Chapter 3: Marketing Segmentation,

Targeting & Positioning

(9 July 2022)
Lesson Learning Outcome

• Understand what is market segmentation, targeting &

positioning.

• Relate these to the marketing activities that are

happening in your surroundings.
 Case Scenario

• Jennifer has just started a new job as a Marketing Manager for a

fashion outlet. She conducts a careful analysis of sales data within the
first few weeks, and quickly identifies a profitable opportunity with a
particular group of high-value customers.
• So, she brainstorms several ideas with her team, and they come up
with an exciting new product which has the potential to be a real
success for the company.
• But how can Jennifer check whether her idea will really work? How
can her team develop the perfect product for their target market? And
how should they communicate its benefits?
 STP – Market Segmentation, Targeting & Positioning

• Companies today are aware that they are not able to appeal to all
consumers in the marketplace – buyers are numerous, widely
scattered, have various buying behavior with different needs,
wants & demands.
• E.g. Some people fly with MAS, some with KLM and some others,
Air Asia.
• Moreover, companies themselves vary widely in their abilities to
serve different market segments.
❖ Customer-driven marketing strategy
 Customer-Driven Marketing Strategy

• It is a 3-stage process that involves:

i) Market Segmentation ii) Targeting iii) Positioning
i) Market Segmentation (S)

• A marketer has to divide his customers into groups of people with

common characteristics and needs.
• The main goal here is to create various customer segments based
on specific criteria and traits that you choose.
• This allows the marketer to design his approach to meet each
group's needs effectively, and gives him a huge advantage over
competitors.
• Divide markets into specific group of consumers – Segmentation
Practices.
Segmentation Practises

i) Demographic – focuses on the characteristics –

age, marital status, gender, ethnicity, education,
or occupation.
ii) Geographic – by country, region, state, city, or
even neighborhood.
iii) Psychographic - by social class, lifestyle,
personality.
iv) Behavioral – by how people use the product,
how loyal they are, the benefits that they are looking for, online shoppers, mall
shoppers or brand preference.
 ii) Targeting (T)

• The marketer’s main goal is to look at segments that he had created before and determine which
of those segments are most likely to generate desired conversions (depending on the marketing
campaign, those can range from product sales to micro conversions like email signups).
• Factors to consider:
➢ Size – the larger the segment, the more potential for
future growth
➢ Profitability – which segment of consumers are
willing to spend the most money for your product/services?
➢ Reachability – how easy or difficult is it to reach
your customers? A high customer acquisition cost (CAC)
results in lower profitability.
 Effective strategies for selecting your target market

• Undifferentiated Targeting: This approach views the market as one group with no
individual segments - use a single marketing strategy. This strategy may be useful for a
business or product with little competition & consumers buy it without much concern over
the brands – flour, sugar, vegetable, fruits, toothpaste, dish soap.
• Concentrated Targeting: This strategy focuses on one specific target market group
(niche) for most or all of its marketing initiatives. If a firm is focusing on a single segment
it can concentrate on understanding the needs and wants of that particular market
intimately. E.g. Products for people who are diabetic, pet owners or children product.
• Multi-Segment Targeting: This strategy is used if you need to focus on two or more well-
defined market segments and want to develop different strategies for them. Multi
segment targeting offers many benefits but can be costly as it involves greater input from
management, increased market research and increased promotional strategies. E.g.
Honda & Acura cars
 iii) Positioning (P)

• Products are made in factories but brands happen in the minds of consumers.
• the way a product is defined by
consumers on important attributes — the
place the product occupies in
consumers’ minds relative to competing
products.
• the ability to influence consumer minds
about a product or brand relative to
competitors.
 Positioning – “implementing”

• Positioning is the process of implementing our segmentation by optimizing our products/services for that
segment and communicating that we have made the choice to distinguish ourselves that way.
• E.g. Apple computers – user-friendly computers that are for ‘non-geeks’.
 The Marketing Mix – 4Ps

• Definition: Marketing mix is the set

of tactical marketing tools that the
company blends to produce the
response it wants in the target market.

• Consists of everything the company

can do to influence the demand for its
product.

