Lecturer B.B.

Kathayat 1
 Learning Objectives

After completing this chapter, students should be able to:

1. Understand the concept and features of market.
2. Know the concept and importance of market segmentation.
3. Ascertain the requirements for effective market segmentation.
4. Define the levels/types of market segmentation.
5. Describe the general process of market segmentation.
6. Recognize the bases for consumer market segmentation.
7. Identify the bases for business market segmentation.
8. Discuss the segment evaluation, analysis and selection.
9. Understand the concept and types of market targeting.
10. Know the concept and types of product positioning.
11. Recognize the general process of product positioning.
Lecturer B.B.Kathayat 2
 1. Concept and Features of Market

 The word “market” was derived from the Latin word “Mercatus” which
means to trade, merchandise or a place where business is transacted.
 In narrow sense, a market is a physical place where customers and sellers
get together to buy and sell goods and services.
A market is a place where buyers and sellers can meet to facilitate the
exchange or transaction of goods and services [Investopedia].
A market is any structure that allows buyers and sellers to exchange any
type of goods, services and information [Wikipedia].
 In broad sense, a market may be a region, which may be a district, state,
country, or even the whole world from which buyers and sellers exchange
goods, services and information with money.

Lecturer B.B.Kathayat 3
 Cont……
The core concepts of market are as…………………

Place

Space Commodity

Core
Concept
of Market

Demand Exchange

Area

Lecturer B.B.Kathayat 4
 Cont……
1) Place: Market is the particular place where sellers and buyers meet
together to exchange goods and services with money or monetary aspects.

2) Commodity: This concept gives greater emphasis on quality goods and

services rather than the exchange place or area.

3) Exchange: This concept gives higher emphasis on the mutual interest

between buyers and sellers with sound relationship.

4) Area: This concept gives greater emphasis on indirect close or regular

relationship through advance communication like social media. It does not
focuses on direct discussion or relationship between sellers and buyers.

5) Demand: Market may be defined as aggregate demand by potential buyers

of a goods and services. Thus, market is to supply the needs of people.

6) Space: This concept gives higher emphasis on digitalization where buying

and selling activities can be performed by using latest technologies.

Lecturer B.B.Kathayat 5
 Cont……

Lecturer B.B.Kathayat 6
 Cont……
Place

Features /Nature of Market Sellers

Buyers

Commodity

Exchange

Needs/Demands

Structure

Communication

Relationship

Lecturer B.B.Kathayat 7
 2. Concept and Importance of Market Segmentation
 The breaking down or building up of potential buyers into groups called
market segments.
 The concept of market segment is based on the fact that the market of
commodities are not homogeneous but they are heterogeneous.
 Markets can be segmented in several ways such as geographically,
demographically, or behaviorally.
 Market segmentation seeks to identify targeted groups of consumers to
tailor products and branding in a way that is attractive to the group.
 In marketing, market segmentation is the process of dividing a broad
consumer or business market, normally consisting of existing and potential
customers, into sub-groups of consumers based on some type of shared
characteristics (Wikipedia).

Lecturer B.B.Kathayat 8
 Cont......
“Market segmentation is the act of identifying and profiling
distinct group of buyers who might require separate product or marketing
mixes.” – Philip Kotler

“Market segmentation is the process of dividing the total,

heterogeneous market for a product into several sub-markets or segments, each
of which tends to be homogeneous in all significant aspects.” – W. J. Stanton

 The objective of market segmentation is to minimize risk by determining

which products have the best chances of gaining a share of a target market
and determining the best way to deliver the products to the market.
 Finally, market segmentation is a marketing strategy in which select groups
of consumers are identified so that certain products or product lines can be
presented to them in a way that appeals to their interests.

