Segmentation, Targeting

& Positioning

• 1. Introduction & Concept of Market

Segmentation
• 2. Benefits of Market Segmentation
• 3. Requisites of Effective Market
Segmentation
• 4. The Process of Market
Segmentation
• 5. Bases for Segmenting Consumer
Markets
Introduction & Concept of Market Segmentation

Market segmentation is how a company seeks to gain a differential advantage over

its competitors. A methodology is required to achieve market segmentation. Markets
usually fall into natural groups or segments which contain customers who exhibit
broadly similar needs. These segments form separate markets in them and can often
be of considerable size. Taken to its extreme, each individual consumer is a unique
market segment, for all people differ in their requirements. However, it is clearly
uneconomical to make unique products for the needs of individuals, except in the
most exceptional of circumstances. Consequently, products are made to appeal to
groups of customers who share approximately the same needs. The basic aim of
market segmentation is to identify the varying and specific needs of different types
of customers so that an appropriate mix of products/services may be designed and
offered to satisfy different types of customers. In this age of intense competition for
the mass market, individual sellers can prosper by serving specific market segments
in a creative manner.
 • Measurable & Obtainable

• Relevant
Requisites of • Accessible
Effective • Sustainable

Market • Valid

Segmentation • Unique or Distinguishable or Differentiable

• Appropriate

• Stable

• Congruous

• Actionable & Feasible

The Process of Market Segmentation

1. Identify the target market.

The first and foremost step is to identify the target
market. The marketers must be very clear about who all
should be included in a common segment. Make sure
the individuals have something in common. A male and
a female can’t be included in one segment as they have
different needs and expectations.

2) Identify expectations of Target Audience

Once the target market is decided, it is essential to find
out the needs of the target audience. The product must
meet the expectations of the individuals. The marketer
must interact with the target audience to know more
about their interests and demands.
3) Create Subgroups
The organizations should ensure their target market
is well defined. Create subgroups within groups for
effective results.

4) Review the needs of the target audience

It is essential for the marketer to review the needs
and preferences of individuals belonging to each
segment and sub-segment. The consumers of a
particular segment must respond to similar
fluctuations in the market and similar marketing
strategies.
5) Name your market Segment
Give an appropriate name to each
segment. It makes implementation of
strategies easier.

6) Marketing Strategies
Devise relevant strategies to promote
brands amongst each segment.
Remember you can’t afford to have the
same strategies for all the segments.
Make sure there is a connection between
the product and the target audience.
Advertisements promoting female
toiletries can’t afford to have a male
model, else the purpose gets nullified.
7) Review the behavior
Review the behavior of the target audience
frequently. It is not necessary individuals would have
the same requirement (demand) all through the year.
Demands vary, perceptions change, and interests
differ. A detailed study of the target audience is
essential.

8) Size of the Target Market

It is essential to know the target market size. Collect
necessary data for the same. It helps in sales planning
and forecasting.
Demographic segmentation divides people based on their age, income, education
level, and occupation. Some examples of companies that use demographic
segmentation include insurance providers, healthcare companies, and banks.

Psychographic segmentation divides people based on their values, attitudes, and

interests. Some examples of companies that use psychographic segmentation
include car manufacturers, clothing retailers, and political campaigners.

Behavioral segmentation divides people based on their buying habits and brand
loyalty. Some examples of companies that use behavioral segmentation include
supermarkets, hotels, and fast-food restaurants.

In addition to these three popular types of market segmentation, there are other
bases certain businesses should consider, including geographic and firmographic.
 A company cannot concentrate on all the segments

of the market. The company can satisfy only limited

Meaning of segments. The segments the company wants to

Targeting serve are called the target market, and the process

of selecting the target market is referred to as

market targeting. Market segmentation results into

dividing total market into various segments or parts

1. We can define the term as: Market targeting is a process of selecting the target
market from the entire market. Target market consists of group/groups of buyers to
whom the company wants to satisfy or for whom product is manufactured, price is set,
promotion efforts are made, and distribution network is prepared.

2. It involves basically two actions – evaluation of segments and selection of the

appropriate market segments. In this relation, market targeting can be defined as:
Market targeting is an act of evaluating and selecting market segments.

3. Finally, we define market targeting as: Market targeting consists of dividing the total
market into segments, evaluating these segments, and selecting the appropriate
segments as the target market.
Target market strategies

1 2 3 4 5
Mass Segment Niche Micro Local
Marketing Marketing Marketing Marketing Marketing
 Mass Marketing

Mass Marketing involves marketing to the

entire population with a single strategy. Mass
marketing focuses on reaching everyone with
maximum exposure to the product. An
attempt is made to spread the message to
everyone with mass media such as TV,
newspaper, and mobile.

Regularly consumed products like toothpaste

and toothbrushes, mass marketing is all that
is needed.
 Segment Marketing

Segment Marketing, known for its

differentiated targeting strategy focuses on a
section of people known as the ‘target
audience’. The target marketing concept is to
attract customers to their products. This
segment of marketing fetches good results
for new products entering to market with
established organizations. This differentiated
marketing is expensive. The differentiated
marketing strategy can be designed uniquely
for the different target audiences.
 Niche Marketing

Niche marketing, also known as concentrated

marketing targets a small section of the
market. The entire campaign is around this
small section of the market. Luxury goods like
Rolex and Armani are examples of niche
marketing. Niche marketing yields results for
small companies with limited production and
sales.
 Micromarketing focuses on a much smaller section of people than niche

