Market Segmentation, Targeting & Positioning | Marketing and Sales for Class 10 PDF Download

 Page 1


22 
 
 
UNIT II 
MARKET SEGMENTATION, TARGETING AND POSITIONING 
 
Learning Objectives 
(a) Understand the importance of Segmentation 
(b) Identify the various bases of Segmentation 
(c) Appreciate the significance of Targeting the Market 
(d) Know about the strategies of Targeting the Market 
(e) Learn the role and importance of Positioning 
(f) Comprehend the various strategies of Positioning 
Introduction 
Whenever a producer decides to produce a product that product may not be suitable for consumption 
of everyone. So for that matter he asks his marketing manager to identify the target audience for his 
product (the people who would need and buy his product) so that all the marketing strategies/plans 
could be designed keeping in view the needs of those specific people. That is why, when one goes to a 
market to buy a product, one might find different types of products for different types of people. For 
example, we have normal Coca-cola for general public and Diet Coca-cola for health conscious and 
diabetic people.   
Now the question arises, how is it done? This is done through the techniques of Segmentation, 
Targeting and then Positioning. First of all, one should understand that the whole market consists of 
different types of people with different tastes, preferences and behaviours. This means that the whole 
market is heterogeneous and catering to everybody?s taste with one?s product is practically 
impossible. So the whole market needs to be broken into smaller units or segments which consist of 
people with similar tastes and behaviour. By doing so the marketer will also be able to focus better on 
his particular target audience. This process is known as Market Segmentation. Market segmentation 
cannot be done in isolation. It has to be followed by „targeting the market? and „positioning the 
product?. Marketing targeting aims at evaluating and comparing the various segments to see their 
attractiveness and deciding as to which segment the marketer should focus. After the decision about 
target market has been made, next step consists of positioning of the product in order to place the 
product so that it occupies a distinct place in the market as well as in the minds of the consumers.  
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly 
called STP, is shown in Figure  
  
Page 2


22 
 
 
UNIT II 
MARKET SEGMENTATION, TARGETING AND POSITIONING 
 
Learning Objectives 
(a) Understand the importance of Segmentation 
(b) Identify the various bases of Segmentation 
(c) Appreciate the significance of Targeting the Market 
(d) Know about the strategies of Targeting the Market 
(e) Learn the role and importance of Positioning 
(f) Comprehend the various strategies of Positioning 
Introduction 
Whenever a producer decides to produce a product that product may not be suitable for consumption 
of everyone. So for that matter he asks his marketing manager to identify the target audience for his 
product (the people who would need and buy his product) so that all the marketing strategies/plans 
could be designed keeping in view the needs of those specific people. That is why, when one goes to a 
market to buy a product, one might find different types of products for different types of people. For 
example, we have normal Coca-cola for general public and Diet Coca-cola for health conscious and 
diabetic people.   
Now the question arises, how is it done? This is done through the techniques of Segmentation, 
Targeting and then Positioning. First of all, one should understand that the whole market consists of 
different types of people with different tastes, preferences and behaviours. This means that the whole 
market is heterogeneous and catering to everybody?s taste with one?s product is practically 
impossible. So the whole market needs to be broken into smaller units or segments which consist of 
people with similar tastes and behaviour. By doing so the marketer will also be able to focus better on 
his particular target audience. This process is known as Market Segmentation. Market segmentation 
cannot be done in isolation. It has to be followed by „targeting the market? and „positioning the 
product?. Marketing targeting aims at evaluating and comparing the various segments to see their 
attractiveness and deciding as to which segment the marketer should focus. After the decision about 
target market has been made, next step consists of positioning of the product in order to place the 
product so that it occupies a distinct place in the market as well as in the minds of the consumers.  
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly 
called STP, is shown in Figure  
  
23 
 
Figure : Sequential Relationship between STP 
__________________________________________________________________________________
___
 
______________________________________________________________________________ 
 
Session 1: Market Segmentation 
 
Concept of Market Segmentation 
Market segmentation can be defined as the process of dividing the total heterogeneous market into 
relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics. In 
other words, Market segmentation involves dividing a market into smaller segments that might 
require different products. 
Therefore, we can also say that a market segment is that portion of a larger market in which the 
individuals, groups, or organizations share one or more characteristics that cause them to have 
relatively similar product needs. 
 
