Market Segmentation, Targeting and Positioning
Session 6

7 Segmentation & Targeting

LB5202 Marketing Management

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Learning Outcomes
After this session you should be able to:
• Explain market segmentation and the bases
• Explain the requirements for effective segmentation: –

measurability, accessibility, substantiality, actionability

• Discuss the process of evaluating and selecting market segments
• Explain positioning for competitive advantage

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Three stages of marketing
• Mass marketing
– seller mass produces, mass distributes and mass promotes one product to all buyers.

• Product-variety marketing
– seller produces two or more products that have different features, styles, quality, sizes and so on

• Target marketing
– seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to each.

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Steps in market segmentation, targeting and positioning Kotler, Brown, Burton, Dean & Armstrong (2010, p.204)
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Three major steps in target marketing Market segmentation
•
•

dividing a market into distinct groups of buyers with different needs, characteristics or behaviours require separate products or marketing mixes

Market targeting
•
•

evaluating each market segment’s attractiveness selecting one or more of the market segments to enter

Market positioning
•

setting the competitive positioning for the product and creating a detailed marketing mix

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Market segmentation
• Markets consist of buyers
– differ in one or more ways

• Differ in their wants, resources, locations, buying attitudes and buying practices
– buyers have unique needs and wants, each is potentially a separate market
– design a separate marketing program for each buyer
– sellers face larger numbers of smaller buyers and do not find complete segmentation worthwhile
– they look for broad classes of buyers who differ in their product needs or buying responses
– grouped into segments that are likely to react similarly
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Bases for segmenting consumer markets Geographic

Demographic

• dividing a market into different geographical units

• dividing the market into groups based on variables:

– nations, regions, states, municipalities, cities or neighbourhoods – age, gender, family size, family life cycle, income, occupation, education, religion, race and nationality www.bing.com/images/ (accessed 1/6/11)
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Bases for segmenting consumer markets Age and life-cycle stage
• Consumer needs and wants change with age,
• age and life-cycle segmentation divides a market based on age and life-cycle groups Gender:
• long used in clothing,
• cosmetics and magazines
• finance and cars, amongst others www.bing.com/images/ (accessed 1/6/11)
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Bases for segmenting consumer markets Occupation

• Income
– used in goods and services such as cars, boats, clothing and travel

• Multivariate demographic Professional
Technical

Official

– Segmentation by combining two or more demographic variables.

Sales
Low

Medium High
Income

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Bases for segmenting consumer markets
• Psychographic:
– buyers segmented on psychological/personality traits, lifestyle or values
– people in the same geodemographic group can have different profiles

• Behavioural:
– segmented into groups based on their knowledge of the product, their attitude towards it, the way they use it and their responses to it

• Benefits sought:
– segmented according to the different benefits they seek from the product.
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Bases for segmentation –