Lecture 4: Market Segmentation, Target marketing &

Market positioning
Case study
In 1963, paracetamol was added to the British Pharmacopoeia, and has gained
popularity since then as an analgesic agent with few side-effects and little
interaction with other pharmaceutical agents. Concerns about paracetamol's
safety delayed its widespread acceptance until the 1970s, but in the 1980s
paracetamol sales exceeded those of aspirin in many countries, including the
United Kingdom. In the 1960s and 1970s, John Vane and others discovered the
basic mechanism of aspirin's effects, while clinical trials and other studies from
the 1960s to the 1980s established aspirin's efficacy as an anti-clotting agent that
reduces the risk of clotting diseases. Aspirin sales revived considerably in the last
decades of the 20th century, and remain strong in the 21st century, because of its
widespread use as a preventive treatment for heart attacks and strokes.

1.1. There are 3 major steps of market focus

Market segmentation
Dividing a market into smaller groups of buyers with different
needs, characteristics, or behaviors who might require separate
product or market mixes. In short, Grouping people according to
their similarity related to a particular product category.
Target marketing
Finding a set of buyers sharing common needs or characteristics
that the company decides to serve. A target market is a segment
of consumers identified through research to be the most likely to
buy a particular product.

Market positioning
Arranging for a product to occupy a clear, distinctive and
desirable place relative to competing products in the minds of
target customer.
Criteria for effective market segmentation
To be effective, segmentation must meet the following basic
requirements.
The market segments must be measurable in terms of
both purchasing power and size.
Marketers must be able to effectively promote to and
serve a market segment.
Market segments must be sufficiently large to be
potentially profitable.
The number of segments must match the firms
capabilities.

1.2. Segmenting consumer market

1.3. Choosing a target marketing strategy

Broad targeting

Narrow Targeting

A. Mass Marketing
Mass marketing is the maximum exposure of product advertising
to consumers. It's the opposite of niche marketing where the idea
is to advertise and market products to specific target markets. In
mass marketing, products that many people want or need such as
soda, toothpaste, bread and household cleaners are advertised to
a large audience.
B. Segmented marketing (also multi-segment marketing)
It is a market coverage and Market Segmentation strategy in
which the product is aimed at two or more specific segments in
the market. The firm decides to target several segments and
develops distinct products/services with separate Marketing Mix
strategies aimed at the varying groups. This technique builds
greater loyalty and repeat purchasing by considering customer
needs and wants. The company may be trying to sell exactly the
same product to different segments but it will change its
promotional methods and the image it creates.

Advantages:

Separate

mix

can

be

developed

for

each

segments, different markets can be easily identified. Typically

creates more sales then Undifferentiated Marketing.
Disadvantages: High marketing costs, message may not reach
some customers.
C. Niche marketing
A market coverage strategy in which a farm goes after a large
share of one or a few segments. Toyota was one of the first
companies to realize there was a group of car buyers who would
be very interested in environmentally friendly cars. To answer this
need, it came up with the legendary Prius. The Prius is the first
mass production hybrid car. Where other car manufacturers saw
Toyota taking a huge risk, Toyota saw it as an opportunity to
identify a new niche and establish its brand in that niche. In
marketing, it is often the first brand on the scene that takes the
day.
D.Micro marketing
It includes local marketing (cities, neighborhood) and individual
marketing (one to one marketing, customized marketing).

1.4. Market positioning for maximum competitive

advantages
Marketers must:
Plan positions to give their products the greatest
advantage in selected target markets,
Design marketing mixes to create these planned
positions.
Steps of choosing a positioning strategy
Step 1.
Identifying Possible Competitive Advantages:
Competitive Differentiation.
Step 2. Selecting the Right Competitive Advantage: Unique
Selling Proposition (USP).
Step 3. Communicating and Delivering the Chosen Position.
Step 4. Support the positioning strategy with a unique
marketing mix

Which differences to promote?

A difference is worth establishing, only to the extent that it satisfies the

following criteria:
o Important - the difference delivers a highly valued benefit.
o Distinctive - competitors do not offer the difference.
o Superior - the difference is superior to other ways in which
o Consumers are able to obtain the same benefit.
o Communicable - the difference is communicable and Visible to the
targeted buyers.
o Pre-emptive - competitors cannot easily copy the difference.
o Affordable - buyers can afford to pay for the difference.
o Profitable - firm can introduce the difference profitably.