7 Segmentation Targeting and Positioning

Marketing Management Unit 7

Sikkim Manipal University 102

Unit 7 Segmentation, Targeting And Positioning

Structure

7.1. Introduction

7.2. Concept of market segmentation

7.3. Benefits of market segmentation.

7.4. Requisites of effective segmentation.

7.5. The process of market segmentation.

7.6. Bases of consumer market segmentation

7.7. Targeting

7.8. Market positioning

7.9. Summary

7.10. Terminal Questions

7.11. Answers to SAQs and TQs

7.1. Introduction Market segmentation is the starting step in applying the marketing strategy. In this process the

marketer divide the market into homogeneous sub markets by understanding the needs, perceptions

and expectations of the consumers. On the basis of segmentation, the company will prepare and

follow different marketing programs for different segments to ensure better customer relationship.

This unit deals with the bases of market segmentation, its targeting and positioning its propositions in

the mind of consumer in detail.

Learning Objectives

After studying this unit, you will be able to

1. Explain the concepts and benefits of market segmentation. 2. Mention the requisites of effective segmentation. 3. Explain the bases of market segmentation. 4. Describe the process of evaluating market segments. 5. Identify appropriate target market for given segment.



6. Analyze positioning strategies of companies on the basis of product differentiation

7.2. Concept of Market Segmentation Market Segmentation is the process of dividing a potential market into distinct submarkets of

consumers with common needs and characteristics.

For example, Cadbury India operates in three different markets namely, Malted foods, cocoa powder

and drinking chocolates and chocolates and sugar confectionary.

Figure 7.1

The malted food market is divided into two different segments i.e. white malted food drinks and

brown malted food drinks. Cadbury India positioned its flagship brand Bournvita in the brown malted

food drinks.

7.3. Benefits of Market Segmentation

1. Understanding the needs of Consumers:

2. To adopt better positioning strategies.

3. Proper allocation of marketing budget.

4. Helps in preparing a better competitive strategy.

5. Provides guidelines in preparing media plan of the company.

6. Different offerings in different segments enhance the sales.

7. Customer gets more customized product.

8. Helps Company to identify niche markets.



9. Provides opportunities to expand market 10. Encourages innovations:

7.4. Requisites of Effective Segmentation To be useful, segmentation of market must exhibit some characteristics that are as follows:

1. Measurable and Obtainable: The size, profile and other relevant characteristics of the segment

must be measurable and obtainable in terms of data. If the information is not obtainable, no

segmentation can be carried out. For example, Census of India provides the data on migration

and education level, but do not specifies how many of the migrated employees are educated and

if educated how many are there in white color jobs. If a company wants to target white color

employees who are migrated to particular city, will not able to measure due to non availability of

data.

2. Substantial: The segment should be large enough to be profitable. For consumer markets, the

small segment might disproportionably increase the cost and hence products are priced too high.

For example, when the cellular services started in India cost of the incoming calls and outgoing

calls were charged at Rs 12/minute. As the number of subscribers grew, incoming calls became

free. Further growth of subscribers resulted in lowering tariffs to the lowest level in the world.

3. Accessible: The segment should be accessible through existing network of people at a

affordable cost. For example, Majority of the rural population still not able to access the internet

due to high cost and unavailability of connections and bandwidth.

4. Differentiable: The segments are different from each other and require different 4Ps and

programs. For example, Life Insurance Corporation of India needs separate marketing programs

to sell their insurance plans, unit plans, pension plans and group schemes

5. Actionable: The segments which a company wishes to pursue must be actionable in the sense

that there should be sufficient finance, personnel, and capability to take them all.



7.5. The process of Market segmentation:

Figure 7.2

1. Identify existing and future wants in the current market.

Marketers must examine the changing needs of the customer. This process provides opportunity to

examine whether customers are satisfied with the existing products or not. If they are not satisfied

what are the features they are looking at. It also helps to test the innovative concepts that company

has, commercially viable or not. For example, Titan, wrist watch manufacturer from Tata group

should analyze whether customer are satisfied with the time accuracy in the watch. It should also

analyze what are the other features customer is looking in the watch. It may be style, calculator,

voice recorder, jewels studded or pulse monitor. In this case, time accuracy became existing want

and other features become future wants.