Lecturer B.B.Kathayat 9
 Cont……
Importance of Market Segmentation
To get knowledge of attracting marketing opportunities

To facilitate in selection of target market

To assist in determination of product mix

To evaluate and select suitable channels

To assess competitors strengths and weaknesses

To help in effective marketing program

To provide customer satisfaction

To maintain competitive advantages

Lecturer B.B.Kathayat 10
3. Requirements for Effective Market Segmentation

Measurable
Beneficial
Divisible

Requirements
for Effective
Market
Appropriate Segmentation Accessible

Actionable Sustainable

Lecturer B.B.Kathayat 11
 Cont……
1) Measurable: The size, needs, purchasing power, and characteristics of the
customers in the segment should be measurable.
2) Divisible: The segments should be differentiable. There must be the clear-cut
basis for dividing customers into meaningful homogeneous groups.
3) Accessible: The segment should be reachable and serviceable. It should be
accessible through existing marketing institutions, such as distribution channels,
advertising media, and sales force.
4) Substantial: The market a brand should want to penetrate should be a
substantial number. It needs to clearly define a consumer’s profiles by gathering
data on their age, gender, job, socio-economic status, and purchasing power.
5) Actionable: Market segments need to be actionable, meaning it have practical
value. A market segment should be able to respond to a certain marketing
strategy or program and have outcomes that are easily quantifiable.
6) Appropriate: The segments must be appropriate to the organization's objectives
and resources. With out this we can not imagine the batter outcomes form
segments.
7) Beneficial: The market segment should be large enough to give the organization
adequate profit and should be sustainable for the long-run.

Lecturer B.B.Kathayat 12
 Cont……

Lecturer B.B.Kathayat 13
 4. Levels/Types of Market Segmentation

→ Mass Marketing: It is a market

Mass coverage strategy in which business
Marketing firm decides to ignore market
segment differences and makes
single offer foe the whole market.

→ Segment Marketing: It is a market

Levels/Types coverage strategy in which business
Micro Segment firm decides to make market
of Market
Marketing Segmentation Marketing segments and design separate offer
for each.

→ Niche Marketing: It is a market

coverage strategy in which business
Niche firm can creates few segments and
Marketing design and offers highly specialized
products to fulfill customer’s needs.

→ Micro Marketing: It is a market coverage strategy in which business firm practices of

tailoring products and marketing programs for fulfilling the needs of specific individual,
groups of customers.

Lecturer B.B.Kathayat 14
 5. General Process of Market Segmentation

2. Construct 3. Evaluate
1. Define or
Market Segments Market
Analyze Market
Profiling Segments

4. Select
6. Implement 5. Develop Appropriate
Marketing Mix Marketing Mix Market
Segments

7. Review
Performance

Lecturer B.B.Kathayat 15
 Cont……
1) Define or Analyze Market: In this step, marketing management needs to
define or analyze market for gathering relevant information about
customers wants, demand, needs, consuming pattern, perception on goods
and service, purchasing procedures, habits. Besides that, life style, social
norms, terms, customs, religion, education, age, gender and other aspects
related information needs to gather and analyze through the statistical
tools.

2) Construct Market segments Profiling: A segment profile is a descriptive

summary of the size, needs, behaviors and preferences of customers within
a particular market segment. In this step, marketing management requires
to identify the core bases for segmentation like geographic, demographic,
psychographic and behavior aspects.

3) Evaluate Market Segments: After constructing segments profiling,

marketing management must be considered to evaluate market segments
on the basis of segment size and growth, structural attractiveness and
company objectives and resources.

Lecturer B.B.Kathayat 16
 Cont......
4) Select Appropriate Market Segments: After evaluating market segments, the
suitable market segments should be selected to enter there. Analysis of
market segments, market coverage, ethical considerations, inter-segment
relationship etc. also should be considered for the selection of suitable
market segments.

5) Develop Marketing Mix: Developing the right marketing mix is essential to

business success. It consist with the effective development of product,
price, place and promotion which supports to fulfill or satisfy customers
needs and wants.

6) Implement Marketing Mix: The marketing mix refers to the set of actions, or
tactics, that a company uses to promote its brand or product in the market.
Besides that, marketers needs to control and optimal utilization of all the
available resources for getting greater profit from segmentation.

