1

P2

P3
P1

P2

P3


M1 M2 M3
P = Product, M = Market
e.g. Apples focus
on high-end
smartphones
e.g. GM producing
different brands of
vehicles for different
countries
Market
specialization
e.g. baby products
by Johnson &
Johnson
Full market
coverage
e.g. Unilever offers different
brands in different product
categories
e.g. Gillette focuses
on Personal care
items
APPROACHES TO TARGETING:
UNDIFFERENTIATED MARKETING
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Sometimes referred to as mass marketing the firm may
decide to aim its resources at the entire market with one
particular offer, ignoring all segment differences. One
product aimed at the mass market in the hope that a
sufficient amount of buyers would be attracted.
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APPROACHES TO TARGETING:
DIFFERENTIATED MARKETING
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Where the firm decides to target several segments and
develops distinct products/services with separate
marketing mix strategies aimed at the varying groups.
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APPROACHES TO TARGETING:
CONCENTRATED MARKETING
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Where the organization concentrates its marketing
effort on one particular segment. The firm will
develop a product that caters for the needs of that
particular group to increase its market share in that
segment.
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APPROACHES TO TARGETING
MICROMARKETING
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Local Marketing
Tailoring brands and
promotion to the needs
and wants of local
customer groups:
Cities
Neighborhoods
Stores

Individual Marketing
Tailoring products and
marketing programs to
the needs and
preferences of individual
customers
Also known as:
One-to-one marketing
Mass customization
Markets-of-one marketing

The practice of tailoring products and marketing programs
to suit the tastes of specific individuals and locations
STUDENT ACTIVITY
1. Identify organizations which you believe
adopted the different approaches to
Targeting, and explain why they choose
that approach
2. Identify two (2) companies which
manufacture several products/ brands
that compete with each other. Explain
why the company would choose to do so.
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MARKET POSITIONING
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Arranging for a
product/service
to occupy a
clear, distinctive
and desirable
place in the
customers
mind, relative to
other products.
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POSITIONING CONCEPTS
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Functional positions
Solve problems
Provide benefits to customers
Get favorable perception by investors (stock profile) and
lenders
Symbolic positions
Self-image enhancement
Ego identification
Belongingness and social meaningfulness
Affective fulfillment
Experiential positions
Provide sensory stimulation
Provide cognitive stimulation
DIFFERENTIATION AND POSITIONING
Positioning
maps use key
variables, as
distinguished
by the target
market, to
show consumer
perceptions of
brands versus
competing
products.

Positioning Strategies
Cult positioning - Harry Potter books.
Origin - Perrier bottled at source.
Positioned with synergistic products and brands -
Bentley and Breitling (high-end Swiss watches).
Positioned against competitors Pepsi vs. Coke
Positioned away from competitors - 7-Up the number 1
Un-cola.
Product class membership - I cant believe its not
butter, the vegetable fat spread, is clearly positioned
against butter.
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Differentiation and Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:

Important Distinctive Superior
Communicable Preemptive
Affordable
Profitable
STUDENT ACTIVITY
Using and industry of your choice, create a
positioning/ perceptual map identifying where
each company or product would be located.

1. Explain why you choose those specific criteria for
positioning the products (i.e. Axis titles)
2. Select a company/ product and identify which of the
positioning strategies you would recommend. State
why.
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Differentiation and Positioning
Developing a Positioning Statement
A positioning statement is a succinct description of the core
target audience to whom a brand is directed, and a compelling
picture of how the marketer wants them to view the brand.
There are four elements or components of a positioning
statement:
Target Audience - the attitudinal and demographic description of the core prospect
to whom the brand is intended to appeal; the group of customers that most closely
represents the brands most fervent users.
Frame of Reference- the category in which the brand competes; the context that
gives the brand relevance to the customer.
Benefit/ Point of Difference- the most compelling and motivating benefit that the
brand can own in the hearts and minds of its target audience relative to the
competition.
Reason to believe- the most convincing proof that the brand delivers what it
promises


The Positioning Statement
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Template for a Positioning Statement:

For (target audience), (brand name) is the (frame of
reference) that delivers (benefit/point of difference)
because only (brand name) is reason to believe).

Criteria for Evaluating a Positioning Statement:
1. Is it memorable, motivating and focused to the core prospect?
2. Does it provide a clear, distinctive and meaningful picture of the brand
that differentiates it from the competition?
3. Can the brand own it?
4. Is it credible and believable?
5. Does it enable growth?
6. Does it serve as a filter for brand decision-making?
Examples of Positioning Statements
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For those suffering from a cold,
Comtrex offers four different relief
formulas that treat and work
against your specific cold
ailments
For consumers ages 16-35, Crest
Whitestrips whiten teeth five times
better than the leading paint-on
whitening gel. Thats because
Crests gel-coated strips hold the
peroxide on teeth longer, to whiten
stains below the tooth surface.
Common and serious positioning
errors
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Under-positioning
A positioning error referring to failure to position a
company, its product or brand.
Over-positioning
A positioning error referring to too narrow a picture of
the company, its products or a brand being
communicated to target customers.
Confused positioning
Leaves consumers with a confused image of the
company, its product or brand.
Implausible positioning
Making claims that stretch the perception of the
buyers too far to be believed.