2. Examine the attributes that distinguish among segments.

In this process marketers should segregate different types of wants into homogeneous categories.

This may be on the basis of product features, lifestyle or behavior. For example, Titan should analyze



how style, calculator, voice recorder, jewels studded and pulse monitor attribute are different. Is there

any possibility of bringing some of these features together? If yes what are the attributes that makes

it homogeneous. To illustrate, student community may be interested in style and also wants

calculator.

3. Evaluate the proposed segment attractiveness on the basis of measurability, accessibility, and size.

Segments selected in second steps should be evaluated against the requisites i.e. measurability,

accessibility, substantial, actionable and differentiability. Company’s further programs will depend on

the outcome of this process.

Titan should examine

a. How big this student segment who like style and also wants calculator?

b. How to get the data pertaining to these students?

c. Whether this segment is accessible to existing Titan showroom?

d. How this segment is different from current segments? If selected what value this proposed

segment adds to the company.

Self Assessment Questions I

1. is the process of dividing a potential market into distinct submarkets of consumers

with common needs and characteristics. 2. Measurability of the segment assessed on

a. Size

b. Profitability

c. Required resources

d. All the above. 3. The requisite of segmentation which specify on 4Ps and programs is

a. Action

b. Substantial

c. Differentiability



d. All the above. 4. Future wants of the customer should be analyzed before identifying the segments.

a. Yes

b. No 5. Segmentation encourages innovation

a. True

b. False

7.6. Bases for Segmenting Consumer Markets

Figure 7.3

Consumer Market

Segments



1) Geographic segmentation: Dividing the market into different geographical units such as

nations, states, regions, cities or neighborhoods. The company can operate in one or a few

Geographic areas or operate in all but pay attention to local variations. For example, Bennett,

Coleman and co Ltd divided markets according to geographical units for their tabloids. In

Bangalore the tabloid is known as Bangalore Mirror where as it is Mumbai Mirror in Mumbai.

2) Demographic Segmentation: In demographic segmentation the market is divided into groups on

the basis of variable such as age, family size, family lifecycle, gender, income, occupation,

education, religion, race, generation, nationality and social class. Demographic variables are the

most popular bases for distinguishing customer groups. One reason is that consumers’ wants,

preferences and usage rates are often associated with demographic variables. Demographic

variables are easy to measure. Even when the target market is described in nondemographic

terms, the link back to demographic characteristics is needed in order to estimate the size of the

target market and the media that should be used to reach it efficiently. Some of the demographic

variables used are :

a) Age and LifeCycle Stage: Consumers’ wants and abilities change with age. On the basis of

age, a market can be divided into four parts viz., children, young, adults and old. For

consumers of different age groups, different types of products are produced. For instance,

different types of readymade garments are produced for consumers of different age groups.

A successful marketing manager should understand the age group for which the product

would be most suited and determine his marketing policy, pricing policy, advertising policy

etc., accordingly.

For example, HUL launched ‘pepsodent kids’ for small children.

b) Gender: Gender segmentation has long been applied in clothing, hairstyling, cosmetics and

magazines. For example, Emami segmented its personal care business on the basis of

gender. For women, it is having Emami naturally fair, and for men it is fair and handsome.

c) Income: Income segmentation is a longstanding practice in such product and service

categories as automobiles, clothing, cosmetics and travel. However, income does not always

predict the best customers for a given product.

For example, Baja Auto limited, a leading automobile company, different bikes for different

commuters. For entry level (less than Rs35000) it is Bajaj CT 100, for mid segment (greater



than Rs35000 but less than Rs60000) it is pulsar and for the upper segment greater than Rs

60000 Avenger and Eliminator is positioned.

3) Psychographic Segmentation: In Psychographic segmentation, buyers are classified into

different groups on the basis of lifestyle or personality and values. People within the same

demographic group can exhibit very different psychographic profiles.

a) Lifestyle: People exhibit different lifestyles and goods they consume express their life

styles. Many companies seek opportunities in lifestyle segmentation. But lifestyle

segmentation does not always work.