• 4 basic elements: Product, Price,

Place & Promotion.
1. Product

• Refers to the goods & services the company offers to the target
market.
• This covers everything from the product design, technology the
product uses to the convenience of the product and warranties.
• Key questions:
• Are the products/services offered relevant to the
consumers/market today?
• How does it rate next to the competitors?
• How is your product different from the others?
2. Price

• It is the amount of money consumers must pay to obtain a product

/services.
• It needs to be relative to your competitors, the needs of your
customers and the marketplace.
• Often, the profitability of products/services does not justify the
amount of effort and resources that go into producing them.
• Consumers use price as an indicator of product quality or benefits.
High-priced brands are often perceived to be of higher quality and
become less exposed to price cuts of competitors.
 3. Promotion

• Promotion is all the ways that a company communicates with its target
audience/customers about its products/services.
• It refers to activities that are communicate by the company about its
product merits & persuade the consumer to buy it.
• E.g. Ford spends more than $2.3 billion each year on U.S. advertising
to tell consumers about the company and its many products. They offer
special promotions and engage potential buyers via their social media
platforms.
 4. Place

• The place is where the product or service is sold, and how it is sold –
company activities that make the product available to its target
market.
• E.g. Ford has a strong dealership collaboration. It is very selective
with its dealers & it strongly supports them.
• For online business, the website and sales process must be
professional, clear/well-structured and convenient for the target
market – prevent them from going to other online stores.
What to consider when managing a marketing plan?
Discussion

Think about a product that you would like to

introduce to the market.

Using the 4Ps, explain what your marketing

plan might be.
How are the 4Ps relevant to Consumers?

1. Consumers – buy value and solutions to their problem / fulfil their needs.
2. Consumers – interested in more than just price; total cost of obtaining the
products/services and disposing of the product.
3. Convenience
4. Consumers want a two-way communication
Managing Marketing Efforts - Marketing Management
Functions
An effective marketing management process requires the 5
marketing management functions:

1. Analysis
2. Planning
3. Implementation
4. Organization
5. Control
Marketing Management Functions
 Managing Marketing Efforts - Marketing Management
Functions

• Firstly, the company develops company-wide strategic plans and then

translates them into marketing and other plans for each division,
product, and brand.
• Through implementation and organization, the company turns the plans
into actions.
• Control consists of measuring and evaluating the results of marketing
activities and taking corrective action where needed.
• Last but not least, marketing analysis provides the information and
evaluations needed for all the other marketing activities
Marketing Analysis – SWOT Analysis
 SWOT Analysis – Marketing analysis

• Strengths - internal capabilities, resources, and positive situational factors that may
help the company serve its customers and achieve its objectives.
• Weaknesses - internal limitations & negative situational factors that may interfere
with the company’s performance.
• Opportunities - favorable factors or trends in the external environment that the
company may be able to exploit to its advantage.
• Threats - unfavorable external factors or trends that may present challenges to
performance.
❖ Goal - match the company’s strengths to attractive opportunities in the
environment, while at the same time eliminate or overcome the weaknesses and
minimize the threats.
Importance of Marketing Mix

• Attracting customers-to face competition & to promote its

company’s sales it needs to attract customers by providing the
best mix.
• Better use of resources- It promotes better utilization of
limited resources as it helps the Marketer to understand his
customer and invest in the areas in which the customer is
interested.
• Precision- Marketing Mix provides accuracy to the study of
marketing.
Importance of Marketing Mix

• Balanced Approach- It reminds the Marketer to (i) carefully

consider the market forces and (ii) think of a total marketing
program instead of relying on any one aspect.
• Collectively Effective- The components of marketing mix are
individually important but their significance lies in the mix or
blend - collectively effective in the dynamic marketing
environment.
• Marketing mix is applicable to business as well as non-business
organization such as clubs, colleges and associations.
Limitation of Marketing Mix

• Marketplace has
become more integrated.
• Some authors have
introduce up to 7Ps of
to extend the effectiveness
of the marketing mix.
The addition 3Ps

• People – relationship/customer contribution; recognition of the role

of the human being coincides with the emergence of relational
marketing – customer satisfaction to the role the employees play in
transmitting value to the brand.

• Physical environment/evidence - elements with which the customer

is in contact when he buys the product.

• Process– attitude, gestures, and behavior of salespeople are codified

to align with the values embodied.