Micromarketing marketing. Micromarketing definition is customized marketing or one-to-one

marketing. The products are customized to the requirements of the

customer. The micro marketing strategies involve customer tastes, whims,

and wishes.
Local Marketing Local marketing strategy involves nearby and neighborhood areas.
The organizations use this marketing strategy to thrive on local
connections and make their presence felt. Amazon Local is a good
example of a local marketing strategy. The online service providers
along with local businesses come up with offers for hotel booking,
spa treatments, and restaurant meals at regular intervals. The local
companies earn good revenue with sales. Another initiative is CSAs
which are community-supported agriculture shares. Local marketing
works wonders for freshly grown greens, fruits, and vegetables by
creating a market in a nearby locality.
Market Positioning - Meaning

Market positioning is the process of creating a marketing mix that puts a product
or service in a unique position for the target segments and turning them into
potential buyers. It is a crucial part of marketing strategies as it helps in
creating a distinct mental position or image of a product or a service in the
mind of the customers as compared to other brands in the market. This is
accomplished through formulating competitive positioning for a product and a
detailed marketing mix.
Market positioning influences how your market sees your brand and how you
present your products to your target audience. It’s fundamental for consumers
to make purchasing choices out of the complex array of offerings. It’s how
businesses can compete within a crowded marketplace for each customer’s
attention, preference, money, and ongoing loyalty.

Positioning is the single biggest influence on consumers deciding to buy. Good

positioning entices prospective customers to find out more about your brand’s
products. Great positioning entices existing customers to continue purchasing
your brand’s products. Therefore, positioning strategies should always be
connected intimately to the whole concept of target markets
 Positioning Strategies

Positioning is the strategy of differentiating your product

from that of the competition, in the mind of the prospect. A
positioning strategy may be developed from the product’s
attributes, its specific uses, the type of uses, the product
class or category, or the competition. Each of these
represents a different approach to developing a positioning
strategy. However, all of them have the ultimate objective of
developing or reinforcing an image in the minds of the
audience. Following are steps of positioning strategies
 Positioning by Product
Characteristics/Consumer
Benefits
a) This is a commonly used strategy and consists of
associating an object with a product characteristic
or customer benefit.

“Colgate is a cavity fighter.”

The ability to fight cavities is a product attribute that
translates into a consumer benefit.
“The toothpaste with clove oil.”
A product can also be positioned along with two or
more characteristics at the time.
“Double action pepsodent fights cavities and
freshens breath.”
A positioning strategy based on Physical characteristics are
product characteristics could be objective and can be measured
based on physical on some physical scale:
characteristics, pseudo-physical Temperature, color, sweetness,
characteristics, or benefits. saltiness, thickness, weight.

Pseudo-physical characteristics, Benefits represent advantages

in contrast, are characteristics that promote the well-being of
that cannot be easily measured: the consumer: Quenching
Spiciness, greasiness, thirst, not harmful to the skin,
creaminess, shininess. satisfying hunger, convenience.
 Positioning by “Price-
Quality
The price-quality issue is so important in some
product categories that it is a positioning strategy. On
the one hand, there are certain product categories
where a high price is automatically associated with
quality, or where a low price is often considered to be
synonymous with inferior quality. For e.g., Perfumes,
whisky, leather goods, stereo systems, designer
clothing. Manufacturers of such brands charge more,
partly to cover the higher costs, and partly to
communicate that they are of higher quality. Such
brands should be positioned based on the price-
quality approach, to communicate that higher price
and higher quality go together. On the other hand,
there may be other brands in the same product
category that try to appeal based on lower prices.
They offer more by way of features and performance
and claim to be of quality that is comparable and is
another way of positioning based on price quality.
 Positioning by Use or
Approach
Associating the product with a specific use is another
commonly used positioning strategy. Sometimes, this type of
positioning strategy may also be used to expand the market
for a particular brand. The example of “Arm and Hammer”, an
international baking soda brand, mentioned earlier, is an
example of this. Arm and Hammer successfully positioned
their product as an odor-destroying agent in refrigerators.

Vicks: “Use Vicks when cold attacks.”

Dettol: The liquid protection against bacteria.”

Clinic All Clear: “The dandruff-control shampoo.”

Positioning by Product
User

This is a strategy of associating the product

with a particular type or class of user. One
way of doing this is through celebrity
endorsements.

E.g., Lux-earlier their positioning was ‘Filmi

Sitaroan Ka Saboon’, now new Aishwarya’s
advertising says that by using Lux you can
also become a star.
Positioning by
Product Class

Sometimes to counter the competition,

some brands need to associate themselves
with a unique classic example of this is
“Seven Up, the uncola”, mentioned earlier.

Another relevant example is diet beers

(Kingfisher) and ice beers (recently
launched by united Breweries) that
position themselves with respect to
regular beer.
 Positioning by
Culture Symbol
This type of positioning strategy consists of identifying
something that is very meaningful to people, and that
competitors are not using, and then associating the
brand with that symbol. Advertising is full of examples
of this type of positioning strategy. A classic
international example is Marlboro cigarette’ American
cowboy, which helped differentiate Marlboro from
other cigarette brands, and developed the Marlboro
Man.

For E.g., Onida’s green-eyed devil also set Onida apart

from the competition by positioning it as something
that is envied and talked about by neighbors.
This type of positioning tends to have a high recall value
because of the use of meaningful and relevant symbols.
 Positioning by Competitor
This type of positioning strategy consists of making consumers
think that your brand is better than, or as good as the
competitors. The competition is used as the point of reference.
This positioning strategy can be used to advantage in certain
cases.

First, when the competitor has an established image that has

been built up over the years, this image can be used as a
“bridge” to communicate another image. For example, if
someone wants to know where a particular office is, it would
be easier to say it is net to the City Bank building rather than
describing the various streets to get there.
Secondly, sometimes it is not important how good customers
think you are. It is more important than they think that you are
at least as good as the competition.
Positioning with respect to competitors can also be done
through comparative advertising.