 
 
 
Figure- showing the segmentation 
How to segment a Market? Or on what bases can a market be segmented: 
Market segmentation
Targeting  the market Positioning the product 
in the segment
Page 3


22 
 
 
UNIT II 
MARKET SEGMENTATION, TARGETING AND POSITIONING 
 
Learning Objectives 
(a) Understand the importance of Segmentation 
(b) Identify the various bases of Segmentation 
(c) Appreciate the significance of Targeting the Market 
(d) Know about the strategies of Targeting the Market 
(e) Learn the role and importance of Positioning 
(f) Comprehend the various strategies of Positioning 
Introduction 
Whenever a producer decides to produce a product that product may not be suitable for consumption 
of everyone. So for that matter he asks his marketing manager to identify the target audience for his 
product (the people who would need and buy his product) so that all the marketing strategies/plans 
could be designed keeping in view the needs of those specific people. That is why, when one goes to a 
market to buy a product, one might find different types of products for different types of people. For 
example, we have normal Coca-cola for general public and Diet Coca-cola for health conscious and 
diabetic people.   
Now the question arises, how is it done? This is done through the techniques of Segmentation, 
Targeting and then Positioning. First of all, one should understand that the whole market consists of 
different types of people with different tastes, preferences and behaviours. This means that the whole 
market is heterogeneous and catering to everybody?s taste with one?s product is practically 
impossible. So the whole market needs to be broken into smaller units or segments which consist of 
people with similar tastes and behaviour. By doing so the marketer will also be able to focus better on 
his particular target audience. This process is known as Market Segmentation. Market segmentation 
cannot be done in isolation. It has to be followed by „targeting the market? and „positioning the 
product?. Marketing targeting aims at evaluating and comparing the various segments to see their 
attractiveness and deciding as to which segment the marketer should focus. After the decision about 
target market has been made, next step consists of positioning of the product in order to place the 
product so that it occupies a distinct place in the market as well as in the minds of the consumers.  
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly 
called STP, is shown in Figure  
  
23 
 
Figure : Sequential Relationship between STP 
__________________________________________________________________________________
___
 
______________________________________________________________________________ 
 
Session 1: Market Segmentation 
 
Concept of Market Segmentation 
Market segmentation can be defined as the process of dividing the total heterogeneous market into 
relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics. In 
other words, Market segmentation involves dividing a market into smaller segments that might 
require different products. 
Therefore, we can also say that a market segment is that portion of a larger market in which the 
individuals, groups, or organizations share one or more characteristics that cause them to have 
relatively similar product needs. 
 
 
 
 
Figure- showing the segmentation 
How to segment a Market? Or on what bases can a market be segmented: 
Market segmentation
Targeting  the market Positioning the product 
in the segment
24 
 
 Primarily, there are two broad categories of markets for which the segmentation has to be done: 
i) Consumer markets 
ii)  Business markets 
Consumer markets are the markets where the consumers buy products for their own consumption. 
Whereas, in business markets, business, industrial houses or business persons buy goods and services 
for use in their organizations or production units for producing goods and services. Since these 
markets are quite different from each other, the bases for segmenting them are also different. 
Here, we will discuss the various bases for segmenting consumer markets only. 
Bases for segmenting consumer markets 
Marketers generally use the following four bases for segmenting their markets, as shown in the figure 
below. 
 
Figure: Bases of Market Segmentation 
 
 
 
Geographic Segmentation 
Bases of 
Segmentation  
Geographic Demographic Psychographic Behavioural
Geographic
Regions Climate States
Page 4


22 
 
 
UNIT II 
MARKET SEGMENTATION, TARGETING AND POSITIONING 
 
Learning Objectives 
(a) Understand the importance of Segmentation 
(b) Identify the various bases of Segmentation 
(c) Appreciate the significance of Targeting the Market 
(d) Know about the strategies of Targeting the Market 
(e) Learn the role and importance of Positioning 
(f) Comprehend the various strategies of Positioning 
Introduction 
Whenever a producer decides to produce a product that product may not be suitable for consumption 
of everyone. So for that matter he asks his marketing manager to identify the target audience for his 
product (the people who would need and buy his product) so that all the marketing strategies/plans 
could be designed keeping in view the needs of those specific people. That is why, when one goes to a 
market to buy a product, one might find different types of products for different types of people. For 
example, we have normal Coca-cola for general public and Diet Coca-cola for health conscious and 
diabetic people.   
Now the question arises, how is it done? This is done through the techniques of Segmentation, 
Targeting and then Positioning. First of all, one should understand that the whole market consists of 
different types of people with different tastes, preferences and behaviours. This means that the whole 
market is heterogeneous and catering to everybody?s taste with one?s product is practically 
impossible. So the whole market needs to be broken into smaller units or segments which consist of 
people with similar tastes and behaviour. By doing so the marketer will also be able to focus better on 
his particular target audience. This process is known as Market Segmentation. Market segmentation 
cannot be done in isolation. It has to be followed by „targeting the market? and „positioning the 
product?. Marketing targeting aims at evaluating and comparing the various segments to see their 
attractiveness and deciding as to which segment the marketer should focus. After the decision about 
target market has been made, next step consists of positioning of the product in order to place the 
product so that it occupies a distinct place in the market as well as in the minds of the consumers.  
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly 
called STP, is shown in Figure  
  
