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Designing a Customer-Driven
Marketing Strategy and Target
Marketing
MRS. SAIRA SAJAD
Major Steps in Target Marketing
Market Segmentation
Target Marketing
Market Positioning
Market Segmentation
Dividing a market into distinct groups
with distinct needs, characteristics, or
behavior who might require separate
products or marketing mix.
Target Marketing
The process of evaluating each market
segment’s attractiveness and selecting
one or more segments to enter.
Market Positioning
Arranging for a product to occupy a
clear, distinctive, and desirable place
relative to competing products in the
mind of target consumers
What is Market Segmentation?
Segmentation
What is Market Segmentation?
 Dividing a market into distinct groups with distinct
needs, characteristics, or behavior who might require
separate products or marketing mix.
 Market Segmentation is breaking down heterogeneous
mass market into more homogeneous submarkets.
 Marketer’s assume that consumers within segments
should respond similarly to particular marketing
actions.
 Consumer response should be different between
different segments.
Why segment
the market?
Why segment the market?
 Customers have diverse needs, wants and buying
behaviors which differ from other customers.
 One firm cannot satisfy everyone’s needs.
 Organizations have different strengths and
competitive advantages in different areas.
 Marketer’s should focus on what they do best.
 It can create better marketing opportunities for
organizations
 It may be more profitable for organizations.
Types of Market Segmentation
 Consumer Market Segmentation
 Business Market Segmentation
 International Market Segmentation
Consumer Market Segmentation
 There is no single way to
segment a market. A
marketer has to try
different segmentation
variables, alone and in
combination to find the
best way to view the
market structure.
Consumer Market Segmentation Variables
 Consumer market can be segmented through the
following variables;
 Geographic segmentation
 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation
Geographical Segmentation
 Dividing a market into
different geographical
units such as nation,
province, regions,
countries, cities and
climate etc.
Geographic Segmentation Variables
 Continents or World Regions-Africa, Asia, Europe
 Countries-Afghanistan US, Pakistan
 Province- kabul, Jalalabad, Herat
 City or Metro Size- under 5000 people, 5000-19,999
 Climate- Tropical, Temperate, Cold.
Demographic Segmentation
 Dividing the market
into groups based on
demographic variables
such as age, gender,
etc.
Demographic Segmentation Variables
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Age
Gender
Family size
Family life cycle
Income
Occupation
Education
Religion
Race
Generation
Nationality
Demographic segmentation
 Age- Under 6 years old, 6-12, 13-19, 20-29,30-39,40-49,50+
 Gender- Dividing a market into different groups based on gender
(male/female).
For example- NIKE has recently capture the women sports shoes
market.
 Family life cycle- Single, Young married, Married with children
 Income- Dividing a market into different income groups. (high,
medium and low income groups)
 For example Honda presenting Motor cycle for low income and car
for high income groups.
Demographic segmentation
 Occupation- employed, unemployed, self employed.
 Education- Grade school or less, high school, graduated from
high school, post graduate from university, Doctorate.
 Religion- Muslims, Christens, Jewish, Buddhist.
 Family Size- 1-2 persons, 3-4 persons, more than 4 persons
 Nationality- Afghani, Pakistani, French, British, Canadian,
Japanese.
Psychographic Segmentation
 Dividing a market into
different groups based
on social class,
lifestyle and
personality
characteristics etc.
Psychographic Segmentation Variables
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Social class- There are 3 major social classes i.e.
Upper, Middle and lower class.
Lifestyle- It may be different on the basis of
income, community, religion etc. Different
customers adopt different lifestyles.
Personality- There may be different personalities
of customers like Calm, Dynamic, Aggressive
Behavioral Segmentation
 Dividing a market into
groups based on
consumer use,
knowledge, attitude or
response to a product.
Behavioral Segmentation Variables
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Occasions
Benefits
Attitude Toward the
Product
User Rates
Loyalty Status
Readiness Stage
Behavioral segmentation
 Occasion-When the buyers get the idea to buy.