Figure 7.4



One of the most used psychographic profiling schemes is called VALS TM. Developed by SRI

International, Inc., its first version groups the entire U.S. population into eight groups, based on the

identities they seek and implement via marketplace behaviors.

The Eight VALS TM Group: Using the selforientation and resources dimensions, VALS defines eight

segments of adult consumers who have different attitudes and exhibit distinctive behavior and

decision making patterns. These segments are Innovators Thinkers, Achievers, Experiencers,

Believers, Strivers, Makers and survivors

Innovators are successful, sophisticated, active, takecharge people with high selfesteem and

abundant resources. They are leaders in business and government and are interested in growth,

innovation, and change. They seek to develop, explore and express themselves in a variety of ways,

sometimes guided by Principle and sometimes by a desire to have an effect or to make a change.

They seek to develop, explore and express themselves in a variety of ways, sometimes guided by

principle and sometimes by a desire to have an effect or to make a change. Image is important to

them, not as evidence of status or power but as an expression of their taste, independence, and

character. They possess a wide range of interests, are concerned with social issues, and show a

cultivated taste for the finer things in life.

Thinkers are mature, satisfied, comfortable, reflective people who value order, knowledge, and

responsibility. Most are well educated and in (or recently retired from) professional occupations,

content with their career, families, and tend to center around the home. Thinkers have a moderate

respect for the status quo institution, but they are open minded to new ideas and social changes.

They tend to base their decision on firmly held principles and consequently appear calm and self

assured. Thinkers are conservative, practical consumers, and the universal values of performance,

service, and price are more important than person values (e.g., social and emotional values).

Achievers are successful career ad work oriented people who like to feel in control of their live. They

value predictability and stability over risk. They are deeply committed to work and family. Work

provides them with a sense of duty, material rewards, and prestige. Their social lives are centered on

family, church, and career. Achievers live conventional lives are phonically conservative, and respect

authority and the status quo. Image is important to them: they favor established prestige products

and services that demonstrate success to their peers.



Experiencers are young, vital, enthusiastic, impulsive, and rebellious. They seek variety and

excitement, savoring the new, the offsets, and the risky. Still in the process of formulating life values

and patterns of behavior they quickly become enthusiastic about new possibilities but are equally

quick to cool. At this stage in their lives they are politically uncommitted, uninformed, and highly

ambivalent about what they believe. Their energy finds an outlet in exercise, sports, outdoor

recreation, and social activities. Experiences are avid consumer and spend much of their income on

clothing, fast food, music, movies and video.

Believers are conservative, conventional people with commitment to family, church, community, and

the nation. Living by a moral code is very important to them. As consumers, Believers are

conservative and predictable and favor American products and established brands. Their income,

education, and energy are modest but sufficient to meet their needs.

Strivers seek motivation, selfdefinition and approval from the world around them. They strive to find

a secure place in life, unsure of themselves and low on economic, social, and psychological

resource. Strivers are concerned about the opinions and approval of others. Money defines success

for Strivers, who don’t have enough of it and often feel that life has given them a raw deal. Strivers

are impressed by possessions, but what they wish to obtain is often beyond their reach.

Makers are practical people who have constructive skills and value selfsufficiency. They live within a

traditional context of family, practical work and physical recreation and have little interest in what lies

outside that context. Makers experience the world by working in it, building a house, raising children,

fixing a car, or canning vegetable and have enough skill, income and energy to carry out their

projects successfully. Makers are politically conservative, suspicious of new ideas, respectful of

government authority and organized labor, but resentful of government intrusion on individual rights.

They are unimpressed by material possessions other than those with a partial or functional pursuing

pressed by martial possession other than those with a practical or functional purpose, such as tools,

utility vehicles, and fishing equipment.

Survivors tend to be chronically poor, illeducated, low skilled, elderly and concerned about their

health. Preoccupied with the urgent needs of the present moment, they do not show a strong self

orientation. Their chief concerns are for security and safety. Survivors are cautious consumers. They

represent a very modest market for most products and services but they are loyal to favorite brands.



b) Personality: Marketers have used personality variables to segment the markets. They endow

their products with brand personality that corresponds to consumer personalities.

c) Social Class: It has a strong influence on preference in cars, clothing, home furnishings,

leisure activities, reading habits etc. Many companies design products and services for

specific social classes.

