Market Segmentation, Targeting,

Positioning, Differentiation & Branding

Definition Of Market
Segmentation
Market segmentation is the process of

dividing a market into distinct subgroups of

consumers with distinct needs,
characteristics, or behaviour, who might
require separate products or marketing
mixes. (Philip Kotler).
The marketing people identify different

ways to segment the market and develop

profiles of the resulting market segments.
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Segmenting Consumer Markets

Geographic Segmentation ( It calls for dividing

the market into different geographical units

such as nations,regions,states, cities or
neighbourhoods. A company may decide to
operate in one or a few geographical areas, or to
operate in all areas but pay attention to
geographical differences in needs and wants)
Region: South India, Western Region, North, East
City: Class-I cities, Class-II cities, metro cities, cities with

a population of 0.5 million to 1 million, cities with a

population of over 1 million
Rural and Semi-urban areas (Rural villages with a
population of over 10,000; Semi-urban areas; small towns
with a population between 20,000 and 50,000)
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Demographic Segmentation (It divides the market

into groups based on variables such as age, family

size, family life cycle, gender, income, occupation,
education, religion, generation, social class, etc)
Age: Under 6 years, 6-11,12-19,20-34,35-49,50-60 years,

60+years
Family size: Young,single; Young, married, no children; young,
married, youngest children under 6; older, married, with
children; older, married, no children under 18; older, single;
other
Gender :(Male, Female)
Income: Low ( up to 40,000 p.a.), lower middle (Rs 40,00180,000 p.a.), middle ( Rs 80,001-120,000 p.a.) upper middle (
Rs 120,001-160,000 p.a.) and high (above Rs 160,000 p. a.)

Occupation: Unskilled worker, skilled worker,

petty traders, shop owners,

businessman/industrialist, self-employed
,professionals, clerical/salespersons,
supervisory levels, officers/junior executives,
middle/senior executives
Education: Illiterate, school upto 4 years,
school between 5 and 9 years, SSC/HSC,
nongraduate, graduate/postgraduate
(general), graduate/postgraduate
(professional)
Generation
Social Class

Psychographic Segmentation ( Psychographics is the science of

using psychology and demographics to better understand

consumers. Here the buyers are divided into different groups
on the basis of psychological/personality traits, lifestyle, or
values)
VALS Segmentation System:
Innovators: Successful, sophisticated, active, take-charge people with

high self-esteem
Thinkers: Mature, satisfied, and reflective people who are motivated by
ideals and value order, knowledge and responsibility
Achievers: Successful goal-oriented people who focus on career and family.
Experiencers: Young, enthusiastic, impulsive people who seek variety and
excitement
Believers-

Conservative, conventional and traditional people with concrete beliefs

Strivers: Trendy and fun-loving people who are resource-constrained
Makers- Practical, down-to-earth, self-sufficient people who like to work with their
hands
Survivors: Elderly, passive people who are concerned about change

Psychographic Segmentation

The VALS Segmentation

System: An 8-Part Typology

Behavioral Segmentation (It divides buyers into groups

based on their knowledge of , attitude toward, uses, or

responses to a product)
Decision roles
Initiator
Influencer
Decider
Buyer
User
Behavioral Variables
Occasions
Benefits
User Status (Nonusers, Ex-users ,Potential users, First-time users, Regular users)
Usage Rate (Light, Medium and Heavy Product Users)
Buyer-Readiness Stage (Unaware, aware, informed, interested, desire the

product, intend to buy)

Loyalty Status (Hard-core loyals, Split-loyals, Shifting loyals, Switchers)
Attitude (Enthusiastic, Positive, Indifferent, Negative and Hostile)

Effective Segmentation
Criteria
Measurable (The size, purchasing power, and

characteristics of the segment can be measured)

Substantial ( The segments are large and
profitable enough to serve)
Accessible ( The segments can be effectively
reached and served)
Differentiable (The segments are conceptually
distinguishable and respond differently to
different marketing-mix elements and programs)
Actionable (Effective programs can be formulated
for attracting and serving the segments)
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Market Aggregation
Market aggregation a.k.a mass marketing

or undifferentiated marketing, is simply

marketing a product to the largest
audience possible. The seller engages in
the mass production, mass distribution, and
mass promotion of one product for all
buyers.