7) Review Performance: After implementing the marketing mix in particular

segments, marketers should be focused to collect feedback and improve
their marketing strategies for segmenting and operating the segments.
Lecturer B.B.Kathayat 17
6. Bases (Variables) for Consumer Market Segmentation

Variables for Consumer

Market Segmentation

Geographic Demographic Psychographic Behavioral

Variables Variables Variables Variables
Region Age Life style Attitude
Climate Gender Personality Brand loyalty
Population density occupation Life value Usage rate
Physical features Income Traits Buying occasions
Education Consumer readiness
Social class Benefit sought
Family size Market sensitivity
Ethnicity

Lecturer B.B.Kathayat 18
7. Bases (Variables) for Business Market Segmentation

Variables for Business

Market Segmentation

Geographic Demographic Operating Variables Purchase Related

Variables Variables Variables
Technology
Area Types of industry Purchasing structure
Usage rate
Climate Size of business Purchase procedures
Service needed and method
Topography Structure of business
organizations Negotiation period
Physical features

Lecturer B.B.Kathayat 19
 8. Segment Evaluation, Analysis and Selection

Evaluation of Market Segments………………………

 Basically the evaluation of market segments depends on the three key

factors such as;
1) Segment size and growth: Business firm needs to collect and analyze the
data associated with current segment likewise; sales turnover, growth
rates, scope and expected profitability of particular segments.

2) Segment structural attractiveness: Business firm requires to establish

long-run market segment by attracting buyers through offering quality
goods and services than competitors.

3) Company’s objectives and resources: Business firm needs to mobilize the

available resources first and assess the outcomes of resources utilization
in relation to organizational goals.

Lecturer B.B.Kathayat 20
 Cont……
Analysis and Selection of Market Segments……………………..
 The analysis and selection of best markets segments can be identified into five
parts such as;
1) Single segment coverage: It is the way of analysis and selection of single market
segment where business firm offers specified product to specified customer like BMW
cars for rich people.

2) Multi segment coverage: It is the way of analysis and selection of multi-market

segments where business firm offers product for multi-segments to reduce business risk
such Himalaya company for cosmetics products.

3) Product specialization: It is the way of analysis and selection of market segments where
business firm sells certain products to several customers like Honda Motorcycles.

4) Market specialization: It is the way of analysis and selection of market segment where
business firm choose particular market segment for supplying all relevant products such
as Hotel and Hospitality sectors.

5) Full market coverage: It is the way of analysis and selection of market segments where
business firm attempts to serve the entire market through particular products likewise
NTC/ Ncell internets.

Lecturer B.B.Kathayat 21
 9. Concept of Market Targeting or Target Market

 When identifying the target market, Marketers required to consider the

following questions :
1. Is your market male or female?
2. What age?
3. Where do they live?
4. What do they do for a living?
5. How much money do they make?
6. What lifestyles and attitudes do they have?

 A target market is a group of customers within the serviceable market that

a business has decided to aim its marketing efforts towards.

 A target market is a group of people considered likely to buy a product or

service.
 A target market consists of customers that share similar characteristics,
such as age, location, income and lifestyle.

Lecturer B.B.Kathayat 22
 Cont……
 Target markets also known as certain clusters of consumers with similar or
the same needs that most businesses target their marketing efforts in order
to sell their products and services.

 Target marketing is the process of evaluating each market segments'

attractiveness and selecting one or more segments to enter.

 Target Marketing refers to a concept in marketing which helps the marketers

to divide the market into small units including of like minded people.

 A target market refers to a group of individuals who are inclined towards

similar products and respond to similar marketing techniques and
promotional schemes.

 A particular market segment at which a marketing campaign is focused.

Lecturer B.B.Kathayat 23
 Cont……

Undifferentiated
Market

Micro Types of Differentiated

Target
Market Market Market

Concentrated or
Niche Market

Lecturer B.B.Kathayat 24
 Cont…...

Lecturer B.B.Kathayat 25
 10. Concept and Types of Product Positioning

 Primarily, positioning is about the place a brand occupies in the mind of its
target audience.

 Positioning in marketing is a strategic process that involves creating an

identity or image of the brand or product within the target customers’
minds.

“Positioning is the act of designing the company’s offering and image so

that they occupy a meaningful and distinct competitive position in the target
customer’s minds.” – Philip Kotler

“Positioning means developing the image that a product projects in

relation to competitive products and to the firm’s other products.” – William J.
Stanton

 Positioning refers to the place that a brand occupies in the minds of the
customers and how it is distinguished from the products of the competitors
and different from the concept of brand awareness [Wikipedia].

