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Lesson

Lesson 15
15

Market Segmentation,
Targeting, and Positioning

Lesson
Lesson Objectives
Objectives
When you have completed this lesson you will be able
to;
Summarise the relationship between market segmentation,
targeting and positioning
Identify and describe the major variables for consumer
segmentation
Outline how companies select target markets and implement
segmentation strategies
Show how market segmentation and the marketing mix are
interlinked in the positioning strategy

The
The STP
STP Process
Process

Segmentation is the process of classifying customers


into groups which share some common characteristic
Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter
Positioning is arranging for a product to occupy a
clear, distinctive and desirable place relative to
competing products in the mind of the consumer

Target
Target Market
Market

A market is a set of all actual and potential buyers


A target market is a group of people toward whom a
firm markets its goods, services, or ideas with a
strategy designed to satisfy their specific needs and
preferences.
Any marketing strategy must include a detailed
(specific) description of this.

Advantages
Advantages of
of Segmentation
Segmentation (pp
(pp 164
164 -- 165)
165)
1. The process of breaking up a homogeneous market
into heterogeneous segments forces the marketer to
analyse and consider both the needs of the market
and the companys ability to competently serve those
needs thereby making the company better informed
about its customers
2. Competitor offerings and marketing positioning must
also be analysed in this context so the company must
consider what its competitive advantages and
disadvantages are, helping it to clarify its own
positioning strategy
3. Limited resources are used to best advantage,
targeted at those segments that offer the best
potential

Requirements
Requirements for
for Effective
Effective Segmentation
Segmentation
Measurable
Measurable
Accessible
Accessible

Size, purchasing power, profiles


of segments can be measured.
Segments can be effectively
reached and served.

Substantial
Substantial

Segments are large or


profitable enough to serve.

Differential
Differential

Segments must respond


differently to different marketing
mix elements & programs.

Actionable
Actionable

Effective programs can be


designed to attract and serve
the segments.

Steps
Steps in
in Segmentation,
Segmentation, Targeting,
Targeting, and
and
Positioning
Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
3. Develop Selection Criteria
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market

Market
Positioning

Market
Targeting

Market Segmentation

Step
Step 1.
1. Market
Market Segmentation
Segmentation
Levels
Levels of
of Market
Market Segmentation
Segmentation
Mass
Mass Marketing
Marketing

Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)

Segment
Segment Marketing
Marketing

Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)

Niche
Niche Marketing
Marketing

Different
Different products
products to
to subgroups
subgroups within
within segments
segments
(more
(more segmentation)
segmentation)

Micromarketing
Micromarketing

Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals and
and locations
locations
(complete
(complete segmentation)
segmentation)
Local Marketing

Individual Marketing

Tailoring brands/ promotions


to local customer groups

Tailoring products/ programs


to individual customers

Step
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting Consumer
Consumer
Markets
Markets
Geographic

Nations, states,
regions or cities

Demographic
Age, gender, family size
and life cycle,
or income

Psychographic
Social class, lifestyle,
or personality

Behavioural
Occasions, benefits
sought, user status,
usage rate, loyalty

Step
Step 1.
1. Market
Market Segmentation
Segmentation

Bases
Bases for
for Segmenting
Segmenting Business
Business Markets
Markets
Personal
Characteristics

Situational
Factors

Demographics

Bases
Bases
for
for Segmenting
Segmenting
Business
Business
Markets
Markets

Purchasing
Approaches

Operating
Characteristics

Segmenting
Segmenting Business
Business
Markets
Markets
Segmentation by customer size or geographic location
Four segments of business customers
Programmed buyers
Relationship buyers
Transaction buyers
Bargain hunters

Step
Step 1.
1. Market
Market Segmentation
Segmentation

Bases
Bases for
for Segmenting
Segmenting International
International Markets
Markets
Industrial
IndustrialMarkets
Markets

Geographic
Geographic

Economic
Economic

Cultural
Cultural

Political/
Political/
Legal
Legal

Intermarket
Intermarket

Linking
Linking the
the Concepts
Concepts
Using the segmentation bases youve just
heard about, segment the Irish clothing
market.
>Describe each of the major segments and
subsegments.