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Target Marketing
Market segmentation reveals the firms market

segment opportunities. The firm now has to evaluate

the various segments and decide how many and
which ones to target.

Target Marketing
Evaluating Market Segments: In evaluating different

market segments, a firm must look at 3 different

factors: Segments size and growth, segments
attractiveness, and company objectives and resources.
Select target Market Segments: Target marketing can

be carried out at different levels:

Undifferentiated Marketing or Mass Marketing (The

company decides to ignore market segment differences

and targets the whole market with one offer)
Differentiated Marketing or Segmented marketing
(The company decides to operate in several market
segments and designs separate offers for each)

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Niche Marketing or Concentrated

Marketing ( It involves marketing in a very

small but profitable market segment.

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Five Patterns of Target Market

Selection
Single-Segment Concentration (Firms use this when their capabilities are

intrinsically tied to the needs of a specific market segment)

Selective Specialization (A firm selects a number of segments, each

objectively attractive and appropriate. There may be little or no synergy

among the segments, but each promises to be a money maker)
Product Specialization (Firms engage in this when their expertise in a

product category can be leveraged across many different market segments)

Market Specialization ( The firm concentrates on serving many needs of a

particular customer group)

Full Market Coverage (Only the largest Firms have the capability to execute

this, which involves the development of multiple marketing programs to

serve all customer segments simultaneously. The firm attempts to serve all
customer groups with all the products they might need)

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Five patterns of target market selection

Selective
specialization

Single-segment
concentration

Product
specialization

M1 M2 M3

M1 M2 M3

P1

P1

P1

P2

P2

P2

P3

P3

M1 M2 M3

P3
Market
specialization

Full market
coverage

M1 M2 M3
P = Product
M = Market

M1 M2 M3

P1

P1

P2

P2

P3

P3

Positioning
It is the act of designing the companys

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offering and image to occupy a distinctive

place in the mind of the target market. The
goal is to locate the brand in the minds of
consumers to maximize the potential
benefit to the firm. A good brand
positioning helps guide marketing strategy
by clarifying the brands essence, what
goals it helps the consumer achieve, and
how it does so in a unique way.
The result of positioning is the successful
creation of a customer-focused value
proposition, a cogent reason why he target

Developing a Positioning Strategy

Positioning possibilities:

Attribute positioning
Benefit positioning
Use or application positioning
User positioning
Competitor positioning
Product category positioning
Quality or price positioning

Product Differentiation
Differentiation helps a company to move to

a position where it can claim a premium for

its product in the market

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Product Differentiation
Product Differentiation: Product features,

performance, conformance, durability, reliability,

repairability, style, etc
Features: Most products can be offered with varying

features that supplement its basic functions.

Performance Quality: It is the level at which the
products primary characteristics operate.
Conformance Quality: Buyers expect products to
have a high conformance quality which is the
degree to which all product units are identical and
meet the promised specifications.

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Durability: It is a measure of the products

expected operating life under natural or

stressful conditions and it is a valued
attribute for certain products.
Reliability: It is a measure of the probability
that a product will not malfunction or fail
within a specified time period.
Repairability: It is a measure of the ease of
fixing a product when it malfunctions or fails.
Style: It describes the products look and feel
to the buyer.
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Design: It is the totality of features that

affect how a product looks, feels, and

functions in terms of customer
requirements.
Services: When the physical product cannot
easily be differentiated, the key
competitive success will lie in adding
valued services and improving their quality.

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Other aspects of Differentiation

Strategies
Personnel Differentiation: Competence,

Courtesy, credibility, reliability,

responsiveness, communication
Channel Differentiation (Coverage,

expertise and performance)

Image Differentiation

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Brand Concepts
A brand is a name, term, sign, symbol, or

design, or a combination of these, that

identifies the maker or seller of a product
or service. (Philip Kotler).
Consumers perceive brand as an important

part of a product and branding adds value

to a product.