Lecturer B.B.Kathayat 26
 Cont……
Components of Positioning……………………………..
 Attributes- products characteristics

 Price- high, medium, low and best value price

 Technology- manual, automatic, computerized, robotize

 Quality- high, medium, low

 Services- pre-sales, after sales, during sales

 Competition- better than competitors

 Use- many use of the same product

 Benefit- end benefit or results from buying the product.

Lecturer B.B.Kathayat 27
 Cont……
Attribute Positioning

Benefit Positioning

Usage Occasion Positioning

Types of Product Positioning

User Positioning

Competitive Positioning

Price Positioning

Lecturer B.B.Kathayat 28
 Cont……
1) Attribute Positioning: It is based on products quality, design, level, size,
durability, reliability and so on. For examples; Apple iPhone, Samsung Cell
Phones, Bajaj Motorcycle, Toyota Vehicles etc.
2) Benefit Positioning: It is based on the products benefits to the users like health
benefits, financial benefits, environmental benefits and so on. For example;
Horlicks, Chyavanprash, Pepsidents, Liril Soap, Sunslik Shampoo etc.
3) Usage Occasion Positioning: It is based on some special occasions where
marketers usages products positioning. For examples; Dashai, Tihar, Chhata,
New Year, Christmas day etc.
4) User Positioning: It is based on users income status, age groups and genders.
For examples; these groups may involves to fulfill their needs and wants by
using goods and services.
5) Competitive Positioning: It is based on differentiated or unique goods and
services from the competitors products. In this positioning, products
comparison must important for measuring quality.
6) Price Positioning: It is based on the determination of price of goods and services
in comparison to competitors pricing. For examples; price determination of
Bayerische Motoren Werke AG (BMW), Toyota Land Cruiser Prado, Nano Car
etc.

Lecturer B.B.Kathayat 29
 11. General Process of Product Positioning

Selecting the
• Product Factors
• Product Differentiation Differentiation
• Pricing Factors
• Service Differentiation Factors
• Placing Factors
• Personnel Differentiation • Consistency with the • Promoting Factors
• Image Differentiation Organizational Image
• Competitor’s Positions
and their Strengths Communicating the
Identification of
• Cost of Creating and Positioning Factors
Differentiation Defending Positions
Factors

Lecturer B.B.Kathayat 30
 Home Assignment 3 [Sample Questions]

Q1. What is market? Describe the key features and concepts of market.
Q2. What do you mean by market segmentation? Explain the core objectives
and importance of market segmentation.
Q3. What are the requirements for effective market segmentation?
Q4. How can you define the term segmentation? Describe the general process
of market segmentation.
Q5. Do you know consumer? Define the bases or variables for consumer market
segmentation.
Q6. Define business market segmentation. What are the bases or variables of
business market segmentation?
Q7. How can you define the term market targeting or target marketing?
Describe the types of target marketing.
Q8. Discuss about product positioning. What are the types of product
positioning.
Q9. What is positioning? Explain the general process of product positioning.
Q10. How can you differentiate between market segmentation and target
marketing? Explain with suitable examples.

Lecturer B.B.Kathayat 31
 Text or Reference Books

o Kotler, P. and Armstrong G.: Principles of Marketing, (13th ed.),

Pearson, India [Philip Kotler and Gray Armstrong]

o Saxena, R.: Marketing Management (new ed.), McGraw Hill, India

[Rajan Saxena]

o Agrawal, G.R.: Marketing in Nepal, Fundamentals, Management

Strategy, Educational Enterprise, KTM [Govinda Ram Agrawal)

o Thapa, G., Neupane, D., and Rai, B.: Fundamentals of Marketing, (new
ed.), Asmita Publication, KTM [Gopal Thapa, Dipendra Kumar
Neupane and Bharat Rai]

Lecturer B.B.Kathayat 32
 Notes
After finalizing the chapter, your are requires to solve and submit CS PDF copy
of answer sheet within the prescribed time and date. It contains with 20
marks. The obtaining marks will fairly accumulates in internal evaluation. If
anyone fail to submit this assignment within the dateline, I throw out form the
evaluation. Thus, please do not miss or neglect this work.
Thank You!!!

B.B. Kathayat
Lecturer, Marketing
Email:[email protected]

Lecturer B.B.Kathayat 33
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