MARKET SEGMENTATION
DESIGNING A CUSTOMER DRIVEN STRATEGY
Select customers to serve Decide on avalue
Decide on valueproposition
proposition
Differentiation
Segmentation
Differentiate the market
Divide the total market
offering to create
into smaller segments
Create value for superior customer value
targeted
customers
Positioning
Targeting
Position the market
Select the segment or
offering in the minds of
segments to enter
target cutomers
Target Marketing Process
Market
Market Positioning
Segmentation – Market Targeting –
– Creating a unique
Dividing the Selecting the most
image in the minds
market into profitable groups.
of customers.
smaller groups.
Sportswear brands focus on fitness lovers instead of everyone.
Baby products companies target parents instead of all
shoppers.
Market Segmentation
Dividing a large market into smaller groups with common characteristics.
Why is it important?
Helps choose the right target market
Makes it easier to reach the selected market
Improves marketing efficiency and saves costs
Identifies unhappy customers and focuses on them
Helps companies serve customers better.
Improves sales and customer satisfaction.
Example:
A restaurant offers veg, non-veg, and vegan options instead of one menu for all.
Types of
Ma r ket
Segment a t ion
Geographic Segmentation
Dividing the market based on geographical
units such as nations, states, regions etc.
People in different places have different needs
and preferences.
Examples: McDonald's menu changes by
country (Paneer Burger in India, Teriyaki
Burger in Japan).
Demographic Segmentation
Dividing people based on age, gender,
income, education, etc.
Most popular bases for segmenting.
Consumer needs, wants and usage rates
vary closely with demographic variables
Examples: Toys are marketed to kids, while
anti-aging creams are for older adults.
Psychographic Segmentation
Dividing people based on lifestyle,
personality, values, and interests.
People in the same demographic group can
have very different psychographic
characteristics
Helps companies understand customer
mindset.
Examples: Nike targets athletes and fitness
lovers.
Behavioral Segmentation
Dividing people based on consumer
knowledge, attitudes, uses or response to
a product.
Segmented based on Occasion, Benefits
Sought, User Status , Usage Rate and
Loyalty Status
Helps companies reward loyal customers
and attract new ones.
Examples: Frequent flyers get special
discounts and priority boarding.
Requirements for Effective Segmentation
Measurable Size, purchasing power, profiles of segments
can be measured.
Accessible Segments must be effectively reached and
served.
Segments must be large or profitable enough
Substantial to serve.
Segments must respond differently to
Differential different marketing mix elements & actions.
Actionable Must be able to attract and serve the
segments.
Market Targeting
Selecting the most suitable customer group from all segments.
Helps businesses focus on the right customers.
Increases sales and customer satisfaction.
Steps in Market Targeting:
Evaluate segments – Which group has more potential?
Select the best segment – Choose the most profitable one.
Develop marketing strategies – Create ads and promotions for that
group.
Example: A luxury watch brand targets high-income professionals, not
students.
Types of Market Targeting Strategies
Undifferentiated Marketing – One product for
everyone.
Differentiated Marketing – Different products for
different groups.
Concentrated Marketing – Focus on one specific
market segment.
Micromarketing – Personalized marketing for
individuals or small groups.
Undifferentiated Marketing
A single product for all customers, no
segmentation.
Also called mass marketing
Low cost, easy to manage.
Does not meet individual needs.
Example: A company selling basic salt for all
households.
Differentiated Marketing
Different products for different market segments.
Also called segmented marketing.
Develop several brands to meet the need of each consumer segments.
Increases sales by targeting multiple groups.
More expensive to produce different products.
Example: A car brand offering economy, mid-range, and luxury models
Concentrated Marketing
Focusing on one specific market segment.
Aims to dominate a small market rather than
compete broadly.
High customization and strong customer
relationships.
Strong brand loyalty and customer retention.
Risky if the market segment shrinks or
changes.
Examples: Rolex focusing only on high-end
luxury watch buyers.
Micromarketing
Customizing products for individuals or
small groups.
Highly personalized marketing and
product development.
Strong customer loyalty due to personal
touch.
Ability to charge premium prices for
customized offerings.
Can be inefficient if demand is low.
Examples: Local tailor designing clothes
based on individual customer preferences
Market Positioning
Market positioning is the process of establishing a
brand's image in the minds of consumers.
Helps differentiate a product from competitors.
Helps businesses stand out from competitors.
Makes it easy for customers to recognize a brand.
Key Aspects of Positioning:
Target market understanding.
Competitive advantage.
Effective communication of the brand message.
Example: Apple is positioned as a premium and innovative brand.
Importance of Market Positioning
Creates Brand Identity: Helps customers associate specific values with
a brand.
Enhances Competitive Advantage: Differentiates the brand from
competitors.
Increases Customer Loyalty: Strong positioning builds trust and repeat
customers.
Guides Marketing Strategies: Helps design advertisements and
promotional messages.
Positioning Strategies
1. Positioning by Specific Product Attribute & Benefits
Highlighting a unique feature or benefit.
Example: Sensodyne – "Best for sensitive teeth."
2. Positioning by Price/Quality
Focusing on affordability or premium quality.
Example: Rolex – Luxury, high-quality watches.
3. Positioning by Use/Application
Promoting how the product is used.
Example: Red Bull – "Gives you energy for sports & work.“
4. Positioning by Product Class
Comparing with a broader category.
Example: Apple iPad – "A better alternative to laptops."
Positioning Strategies
5. Positioning by Product User
Targeting a specific group of users.
Example: Johnson’s Baby – "Best for baby skincare."
6. Positioning by Competitor
Comparing with competitors to show superiority.
Example: Pepsi – "The choice of a new generation" (vs. Coke).
7. Positioning by Cultural Symbols
Associating with cultural or emotional symbols.
Example: Amul – The Amul Girl as a symbol of Indian culture &
nostalgia.
Differentiation
Differentiation is the process of making a
product or service stand out from competitors
in the eyes of consumers.
Why Differentiation Matters
Stand Out in a Crowd
• Helps your brand or product to be noticed
among similar options in the market.
Builds Brand Loyalty
• Creates a unique identity that resonates with
customers, encouraging repeat purchases.
Market Differentiation Strategies
Technology Differentiation – Leveraging innovation to enhance
performance and uniqueness.
Example: Tesla’s autopilot, Apple’s A-series chips, Samsung’s foldable
phones.
Price/Quality Differentiation – Competing on affordability or
premium quality.
Example: Walmart (low-cost), Rolex (premium), Nike (mid-range
balance).
Product Differentiation – Unique features, superior design, or
advanced functionality.
Example: Nike’s Air technology, Coca-Cola vs. Pepsi taste.
Market Differentiation Strategies
Customer Service Differentiation – Outstanding support and
personalized experiences.
Example: Amazon’s fast delivery, Ritz-Carlton’s luxury service, Zappos’
customer-first approach.
User Experience Differentiation – Enhancing ease of use and overall
customer interaction.
Example: Google’s simple interface, Apple’s ecosystem, Netflix’s AI-
driven recommendations.
