Compiled by: Gul Sayyar, ACCA-UK 1 9/20/2015. MARKETING MANAGEMENT Market Segmentation, Targeting And Positioning

Compiled by: Gul Sayyar, ACCA-UK1 04/19/23

MARKETING MANAGEMENT

Market Segmentation, Targeting And Positioning

What are Markets?

Market: people or institutions with sufficient purchasing power, authority, and willingness to buy.

Compiled by: Gul Sayyar, ACCA-UK

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Requirements of a Markets

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Need Ability Willingness Authority

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“Market Segmentation, Targeting and Positioning”


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Mass marketing refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass production, mass distribution, and mass communication. The drawback of mass marketing is that customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all customers.

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Some marketers says that Mass Marketing is dying. Most companies are turning to Micromarketing at one of four levels: Segmentation, Niches, Local areas, Individuals.

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Target marketing on the other hand recognizes the diversity of customers and does not try to please all of them with the same offering. The first step in target marketing is to identify different market segments and their needs.

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Market Segmentation (Definition):


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The process of splitting customers, or potential customers, in a market into different groups, or segments, within which customers share a similar level of interest in the same or comparable set of needs satisfied by a distinct marketing proposition.

Division of the total market into smaller, relatively homogeneous groups.

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A market segment consists of a group of customers who share a similar set of needs and wants. We can distinguish between car buyers who are primarily seeking low-cost basic transportation, those seeking luxurious driving experience .

The marketer does not create the segments; the marketer task is to identify the segments and decide which one(s) to target. Marketing segmentation is better than Mass marketing, company can better design, price, disclose and deliver the product or service to satisfy the customer.

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Flexible market offering: In a segment marketing not all customers may

require the same product or service. Therefore, marketers may come up with a flexible market offering. A flexible market offering consists of two parts: a clear solution containing the product and service elements that all segment customers value, and discretionary options that some segment’s customers value. Each option might carry an additional charge.

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Market Niches: A niche is a more narrowly defined customer group seeking

a distinctive mix of benefits. Marketers usually identify niches by dividing a segment

into sub segments. A small but profitable segment of a market suitable for

focused attention by a marketer. Market niches do not exist by themselves, but are created by identifying needs or wants that are not being addressed by competitors, and by offering products that satisfy them.

For Example:

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For example, sports channels like STAR Sports, ESPN, STAR Cricket, and Fox target a niche of sports lovers.

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local market (Definition) Clients and customers who will buy a product in

the region or area in which it is produced. For marketing purposes it is important to know who will buy the product, where they are located and how far they will travel to obtain the product. The local market includes customers located within the region the product or service is produced or made available.

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Target marketing is leading to marketing program tailored to the needs and wants of local customer groups (trading areas, neighborhoods even individual stores). For example citibank provides different mixes of banking services in its branches, depending on neighborhood demographics.

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Customerization: The ultimate level of segmentation leads to

“segments of one,” “customized marketing,” or “one to one marketing”.

Today customers are taking more individual initiative in determining what and how to buy.

Customerization is certainly not for every company: it may be very difficult to implement for more complex products such as automobiles.

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Segmenting Consumer Markets: Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioral Segmentation

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Geographic Segmentation: Dividing the market into different

geographical units such as nation, states, religions, countries, cities or neighborhoods.

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Demographic Segmentation: The market is divided into groups on the

basis of variables such as age, family size, family life cycle, gender, income, occupation, religion etc.

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Psychographic Segmentation: Markets are divided on the basis of

personality traits, lifestyle, or values. People within the same demography group can exhibit very different psychographic profile.

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Behavioral Segmentation: In behavioral segmentation, buyers are divided

into groups on the basis of their knowledge of, attitude toward, or response to a product.

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Target Marketing: (Definition) Consists of a set of buyers who share

common needs or characteristics that the company decides to serve.

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Selecting Target Market Segments Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual)

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Choosing a Target Marketing Strategy: We must Consider:

Company resources The degree of product variability Product’s life-cycle stage Market variability Competitors’ marketing strategies

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Positioning: The place the product occupies in consumers’ minds

relative to competing products. Typically defined by consumers on the basis of

important attributes. Involves implanting the brand’s unique benefits and

differentiation in the customer’s mind. Positioning maps that plot perceptions of brands are

commonly used.

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Choosing a Positioning Strategy: 1.Identifying possible competitive advantages: Differentiation can be based on

Products Services Channels People Image

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2.Choosing the right competitive advantage: How many differences to promote?

Unique selling proposition Several benefits

Which differences to promote? Criteria include: Important Distinctive Superior Communicable Affordable Profitable

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3.Choosing a positioning strategy: Value propositions represent the full positioning

of the brand. Possible value propositions:

More for More More for the Same More for Less The Same for Less Less for Much Less

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Documents

Compiled by: Gul Sayyar, ACCA-UK 1 9/20/2015. MARKETING MANAGEMENT Market Segmentation, Targeting And Positioning