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Brand Equity
David Aaker has defined Brand Equity as

the unique set of brand assets and liabilities

that is linked to the brand. Brand equity is
the net result of all the investments and
efforts that a marketer puts into building a
brand. Usership of the brand, customer
loyalty towards it, its perceived quality,
positive symbols and favourable associations
around the brand- a bundle of all these
attributes together results in brand equity.
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In simple terms, Brand Equity is the value or

worth of a brand.

BEST GLOBAL BRANDS 2013

(Source: Interbrand)

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Brand

Brand Value ($m)

Apple

98,316

Google

93,291

Coca Cola

79,213

IBM

78,808

Microsoft

59,546

GE

46,947

McDonalds

41,992

Samsung

39,610

Intel

37,257

Toyota

35,346

Components of Brand Equity

David A Aaker has proposed a structure of five assets

underlying brand equity which create value for both

customer and the marketer. They are:
Brand Loyalty: When customers perceive high value for a

brand name or symbol and exhibit high loyalty to the brand,

it is an important asset
Brand awareness: Awareness creation about a brand name
among the target audience is a necessary precondition for
trial of products or services
Perceived quality: A well-known brand always conveys an
image of good quality, durability and dependability.
Brand associations: Customers have certain subjective and
emotional attachments which form a part of the brand equity.
Brand identity: Establish of relationship between Brand and
Customer
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Brand Strategy Decisions

Brand Positioning
Brand name selection
Brand sponsorship
Brand development

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 Brand Positioning:
E.g:

Face cream-Ponds- softer skin, glowing skin

Brand Name Selection

The name should be suggestive of the products benefit and qualities. E.g:
Fair & Lovely, Whirlpool
It should be easy to pronounce, recognise and remember E.g: Ariel, Surf,
Nokia, Pepsi
It should be extendable. E.g. : Amazon.com online bookseller expanded into
other categories.

Brand Logo Selection

Air

India- Maharaja
Amul Butter- Girl
Asian Paints- Gattu the boy

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 Brand Sponsorship
Co-branding: If you are a subscriber of Idea Cellular, you

get an HDFC Bank-Idea co-branded VISA Credit Card,

plus many other benefits. Similarly, HDFC bank credit
card customers can get an Idea mobile post-paid
connection free.
Brand Development
a) Brand Extensions- Ex: Amul milk powder- Amul ghee, Amul
butter, Amul cheese, Amul cheese spread, Amul ice-cream, Amul
Chocolates
b) Line Extensions- Ex: HULs Surf, Surf Ultra, Surf Excel.
Colgate Line extension includes: Colgate
Gel, Colgate Calciguard, Colgate Herbal, and Colgate Total

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c) Multi Brands: Examples: HULs soaps:Dove, Lux, Pears, Liril, Hamam

HULs Toothpastes- Close up, Pepsodent
d) New Brands: A new brand name is
created by a company when it enters a new
product category for which the present
brand name is found not suitable.E.g: Titan
watches created a new brand name, Fast
Track for the watch aimed at teenagers.

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Branding Decisions
Individual names: Procter & Gamble: Vicks (health

care), Pantene, Head & Shoulders (hair care),

Pampers (baby Care), Ariel and Tide (fabric care)
Blanket family names: This policy is followed by
Tata. The blanket family name of the company is
used in diverse product categories such as salt, tea,
steel, etc
Separate family names for all products: The Aditya
Birla Group in India follows this policy to a great
extent. It uses separate family names for its various
products. Hindalco for aluminium, Ultra Tech for
cement, Grasim for suitings are some examples.

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Corporate name combined with individual

product names: Kellogg combines

corporate and individual names in Kelloggs
Rice Krispies, Kelloggs Raisin Bran, and
Kelloggs Corn Flakes

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