(occasional buyers)
 Benefit- Dividing a market into groups according to the
different benefits that consumers seek from the product.
For example- free bag with a laptop. Or discount on
software or free delivery.
 User Loyalty status- A market can also be segmented
by consumer loyalty.
For Example-Consumer can be loyal to brand (Nokia),
stores (Imperial Store) and companies (Toyota).
Behavioral segmentation
 Usage rate- Markets can also be segmented into
light, medium and heavy usage of products.
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Attitude Toward the ProductFor some companies or products customers show favorable
attitude and for some products, they show unfavorable
attitudes.
Business Market Segmentation
 Business markets can be segmented on the basis of various
consumer market variables and some other variables like
operating variables, purchasing approaches etc.
 For example: American Express focuses on convincing new
merchants, building relationships with old customers, and
offering benefits to corporate such as insurance plan, travel
discounts etc.
Bases for Segmenting Business Markets
Demographics
Business Marketers
Use Many of the
Same Consumer
Variables, Plus:
Operating Variables
Purchasing Approaches
Situational Factors
Personal Characteristics
Bases for Segmenting Business Markets
Demographic segmentation
Business markets can be segmented on the basis of Industry,
company size and location etc.
For Example; Textile, Sugar and FMCG (Fast Moving
Consumer Goods) are different industries, so there raw
material and machinery will be available in different business
markets.
Operating variables
Business markets can be segmented on the basis of
Technology, usage status and customer (business) capabilities.
For Example; Computers, mobile phones and electronics are
technology based products as compared to juices and
furniture. So on the basis of technology, business market will
be different.
Cont…
Purchasing approaches
Business markets can be segmented on the basis of Regular
purchases and occasional purchases.
For Example; Some type of raw materials are regularly
purchased by different businesses like stationary, papers, paints
etc but some raw materials like sugarcane, cotton will be
purchased occasionally in the season.
Situational factors
Business markets can be segmented on the basis of Urgency,
specific application and size of order.
For Example; Some businesses are very big businesses, therefore
their size of order for raw materials are also very big, so such
markets may be segmented which are selling products in larger
quantity only or in wholesale, not in retail.
Cont…
Personal characteristics
Business markets can be segmented on the basis of Buyer-seller
similarity, attitudes toward risk, loyalty.
For Example; If the buyer (Businessman of sugar mill) makes a
contract with seller (Farmer of sugarcane) that for next 10
years , he will provide a specific quantity of raw material to
him on a specific price. So in this regard, the buyer (Business)
reduces his risk and he created loyality.
International Market Segmentation
 “Forming segments of consumers who have similar needs
and buying behavior even though they are located in
different countries.”
 Geographical Segmentation
 Economic Factors Segmentation
 Political & Legal Factors Segmentation
 Cultural Segmentation
Bases for Segmenting International
Markets
Geographic
Location
Cultural
Factors
Factors Used
to Segment
International
Markets
Political and
Legal Factors
Economic
Factors
Bases for Segmenting International Markets
Geographic segmentation
For Example; World market can be segmented by geographic location,
grouping countries by region such as Western Europe, Middle East,
South Asia etc.
Economic factors
World market can also be segmented on the basis of economic factors
i.e. Population income or level of economic development.
For example-countries might be grouped by population income level or
by their overall level of economic development.
Political and legal factors
World market can also be segmented by political and legal factors, such as
the type and stability of the Government, monetary regulations,
amount of bureaucracy etc.
Cultural factors
World market can also be segmented by Language, religion, values,
attitudes, customs, behavioral patterns
Target Marketing
Target Marketing
 Target market: A set of buyers sharing common
needs or characteristics that the company decides to
serve.
 After successfully segmented the market the firm
now must evaluate the various segments and decide
how many and which segment it can serve best.
Steps in the Target Marketing Process
• Evaluating Market Segments
• Selecting Target Market Segments
Evaluating Market Segments
 In evaluating different market segments, a firm must look at
three factors:
 Segment size and growth
Analyze sales, growth rate and expected profitability.