Behavioral Segmentation or Consumer Response Segmentation:

In behavioral segmentation, buyers are divided into groups on the basis of their knowledge or attitude

towards the use of, or response to a product. Some marketers believe that behavioral variables are

the best starting points for constructing market segments.

a) Occasions: According to the occasions, buyers develop a need, purchase a product or use a

product. It can help firms expand product usage. A company can consider critical life events to

see whether they are accompanied by certain needs. For example, Tanishq a TATA enterprise

offers schemes and promotions for Akshaya Thrutiya ( auspicious day to purchase jewellary)

b) Benefits: Buyers can be classified according to the benefits they seek. For example, Peter

England, a madhura garment brand positioned its wrinkle free trousers on the basis of benefits.

c) User Status: Markets can be segmented into nonusers, potential users, first time users and

regular users of a product. Each market segment requires a different marketing strategy. The

company’s market position will also influence its focus. Market leaders will focus on attracting

potential users, whereas smaller firms will try to attract current users away from the market

leader. For example, Kishkinda resort near Hampi classifies its customers according to this

characteristic. Resort believes that locals falls into non user category, affluent class who comes

to Hampi as potential users, foreigners as first time users rich people near Hampi who frequently

come there as regular users.

d) Usage Rate: Markets can be segmented into light, medium and heavy product users. Heavy

users are often a small percentage of the market but account for a high percentage of total

consumption. Marketers prefer to attract one heavy user rather than several light users and they

vary their promotional efforts accordingly.

For example, Alan Paine textile brand, offered 4 cotton trousers for Rs 999. Company is

interested in getting profit from sales volume.



e) Loyal Status: Consumers have varying degrees of loyalty to specific brands, stores and other

entities. Buyers can be divided into four groups according to brand loyalty status.

a) Hardcore Loyal: Consumers who buy one brand all the time. For example, customer may

be using only BSNL cellular services though there are different options available.

b) Split Loyal: Consumers who are loyal to two or three brands. For example, consumer may

go for tax savings schemes of post offices and Life Insurance Corporation of India

c) Shifting Loyal: Consumers who shift from one brand to another. For example, consumer

who used Nokia cell phones starts buying Sony Ericsson mobiles.

d) Switchers: Consumers who show no loyalty to any brand. When there is a low involvement

and few significant perceived brand differences consumer try to purchase different brands in

the category. To illustrate, customer who bought cinthol wants to try Medimix, Mysore sandal,

Himalaya, Santoor, Chandrika etc…

A company can identify its product’s strengths by studying its Hardcore Loyal. By studying its Split

Loyal, the company can pinpoint which brands are most competitive with its own. By looking at

customers who are shifting away from its brand, the company can learn about its marketing

weaknesses and attempt to correct them.

(f) BuyerReadiness Stage: A market consists of people in different stages of readiness to buy a

product. Some are unaware of the product, some are aware, some are informed, some are

interested, some desire the product and some intend to buy. The relative number makes a big

difference in designing a marketing program. For example, People may be aware of Aqua guard

but don’t know much about it.

7.7. Targeting

Targeting is defined as a group of people or organizations for which an organization designs,

implements and maintains the marketing mix.

Once the bases for segmentation are selected, you have to identify the people or organization to

which the product meant. Organizations may not differentiate their customer or it may have different

customer for different products. In the next section we will study how to identify the target customers.

Selecting Target Market Segments



Depending upon the emerging patterns of market segmentation, homogeneous preference (showing

no natural segments) as in case of soft drinks sale by Pepsi and CocaCola), diffused preference

(showing clear preferences as in case of automobile market), and clustered preference (market

showing natural segments as in case of occupation having impact on the types of clothes worn), a

company chooses its market segmentation strategy.

A) Undifferentiated Marketing: It is a market coverage strategy in which the company treats the

target market as one and does not consider that there are market segments that exhibit

uncommon needs. The company focuses on the centre of the target market to get maximum

advantage. The feature of ‘one productall segments’ calls for presenting one marketingmix for

the target market. For example, the CocaCola Company sells Coke, Limca, Thumsup etc., and

does not distinguish the target audience.

