Chapter 6: SEGMENTATION, POSITIONING,

AND TARGET MARKETING

Segmentation, targeting, and positioning or simply STP for
short has an important role in getting to the right customer.
These three serve as tools to align products/services with the
right customers.
WHAT IS MARKET
SEGMENTATION

Segmentation entails discovering what type of consumers with

diverse needs exist. In order for a company to be profitable, it needs
to meet the needs of a particular group of consumers. In general,
marketing professionals have three approaches in meeting the needs
of customers which are:

1.Undifferentiated strategy
- Here all consumers are treated as the same, with companies not
making any specific efforts to satisfy particular groups. Usually, this is
the case only for commodities such as rice, sugar, salt and other
similar generic or standardized products.
2.Concentrated strategy
- Here a company chooses to focus, specialize and target only
one segment of the market while leaving other segments to
competitors. Though it is a smaller group of customer, yet the
business can very well satisfy their specific needs and generate
more sales.

3. Differentiated strategy
- Here, a company is trying to sell to two or more specific
market segments consumers that are treated in different
marketing messages, different distribution channels, different
 Table 2: Segmentation of Aflluent Asians
Name of % in the Characteristics
Group Market
• Adult aged 45 and above
• Seek to attain a work-life balance, are environmental aware and
socially conscious
Work to 28% • Well-educated, watch television and read more newspapers
• Have lower ownership of household and personal items.
Lives
• More females
• Younger adults between the ages of 25 and 34
• Self-centered, fashion conscious and seek luxuries.
• Have high internet penetration, terrestrial television viewership of
Gimmes 25% content via cell phone
• Love to travel, less interested in sports, more updated in
information
• Less concerned about the environment and their contributions to
society
 • Well-educated, work for big companies , have a global outlook ,
and travel widely for work
• Mostly males and top-income earners
• Have the highest penetration for the internet and usage of e-mail
Executive and instant messaging
Warriors 21% • Highest ownerships of personal and household items
• See the need to stay current and access information through
reading newspapers and magazines, watching cable TV and
terrestrial television and connecting to mobile devices

• Hungry, urban and mobile individuals are career-

oriented and have a positive outlook
• Have relatively lower income, but they strive to move up corporate
ladder
Hummers 15% • Watch a lot of television but read less print materials
• Have the highest spending on cosmetics and perfume/cologne
• Very quality conscious when they purchase products
 • Older and more women
• Usually married and not working
Luxury Loyalists 12% • Tend to purchase more of the luxury products such
as jewelry and clothing, fewer digital product such
as laptops and MP3 players
• Tend to seek the views and advice of others in their
choice of products and brands

There are two types of segmentation approaches:

1.) Needs based approach - Under the needs based approach, market is
segregated into different segments according to similar nature of
needs.
2.) Profilers’ approach – Profilers are descriptive in nature and
measureable in terms of customer characteristics ( such as location,
nationality, age, income ) which can be used to update a segmentation
exercise.
 CRITERIA FOR SUCCESSFUL SEGMENTATION

When market segmentation criteria are clearly defined, it ensures that

customers are more likely to identify and buy the product that is fitted for them.
It also reduces wastage of resources, cutting the time used in marketing the
wrong products to the wrong customers. It is vital, however, to center resources
on market segment whose size is big enough, has continued growth and has
good profitability, both immediately and in the long run.

Segmentation must be Measureable

Market segment are typically measured in terms of sales value or volume
or simply the number of customers within the segment. A good market research
must be able to find out the accurate size of a market segment. This way a
marketer may decision as to manner and extent of focus of the marketing efforts
Segment must be Accessible
When differentiating a market segment, it is essential to reflect on how
the group might be accessed. It is crucial to know, whether this falls within
the strengths and abilities of the company’s marketing department. Different
segments may react better to outdoor advertising, social media campaigns,
television infomercials, or any number of other promotional approaches.

Segment must be Substantial

A substantial market segment should be sufficiently large to have
enough spending power for the company to sustain itself. The targeted
segment must be adequate in size so that a customized marketing mix could
be fashioned and sustained.
Segment must be Actionable/Responsive
A market segment that warrants action should have practical
value. This means the segment should have characteristics that
provide supporting data for a marketing position or sales strategy.

Segment must be Differentiable

Ideally, a market segment must be internally homogeneous. This
simply means that all customers within the segment have similar
preferences and characteristics.
CONSUMER MARKET SEGMENTATION

The consumer market pertains to buyers who purchase goods and

services for consumption rather than resale. However, not all
consumers are alike in their tastes, preferences and buying habits due
to different characteristics that can distinguish certain customers from
others.

Demographic Characteristics
Demographic variables entail but are certainly not limited to
grouping consumers with regard to their gender, age, ethnic
background, income, occupation, education, household size, religion,
generation, marital status, nationality and even social class.
Psychographic Characteristics

Consumer market characteristics can also be psychographic in nature. The psychographic

variables cover lifestyle, personality interests, activities, opinions, values and attitudes. The
psychographic variables alone do not always accurately forecast consumers behavior because
they are weak in foreseeing what consumers will purchase.

Figure 10 VALS Lifetime Scale

Actualizers
Upper Fulfilleds
Class
Believers

Achievers
Middle
Class Strivers

Experiencers
Lower
Makers
Class
Strugglers
TABLE 3: Characteristics of Each Consumer Group under VALS

Consumer Group Members of this group typically:

Innovators 1. Are always taking in information ( antennas up )
- Exhibit all three 2. Are confident enough to experiment
3. Make the highest number of financial transactions
primary 4. Are skeptical about advertising
motivations in 5. Have international exposure
varying degrees 6. Are future oriented
7. Are self-directed consumers
8. Believe science and R&D are credible
9. Are most receptive to new ideas and technologies
10.Enjoy the challenge of problem solving
11.Have the widest variety of interest and activities.
Thinkers 1. Have “ought” and “should” benchmarks for social conduct
- Have high resources 2. Have a tendency toward analysis paralysis
3. Plan, research, and consider before they act
and an ideal 4. Enjoy a historical perspective
motivation 5. Are financially established
6. Are not influenced by what’s hot
7. Use technology in functional ways
8. Prefer traditional intellectual pursuits
9. Buy proven products.

Believers 1. Believe in basic rights and wrongs to lead a good life

- Have low resources 2. Rely on spirituality and faith to provide inspiration
3. Want friendly communities
and an ideal 4. Watch TV and read romance novels to find an escape
motivation 5. Want to know where things stand; have no tolerance for
ambiguity
6. Are not looking to change society
7. Find advertising a legitimate source of information
8. Value constancy and stability ( can appear to be loyal )
9. Have strong me-too fashion attitudes.
Achievers 1. Have a “me first, my family first, attitude
2. Believe money is the source of authority
- Have high resources 3. Are committed to family and job
4. Are fully scheduled
and an achievement 5. Are goal oriented
6. Are hardworking
motivation 7. Are moderate
8. Act as anchors of the status quo
9. Are peer conscious
10. Are private
11. Are professional
12. Value technology that provides a productivity boost.

Strivers 1. Have revolving employment; high temporary employment

2. Use video and video games as a form of fantasy
- Have low resources 3. Are fun loving
and an achievement 4. Are imitative
motivation. 5. Rely heavily on public transportation
6. Are the center of low-status street culture
7. Desire to better their lives but have difficulty in realizing their
desire
8. Wear their wealth.
Experiencers 1. Want everything
2. Are first in and first out of trend adoption
- Have high resources 3. Go against the current mainstream
and a self-expression 4. Are up on the latest fashions
motivation 5. Love physical activity (are sensation seeking)
6. See themselves as very sociable
7. Believe that friends are extremely important
8. Are spontaneous
9. Have a heightened sense of visual stimulation.

Makers 1. Are distrustful of government

2. Have a strong interest in all things automotive
- Have low resources 3. Have strong outdoor interest ( hunting and fishing )
and a self-expression 4. Believe in sharp gender roles
motivation 5. Want to protect what they perceive to be theirs
6. See themselves as straightforward; appear to others as anti-
intellectual
7. Want to own land.
Survivors 1. Are cautious and risk averse
2. Are the oldest consumers
- Have the lowest 3. Are thrifty
resources; they exhibit 4. Are not concerned about appearing traditional or trendy
no primary motivation 5. Take comfort in routine, familiar people, and places
6. Are heavy TV viewers
7. Are loyal to brands and products
8. Spend most of their time alone
9. Are the least likely use the internet
10.Are the most likely to have a landline-only household.
Behavioral Characteristics
Behavioral characteristics of consumer markets consist of product usage
rates, brand loyalty, user status or how long they have been a customer, and even
benefits that consumers seek. Marketers try to distinguish between heavy,
medium, and light users, whom they can then target with any type of promotion
such as advertising.
Here are some behavioral characteristics as defined:
Usage Rate > It divides the market into light, mid,-level, and heavy product
users.
Categorizing customers based on usage is rather simple which are:
1.) Heavy users - These are the most reliable customers who provide a company
with a volume of consumer-generated revenue.
2.) Mid-level users – These are customers who can be depended on to generate
purchases at regular but not frequent intervals.
3.) Light users – These are likely being one-off customers except if the company
makes an offer they cannot turn down.
Product Benefits > It divides the market based on 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.
Brand Loyalty > It divides the market into groups according to their degree of
loyalty.
 Based from the concept of Total Loyalty Marketing ( TLM ) by Anne M. Shuller
and Gerhard Fuchs, there are five levels of customer loyalty:
1. Applicant - He comes and is interested in the products of the enterprise
( organization ).
2. First-time buyer - He is a customer who knows about the products of the
enterprise and buys them first time.
3. Frequent buyer – He is a customer who may be satisfied with products and buy
them repeatedly.
4. Promoter – He is satisfied and loyal and wants to share his good experience
with enterprise’s products with others.
5. Loyal customer – He is highly loyal customer who consistently maintains his
relationship with the enterprise and he is a permanent user of enterprise’s
products.
Occasions > It divides the market into groups according to occasions
when they get the idea to buy, actually make purchases, or respond to
a product such as birthdays, anniversaries, Christmas and the likes.
This category can be broken down into three subcategories:
1.) Universal occasions – This applies to the majority of consumers
within a certain demographic.
2.) Regular- personal occasions – This applies to purchases an
individual consumer makes based on factors in their personal life.
3.) Rare- personal occasions – These are irregularities that are not
necessarily traceable or predictable.
User Status > It divides the market into non-users, prospects, first-time buyers,
Regular users and defectors ( ex-customers who have chosen a competitor’s
brand ) of a product.
1.) Non-users might need to be made conscious that they have a problem or pain
point in the first place.
2.) Prospects will need to learn why preferring a company’s product or service is
the better choice.
3.) First-time buyers might require additional instruction on how to use a
company’s product to obtain the most out of it.
4.) Regular users would benefit from being introduced to supplemental products
or services a company offers that could help them reach their goals.
5.) Defectors might though it’s doubtful to come back to a company’s brand if it
recently mended the issue that made them to defect in the first place.
Geographic Characteristics
Consumer markets also have different geographic characteristics. Geographic
segmentation is the practice of segmenting a campaign’s target audience based on
where they are located.

Here are some factors and examples under geographic segmentation:

1.) Climate – A company that sells both rain wear and summer wear has to
consider weather changes while marketing such products.
2.) Population Density – Certain products are marketed on the basis of population
density in different locations.
3.) Cultural Preferences – The fast food giant McDonald’s serves beer in their
German outlets.
 BUSINESS MARKET SEGMENTATION

As discussed earlier, segmentation is the process of dividing a target market

group into sub-groups so that there would be specific communication channels
and key messages to a particular market segment.
Geographic Segmentation
Geographic segmentation is used to identify business target markets
depending on where the business are situated. In some cases, business
marketers will be attempting to appeal to a very local market segment, such as
cleaning services.
Segmentation by Size
Business to business, or B2B, marketers occasionally decide to target
possible business customers based on their size. Size may be calculated using the
number of employees or in terms of yearly sales.
Segmentation by Industry
Industry segmentation may be used by marketers who are selling
products with particular appeal in certain industry segments.

Business Needs Segmentation

Segmentation based on business need allows marketers to
pinpoint and connect with businesses that span geographies, size and
industry, but share a common need addressed by the marketer’s
product or services.
 SELECTING TARGET MARKETS
Targeting marketing entails dividing a market into segments and then focusing
all marketing efforts on one or a few key segments comprising of those customers
whose needs and desires match very well a company’s product or service offering.
There are several approaches to target marketing, which are:

Undifferentiated Targeting
Undifferentiated target marketing is an approach whereby a company selects
the whole market as one big market with no individual segments.
Multiple Segment Targeting
Multiple segment targeting is an approach in which the company selects two
or more segments to go after. It exploits the differences between marketing
segments by designing a specific marketing mix for each one of them.
Concentrated Targeting/Niche
Concentrated targeting marketing focuses on one or a few segments or niches in a market.
The aim is then to reach a large share in this segment or niche, instead of going after a small
share of a large market.
Micromarketing
Micromarketing means tailoring the marketing programs and products to suit the needs
and wants of specific locations of specific individuals. Therefore, micromarketing can take the
form of local marketing and individual marketing.

POSITIONING STRATEGIES

- Positioning strategies is the space a brand occupies in the brains of customers. It makes
customers view a product in an exceptional and distinctive way and makes it stand out from
the competition.
- Positioning strategies can be visualized and created in many ways. It can be resulting from
the object attributes, competition, application, the types of consumers concerned, or the
distinctiveness of the product class.
Product Characteristics/Customer Benefits
This strategy basically concentrates on the attributes of the product or
customer benefits.

Pricing Quality
Basically because of perception, most consumers perceive that if a product
is expensive it will be a quality product. Whereas, if a product is cheaper, it is
perceived with lower quality.

Use or Application
Positioning of a product can also be done on the basis of its use or
application.
Product User
Another positioning approach is to link the product with its users or a group
of users. Manufacturers of casual clothing like jeans have introduced “ designer
labels” to build up a fashion image.

Product Class
Positioning by product class is a marketing strategy that consist of
promoting two products situated in similar products class. The positioning by
product class is typically sales promotions and sales campaigns, its marketing
approach because a business can gain more consumer publicity by offering a
product that works with or has a connection to a first product they may know
and trust.
Cultural Symbols
In today’s world many advertisers are using deeply entrenched cultural
symbols to differentiate their brands from that of competitors. The essential task
is to identify something that is very meaningful to people that other competitors
are not using and associate this brand with that symbol.
Competitors
In this type of positioning strategies, an implicit or explicit frame or
reference is one or more competitors. In some cases, reference competitors can
be the dominant aspect of the positioning strategies of the firm, the firm either
uses the same of similar positioning strategies as used by the competitors or the
advertiser uses a new strategy taking the competitors’ strategy as the base.
 PERCEPTUAL MAPPING

A perceptual map is a helpful tool for this step. Perceptual maps form a
picture of how diverse competitors are situated in the market, anchored in the
important criteria that powerfully influence customer decisions.
Example:
 COMMUNICATING POSITIONING STRATEGY

Communicating a positioning strategy starts with creating a positioning statement

and sharing it internally across the organization to ensure that everybody understands
how and where an offering will fit in the market. The positioning comes from a
competitive advantage. Hence, it is necessary for a company to convey on the
expectations the positioning sets in customers’ minds. If a positioning is founded on
being an ideal “lifestyle” fit for a target market.

Writing a Positioning Statement

A positioning statement is a brief and concise description of a target market and a
compelling picture of how a company wants its targeted market to perceive its brand.
A good positioning statement is a guidepost for all marketing efforts. It helps a
company maintains concentration on its brand and its value proposition as it works on
market strategy and tactics.
 Here are six(6) important factors to remember in writing a good positioning
statement:
1. It is straightforward, impressive, and fitted to the target market.
2. It offers an instantly recognizable and simply understood picture of a brand
that differentiates it from its competitors.
3. It is believable, and the brand can fulfill on its promise.
4. A brand can be the only occupier of this particular position in the market, so
“own” it.
5. It helps a company evaluates whether or not marketing decisions are reliable
with and supportive of its brand.
6. It provides opportunity for growth.
 REPOSITIONING

Repositioning involves an attempt to transform consumer perceptions of a brand, generally because the
current position that the brand holds has turned into less attractive.
Repositioning could have the following benefits:
1.) Stronger competitive position – One of the major goals of product repositioning is to enhance the brand’s
perceived positioned comparative to competition. For that reason, a successful repositioning of a product must
produce a continuing market advantage.
2.) Enhanced sales – Possibly the other chief goal of repositioning is to produce added sales through a more
appropriate offering, which must be communicated well to a different target market.
3.) Clearer target market – In some instances, product repositioning is done to simplify or to modify the brand’s
target market.
4.) Better aligned to present market needs – Repositioning allows the company to communicate effectively the
important benefits and the present benefits of a product. This will both assist restrengthen the product and help
bond it to more current consumer needs.
5.) Possible media attention – In some situations, since repositioning products needs major promotional support
for success, it is expected that some famous products/brands will get a sound amount of media attention which
will help be in touch and strengthen the product’s repositioning goals.
Repositioning Strategies
Repositioning consist of changing target markets or the differential advantage or both.
There are four generic repositioning strategies, namely:
Figure 12 Repositioning Strategies

Same product
and target
market, Product
change in the repositioning
image of the
product

Intangible-
Target Tangible-
different Product and
market target market
segments with changed
the same
product
Product repositioning
The product is modified to make it more satisfactory to its existing target
market. Customer requirements may have altered and the product has to be
tailored to be able to serve the latest needs well.
Intangible Repositioning
The company targets various market segments with identical product. The
company is capable of locating a segment which has requirements, comparable
to the requirements of the segments it is presently serving.
Tangible Repositioning
Together the product and target market are altered. A company may
possibly choose to move up to or down a market by means of launching a new
variety of products to satisfy the needs of the new target customer.
Challenges of Repositioning
Product repositioning is changing the positioning in general. That
means altering the key product benefits, product application or
competitive advantages or changing the target market for the product.
There are several challenges in repositioning, which are described
below:
Development cost
Repositioning is a demanding exercise. In some instances, it is
chiefly a communication exercise. However, that still needs the outlay
in advertising and communications production costs, typically
repackaging expenses, shifting of any other communications, such as
websites, and so on.
Significant cost of re-educating the market
Probably the most difficult challenge of a product repositioning is
re-educating the marketplace. The target market most likely has an
established perception of the brand previously. Therefore, one of the
communication goals of the repositioning is to make consumer to
“unlearn” their current knowledge of the brand and then be taught of
a range of fresh features and benefits.
Loss of current sales
Is deviating from its current benefits that are possible to be
attractive to various consumers. The general goal is to attain more
sales from its new position and produce new customers, with the
prospect that sales to existing customers are possible to diminish.
Confused positioning
If the repositioning exercise is weakly implemented or not given
support adequately, eventually then the outcome is expected to be
somewhat confused positioning. The target market will have been a
combination of puzzling messages and thoughts about the product
that had been built up in the end.
Decision of repositioning against a new offering
Within the company there will be argument of the most fitting
strategic approach. The challenges mentioned above may mean that a
different approach would be to start a new product/brand into the
preferred positioning, rather than attempting to recreate a current
product.
Competitive actions
Competitive may take the chance of stressing the stability of their
offerings, or possibility repositions themselves as a part of relation or
counter strategy. Eventually a company must acquire logic of what its
competitors are expected to do. Although, this approach will continue
to be risky for random competition and new market participants.
Brand risk
Usually a repositioning is a chief exercise and brings the risk of
harming the brand’s integrity and perceived quality in the marketplace.
This risk is enlarge by the prospect for confused positioning, which is
explained on top.