 Segment structural attractiveness
Consider effects of Competitors, Availability of Substitute
Products and the Power of Buyers & Suppliers. A segment is less
attractive if it already contain strong and aggressive competitors
or substitute products.
 Company’s objectives and resources
Even if a segment has the right size and growth and is
structurally attractive, the company must consider its own
capability, compatative advantage, objectives and resources.
Selecting target market segments
 After evaluating different segments, the company must
decide which and how many segments it will target.
 A target market consists of a set of buyers who share
common needs or characteristics that the company
decides to serve.
 Buyers have unique needs and wants, a seller could
potentially view each buyer as a separate target market.
Then a seller might design a separate marketing program
for each buyer.
 Companies can target very broadly , very narrowly or
some where in between.
 There are four different types of strategies which the
marketers apply while selecting target market segments.
Target Marketing Strategies
Undifferentiated (mass
marketing)

Targeting broadly
Differentiated
(segmented
marketing)
Concentrated
(Niche
marketing)
Micromarketing
(local or
individual
marketing
targeting narrowly
Undifferentiated Marketing
 A firm might decide to ignore market segments and
target the whole market with one offer. This mass
marketing focuses on what is common in the needs
of consumers rather than on what is different.
 For Example; Nestle offers mineral water for the
entire market without any change for different
customers attributes.
Company
Marketing Mix
A. Undifferentiated Marketing
Market
Differentiated Marketing
 A firm decides to target several market segments and
design separate offers for each.
 For Example; Head & Shoulders design separate
nature of shampoo for different types of customer
needs.
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 3
Segment 1
Segment 2
Segment 3
B. Differentiated Marketing
Concentrated (Niche marketing)
 A third market coverage strategy is specially
appealing when company resources are limited.
Instead of going after a small share of a large market,
the firm goes after a large share of one or few smaller
segments.
 For Example; Pepsi offers Diet Pepsi (Pepsi Max) for
Diabetes patients and diet conscious people.
Company
Marketing
Mix
Segment 1
Segment 2
Segment 3
C. Concentrated Marketing
Micromarketing (Local or Individual Marketing)
 The practice of tailoring products and marketing
program to the needs and wants of specific
individuals.
 Individual marketing has also labeled one to one
marketing.
 For example. Dell is doing individual marketing, by
taking the order of every individual and prepare the
computer accordingly for each customer.
Company
Marketing
Mix
Individual
Customer
D. Custom Marketing Strategy or
Micromarketing Strategy
Market Positioning
Market Positioning
Arranging for a product to occupy a
clear, distinctive, and desirable place
relative to competing products in the
mind of target consumers
Positioning for Competitive Advantage
Product’s Positioning
“The place the product occupies in consumers’
minds relative to competing products”
i.e. Volvo positions on “safety”.
Marketers must:
 Plan positions to give products the greatest
advantage
 Develop marketing mixes to create planned
positions
Choosing and Implementing
a Positioning Strategy
 Step 1. Identifying a set of possible competitive
advantages. i.e. Competitive Differentiation, which
may be of product, service, personnel and image
etc.
 Step 2. Selecting the right competitive advantage
suitable to your organizational objectives and
capabilities.
 Step 3. Effectively communicating and delivering
the chosen position to the market by different
effective promotional medias.
Identifying Possible Competitive Advantages
Product
Differentiation
i.e. Features, Performance, Style &
Design, or Attributes
Image
Differentiation
i.e. Symbols,
Atmospheres, Events
Services
Differentiation
i.e. Delivery, Installation,
Repair Services, Customer
Training Services
Personnel
Differentiation
i.e. Hiring, Training
Better People Than
Competitors Do
Steps in Market Segmentation, Targeting,
and Positioning
Market Segmentation
1. Identify bases for segmenting the
market
2. Develop attractive segments
Market Targeting
3. Evaluating Market Segments
4. Selecting Target Market Segments
Market positioning
5. Develop positioning for target segments
6. Develop a marketing mix for each
segment
End of
Chapter