B) Differentiated Marketing: It is a market coverage strategy in which the company goes for proper

market segmentation as depicted by its analysis of the total market. The company, therefore,

goes for several products or several segment approach which calls for preparing different

marketing mixes for each of the market segment. This strategy is followed by Hindustan Lever

Limited which sells different soaps (Life Buoy, Lux, Rexona, Liril, Pears etc.) and each of them

has its own market. Thus, the company creates segments in the soap market and not in toiletries

market (including soaps, detergents, toothpaste, etc.)

C) Concentrated Marketing: It is a market coverage strategy in which company follows ‘one

productone segment’ principle. For example, Ashok Leyland produces large chassis of machine

which can be used for buses and trucks. The manufacturer gets maximum knowledge about the

segment’s needs and therefore acquires special reputation. This strategy can also help the small

company to stand against a large corporation because the small company can create niches in its

oneproduct onesegment approach by providing maximum varieties.

Choosing a Market Coverage Strategy: The below table depicts an overview of the three market

coverage strategies will help to choose one for a particular company. Table 7.1 provides a snapshot

view.



Table 7. 1: Comparison of Market Coverage Strategies

Focus Undifferentiated Differentiating Concentrated Marketing Marketing Marketing

Product One/Few Many One/Few

Segment All Many One/Few

MarketingMix One Many One/Few

Given the comparison of different coverage strategies, it is easy to locate the relevant strategies as

shown in Table 7.2.

Table 7.2: Choosing a Market Coverage Strategy

Undifferentiated Differentiating Concentrated Marketing Marketing Marketing

Constrained More suitable Least suitable Most suitable

Firm Resources

Common usage Most suitable More suitable Least suitable

Products

Different need Least suitable Most suitable More suitable

Satisfying products

Given the above table, the firm’s resources and the product’s requirement in its present form (by all

or few) would decide the choice of a particular market coverage strategy. Finally, the competitor’s

adaptation of a particular strategy should be considered for deciding company’s own strategy. For

example, CocaCola starts segmenting soft drinks market and targets family, Pepsi cannot ignore it

because it would be suicidal for them (segmentation would provide differentiation of products more

easily).

7.8 Market Positioning Each firm needs to develop a distinctive positioning for its market offering.

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in

the target market’s mind. Each company must decide how many differences to promote to its target

customers. Many marketers advocate promoting only one central benefit and Rosser Reeves called it



as “a unique selling proposition”. Some of the USPs includes “best quality”, “best service”, “Lowest

price”, “best value”, “safest”, “more advanced technology” etc. If a company hammers away at one of

these positioning and delivers on it, it will probably be best known and recalled for this strengths.

Not everyone agrees that singlebenefit positioning is always best. Doublebenefit positioning may be

necessary if two or more firms claim to be best on the same attribute. There are even cases of

successful triplebenefit positioning.

As the companies increase the number of claims for their brand, they risk disbelief and a loss of clear

positioning. In general, a company must avoid four major positioning errors.

1) Under positioning: Some companies discover that buyers have only a vague idea of the brand.

The brand is seen as just another entry in a crowded marketplace.

2) Overpositioning: Buyers may have too narrow image of the brand.

3) Confused Positioning: Buyers might have a confused image of the brand resulting from the

company’s making too many claims or changing the brand’s positioning too frequently.

4) Doubtful Positioning: Buyers may find it hard to believe the brand claims in view of the

product’s features, price or manufacturer.

Positioning maps:

Two dimensional graphs of how a product, brand or company is perceived versus competition.

Before identifying the positioning strategies for the product marketer prepares its perceptual maps.

These maps are drawn on important buying dimensions of consumer for company products as well

as competitor products.

How to construct Position maps?

1. Evaluate the buying dimensions of customer

2. Select two buying dimensions of consumer for example price and quality.

3. Identify the relative market share: relative market share is the ratio of company’s market share to

its largest competitors’ share.

4. Draw the circles according to relative market share on two dimension graph

Position map for Toilet soaps



Cosmetic

Godrej No1 Pears Dove

Lifebuoy Santoor

Low price cinthol High Price

Hamam

Medimix Himalaya cucumber

Ayurvedic

Type of product

Bases for positioning the product

Overcoming the positioning difficulties enables the company to solve the marketingmix problem.

Thus seizing the “highquality position” requires the firm to produce high quality products, charge a

high price, distribute through highclass dealers and advertise in highquality media vehicles.

The bases for positioning strategies that are available are: 1 Attribute Positioning: A company positions itself on an attribute such as size or number of years

in existence. Sun feast position its snacky brand as bigger lighter and crisper. (Figure 7.5)



Figure 7.5

Figure 7.6

2 Benefit Positioning: The product is positioned as the leader in a certain benefit.

Automotive: Hyundai Santro

Headline: India's bestloved family car is now also India's simplest car to drive.

Subhead: Hyundai introduces Santro Zip plus Automatic.

No shifting gears, no clutch, no problems.

Baseline: The simplest car to drive.( Positioning)



3 Use or Application Positioning: Positioning the product as best for some use and application.

For Example, Kenstar positioned its product as unexpectedly cold.( figure 7.7)

Figure 7.7 Figure 7.8

4 User Positioning: Positioning the product as best for some user group.

In this advertisement( Figure 7.8) of Parle –G, the boy was positioned as rock star. This

advertisement basically targets the kids and boys. 5 Competitor Positioning: The product claims to be better in some way than a named competitor. In this advertisement( Figure 7.9) Mathrubhumi base line says ‘In the wake of ABC results,

Mathrubhumi celebrates the addition of 33,960 copies while nearest competitor laments the loss of

7,258 copies. Planners, take note’. It is directly mentioning its and competitors sales of newspaper.

Figure 7.9 Figure 7.10



6 Product Category Positioning: The product is positioned as the leader in a certain product

category.Bajaj CT 100 was positioned as leader in the entry segment bikes.( Figure 7.10) 7 Quality or Price Positioning: The product is positioned as offering the best value.

Figure 7.11

The vegetable oil brand dhara position it self as ‘anokhi shuddata, anokha asar’. This means,

company offers unique purity and unique effect.

Self Assessment Questions 2

1. In………………..segmentation, buyers are divided into different groups on the basis of lifestyle

or personality and values.

2. By studying its…………….., a company can pinpoint which brands are most competitive with its

own.

3. …………… is a market coverage strategy in which company follows ‘one productone segment’

principle.

4. ………………..is the act of designing the company’s offering and image to occupy a distinctive

place in the target market’s mind.

5. …………………….are consumers who buy one brand all the time.

7.9 Summary

• Market Segmentation is the process of dividing a potential market into distinct submarkets of

consumers with common needs and characteristics.

• The size, profile and other relevant characteristics of the segment must be measurable and

obtainable in terms of data.

• Target marketing helps the marketer to identify the markets – the group of customers for whom

the product is designed.



• Buyers can be classified into four groups based on brand loyalty status:

a) ‘Hardcore Loyal’ are those consumers who buy one brand all the time.

b) ‘Split Loyal’ is those consumers who are loyal to two or three brands.

c) ‘Shifting Loyal’ are those consumers who shift from one brand to another.

d) ‘Switchers’ are those consumers who show no loyalty to any brand.

• Positioning is the act of designing the company’s offering and image to occupy a distinctive place

in the target customers’ mind.

Terminal Questions

1) What do you mean by segmentation? What are its benefits?

2) Discuss the various bases for segmenting consumer markets.

3) Explain the methods of selecting target market segments.

4) Write a note on positioning of the product.

5) What are the requisites of effective segmentation?

Answers to Self Assessment Questions


1. Market segmentation

2. Size

3. differentiability

4. Yes

5. True


1. Psychographic segmentation

2. Split Loyal

3. Concentrated Marketing

4. Positioning

5. Hardcore Loyal



Answer to Terminal Questions

1. Refer to 7.2 & 7.3

2. Refer to 7.6

3. Refer to 7.7

4. Refer to 7.8

5. Refer to 7.4

7 Segmentation Targeting and Positioning

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