Page 107 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes Explain the market targeting strategies
Discuss the positioning strategy and state the positioning approaches
Identify the tools for differentiation

Connect the marketing strategy and marketing mix
Introduction

Modern companies understand the fact that they cannot appeal to all buyers in the market or at
least not to all buyers in the same way. There are numerous buyers in the market and they are
too widely scattered. These buyers are varied in their needs and buying practices. Also, the
companies themselves vary widely in their abilities to serve different segments of the market.
In such a scenario, the companies must design customer-driven marketing strategies that build
the right relationships with the right customers.
There are three steps in designing a customer driven marketing strategy, namely, market
segmentation, targeting and positioning.
Market segmentation is the process of dividing the total market into relatively distinct
homogeneous sub-groups of consumers with similar needs or characteristics that lead them to
respond in similar ways to a particular marketing programme.

A market segment is a portion of a larger market in which the individuals, groups, or organisations
share one or more characteristics that cause them to have relatively similar product needs.
In this unit, you will be introduced to the three-decision processes comprising market
segmentation, target marketing, and positioning that are closely related and have strong
interdependence and essentially need to be examined carefully and implemented to be successful
in managing a given product-market relationship.

5.1 Requirements for Effective Segmentation

Five conditions must exist for segmentation to be meaningful:
1. A marketer must determine whether the market is heterogeneous. If the consumers’ product
needs are homogeneous, then it is senseless to segment the market.
2. There must be some logical basis to identify and divide the population in relatively
distinct homogeneous groups, having common needs or characteristics and who will
respond to a marketing programme.
3. The total market should be divided in such a manner that comparison of estimated sales
potential, costs and profits of each segment can be estimated.
4. One or more segments must have enough profit potential that would justify developing
and maintaining a marketing programme.

5. It must be possible to reach the target segment effectively. For instance, in some rural areas
in India, there are no media that can be used to reach the targeted groups. It is also possible
that paucity of funds prohibits the development required for a promotional campaign.
As more and more identifying characteristics are included in segmenting the market, the more
precisely defined are the segments. However, the more divided a market becomes, the fewer the
consumers are in each segment. So, at least in theory, each consumer can be considered as a
separate segment. An important decision for the marketer is how far to go in the segmenting
process. A market niche is composed of a more narrowly defined group of consumers who have

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