TOPIC 4 - MARKET SEGMENTATION, TARGETING AND POSITIONING

Topic 4

MARKET SEGMENTATION, TARGETING &
POSITIONING

DEFINITION

Segmentation Targeting Positioning

Dividing a market into

SMALLER groups with The process of Arranging for a market

distinct needs, evaluating each market offering to occupy a

characteristics or segment’s clear, distinctive and

behavior attractiveness and desirable place relative

to the group who share selecting one or more to competing products

a similar set of needs, segments to enter. in the minds of target

wants or consumers.

characteristics



MARKET SEGMENTATION

 DEFINITION :
is a process of dividing a market into SMALLER groups with distinct
needs, characteristics or behavior to the group who share a similar set
of needs, wants or characteristics

 Market consist of buyer differ in their wants, resources, locations, buying
attitudes and buying practices

 Through market segmentation  heterogeneous markets into smaller
segments that can be reach more efficiently and effectively with
products and services that match their unique needs

MARKET SEGMENTATION MARKET
SEGMENT A
MARKET
MARKET
HETEROGENEOUS MARKETS SEGMENT B
 Different :  Needs
MARKET
 characteristics SEGMENT C
 behavior
HOMOGENOUS MARKETS

 Similar :  Needs
 characteristics
 behavior

MARKETING SEGMENTATION MAJOR BASES

GEOGRAPHIC SEGMENTATION

• Dividing a market into different geographical units such as :
a) nations
b) states
c) regions
d) counties
e) cities or
f) neighborhoods

• A company may decide to operate in one or a few geographical
areas, or to operate in all areas buy pay attention to
geographical differences in needs and wants.

• Example: ???

Example: Region variable

North
Perlis, Kedah,
Pulau Pinang

South
Negeri Sembilan,

Melaka, Johor

East
Kelantan,
Terengganu,

Pahang

West
Perak,
Selangor

Example: Cities variable

Urban

Suburban

Rural

DEMOGRAPHIC SEGMENTATION

• Dividing the market into groups based on demographic
variables such as :

a) age f) occupation

b) gender g) education

c) family size h) religion

d) family life cycle i) race

e) income j) nationality

• The most popular bases for segmenting customer groups.

• Consumer needs, wants and usage rate soften closely with
demographic variables.

Example: Races variable

Malays Chinese Indians Others
Baba & Nyonya,
Kadazan, Dusun

& Iban

Example: Age variable

Babies
Children
Adolescents
Adults

Middle-age
Seniors

PSYCHOGRAPIC SEGMENTATION

• Dividing a market into different groups based on :
a) social class
b) lifestyle or
c) personality characteristics

• People in the same demographic group can have very
different psychographic makeup

• Example: ???

Example: Social class variable

Lower lowers
Upper lowers
Middle class
Lower uppers

Upper uppers

Example: Personality characteristics variable

• Soccer
Fan

• Good
Saver
• Enjoy
Holidays

Good • Cat
Saver lovers

• Likes Dance
Music

BEHAVIORAL SEGMENTATION

• Dividing a market into groups based on consumer :

a) knowledge

b) attitude to a product

c) use or

d) response

• Behavior variables :
a) occasion
b) benefits sought
c) user status
d) usage rate
e) loyalty status
f) attitude

Example: User status variable

non-users

Regular- ex-users
users

First time- potential-users
users

Example: Loyalty status variable

Strong

Absolute Medium

None





MARKETING TARGETING

Targeting is the act of evaluating and comparing the
identified groups, and then selecting one or more of
them as the prospect

The firm now has to :-
a) evaluating market segments
b) selecting target market segments

Evaluating Selecting
Market Target Market

Segments Segments

EVALUATING MARKET SEGMENTS

Segment size and growth

• a company should find out what is the size or market potential of
each market segment

Segment attractiveness

• a company needs to examine major structural factors that affect
long-run segment attractiveness such as existing/potential
competitors, buying power, supplier power, the threat of substitute
products

Company objectives and resources

• a company should ask itself whether each potential segment is in line
with the company’s long term objectives. If not, the segment should
be eliminated.

SELECTING TARGET MARKET SEGMENTS

Targeting broadly Undifferentiated Marketing
(Mass Marketing)

Targeting narrowly Differentiated Marketing
(Segmented Marketing)

Concentrated Marketing
(Niche Marketing)

Micromarketing
(Local Or Individual Marketing)

1 – UNDIFFERENTIATED MARKETING (MASS MARKETING)

• No segmentation
• Ignore market segment differences and target the whole market with one offer.

• Focuses on what is common in the needs of consumers rather than on what is
different.

• Use :
a) mass producing
b) mass distributing
c) mass promoting
d) same product in about the same way to all customers.

• Eg : Coca Cola and Pepsi at one time produces only one drink for whole market.

2 – DIFFERENTIATED MARKETING (SEGMENT MARKETING)

• Firm decides to target several market segments and designs separate offers for each

• Toyota tries to produce a car for every ‘purse, purpose and personality’
• Nike has created 2 different retail store formats  for man and women
• In Malaysia, Procter & Gamble markets 4 different brands of shampoo which

cSohmoupldeteer,wHiethrbeaalcEhssoetnhceer)on supermarket shelves (Pantene, Rejoice, Head &
• Benefits :

a) higher sales and stronger position within each market segment
b) market more efficiently, targeting its products or services, channels and

cmoomstmpurnoifcitaatbiolyn.s programs toward only consumers that it can serve best and

3 – CONCENTRATED MARKETING (NICHE MARKETING)

• Focusing on sub-segments or niches with distinctive traits that may seek a special
combination of benefits

• A niche characteristics :
 more narrowly defines group
 less competitors
 low market shares
 understand consumer’s needs

• Eg :
a) Ferrari, Lamborghini, Porsche (luxury and sporty)
b) Rafflesia  pearl jewelleries

4 - MICROMARKETING

• The practice of tailoring products and marketing programs to suit the tastes
of specifics individuals and locations.

• Includes :
a) Local marketing

• Involves tailoring brands and promotion to the needs and wants of local
customer groups :

• Cities
• Neighborhoods
• Stores

b) Individual Marketing
• Individual marketing involves 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



MARKET POSITIONING

• Positioning is the way the product is defined by consumers on
important attributes—the place the product occupies in consumers’
minds relative to competing products

• Market positioning strategies that can be used by manufacturers
include product attributes, product benefits, user frequency, users
and product classification.
• product attributes
• Product benefits
• User frequency
• Users
• Product classification

Examples :
1. Dinamo : is positioned as a powerful, all-purpose family detergent
2. Pureen Liquid Detergent : is positioned as the gentle detergent for
baby clothes
3. In the automobile market :
Proton & Perodua – are positioned on economy
Mercedes & BMW – luxury
Porsche, Ferrari – performance
Volvo – safety
Toyota Prius hybrid & Honda Civic Hybrid – high-tech solution to the
energy shortage

POSITIONING STRATEGY

a) MORE FOR MORE
• Provide the most upscale product-superior quality. Craftsmanship, durability, performance or style and
charges a price to match
• Not only offering high in quality but also gives prestige to buyer
• High price

b) MORE FOR THE SAME
• Company attack a competitor by introducing a brand offering comparable quality at lower price

c) THE SAME FOR LESS
• Powerful value proposition – everyone likes a good deal
• Deep discount such as best buy

d) LESS FOR MUCH LESS
• Lower performance or quality requirement at a much lower price

e) MORE FOR LESS
• Winning value proposition
• Eg : when its first opened for business, company offer the best product selection, best service, lowest
price