Chapter 4

Segmentation, Targeting and Positioning

Chapter Index

S. No

Reference No

Particulars

Slide

From-To

1 Learning Objectives 3

2 Topic 1 Concept of Market Segmentation 4-9

3 Topic 2 Market Targeting 10-12

4 Topic 3 Developing Positioning Strategy 13-15

Learning Objectives

Explain the concept of marketing segmentation

Discuss the concept of business vs. consumer segmentation

Classify the levels of market segmentation

Describe the process of market segmentation

Describe the positioning strategy

Explain the concept of competitive differentiation

Concept of Market Segmentation

Market segmentation is a process of dividing the market into various

segments on the basis of differing needs and then deciding which of these

needs it can fulfill with offerings.

Bases for Consumer Market Segmentation

Geographic segmentation

In geographic segmentation, a market is

divided into different geographical areas

like cities, states and countries.

Demographic segmentation

Demographic segmentation classifies the

market into segments based on

demographic attributes, such as age,

gender, income, occupation, religion, race

and social class.

Psychographic segmentation

Psychographic segmentation involves

segmentation on the basis of lifestyles,

values and beliefs of an individual.

Behavioural segmentation

Behavioural segmentation is useful in

cases when a customer buys a product

regularly from the marketer.

Bases for Business Market Segmentation

Bases for Segmenting Business Market

Segmentation Strategies

Individual Marketing

Mass

Segmentation

Segment Marketing

Niche Marketing

Local Marketing

Segmentation

Strategies

Process of Market Segmentation

Analysing the Findings

Conducting a Survey

Profiling the Segment

Evaluating Segment Attractiveness

Market Targeting

The target market selection process involves evaluating the attractiveness of every market and selecting one or more profitable markets.

An organisation considers various factors, such as size and growth of a particular segment.

Evaluating the market segment

Selecting the market segment

Target Market Selection Process

The market segment can be evaluated by focusing on the following dimensions:

Evaluating the Market Segment

Market potential

It implies the amount of a product that is purchased by a customer. In this case, a

marketer gauges the market potential of the targeted segment.

Organisation’s sales potential

It refers to the percentage of the market potential that an organisation expects to

gain for a product. The different approaches to measure the same are:

Build-up approach: It involves

estimating purchases made by

customers in a particular segment

and then multiplying it with the

number of potential customers.

This helps to evaluate total sales

potential of a particular segment.

Breakdown approach: It involves

developing the general forecast for

an organisation to derive market

potential. Then, sales potential is

calculated from the estimated

market potential.

Selecting the Market Segment

Selecting the market segment involves finding the target market

to sell products.

Single segment

concentration

Selective specialisation

Product specialisation

Market specialisation

Full market coverage

Techniques for Selecting a Market Segment

Developing Positioning Strategy

A successful product positioning can be done by differentiating products of an

organisation from its competitors.

Significance

It implies that a

product should

give benefits to its

target customers.

Uniqueness

It implies that a

product should

consist of

distinctive

features. Product

uniqueness can be

an add-on benefit

in the existing

product of an

organisation.

Reasonable

It should check

the buying ability

and budget of

customers.

Profitability

It helps an

organisation to

continue its

operations for a

longer period and

differentiate with

change in time.

An organisation should create differentiation on the basis of the following criteria: