1. MARK4210, 2014 Spring, L1/L2
[Class #5]
Segmentation, Targeting,
Positioning
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2

2. 2
MARK4210, 2014 Spring, L1/L2
Overview: Segmentation, Targeting
& Positioning

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MARK4210, 2014 Spring, L1/L2
Market Segmentation
Dividing a heterogeneous
market into groups of
(potential) customers (i.e.,
market segments)
 distinct & similar
characteristics, behaviors,
or needs
 reacts differently to
specific marketing
strategies
Source: Market Segmentation, Target Market Selection, and Positioning, Module Note, Harvard Business School, April 17, 2006

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MARK4210, 2014 Spring, L1/L2
Market Segmentation – Why?
Firms can serve segments more efficiently and
effectively with products that match segment needs
 Identify groups that can be more effectively targeted
with specific marketing efforts
 Minimizes “guessing” in formulating marketing mix
strategy
 Leads to more effective implementation of marketing
mix
 Provides basis for long range planning (e.g., market
evolution, product development)
Source: A Note of Consumer Market Segmentation, Harvard Business School, October 1, 1978

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MARK4210, 2014 Spring, L1/L2
Typical Segmentation Variables
 Based on consumers market history
• Product usage
• Product benefit
• Decision process
 Based on consumer characteristics
• Geography
• Demographic
• Psychographic
• General Lifestyle
 No single best way to segment a market, often need to
combine variables and identify smaller, better-defined
target groups
Source: A Note of Consumer Market Segmentation, Harvard Business School, October 1, 1978

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MARK4210, 2014 Spring, L1/L2
Criteria for Selecting Segmentation
Variables
Source: Adapted from A Note of Consumer Market Segmentation, Harvard Business School, October 1, 1978
Differentiable
internally homogenous (similar
characteristics/ behavior), different from other
groups
Identifiable
individuals can be efficiently assigned based
on meaningful & measurable characteristics
Substantial
has effective demand – group is large
enough with income & purchase ability
Accessible
can be reached by promotional efforts and
distribution channels
Stable
segment characteristics & members do not
change in the short term

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MARK4210, 2014 Spring, L1/L2
Example: Coca Cola Segmentation
(USA)
Potential Market
“Regular” market
“Weight-
conscious”
Women Men

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MARK4210, 2014 Spring, L1/L2
Example: Cosmetics Market
Segmentation
Potential Market
Male Female
60+ y.o.< 25 y.o. 25-39 y.o. 40-59 y.o.
Skin
Repair
Wrinkle
removal
Glowing
skin
Social
status

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MARK4210, 2014 Spring, L1/L2
Example: Hotel Segmentation
Segment
by Ave.
Rates
Luxury
Upper
Upscale
Upscale
Upper
Midscale
Midscale Economy
Marriott
Group
(USA)
Hilton
World-
wide
(USA)
Accor
Group
(France)

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MARK4210, 2014 Spring, L1/L2
Steps in Segmentation
Steps Some Guide Questions
Define purpose
& scope
• What are the marketing objectives (e.g., increase share,
increase demand, combat competition)?
• Looking for new segments, or to better satisfy existing ones?
• Use existing data or new research?
Analyze total
market data
• Characteristics of the total market (e.g., size, structure)?
• Differences between users/non-users of the product class?
• Factors that distinguish users, non-users, users of competitors?
• Current competitive position (e.g., leader, niche)?
Develop
segment profiles
• What factor differentiates groups of consumers most clearly?
• Are profiles of each segment internally consistent?
Evaluate
segmentation
• Differentiable? Identifiable? Substantial? Accessible? Stable?
• Major similarities and differences among segments?
• Should number of segments be reduced or increased?
• How sensitive is the segmentation to the competitive
environment, market growth?
Source: A Note of Consumer Market Segmentation, Harvard Business School, October 1, 1978

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MARK4210, 2014 Spring, L1/L2
Targeting: Selecting Market
Segments
 Segment Potential
• Sales, market share, profitability and growth rates
 Segment Structural Attractiveness
• Competition, substitute products,
• Buyers & supplier power, new entrants (Porter’s Five
Forces)
 Company Objectives and Resources
• Core competencies
• “What business do we want to be in?”

