A write up about

Market Segmentation, Targeting and

Positioning for Market Advantage




In partial fulfilment
Of the requirements
In Principles of Marketing





Submitted by Group 3:

Market Segmentation
Market segmentation is a crucial marketing strategy. Its aim is to identify and
delineate market segments or "sets of buyers" which would then become targets
for the company's marketing plans. The advantage to marketing management is
that this technique divides total demand into relatively homogeneous segments
which are identified by some common characteristics. These characteristics are
relevant in explaining and in predicting the response of consumers, in a given
segment, to marketing stimuli.
Market Segmentation can be defined as the process of breaking down all
consumers into groups of potential buyers with similar characteristics or grouping
consumers by some criteria, such that those within a group will respond similarly
to a marketing action and those in a different group will respond differently.
Levels of Market Segmentation
Market segmentation represents an effort to increase a companys targeting
precision. It can be carried out at four levels: mass, segment, niche and
micromarketing.
In mass marketing, the seller engages in the mass production, mass
distribution, and mass promotion of one product for all buyers. Henry Ford
epitomized this marketing strategy when he offered the Model-T Ford to all
buyers; they could have the car in any color as long as it is black. Coca-Cola
also practiced mass marketing for many years when it sold only one size Coke in
a 6.5-ounce bottle.
A market segment consists of a large identifiable group within a market. A
company that practices segment marketing recognizes that buyers differ in their
wants, purchasing power, geographical locations, buying attitudes, and buying
habits. At the same time, though, the company is not willing to customize its
offer/communication bundle to each individual customer. The company instead
tries to isolate some broad segments that make up a market. For example, an
auto company may identify four broad segments: car buyers seeking basic
transportation, those seeking high performance, those seeking luxury, and those
seeking safety.
Segment marketing offers several benefits over mass marketing. The
company can create a more fine-tuned product/service offer and price it
appropriately for the target audience. The choice of distribution channels and
communications channels becomes much easier. And the company may face
fewer competitors if fewer competitors are focusing on this market segment.
Market segments are normally large identifiable groups within a marketfor
example, nonsmokers, occasional smokers, regular smokers, and heavy
smokers. A niche is a more narrowly defined group, typically a small market
whose needs are not being well served. Marketers usually identify niches by
dividing a segment into subsegments or by defining a group with a distinctive set
of traits who may seek a special combination of benefits. For example, the sema,
and heavy smokers with emphysema who are overweight.
Micromarketing consists of Local marketing and Individual marketing. In local
marketing, target marketing is increasingly taking on the character of regional and
local marketing, with marketing programs being tailored to the needs and wants
of local customer groups (trading areas, neighborhoods, even individual stores).
Thus Citibank provides different mixes of banking services in its branches
depending on the banks neighborhood demographics. And Kraft helps
supermarket chains identify the cheese assortment and shelf positioning that will
optimize cheese sales in low-income, middle-income, and high-income stores,
and in different ethnic communities. In comparison, Individual marketing, the
ultimate level of segmentation leads to segments of one, customized
marketing, or one-to-one marketing. The prevalence of mass marketing has
obscured the fact that for centuries consumers were served as individuals: The
clothier tailor-made the suit, the cobbler designed shoes for the individual, and so
on. And much business-to-business marketing today is customized, in that a
manufacturer will customize the offer, logistics, and financial terms for each major
account. It is the new technologiesspecifically computers, databases, robotic
production, and instant communication media such as e-mail and faxthat are
permitting companies to consider a return to customized marketing, or what is
called mass customization. Mass customization is the ability to prepare on a
mass basis individually designed products and communications to meet each
customers requirements.
Bases for segmenting