Step
Step 2.
2. Market
Market Targeting
Targeting

Evaluating
Evaluating Market
Market Segments
Segments (developing
(developing
selection
selection criteria)
criteria)
Segment Size and Growth
Analyze sales, growth rates and expected profitability for
various segments.

Segment Structural Attractiveness


Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources


Company skills & resources relative to the segment(s).
Look for Competitive Advantages.

Step
Step 2.
2. Market
Market Targeting
Targeting
Market
Market Coverage
Coverage Strategies
Strategies
Company
Company
Marketing
Marketing
Mix
Mix

Market
Market

A. Undifferentiated Marketing

Company
Company
Marketing
MarketingMix
Mix11
Company
Company
Marketing
MarketingMix
Mix22
Company
Company
Marketing
MarketingMix
Mix33

Segment
Segment11
Segment
Segment22
Segment
Segment33

B. Differentiated Marketing

Company
Company
Marketing
Marketing
Mix
Mix

Segment
Segment11
Segment
Segment22
Segment
Segment33

C. Concentrated Marketing

Step
Step 2.
2. Market
Market Targeting
Targeting

Choosing
Choosing aa Market-Coverage
Market-Coverage Strategy
Strategy
Company
Resources
Product
Variability
Products Life-Cycle
Stage
Market
Variability
Competitors
Marketing Strategies

Linking
Linking the
the Concepts
Concepts
At the last linking the concepts, you segmented
the Irish clothing market.
> Now, pick two companies that serve this market and
describe their segmentation and targeting strategies.
> Can you come up with one that targets many different
segments versus another that focuses on only one or
a few segments?

How does each company you choose


differentiate its marketing offer and image?
How has each done a good job of establishing
this differentiation in the minds of targeted
consumers?

Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage
Advantage
Products Position - the way the product is
defined by consumers on important
attributes - the place the product occupies
in consumers minds relative to competing
products.
Marketers must:
Plan positions to give their products the
greatest advantage in selected target markets,
Design marketing mixes to create these
planned positions.

Step
Step 3.
3. Positioning
Positioning for
for Competitive
Competitive
Advantage:
Advantage: Strategies
Strategies
Product
Product
Class
Class
Away
Away from
from
Competitors
Competitors

Product
Product
Attributes
Attributes

HH

Benefits
Benefits
Offered
Offered

GG
CC
AA

Against
Against aa
Competitor
Competitor

EE

DD
BB

User
User Class
Class

FF

Usage
Usage
Occasions
Occasions

Steps
Steps to
to Choosing
Choosing and
and Implementing
Implementing
aa Positioning
Positioning Strategy
Strategy
Step 1. Identifying Possible Competitive
Advantages: Competitive Differentiation.
Step 2. Selecting the Right Competitive Advantage:
Unique Selling Proposition (USP).
Step 3. Communicating and Delivering the Chosen
Position.
Step 4. Support the positioning strategy with a
unique marketing mix

Developing
Developing Competitive
Competitive
Differentiation
Differentiation
Product
Product

Service
Service

Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation

Image
Image

People
People

Selecting
Selecting the
the Right
Right Competitive
Competitive
Advantages
Advantages
Important
Important

Profitable
Profitable

Affordable
Affordable

Preemptive
Preemptive

Criteria
Criteria
for
for
Determining
Determining
Which
Which
Differences
Differences
to
to
Promote
Promote

Distinctive
Distinctive

Superior
Superior

Communicable
Communicable

Step
Step 44 Supporting
Supporting the
the
positioning
positioning strategy
strategy
At this stage the company has decided on its
positioning strategy and must now design a marketing
mix to support this strategy. The next part of the
course looks at Developing the Marketing Mix

Reviewing
Reviewing the
the Concepts
Concepts
Define the three steps of target marketing: market
segmentation, market targeting, and market
positioning.
List and discuss the major levels of market
segmentation and bases for segmenting consumer
and business markets.
Explain how companies identify attractive market
segments and choose a market coverage strategy.
Discuss how companies position their products
for maximum competitive advantage in the
marketplace.