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MARK4210, 2014 Spring, L1/L2
Selecting Market Segments:
Evaluation Framework
Segment A Segment B Segment C …
Segment Potential
Market Size $$$$ $$$ $$
Market Growth -% +/-% +%
Product Market Share %%%% %%% %
Product Profitability $ $$$ $$$$
Segment Structural Attractiveness
Competition High Medium Low
Company Objectives & Resources
Vision Fit Low Medium High
Competency Fit High Medium Low
…

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MARK4210, 2014 Spring, L1/L2
Target Market Selection: Product
(P) x Market (M) Matrices

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MARK4210, 2014 Spring, L1/L2
Strategies for Reaching Target
Markets
 Range of potential target market
 Relevant strategies
Full Market
Coverage
Multiple
Segments
Single
Segments
Individuals as
Segments
Source: Marketing Management, Kotler & Keller, Pearson, 2012
Mass Market Customization

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MARK4210, 2014 Spring, L1/L2
Undifferentiated (Mass) Marketing
 Ignores segmentation
opportunities

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MARK4210, 2014 Spring, L1/L2
Differentiated (Segmented)
Marketing
 Targets several segments and designs separate
offers for each

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MARK4210, 2014 Spring, L1/L2
Niche Marketing
 Targets one or a couple small segments
 Niches have very specialized interests

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MARK4210, 2014 Spring, L1/L2
Micromarketing
 Tailoring products and marketing programs to suit
the tastes of specific individuals and/or localities

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MARK4210, 2014 Spring, L1/L2
Positioning
 Defined as marketer’s effort to identify a unique
selling proposition for the product
 Arranging the product to occupy a clear, distinctive
and attractive position relative to competition in the
minds of target consumers
Source: Market Segmentation, Target Market Selection, and Positioning, Module Note, Harvard Business School, April 17, 2006

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MARK4210, 2014 Spring, L1/L2
The Positioning Statement
 Common form:
[The product/brand] is [single most important claim /
product benefit or differentiation] among all [product
category / competitive frame] in the [target market]
because [single most important support / reason to
believe]
 Primarily directed to potential customers
 Guides development of the marketing plan
Source: Adapted from Market Segmentation, Target Market Selection, and Positioning, Module Note, Harvard Business School, April 17, 2006

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MARK4210, 2014 Spring, L1/L2
Positioning Statement: Key
Characteristics
 A good positioning statement addresses:
• Who are the customers (target market)?
• What is the set of needs/benefit that the product fulfills?
• Why is the product the best option to satisfy those
needs?
 Answers should be based on thorough
understanding of customers, the competitive
environment, the company itself, and conditions of
the marketplace
Source: Market Segmentation, Target Market Selection, and Positioning, Module Note, Harvard Business School, April 17, 2006

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MARK4210, 2014 Spring, L1/L2
Positioning: Key Considerations
 Competitive frame of reference
• Defining the target market and competition (“category membership”)
 Points of Difference (PDP) – Differentiation
• Attributes or benefits consumers strongly associate positively with a
brand, and believe they cannot find with a competitive brand
 Points of Parity (POP)
• Associations by consumers that are shared with other brands
• May not be reason to choose a brand, but absence can be reason to
drop a brand
• Important to nullify competition by matching POP’s, e.g., late market
entrants try to make competitor's POD into a POP for the category,
and then introduce a new POD to gain leadership
 Positioning may change over time

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MARK4210, 2014 Spring, L1/L2
Positioning Tool: Positioning/
Perceptual Map
Plotting consumer’s perception of brand, often based on
two important dimensions/ bases (e.g., quality - price)
Denim Jeans Market (Singapore)

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MARK4210, 2014 Spring, L1/L2
Positioning: Role of Brands
 Positioning and branding are inextricably linked
 Brands are introduced to customers’ vocabulary to
make product differentiation concrete
 Brands can be viewed as promises or pledges about
the attributes (and thus positioning) of the product
Source: Market Segmentation, Target Market Selection, and Positioning, Module Note, Harvard Business School, April 17, 2006
Registering brands (via Patent/Trademark office)
affords legal protection against misuse of the
brand name

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MARK4210, 2014 Spring, L1/L2
Jones-Blair Case – Key Questions
for Discussion
 How would you characterize the architectural paint coatings industry?
 How would you characterize the market area that Jones Blair serves?
 How should Jones Blair’s market area be segmented?
 Which segment(s) should Jones Blair pursue? Why?
• First, how attractive is each segment to JB? Consider the following factors: size of
each segment (need to calculate), characteristics of each segment, future growth
• Second, what is JB’s competitive position in each segment? Consider the following
factors: Jones Blair’s current market share in each segment (need to calculate), the
fit between each segment’s need and the company’s capabilities
 Among the four different plans proposed by VP of Advertising, VP of
Operations, VP of sales, VP of finance, what strategy should Jones Blair
adopt? Apart from qualitative assessment, you also need to make a
quantitative assessment of the various options (e.g., break-even).
 NOTE: It would be helpful for you to write down notes and calculations
and bring them to class for discussion.