MARKET SEGMENTATION, TARGETING AND

POSITIONING
• Introduction
• Market segmentation is a process of dividing customers into different
groups or segments having similar wants. By doing so, each can be
targeted and reached with a distinct marketing mix.

Bases of Market Segmentation:

• 1.Geographic segmentation
• In this method, the market is divided on the bases of different geographic
regions. This is useful for organizations which intend to slowly grow and
enter different regions/ market in sequences. One of the most common
geographic segmentation in India is about urban and rural areas. Urban
and rural areas show differences in education level, income and
spending patterns, socio cultural aspects etc. ( /bicycle –normal ,
bicycle-luxury ,nirma soap)
2.Demographic segmentation
•When segmentation is based on : Age, gender, family size, family life
cycle, income, education, occupation, marital status, race, religion,
generation, nationality, language and social class.
•It is easy to measure this variable and consumer’s needs, wants and
demands are directly linked with the demographic patterns and hence this
segmentation criterion is more popular.
•Need and consumption pattern changes with age and life cycle.
•Income of person has direct influence on purchasing pattern.
• 3. Psychographic segmentation
• This method uses life style of individuals as segmenting criteria. People of
same age, social class, living in same geographical area which have
different lifestyles. Lifestyle represents person’s entire way of living and this
also determines his/her marketing needs. Marketing organizations uses
some readymade models which differentiate lifestyles of individuals into
different categories. One such model is VALS (Values and life styles) which
classifies people into innovators, thinkers, achievers, experiences, believers,
strivers, makers, survivors. Automobile manufacturers, Garments (suiting
and shirting) industry etc. use such segmentation.
• AUDI OR ALTO
• 4. Behavioural segmentation
• In this method, the market is segmented based upon consumers’
knowledge, attitude , use and response to a product. Individuals as
consumers play different roles such as an initiator, influencers, decider,
buyer and user.

• The examples of behavioural segmentation are:

Decision maker
• In India, students pursue higher education. But promoters of self financed
institutions try to convince their parents to woo the students.

Occasions
• Throughout the world, large numbers of religious and non religious festivals
are celebrated. Such special occasions provide opportunity for marketers to
sell their products. For e.g. In India, Raksha bandan is celebrated as a
festival of bond between brother and sister. Many marketing organizations
communicate their products as special gift article.
• 5 Benefit segmentation
• Consumers are also segmented on the basis of benefit they seek from the
product e.g. consumers might be purchasing two wheelers either as a
economic vehicle (fuel efficient) or as a status symbol (additional features
in the vehicle). Tooth paste users might be purchasing it to enhance the
teeth appearance or to prevent decay. Its examples are as under.

User status
• All consumers of a product can be classified as non user, first time user, ex-
user, regular user or potential user. The marketing organization can adopt
different marketing strategies for each class.

Usage rate
• Based upon quantity of purchase, the user can be segmented as heavy,
medium or light user. For example, a soft drink supplier company may
segment the young college students of a particular geographic area into
heavy, medium and light based upon their consumption. It may then try to
convert light users to medium or heavy type by special promotion schemes.
Industrial Market Segmentation

•The industrial segmentation criteria :

•1. Industry: To which industry the firm should supply?

•2. Firm size: Which size firms should the organization target?
•3. Location: Which geographical region should be targeted?
•4. Technology: Which customer technology should be focused on?
•5. User status: Which user status customer from heavy, medium, light etc.
should be served?
•6. Customer capability: What kind of customer is to be served, one requiring
few or one requiring all services?
•7. Purchasing function: Which kinds of firms are served, one with centralized
purchasing system or one with decentralized purchasing system?
• 8. Power structure: Which kind of firm is to be served, one with marketing
domination or financial domination or engineering domination?
• 9. Size of order: Which type of order is to be focused on, small or large?
• 10. Similarity among buyer-seller: Which kind of firm is to be targeted, one
having similar or different values?
• 11. Risk attitude: Whether risk averse or risk taking attitude firm is to be
selected?
• 12. Loyalty: Whether the firm showing high loyalty to their customer is to be
targeted or not?
Stepwise Process of Market Segmentation
•1. Preparing a primary list and standard profile of the various groups
•2. Finding out what is bought, where, when and how it is bought. A list of all
similar competitive product/service, channels of distribution, frequencies and
purchase methods.
•3. Who buys what, where and how? The data obtained from first two steps
are combined to obtain various micro segments.

