UNIT ONE

MARKET SEGMENTATION

Unit Coverage

This unit is designed to provide you with the necessary knowledge, skills and attitude regarding
the following contents:

1.1. Meaning and benefits of Market Segmentation

1.2. Levels of Market Segmentation

1.3. Requirements for Effective Segmentation

1.4. Market Segmentation Procedure

1.5. Consumer Market Segmentation

Unit Learning Outcomes

This unit will assist you to attain the following learning outcomes. Specifically, upon the
completion of this unit, you will be able to:

 Understand the meaning and importance of market segmentation

 Apply market segmentation process

 Identify levels of market segmentation

 Identify the requirements for effective segmentation

 Apply procedures for segmenting a market

 Segment consumer market

Key Terms: Market Segmentation, Consumer Market, geographic Segmentation, Demographic

Segmentation, Behavioral Segmentation, Psychographic Segmentation, Business Market
 Introduction

A company that decides to operate in a broad market recognizes that it normally cannot serve all
customers in that market. The customers are too numerous and diverse in their buying
requirements. Instead of competing everywhere, the company needs to identify the market
segments that it can serve most effectively.

Market segmentation involves dividing the entire market in to distinct groups of buyers who
might require separate market offerings. To choose its markets and serve them well, many
companies are embracing target market. In target marketing, sellers distinguish major market
segments, target one or more of those segments, and develop products and marketing programs
tailored to each segment. Instead of scattering their marketing effort they can focus on the buyers
whom they have the greatest chance of satisfying.

Therefore, in order to achieve their objective marketers are required to take three major steps
(see figure 1.1)
Market Market Market
Segmentation Targeting Positioning

1. Identify segmentation 3. Evaluate the 5. Identify possible

variables and segment the attractiveness of each positioning concepts for
market. segment. each target segment.

2. Develop profile of 4. Select the target 6. Select, develop and

resulting segments. segment(s) communicate the chosen
positioning concept.

Figure 1.1 Steps in market segmentation, targeting and positioning

1.1. Meaning and benefits of Market Segmentation

1.1.1. Meaning of Market Segmentation

As it was defined earlier, a market consist of actual and potential buyers, and buyers differ in one
or more ways; in their wants, resources, locations, buying attitudes and buying practices.
Through market segmentation companies divide large heterogeneous markets into smaller
segments that can be reached more efficiently with products and services that match their unique
needs.
Market segmentation can be defined as the process of dividing a market in to distinct groups of
buyers with different needs, characteristics or behavior who might require separate products or
marketing mixes.

 Better Targeted
Digital Advertising in
Marketing Management:
Marketing
segmentation enables
more effective digital
advertising strategies
in marketing
management. By
directing efforts towards
specific age groups,
locations, or habits on
platforms like social
media, businesses ensure
that their marketing
messages reach the
right audience,
maximizing the impact of
digital advertising
campaign
1.1.2. Market Segmentation Benefits

Market segmentation, while demanding in terms of effort and resources, brings

several advantages that contribute to a company’s long-term success:

 Increased Resource Efficiency: Market segmentation allows for a focused and precise
approach by targeting specific demographics or customer groups. This efficient strategy
helps save costs and resources compared to broad-reaching marketing campaigns.
 Stronger Brand Image: Segmentation in marketing management compels businesses to
carefully consider how they want to be perceived by specific audiences. This intentional
approach to branding and messaging enhances company’s overall brand image.
 Greater Potential for Brand Loyalty: Market segmentation, by tailoring efforts to specific
segments, provides opportunities to build long-term relationships with customers. This
personalized marketing fosters a sense of inclusion, community, and belonging, increasing
the potential for brand loyalty.
  Stronger Market Differentiation: Marketing segmentation allows companies to convey
precise messages to target audiences, helping them stand out from competitors. This targeted
approach aids in creating product differentiation, making company’s image more memorable
and specific.
 Better Targeted Advertising and Promotion: Marketing segmentation enables more effective
digital advertising strategies in marketing management. By directing efforts towards specific
age groups, locations, or habits on platforms like social media, businesses ensure that their
marketing messages reach the right audience, maximizing the impact of digital advertising
campaign

Self-check 1.1

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Define market segmentation?

2. Explain the benefits of market segmentation?

1.2. Levels of Market Segmentation

Market segmentation is an effort to increase a company’s precision marketing. The starting point
of any segmentation discussion is mass marketing. Market segmentation has four major levels
which can be depicted as follows

Mass Segment Niche Micro

Marketing Marketing Marketing Marketing

No segmentation Complete segmentation

Figure 1.2: Levels in the market segmentation

i. Mass Marketing
In mass marketing the seller engages in the mass production, mass distribution and mass
promotion of one product for all buyers. The traditional argument for mass marketing is that it
creates the largest potential market, which leads to the lowest costs, which in turn can translate in
to either lower prices or higher margins. However, many factors now make mass marketing more
difficult.

ii. Segment Marketing

A market segment consists of a large identifiable group with in a market with similar wants,
purchasing power, geographical location, buying attitudes, or buying habits. For example, an
auto company may identify four broad segments: car buyers who are primarily seeking basic
transportation or high performance or luxury or safety.

Segmentation is an approach midway between mass marketing and micro marketing. Each
segment’s buyers are assumed to be quite similar in wants and needs, yet no buyers are really
alike. Segment marketing offers several benefits over mass marketing. The company can create a
more fine-tuned product or service offering and price it appropriately for the target audience. The
choice of distribution channels and communications channels becomes much easier. The
company also may face fewer competitors in the particular segment.

iii.Niche Marketing

In the niche marketing the marketers focuses on very specific market segment for which very
high quality of services and also requires high attention.

A niche is a more narrowly defined group, usually identified by dividing a segment into sub
segments or by defining a group with a distinctive set of traits who may seek a special
combination of benefits.

While segments are fairly large and thus normally attract several competitors, niches are fairly
small and normally attract only one or a few competitors. Niches typically attract smaller
companies.

An attractive niche is characterized as follows.

a) Customers have a distinct and complete set of needs.
b) The ‘nicher’ has the required skills to serve the niche in a superior fashion.
 c) The ‘nicher’ gain certain economics through specialization.
d) The niche is not likely to attract other competitors.
e) The ‘nicher’ can depend on itself.
f) The niche has sufficient size, profit, and growth potential
iv. Micro Marketing

It is the practice of tailoring products and marketing programs to suit the tastes of specific
individuals and locations. Micro marketing includes local marketing and individual marketing.

a) Local marketing: - It involves tailoring brands and promotions to the needs and wants of local
customer groups: cities, neighborhoods and even specific stores. Local marketing derives certain
drawbacks such as: increasing manufacturing and marketing costs, reduces economics of scale,
creates logistical problems and diluted the overall image of brands. However, the advantages of
local marketing overweigh the drawbacks as it is supported by new developed technologies.

b) Individual marketing: - also known as customized marketing or one-to-one marketing. It

involves tailoring products and marketing programs to the needs and preferences of individual
customers. For countries, consumers were served as individuals: The tailor made the suit and the
cobbler designed shoes for the individual

Self-check 1.2

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Discuss the levels of market segmentation?

2. Explain niche marketing ?.

3. Distinguish Micro marketing and Individual marketing?.

1.3. Requirements for Effective Market Segmentation

To be useful market segments must be:

The requirements for
effective market
segmentation are as
follows:
a) Measurable: The
size, needs,
purchasing power,
and characteristics of
the
customers in the
segment should be
measurable.
Quantification should
be possible.
b) Divisible: The
segments should be
differentiable. There
must be clear-cut
basis
for dividing
customers into
meaningful
homogeneous
groups. They should
respond
differently to different
marketing mixes.
There should be
differences in buyer's
needs, characteristics
and behavior for
dividing in groups.
c) 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. There
should be middlemen
to distribute the
products.
d) Substantial: The
segment should be
substantial. It should
be large enough in
terms of customers
and profit potential.
IT should justify the
costs of developing a
separate marketing
mix.
e) Actionable: It
should be actionable
for marketing
purposes.
Organizations
should be able to
design and
 implement the
marketing mix to
serve the chosen
segment
a) Measurable: The size, needs, purchasing power, and characteristics of the customers in the
segment should be measurable. Quantification should be possible.
b) Divisible: The segments should be differentiable. There must be clear-cut basis for dividing
customers into meaningful homogeneous groups. They should respond differently to
different marketing mixes. There should be differences in buyer's needs, characteristics and
behavior for dividing in groups.
c) 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. There should be middlemen to distribute the products.
d) Substantial: The segment should be substantial. It should be large enough in terms of
customers and profit potential. It should justify the costs of developing a separate marketing
mix.
e) Actionable: It should be actionable for marketing purposes. Organizations should be able to
design and implement the marketing mix to serve the chosen segment

Self-check 1.3

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Discuss the requirements for effective market segmentation?

1.4. Market Segmentation Procedure

The three steps for identifying market segments are survey. Analysis, and profiling.

Step One: - Survey Stage

The researcher conducts exploratory interviews and focus groups to gain insight into consumer
motivations, attitudes, and behavior. Then the researcher prepares a questionnaire and collects
data on attributes and their importance ratings; brand awareness and brand ratings; product usage
patterns, attitudes toward the product category; and demographics, geographic, psychographics,
and media graphics of the respondents.

Step Two: - Analysis Stage

The researches applies factor analysis to the data to remove highly correlated variables, then
applies cluster analysis to create a specified number of maximally different segments.

Step Three: - Profiling Stage

Each cluster profiled in terms of its distinguishing attitudes, behavior, demographics,

psychographics, and media patterns. Each segment is given a name based on its dominant
characteristics.

Self-check 1.4

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. What are the steps in market segmentation process?

2. What activities to be done in the survey stage of market segmentation process?.

3. What activities to be done in the analysis stage of market segmentation process?.

4. What activities to be done in the profiling stage of market segmentation process?.

1.5. Consumer Market Segmentation

Consumer market is a market consists of buyers who buy products for personal consumption or
final use. There is no single way to segment a market. A marketer has to try different
 segmentation variables, alone and in combination, to find the best way to view the market
structure. Major variables used in segmenting consumer markets are: geographic, demographic,
psychographics and behavioral.

1.5.1. Geographic Segmentation

Geographic segmentation calls for dividing the market in to different geographical units such as
nations, states, regions, counties, cities or neighborhoods. The company can decide to operate in
one or a few geographical areas or operate in all but pay attention to geographical variations in
wants and preferences.

Geographic segmentation helps companies to pay attention to geographical differences in needs

and wants and to localize the company’s products, advertising, promotion and sales efforts to fit
the needs of individuals in the region.

1.5.2. 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, social class.

Demographic variables are the most popular bases for distinguishing customer groups. One reason
is that consumer wants, preferences and usage rates are often associated with demographic
variables. Another is that demographic variables are easier to measure.

Even when the target market is described in non-demographic term (say, a personality types), the
link lack to demographic characteristic is needed in order to estimate the size of the target market
and the media that should be used to reach it efficiently. Here is how certain demographic
variables have been used to segment markets.

1. Age and lifecycle stage

Consumer’s wants and abilities change with age. Photo companies are now applying age and
lifecycle segmentation to the film market. With film sales down, photo companies are working
hard to exploit promising niche markets: moms, kids, and older people. Nevertheless, age and
 lifecycle can be tricky variables. For example, the ford motor company designed its mustang
automobile to appeal to young people who wanted an inexpensive sport car. But ford found that
the car was being purchased by all age groups, it then realized that its target market was not
chronologically young but the psychologically young.

2. Gender

Gender segmentation has long been applied in clothing, hairstyling, cosmetics, and magazines.
Occasionally other marketers notice an opportunity for gender segmentation..

The automobile industry is beginning to recognize gender segmentation. With more women car
owners, some manufacturers are designing certain futures to appeal to women, although stopping
shat of advertising the cars as women’s cars.

3. Income

Income segmentation is a long-standing practice in such product and service categories as

automobiles, boats, clothing, cosmetics, and travel. However, income does not always predict the
best customs for a given product.

4. Social Class

Social class has a strong influence on preference in case, clothing, house furnishing, leisure
activities, reading habits, and retailers. Many companies design products and services for
specific social classes.

1.5.3. Behavioral Segmentation

In behavioral segmentation, buyers are divided into groups on the basis of their knowledge,
attitude, use or response to a product. Many marketers believe that behavioral variables:
occasions, benefits, user status, usage rate, loyalty status, buyer readiness stage, and attitude are
the best starting point for constructing market segments.

1. Occasion segmentation

Buyers can be divided into groups according to occasions when buyers get the idea to buy,
actually make their purchase, or use the purchased item. Occasions may include: vacations,
 marriage, separation, divorce, acquisition of a home, injury or illness, change is employment or
career, retirement, death of a family member. Occasions may also be special occasions or regular
occasions.

2. Benefit segmentation

This is dividing the market into groups according to the different benefits that consumers seek
from the product. It requires finding the major benefits people look for in the product class, the
kinds of people who look for each benefit and the major brands that deliver each benefit. For
example, while traveling with all airplane, the traveler either of the three major benefits; comfort,
safety and economy or buy any of the three class tickets; first class, business class and economic
class.

3. User status

Markets can be segmented into groups of nonusers, ex users, potential users, first-line users and
regular users of a product. For example, the blood banks must not rely only on regular donors to
supply blood. They must recruit new first time donors and contact donors and each will require a
different marketing strategy. The company’s position in the market will also influence its focus.
Market share leaders will focus on attracting potential users, while smaller firms will often focus
on attracting current users away from the market leader.

4. Usage Rate

Markets can be segmented into light, medium and heavy users, Heavy users are often a small
percentage of the market but account for a high percentage of total consumption. Marketers
usually prefer to attract one heavy user to their product or service rather than several light users.

5. Loyalty status

A market can be segmented by consumer loyalty patterns. Consumers can be loyal to brands,
stores (sellers). Companies (producers). Buyers can be divided in to groups according to their
degree of loyalty status.

 Hard-core loyal: - consumers who buy one brand all the time. It indicates the strength of the
company’s products.
  Split loyal: - Consumers who are loyal to two or more brands. This helps the company to
identify which brands are most competitive with its own.

 Shifting loyal: - Consumers who shift from one brand to another. Here, the company can learn
about its marketing weaknesses and attempt to correct them. The marketer can attract switchers
by running frequent sales.

 Switchers: - Consumers who show no loyalty to any brand. They either want something
different each time they buy or they buy whatever is on sale.

Note: - What appear to be brand loyal purchase patterns may reflect habit, indifference, a low
price, a high switching cost, or the non-availability of other brands. Thus a company must
carefully interpret what is behind the observed purchase patterns. It must determine whether
users are loyal, switcher or emergent, and it must create its marketing campaigns accordingly.

6. Buyer readiness 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.

Unaware – aware – informed – interested – desire –intend to buy

7. Attitude

Five attitude groups can be found in a market: enthusiastic, positive, indifferent, negative, and
hostile. To the extent that attitudes are correlated with demographic descriptors.

1.5.4. Psychographics Segmentation

In psychographics segmentation, buyers are divided into different groups on the basis of
lifestyle, value and personality characteristics. People within the same demographic group can
exhibit very different psychographics profiles.

1. Lifestyle Segmentation

It involves dividing the market into group’s based on lifestyles they exhibit, based on three major
dimensions called AIO, stands for Activity, Interest and Opinion.
  Activities: includes work, hobbies, shopping, sports, and social events

 Interests: includes food, fashion, family, recreation, etc.

 Opinions: includes opinions about themselves, social issues, business and products.

Life style captures something more than the person’s social class or personality. It profiles a
person’s whole pattern of acting and interacting in the world like actualizes, achievers, strivers
and strugglers. People’s product interests are influenced by their lifestyles. In fact, the goods
they consume express their lifestyle.

2. Personality segmentation

Personality is a person’s distinguishing psychological characteristics that lead to relatively

consistent and lasting responses to his or her own environment. It can be described in terms of
traits such as: self-confidence, dominance, sociability, autonomy, defensiveness, and adaptability
and aggressiveness. Marketers have used personality variables to segment markets. They endow
their products with brand personalities that correspond to consumer personalities.

3. Values

Some marketers segment by core values, the belief system that underlie consumer attitudes and
behavior. Core values go much deeper than behavior or attitude, and determine at a basic level,
people’s choices and desires over the long term. Marketers that segment by values behave that by
appealing to people’s inner selves it is possible to influence their purchase behavior.

Marketers rarely limit their segmentation analysis to only one or a few variables. Rather, they are
increasingly using multiple segmentation bases in an effort to identify smaller, better-defined
target groups.

Self-check 1.5

Directions: Answer all the questions listed below. If you have to need some clarifications feel- free to ask
your instructor.

1. Discuss the different basis for segmentingconsumer market?

2. List the demographic segmentation variables for consumer market?

3. List the behavioral segmentation variables for consumer market?

4. List the geographic segmentation variables for consumer market?

5. List the psychographic segmentation variables for consumer market?

Unit Summary

A market consists of people or organization with wants, money to spend and the willingness to
spend it. However, with in the markets the buyers’ needs are not identical. Therefore, a single
marketing program for the entire market is unlikely to be successful.

A sound marketing program starts with identifying the deference that exist with in a market, a
process called market segmentation.

Market segmentation is dividing the total market based on homogeneity, which need a separate
or unique marketing mix. Market segmentation enables a company to make more efficient use of
its marketing resources.

The four major bases that may be used for further segmenting the consumer market are

1) Geographic – the distribution of population

2) Demographic – the vital statistics of the population, such as income, age, and gender;

3) Psychographics – personality traits and lifestyles, and

4) Behavioral – benefits desired and product usage rates.

 Unit Review Questions

Part One: True/False Questions

Instruction: Say True or False

1. Culture could be segmented on the bases of demographic variables. _______

2. The broad bases for segmenting consumer market is based on demographic variables. ______

3. In demographic segmentation, buyers are divided into groups on the basis of this knowledge,
altitude towards use of or response to a product. _______

4. Geographic segmentation calls per dividing the market on such basis as nations, states, regions,
countries, cities etc. _______

5. Market segmentation identify groups of buyers who might not require separate product or
marketing mix. _______

Part Two: Multiple choice questions

Instruction: Choose the best answer from given alternatives.

1. Your new employer asked you, as a new marketing graduate, to develop a group of potential
customers who might respond in a similar way to a given set of marketing mixes. You have been
asked to develop ___________________

A. Target market C. Market strategy

B. Market segment D. Market

2. If TOYOTA Company produces different types of automobiles to suit for cold and hot climate
areas, the basis for segmentation that a company applied was:

A. Geographic segmentation C. Behavioral segmentation

B. Demographic segmentation D. Psychographic segmentation

3. Age and Family Lifecycle stage are segmentation variables categorized under:
A. Geographic segmentation C. Behavioral segmentation

B. Demographic segmentation D. Psychographic segmentation

4. If Coca Cola Company categorize its customers as nonusers, light users, medium users, and
heavy users. The variables used for segmentation is:

A. User status C. Usage rate

B. Occasions D. Loyalty status

5. Lifestyle, personality and values are segmentation variables included under ____?

A. Geographic segmentation

B. Demographic segmentation

C. Behavioral segmentation

D. Psychographic segmentation
Part Three: Discussion questions

Instructions:- Give your short answer for the following questions.

1. Define market segmentation? Explain the reasons for segmenting a market?

2. Describe the four levels of market segmentation?

3. To be useful, market segments must fulfill certain conditions. What are the criteria/conditions
that a market segment should fulfill?

4. Discuss the major basis for consumer market segmentation?

Part Four: Practical Activity

Instructions: read the case and give your response accordingly.

Assume that you are the marketing officer for a cosmetics company that has just developed a
new line of male cosmetics. The new cosmetics are invisible on the skin, reduce skin irritations,
and provide some protection from the sun. The company is charging high price to the new
cosmetics and planning to offer for Ethiopian market. As a marketing officer of the company,
conduct market segmentation for the company.

Required:

 Define the total market (what the entire market looks like)
o Size of the entire market, location, other demographic characteristics of the total
market, etc…
 Select the most appropriate base of segmentation and specific variable for segmenting
the market and conduct segmentation?
 Profile each segment
o Each segment profiled in terms of its distinguishing attitudes, behavior,
demographics, psychographics, and media patterns.
o Each segment is given a name based on its dominant characteristics.
 Prepare a report on:
o The procedure you have followed to conduct the market segmentation
o The segmentation strategies you have used
 UNIT TWO

MARKET TARGETING

Unit Coverage

This unit is designed to provide you with the necessary knowledge, skills and attitude
regarding the following contents:

2.1. Meaning of Market Targeting.

2.2. Market Targeting Process

2.3. Market Targeting Strategies.

Unit Learning Outcomes

This unit will assist you to attain the following learning outcomes. Specifically, upon the
completion of this unit, you will be able to:

 Evaluate Market Segment Attractiveness.

 Select the Target Market to Serve.

 Apply Market Targeting Strategies.

Key Terms: Market Targeting, aggregation Strategy, Multiple Segment Strategy, Single Segment
Strategy

Introduction

Targeting is the next step

in the sequential process
and involves a business
making choices about
segment(s) on which
resources are to be
focused.
Targeting is the actual
selection of the
segment. "A set of
buyers sharing
common needs or
characteristics that the
company decides to
serve."
Companies use target
marketing to tailor for
specific markets. There
are
three major targeting
strategies:
undifferentiated,
concentrated, and
differentiated. During this
process the Business
must balance its
resources
and capabilities against
the attractiveness of
different segments
Targeting is the next step in the sequential process and involves a business making choices about
segment(s) on which resources are to be focused. Targeting is the actual selection of the
segment. "A set of buyers sharing common needs or characteristics that the company
decides to serve." Companies use target marketing to tailor for specific markets. There are three
 major targeting strategies: undifferentiated, concentrated, and differentiated. During this process
the Business must balance its resources and capabilities against the attractiveness of different
segments

2.1. M
eaning of Market Targeting

After markets are divided into groups, their respective feasibility should be evaluated. The
process of evaluating the size and attractiveness of market segments in order to choose one or the
other to enter is known as market targeting. That particular chosen segment is known as market
target.

Market Targeting can be defined as the process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter.

A target market is a specific group of potential customers who a business aims to reach with its
products or services. This group may share common characteristics such as age, gender, income
level, education, interests, or geographic location that make them more likely to be interested in
and purchase from a business.

Self-check 2.1

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Define market targeting?

2. Discuss the concept of market targeting in relation to market segmentation and market
positioning?

2.2. Market Targeting Process

The process of market targeting involves the following steps.

Step 1: Evaluating the market segments

 In evaluating different market segments, a firm must look at three factors: the size and growth of
the segment, the structural attractiveness of the segment, and company’s objectives and
resources.

i. Segment size and growth:-

The firm must ask whether a potential segment has the characteristics that make it generally
attractive, such as size, growth, profitability, scale economics, low risk and so on.

ii. Segment structural attractiveness:

Structural attractiveness of a segment may be affected by the existence of many strong and
aggressive competitors, the existence of many actual or potential substitute products, the relative
power of buyers and the powerful suppliers who limit cost and quality of ordered goods and
services.

iii. Company objectives and resources:-

The firm must consider whether investing in the segment makes sense given the firm’s objectives
and resources. The segment should fits the company’s objectives and also the company must
consider whether it possesses the skills and resources it needs to succeed in that segment.

Step 2: Selecting the Market Segments

After evaluating different segments, the company must now decide which and how many
segments to serve. This is the problem of target market selection. In other words, the company
must decide which segments to target. The company can consider the five patterns of target
market selection. They are presented as follows:

i. Single – Segment Concentration/Concentrated Marketing

This is a market coverage strategy in which a firm goes after a large share of one or a few sub
markets. Instead of going after a small share of a large market, the firm goes after a large share
of one or a few sub markets. This provides an excellent way for small new businesses to get a
foot-hold against larger, more resourceful competitors.

ii. Selective Specialization

 Here the firm selects a number of segments, each objectively attractive and appropriate, given
the firm’s objectives and resources. There may be little or no synergy among the segments, but
each segment promises to be a money maker. This multi-segment coverage strategy has the
advantage of diversifying the firm’s risk. Even if one segment becomes unattractive, the firm can
continue to earn money in other segments.

iii. Product Specialization

Here the firm concentrates on making a certain product that it sells to several segments. The firm
builds a strong reputation in the specific product area. An example, would be a microscope
manufacturer that sells microscopes to university laboratories, government laboratories and
commercial laboratories. The firm makes different microscopes for these different customer
groups, but does not manufacture other instruments that laboratories might use. The downside
risk is that the product may be supplanted by an entirely new technology.

iv. Market Specialization

Here the firm concentrates on serving many needs of a particular customer group. An example
would be a firm that sells an assortment of products for university laboratories, including
microscopes, oscilloscopes, Bunsen burners, and chemical flasks. The firm gains a strong
reputation for specializing in serving this customer group and becomes a channel for all new
products that the customer group could feasibly use.

v. Full Market Coverage

Here the firm attempts to serve all customer groups with all the products that they might need.
Only large firms can undertake a full market coverage strategy. Large firms can cover a whole
market in two broad ways: through undifferentiated marketing or differentiated marketing.

a) Undifferentiated marketing: -

In undifferentiated marketing the firm ignores market segment differences and goes after the
whole market with one market offer. It focuses on buyer’s needs rather than differences among
buyers. It designs a product and a marketing program that will appeal to the broadest number of
buyers. It relies on mass distribution and mass advertising.

b) Differentiated Marketing.
 In differentiated marketing, the firm operates in several market segments and designs different
programs for each segment. Differentiated marketing typically creates more total sales than
undifferentiated marketing. However, it also increases the costs of doing business.

Table 2.1. Comparison of Differentiated and undifferentiated Marketing

Differentiated Marketing Undifferentiated Marketing

Purpose Achieve audience diversification Reach as large an audience as

possible.

Strategy Use various messages for a sign Use one marketing mix-product,
price, place, promotion-for all
Campaign.
marketing campaigns
Employ different channels and
Strategies.

Benefit Resonate with different customer Reach many people with a more
standardized process
groups
Characteristics Keep improving and adding new Focus on quality and key features
of the product
features to match customer
expectations

Examples Products with diverse needs Products that serve the same need
among the audience-food, for everyone-toothpaste, shampoo,
beverages, etc. shower gel, etc.

Step 3. Choosing a Market-Coverage Strategy

Many factors need to be considered when choosing a market coverage strategy. Which strategy
is best depends on:

i. Company resources:-when the firm’s resources are limited, concentrated marketing makes the
most sense.

ii. The degree of product variability:-If the company produces similar/uniform products,
undifferentiated marketing is appropriate, whereas, as the company produces different products,
differentiated or concentration marketing is appropriate.
 iii.The products life-cycle stage:-The market coverage strategy for a product varies at the different
stages of a product life cycle. In the introduction and growth stage, undifferentiated or
concentrated marketing makes the most sense. Whereas, at maturity and decline stage,
differentiated marketing begins to make more sense.

iv. Market variability:-if most buyers have the same tastes, buy the same amounts, and react the
same way to marketing efforts, undifferentiated marketing is appropriate.

v. Competitor’s marketing strategies:-company’s should see competitors’ market coverage

strategy and develop a counteractive market coverage strategy. For example, when competitors
use segmentation, the company uses differentiation marketing and when competitors use
undifferentiated marketing, the company uses differentiated or concentrated marketing.

Self-check 2.2

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Discuss the steps in the market targeting process?

2. In evaluating different market segments, a firm must look at critical factors: briefly discuss those
factors needs to be considered while evaluating segments?.

3. Discuss the five patterns of target market selection?

4. Discuss the factors need to be considered when choosing a market coverage strategy?

2.3. Market Targeting Strategies

Let’s assume that a company has segmented the total market for its product. Now management is
in a position to select one or more segments as its target markets. The company can follow one
of three strategies –market aggregation, single-segment concentration, or multiple segment
targeting. The alternative strategies for market targeting discussed as follows:

1. Aggregation Strategy

By adopting a market aggregation strategy also known as a mass-market or un-differentiated

market strategy –a seller treats its total market as a single segment.
 Single Marketing mix One mass undifferentiated market
An aggregated market numbers are considered to be alike with respect to demand for the
product. Therefore management can develop a single marketing mix and reach most of the
customers in the entire market. That is the company develop a single product for this mass
audience. It develops one pricing structure and one distribution system of its product. And it uses
a single promotional program aimed at the entire market.

This strategy would be appropriate for firms that are marketing an in differentiated, staple
product such as salt or sugar. In the eyes of many people, sugar is sugar. Regardless of the brand,
and all brands of table salt are pretty much alike.

The strength of a market aggregation is in its cost minimization. It enables a company to

produce, distribute, and promote its product very efficiently. Producing and marketing one
product for the entire market means longer production runs at lower unit costs. Inventory costs
are minimized when there is no (or very limited) variety of colors and size of products.
Warehousing and transportation are most efficient when one product is going to one market.
Promotion costs are minimized when the same message is transmitted to all customers.

2. Single Segment Strategy

A single-segment (or concentration) strategy involves selecting one segment from within the
total market as the target market. One marketing mix is developed to reach this single segment.
A company may want to concentrate on a single market segment rather than to take on the
competitors in the broader market.

A single-segment strategy enables a seller to penetrate one market in depth to acquire a repetition
as a specialist or an expert in this limited market. A company can imitate a single-segment
strategy with limited resources. And as long as the single segment remains a small market, large
competitors are likely to leave it alone. However, if the small market should show signs of
becoming a large market, big boys jump in.

 Market Segment A

Single Marketing Mix  Market Segment B

 Market Segment C
 The resale and limitation of a simple-segment strategy is that the seller has all its eggs in one
basket. If the market potential of that single segment declines, the seller cars sinter considerably.
Also a seven with a strong name and reputation in one segment may find it very different to
expand in to another segment.

3. Multiple-Segment strategy

Under a multiple-segment strategy two or more difficult groups of potential customer are
identified as target markets. A separate marketing mix is developed to reach segment.

Marketing mix A  Market segment A

Marketing mix B  Market segment B

Marketing mix C  Market segment C

In a multiple-segment strategy, a seller frequently will develop a different version of the basic
product for each segment. However, market segmentation can also be accomplished with no
change in the product, but rather with separate distribution channels or promotional appeals, each
tailored to a given market segment.

A multiple segment strategy normally results in a greater sales volume than a single segment
strategy. It also is useful for a company facing seasonal demand. A firm with excess production
capacity may well seek additional market segment to absorb this capacity.

Multiple segments can provide benefits to an organization, but the strategy has some drawbacks
with respect to costs and market coverage. In the first place, marketing to multiple segments can
be expensive in both the production and marketing of products.

Self-check 2.3

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Discuss the alternative strategies for market targeting?

Unit Summary

Market targeting is the other strategic marketing element which involves evaluating each market
segment attractiveness and select one or more segments to serve. Normally, in either of the
consumer or business market, a seller will use a combination of two or more segmentation bases.

The three alternative strategies for selecting a target market are: market aggregation, single
segment, and multiple segment. Market aggregation involves using one marketing mix to reach a
mass, undifferentiated market.

With a single segment strategy, a company still uses only one marketing mix, but it is directed at
only one segment of the total market. A multiple segment strategy entails selecting two or more
segments and developing a separate marketing mix to reach each segment.
 Unit Review Questions

PART ONE: Multiple Choice Questions

Instructions:- Choose the best answer from given alternatives.

1. What are the factors to be considered while evaluating segment attractiveness and selecting
target market to serve?

A. Segment size and growth C. Company objectives and resources

B. Segment structural attractiveness D. All of the above

2. Which of the following statement is FALSE about Aggregation Strategy?

A. Dividing a heterogeneous market in to different homogeneous groups of customers

B. A strategy that considered the total market as a single segment.

C. A strategy to develop a single marketing mix to reach the entire market.

D. Appropriate for such products as: salt or sugar, coca cola, cement.

3. ____________ is a targeting strategy in which two or more groups of potential customer are
identified as target markets and develop separate marketing mixes for each segment.

A. Single segment strategy C. A multiple-segment strategy

B. Aggregation strategy D. None of the above

4. In ______________ the firm operates in several market segments and designs different programs
for each segment.

A. Differentiated marketing C. Multi-segment marketing

B. Undifferentiated marketing D. A and C only

5. _________ involves developing a single marketing mix and reach most of the customers in the
entire market.

A. Single-segment concentration B. Multiple –segment targeting

C. Market aggregation D. None of the above
 PART TWO: True/False

Instruction: Say True or False

1. Market targeting calls for selecting distinct customer groups that require separate marketing
mix. _____

2. A niche is a large market whose needs are not well served. _______

3. A multiple segment strategy normally results in a greater sales volume than a single segment
strategy. __________

4. Differentiated marketing calls for designs single program for entire market_________

5. In market specialization a firm concentrates on serving many needs of a particular customer

group.

PART THREE: Discussion Questions

Instructions:- Give your short answer for the following questions.

1. Define target marketing?

2. Discuss the three target market strategies?

3. Discuss the pattern of target market selections?

4. What are the factors to be considered when evaluating segment attractiveness?

5. Distinguish between undifferentiated marketing and differentiated marketing?

6. Discuss the factors need to be considered when choosing a market coverage strategy?
 UNIT THREE

MARKET POSITIONING

Unit Coverage

This unit is designed to provide you with the necessary knowledge, skills and attitude
regarding the following contents:

3.1. Meaning of Market positioning

3.2. Tools for competitive differentiation

3.3. Market positioning strategy

Unit Learning Outcomes

This unit will assist you to attain the following learning outcomes. Specifically, upon the
completion of this unit, you will be able to:

 Understand the meaning and concepts of market positioning

 Develop market positioning sttrategies

 Apply procedures for market positioning

Key Terms: Market Positioning, differentiation strategy, Competitiveness

Introduction

After selecting one or more segments to target, the marketer should design a strategy that meets
the expectation of the target market and develop a competitive advantage over the competitors in
the market. Positioning is the use of marketing to enable people to form a mental image of your
product in their minds (relative to other products). Positioning is how the product or service is to
be perceived by a target market compared to the competition. Therefore, market 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 mind.
3.1. Meaning of Market Positioning

After a target market has been selected a company will naturally find others competing in that
segment. The next task is to develop a marketing plan that will enable your product to compete
effectively against them. It is unlikely that success will be achieved with a marketing program that
is virtually identical to competitors for that already have attained a place in the minds of
individuals in the target market and have developed brand loyalty. Since people have a variety of
needs and tastes, market acceptance is more easily achieved by positioning.

Market 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 mind.

For example, one auto company might choose to differentiate its cars on durability, while its
competitors may choose to emphasize fuel economy, comfort or smoothness of ride. The end
result of positioning is the successful creation of a market – focused value proposition, a simple
clear statement of why the target market should buy the product.

Self-check 3.1

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Define market positioning?

2. Discuss the reasons for market positioning?

3.2. Tools for Competitive Differentiation

A company must try to identify the specific way it can differentiate its products to obtain a
competitive advantage. Differentiation is the act of designing a set of meaningful differences to
distinguish the company’s offering from competitors offering.

How exactly can a company differentiate its market offering from competitors? Here we will
examine how a market offering can be differentiated along time dimensions: - product, services,
personnel, channel or image.
3.2.1. Product Differentiation

Differentiation of physical products takes place along a continuous. At one extreme we find
highly standards products that allow little variation. At the other extreme are products capable of
high differentiation, such as automobiles, commercial holdings, and furniture. Here the seller
faces an abundance of design parameters. The main product differentiations are features,
performance, conformance, durability, reliability, reparability, style and design.

1. Features: -

Features are characteristics that supplement the products basic function. The starting point of
feature differentiation is a stripped down, or “bare bones”, version of the product. The company
can create additional version by adding extra features. Thus automobile manufacturers can offer
optional features, such as electric windows, air bags, automatic transmission, and air conditioning.

How can a company identify and select appropriate features? One answer is for the company to
contact recent buyers and ask them a series of questions. How do you like the product? Any bad
features? Good features? Are there any features that could be added that would improve your
satisfaction? What are they? How much would you pay for each feature? How do you feel about
each of several features that other customers suggested? This research will provide the company
with a long list of potential features. The next task is to decide which features one worth adding.

2. Performance Quality

Most products are established initially at one of four performance levels, low, average, high and
superior. Performance quality refers to the level at which the products primary characteristics
operate. The important question here is: Does higher product performance produce higher
profitability?

Quality’s link to profitability does not mean that the firms should always design the highest
performance level possible. There are diminishing returns to level increasing performance, in that
fewer buyers are willing to pay for it. The manufacturer must design a performance level
appropriate to the target market and competitor’s performance levels.
 A company must also decide how to manage performance quality through time. Three strategies
are available here. The first, where the manufacture continuously improves the product, often
produces the highest return and market share.

The second strategy is to maintain product quality at a given level. The third strategy is to reduce
product quality through time. Some companies cut quality to offset rising costs, hoping the buyers
will not notice any difference. Others reduce the quality deliberated by in order to increase this
current profits, although this course of action often hurt this long run profitability.

3. Conformance Quality

Buyers expect products to have a high conformance quality. Conformance quality is the degree to
which all the produced units are identical and meet the promised target specifications. The
problem with low conformance is that the product will felt to deliver on its promises to many
buyers.

4. Durability: -

Durability is a very important product attribute to most buyers. Durability is a measure of the
product’s expected operating life under natural and/or stressful conditions. Buyers will generally
pay more for products that have more durability. However, this rule is subject to some
qualifications. The extra price must not be exclusive. Furthermore, the product must not be
subject to technological obsolescence, in which case the buyer may not pay more for longer-lined
products.

5. Reliability

Buyers normally will pay a premium for product with more reliability. Reliability is a measure of
the probability that a product will not manufacture or fail within a specified time period. Buyers
want to avoid the high costs of product breakdowns and repair time.

6. Reparability: -

Buyers prefer products that are easy to repair. Reparability is a measure of the ease of fixing a
product that manufactures or fails. Thus an automobile made with standard parts that are easily
replaced has high reparability. Ideal reparability would exist if users could fix the product
 themselves with little or no cost or time lost. The buyer might simply remove the defective part
and insert a replacement part.

7. Style: -

Buyers are normally willing to pay a premium for products that are attractively styled. Style
describes the product’s looks and feel to the buyer. Many car buyers pay a premium for jaguar
automobiles because of this extraordinary look, even though Jaguar had in the past a poor record
of reliability.

Style has the advantage of creating product distinctiveness that is difficult to copy. Under style
differentiation, we must include packaging as a styling weapon, especially in food products,
cosmetics, toiletries, and small-consumer appliances. The package provides the buyer’s first
encounter with the product and is capable of turning the buyer on or off.

8. Design

As competitions intensify, designs will offer one of the most patent ways to differentiate and
position a company’s products and services. Design is the totality of features that affect how a
products look and functions in terms of customer requirements.

Design is particularity important in making and marketing desirable equipment, apparel, retail
services and packaged goods. All of the qualities we’ve discussed under the meaning “Product
differentiation are design parameters. The design has to figure out how much to invest in feature
development, performance, conformance, reliability, reparability, style and so forth.

3.2.2. Service Differentiation

In addition to differentiating its physical products, a firm can also differentiate its services. When
the physical product cannot easily be differentiated the key to competitive success and improving
their quality. The main service differentiations are ordering ease, delivery, installation, customer
training, customers consulting, maintenance and repair, and a few others.

1. Ordering Ease: -

Ordering ease refers to how easy it is for the customer to place an order with the company. For
example, some company’s has eased the ordering process by supplying customers with computer
 terminals through which they sell orders directly to the seller. Many banks are now providing
home banking software to help customers get information and transact with the bank more
efficiently.

2. Delivery: -

Delivery refers to how well the product or service is delivered to the customers. It includes the
speed, accuracy, and care attending the delivery process. Buyers will often choose the supplier
with a better reputation for on-time delivery.

3. Installation: -

Installation refers to the work done to make a product operational in its planned location. Buyers
of heavy equipment expect good installation service from the vendor. For examples, some
companies deliver all the purchased equipment to the site at the same time rather than sending in
different components at different times.

4. Customer Training: -

Customer training refers to training the customer’s employees to use the vendor’s equipment
properly and efficiently. Some companies are not only selling and installs this expensive
equipment but also takes on the responsibility for training the uses of this equipment.

5. Customer consulting: -

Customers consulting refer to data, information systems, and advising services that the seller
offers free or for a price to buyers. Some sellers consult their buyers in setting up accounting and
inventory systems, computer ordering systems and so forth.

6. Maintenance and repair

Maintenance and repair describes the company’s service program for helping customers keep this
purchased product in good working order. Automobile buyers are especially concerned with the
quality of repair service that they can expect from this dealer.

7. Miscellaneous services
 Companies can find many other ways to add value by differentiating their customer services.
They can offer a better product warranty or maintenance contract than their competitors. They can
establish patronage awards, as the airlines have done with their frequent-flyer programs.

3.2.3. Personnel Differentiation

Companies can gain a strong competitive advantage through hiring and training better people than
their competitions do. Better-trained personnel exhibit six characteristics:

 Competence –The employees possess the required skill and knowledge.

 Courtesy –The employees are friendly, respectful and considerate.

 Credibility –The employees are trust worthy.

 Reliability –The employees perform the service consistently and accurately.

 Responsiveness –The employees respond quickly to customer’s requests and problems.

 Communication –The employees make an effort to understand the customer and communicate
clearly.

3.2.4. Image Differentiation:

A company or brand image should convey the product’s distinctive benefits and positioning.
Image is the way the public perceives the company or its products. An effective image does three
things for a product.

It conveys a singular message that establishes the products character and value proposition. It
conveys this message in a distinctive way so that it is not confused with similar message from
competitors. It delivers emotional power so that it stirs the hearts as well as the minds of buyers.

Image can be implanted in the public’s mind through: symbols (a strong image consists of one or
more symbols that trigger company or brand recognition), written and audiovisual media. The
chosen symbol must be worked into advertisement that convey the company or brand
personality, atmosphere (The physical space in which the organization produces or delivers its
 products and services), events (a company can build an identity through the type of events it
sponsors.

3.2.5. Channel Differentiation:

Companies can achieve differentiation through the way they shape their distribution channels,
particularly those channels’ coverage, expertise and performance.

Self-check 3.2

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. List thetools for competitive differentiation?

2. Discuss how a marketer use product differentiation?

3. Discuss the specific tools for personnel differentiation?

4. Describe the tools for service differentiation?

3.3. Market Positioning Strategy

3.3.1. Choosing and implementing positioning strategy

Marketers can follow several positioning strategies. They can position their products on specific
product attributes such as low price, performance, benefits, usage occasions, against a competitor
and combination of many attribute.

Each firm must differentiated its offer by building a unique bundle of competitive advantages that
appeals to a substantial group within the segment. The positioning task consists of three steps.

1. Identifying a set of possible competitive advantages on which to build a position.

2. Selecting the right competitive advantages (choosing differentiation strategy)

3. Effectively communicating and delivering the chosen position to the market.

Step 1: Identifying Possible Competitive Advantages (determining tools for differentiation)

It involves identifying a set of possible differentiation tools up on which to build position.

Marketers must understand needs and deliver value and gain competitive advantage. Competitive
advantage is an advantage over competitors gained by offering consumers greater value, either
through lower prices or by providing more benefits that justify higher prices.

Consumers typically choose products and services that give them the greatest value. Thus the key
to winning and keeping customers is to understand their needs and buying processes rather than
competitors do and to deliver more value.

Positioning begins with actually differentiating the company’s marketing offer so that it will give
consumers more value than competitors’ offers do. A company or market offer can be
differentiated alone the lines of Product (features, performance, style, consistency, durability,
reliability or reparability and design), Services (speedy, convenient, careful delivery), People
(hiring and training better to make people happy), Channels (coverage, expertise, performance) or
image (conveying distinctive benefits and positioning).

Step 2: Selecting the Right Competitive Advantages (choosing a differentiation Strategy)

This step entails deciding how many differences to promote and which ones.

How many differences to promote? One opinion is that company should develop a unique
selling proposition and focus on one difference and become number one brand in it. The other is
that companies should use more than one differentiator to avoid situations where more than one
firm claims to be the best in the attribute.

Many marketers advocate promoting only one benefit to the target market. The most commonly
promoted number one positioning are: “Best quality”, “Best service”, “Lowest price”,” Best
value” and “Most advanced technology”. If a company hammers away at one of these positioning
and convincingly delivers on it, it will probably be best known and recalled for this strength.

Other marketers think that companies should position themselves on more than one differentiating
factor. (Not everyone agrees that single–benefit positioning is always best). Double–benefit
positioning may be necessary if two or more firms are claiming to be best on the same attribute.
The intention is to find a special niche within the target segment. There are even cases of
successful triple–benefit positioning: aqua-fresh (anti-cavity protection, better breath, and whiter
teeth). Clearly many people want all the three benefits, and the challenge is to convince them that
the brand delivers all three. The company’s solution was to create a toothpaste that squeezed out
 of the tube in three colors, thus visually confirming the three benefits. In doing this, the company
“counter segmented”; that is, it attracted three segments instead of one.

However, as companies increase the number of claims for their brands, they risk disbelief and a
loss of clear positioning.

Which differences to promote? Not all differences are meaningful. That is, not every difference
makes a good differentiator. Each difference has the potential to create company costs as well as
customer benefits. Therefore, the company must carefully select the ways in which it will
distinguish itself from competitors. A worthwhile difference should fit a number of criteria.

Differentiation and positioning strategies are worth establishing to the extent that it satisfies the
following criteria:

 Important: - The difference delivers a highly valued benefit to a sufficient number of buyers.

 Distinctive: - The difference either isn’t offered by others or is offered in a more distinctive way
by the company.

 Superior: - The difference is superior to other ways of obtaining the same benefit.

 Communicable:- The difference is communicable and visible to buyers

 Preemptive: -The difference cannot be easily copied by competitors

 Affordable: - The buyer can offered to pay for the difference.

 Profitable: - The Company will find it profitable to introduce the difference.

Step 3: Effectively Communicating and Delivering the Chosen Position to the Market

When communicating and delivering the chosen position- the company’s marketing mix should
support the positioning strategy. Company needs to deliver the position it describes and design
marketing mix accordingly. The marketing mix-product, price, place, and promotion-is essentially
the working out of the tactical details of the positioning strategy. Thus a firm that sizes upon the
“high quality” position knows that it must produce high – quality products, charge a high price,
distribute through high class dealers, and advertise in high – quality magazines. This is the
 primary way to project a consistent and believable high-quality image. Once the company has
developed a clear positioning strategy, it must communicate that positioning effectively.

The pitfall is that it is easier to come up with a good strategy than implement and maintain it. The
position needs to be monitored closely and adapted to the changing market environment to remain
sustainable. Positioning is arranging for a market offering to occupy a clear, distinctive and
desirable place relative to competing products in the minds of target consumers. A position of a
product consists of a sophisticated set of perceptions, impressions and feelings of consumers for
the products compared to a competing one. The company’s marketing mix should support the
positing strategy.

3.3.2. Market Positioning Strategies

A company must carefully select the ways in which it will distinguish itself from competitors. A
company can differentiating and positioning its market offerings by using the following
positioning strategies:

a) Attribute positioning: - When company’s positions itself on attributes.

b) Benefit positioning: - Here the product is positioned as the leader on a certain benefits.

c) Use/Application positioning: - Positioning the product as best for some use or application.

d) User Positioning: - Positioning the product as best for some user group.

e) Competitor positioning: - Product positions itself as better in some way than a named or implied
competitor.

f) Product category positioning: - Product positioned as the leader in a certain product category

g) Quality/Price positioning: - Product positioned as offering the best value.

3.3.3. Major Positioning Errors

In general, a company must avoid the following major positioning errors.

1. Under positioning: - means failing over to really position the company at all. Some companies
discover that buyers have only a vague idea of the company or that they do not really know
anything special about it.

2. Over positioning: - means giving buyers too narrow a picture of the company. For example, a
consumer might think that a company produces only products that are expensive while, in fact,
the company makes affordable products as well that are cheap.

3. Confused positioning: - gives distorted image to consumers. Buyers might have a confused
image of the brand resetting 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.

The advantage of solving the positioning problem is that it enables the marketer to solve the
marketing mix problem.

Self-check 3.3

Directions: Answer all the questions listed below. If you have to need some clarifications feel-
free to ask your instructor.

1. Discuss the steps in market positioning?

2. Discuss how a company differentiating and positioning the market offering?

3. Explain the criterion for selecting the right positioning strategy to pursue?

4. What are the major positioning errors made by the company?

Unit Summary

In a competitive industry, the key to competitive advantage is product differentiation. A market

offering can be differentiated long five dimensions: product (features, performance, quality,
conformance, quality, durability, reliability, reparability, style, design, services (ordering ease,
delivery, installation, customer training, customer consulting, maintenance, and repair,
miscellaneous services), personnel, channel or image (symbols, written and audiovisual media,
atmosphere, and events). Deference is worth establishing to the extent that it is important,
distinctive, superior, communicable, preemptive, affordable, and profitable.

Many marketers advocate promoting only one product benefit, thus creating a unique selling
preposition as they position their product. People tend to remember “number ever”. But double
benefit positions and triple positioning can also be successful as long as marketers take steps to
ensure that they do not under position, over positions or create confused or doubtful positioning.

Once the company has developing a clean positioning strategy, it must communicate that
positioning effectively via marketing mix.
 Unit Review Questions

PART ONE: Multiple Questions

Instructions: - Instruction: Choose the best answer from given alternatives.

1. ____ calls for establishing and communicating the products key distinctive benefits in the
market?

A. Market positioning

B. Market segmentation

C. Market targeting

D. Market selection

2. If Samsung cell phone manufacturer creates additional versions of cell phone by adding extra
features to its product, the product differentiation lies on:

A. Features

B. Durability

C. Style

D. Reliability

3. If Ethiopian Air Lines gain a strong competitive advantage through hiring and training better
people than their competitors do in the aviation industry. The positioning strategy is:

A. Product differentiation

B. Service differentiation

C. Personnel differentiation

D. Image differentiation

4. Commercial Bank of Ethiopia’s success in the banking industry is based partly on large number
of branches that are found in more locations than competing banks. The
differentiation/positioning strategy adopted by CBE is:
A. Product differentiation

B. Service differentiation

C. Image differentiation

D. Channel differentiation

5. _________ involves positioning the product as best for some use or application.

A. Attribute positioning
B. Application positioning
C. Benefit positioning
D. User Positioning
PART TWO: Discussion Qiestions

Instructions:- Give your short answer for the following questions.

1. Write the tools/strategies for differentiation?

2. Discuss the alternative positioning strategies?

3. What are the major positioning errors made by the company?

PART THREE: Practical Activity (Case study)

Instruction: Read the case and perform the requirements.

Assume you are working at Marketing Consultant Company as a marketing officer. Your
company work with big organizations including Ethiopian Airlines. The Ethiopian Airlines is
now planning to reposition itself to attain competitive advantage in the airlines industry. Your
manager assign a responsibility to develop differentiation strategies to Ethiopian Airline’s
services by using personnel differentiation and service differentiation.

Required:

1. What personnel differentiation tools would you use? How would you differentiate the
airline’s services using these tools?
2. What service differentiation tools would you use? How would you differentiate the airline’s
services using these tools?
3. What procedures would you follow to reposition Ethiopian Airline’s services?
4. What positioning strategy/strategies would you choose?
5. How to communicate and deliver the chosen positioning strategy to airlines market?
 Project work

This ‘project work’ is designed for the competency “Develop Strategic Marketing Elements” to
help you to demonstrate the requisite knowledge, skills and attitudes described in the module.

Instruction: Develop market segmentation, targeting and positioning for the case company.

Assume yourself as a marketing manager for the newly established athletic shoe manufacturing
PLC. Major competitors have several segmented markets. One segment is based on gender and
another segment is based on the type of sport or activity. They have different marketing mixes
for each segmented market. So that as a marketing manager for the newly established athletic
shoe manufacturing PLC, perform market segmentation, targeting and positioning.

Task 1: Demonstrate how to segment the entire market for the athletic shoe manufacturing PLC?

Task 2: Decide which segmentation criteria/variable will be most helpful to you in segmenting your
market? You can use one or combinations of segmentation basis/variables.

Task 3: Demonstrate how to target the market for the athletic shoe manufacturing PLC?

Task 4: Apply criteria to evaluate each segment attractiveness and select target market to serve?

Task 5: Demonstrate how to profile the target market for the athletic shoe manufacturing PLC?

Task 6: Identify the demographic, behavioral and psychographic characteristics regarding your target
market.?

Demographic Characteristics for Consumer Market (template)

Age
Income
Gender
Profession
Education
Family Size
Homeowner
Marital Status
 Psychographic Characterize for Consumer Market (template)

Lifestyle
Fun-Seeking
Family Stage
Trendy
Hobbies
Status Seeking
Sports Enthusiasts
Conservative
Forms of Entertainment
Socially Responsible

Behavioral Characterize for Consumer Market (template)

Reason/Occasion for Purchase?

Number of times they’ll purchase?
Timetable of purchase
Amount of product/service purchased?

How long to make decision to Purchase?

Where does customer purchase?

Task 7: Demonstrate how to position product to target market for the athletic shoe manufacturing PLC?

Task 8: Decide which differentiation tools you are using to create competitive advantage for athletic shoe
manufacturing PLC?

Task 9: Select and develop market positioning strategy for athletic shoe manufacturing PLC?
 References:

 Ac-ac, Maria Victoria M. Principles of Marketing, Revised Ed., Pasig: Anvil Publishing, Inc.,
2014

 Armstrong, Gary. Marketing: An introduction 11th, Global ed. Harlow, England: Pearson,
2013.

 Go, Josiah. Contemporary Marketing Strategy in the Philippine Setting, Manila: National
Bookstore, 1996.

 Glencoe Marketing Essentials, McGraw-Hill- 2012-