•4. Why purchase is made? Trying to know what exactly consumer in each
micro segment try to get from their purchase.
•5. Segmentation: Forming segments of consumers having similarities.
•6. Segment examination: The segment tested for size, differentiation, reach
and compatibility with organization.

•7. Defining attractiveness criteria: factors which make a segment

attractive are identified
•8. Deciding criteria parameter: Low, medium and high scores are set for
chosen criteria of attractiveness.
• 9. Rank the segments: The segments are ranked considering overall
attractiveness of each segment.

• 10. Deciding target segment: Based upon organizations strengths and

weaknesses, a target segment is finally selected.

Targeting

• It is mainly defined by age, gender, geography, socio economic

grouping, or any other demographic combination. Target marketing
involves breaking a market into segments and then selectively putting all
marketing efforts on one or a few key segments.

• For selecting target market, organization performs evaluation of different

segments on criteria of relevant, accessible, sizable, profitable etc. and
selects the most appropriate segments.
• Attractiveness of the segment and the fit between the segment
and the firms objectives, resources and capabilities.

Segment is decided keeping following factors in view:

• Size of the segment (number),

• Growth rate and competition in the segment,
• Attainable market share depending upon promotional budget
and competitors expenditure,
• Brand loyalty of present customers in the segment, break
even market share,
• Sales potential and expected profit margin in segment.
• Suitability of market segment depends upon: organization’s capacity in
offering superior value to the customers in the segment, impact of serving
the segment on the firm’s image, access to distribution channels, firm’s
resources in relation to capital investment required to serve the segment.
Target market strategies :
• i)Single segment strategy ( baby toy)
• Serving one market segment with one marketing mix. This strategy is
adopted by smaller companies with limited resources. ( RR/Fe)
• ii)Selective specialization Different marketing mixes are offered to different
segments. ( tata tea : red label/green etc) )

• iii)Product specialization
• The organization specializes in a particular product and tailors it to different
market segments. ( nestle baby food)
• iv)Market specialization
• The organization specializes in serving a particular market segment and
provides different products in the segments. ( cosmetics for young )
• v) Full market coverage
Serving the entire market either by a man market strategy in which a single
undifferentiated marketing mix is offered to the entire market or by
differentiated marketing strategy in which differentiated marketing mix is
offered to each segment. Example: Junior Horlicks / Mother's Horlicks /
Women's Horlicks / Lite Horlicks
Positioning
• The position of a product is the aggregate of all the qualities ascribed to it by
the consumers. A product’s potential is how potential buyers see the product
and is expressed relative to the position of the competitors. Positioning is a
platform for the brand. It facilitates the brand to get through the mind of
target consumers.

• Three types of positioning used by marketing organization:

• 1. Functional Positioning: Provide benefits, solve problems, obtain
favorable (toothpaste) perception from financial Stockholders.
• 2. Symbolic Positioning: ego identification, self image enhancement,
belongingness and social meaningfulness. (cloth)
• 3. Experimental Positioning: Provide sensory and cognitive stimulations.
» (book)
Approaches of positioning

•1. Customer Benefit Approach: Putting the brand above competitors based
upon specific brand attributes and customer benefit. e.g. shampoos.
•2. Price Quality Approach: Brands offer more in terms of services, feature,
quality or performance and also charge higher price to cover additional cost
and communicate that they are of high quality. e.g. Watches
•3. Use and Application Approach: Product is positioned with a use or
application approach. e.g. Mobiles.
•4. Product user Approach: Brand identifies and determines the target
segment for positioning the product e.g. Chyavanprash.
•5. Product Class Approach: Brand is associated with a particular product
category e.g. Toilet Soaps.
•6. Cultural Symbol Approach : Approach is based upon deeply entrenched
cultural symbol e.g. cigarettes
•7. Competitor Approach: Brand (apple) uses competitor as a dominant
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