23 
 
Figure : Sequential Relationship between STP 
__________________________________________________________________________________
___
 
______________________________________________________________________________ 
 
Session 1: Market Segmentation 
 
Concept of Market Segmentation 
Market segmentation can be defined as the process of dividing the total heterogeneous market into 
relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics. In 
other words, Market segmentation involves dividing a market into smaller segments that might 
require different products. 
Therefore, we can also say that a market segment is that portion of a larger market in which the 
individuals, groups, or organizations share one or more characteristics that cause them to have 
relatively similar product needs. 
 
 
 
 
Figure- showing the segmentation 
How to segment a Market? Or on what bases can a market be segmented: 
Market segmentation
Targeting  the market Positioning the product 
in the segment
24 
 
 Primarily, there are two broad categories of markets for which the segmentation has to be done: 
i) Consumer markets 
ii)  Business markets 
Consumer markets are the markets where the consumers buy products for their own consumption. 
Whereas, in business markets, business, industrial houses or business persons buy goods and services 
for use in their organizations or production units for producing goods and services. Since these 
markets are quite different from each other, the bases for segmenting them are also different. 
Here, we will discuss the various bases for segmenting consumer markets only. 
Bases for segmenting consumer markets 
Marketers generally use the following four bases for segmenting their markets, as shown in the figure 
below. 
 
Figure: Bases of Market Segmentation 
 
 
 
Geographic Segmentation 
Bases of 
Segmentation  
Geographic Demographic Psychographic Behavioural
Geographic
Regions Climate States
25 
 
Geographical segmentation means segmenting the market on the basis of geography. Geographic 
segmentation focuses on dividing the whole market into different geographic units, such as regions, 
states, urban, rural, climate, etc. People residing in different geographical locations might be having 
different needs and hence requiring different products. For example, people living in rainy areas 
would be requiring raincoats, umbrellas, boots while people living in deserts would not be requiring 
them. Therefore, the marketer has to see whether the product produced by him will cater to which 
market segment. The marketers marketing raincoats will have to segment their market on the basis of 
geography (i.e. weather).  Similarly, food habits also change with geographical locations. The food 
habits of South Indians are different from those residing in North or West India. The marketer has to 
keep this in mind.  In case of multinational companies, the companies segment the market by 
continent/country/region in the first instance, and then go for segmentation on other bases.  
 
 
 
 
Figure: Geographic Segmentation 
 
Demographic Segmentation 
 
Demographic segmentation is done on the basis of the demography of a country. The demography 
means the composition of human population of a country. Therefore, Demographic segmentation may 
be based on factors like age group, income level, gender, education status, religion, occupation 
and so on.  
The tastes and needs of people of different age-groups are different. Children need toys, books, 
chocolates etc., while the needs of elders will be quite different.  Hence, the marketer has to see that 
Demographic
Age Gender Income
Education 
level
Occupation
Religion
Page 5


22 
 
 
UNIT II 
MARKET SEGMENTATION, TARGETING AND POSITIONING 
 
Learning Objectives 
(a) Understand the importance of Segmentation 
(b) Identify the various bases of Segmentation 
(c) Appreciate the significance of Targeting the Market 
(d) Know about the strategies of Targeting the Market 
(e) Learn the role and importance of Positioning 
(f) Comprehend the various strategies of Positioning 
Introduction 
Whenever a producer decides to produce a product that product may not be suitable for consumption 
of everyone. So for that matter he asks his marketing manager to identify the target audience for his 
product (the people who would need and buy his product) so that all the marketing strategies/plans 
could be designed keeping in view the needs of those specific people. That is why, when one goes to a 
market to buy a product, one might find different types of products for different types of people. For 
example, we have normal Coca-cola for general public and Diet Coca-cola for health conscious and 
diabetic people.   
Now the question arises, how is it done? This is done through the techniques of Segmentation, 
Targeting and then Positioning. First of all, one should understand that the whole market consists of 
different types of people with different tastes, preferences and behaviours. This means that the whole 
market is heterogeneous and catering to everybody?s taste with one?s product is practically 
impossible. So the whole market needs to be broken into smaller units or segments which consist of 
people with similar tastes and behaviour. By doing so the marketer will also be able to focus better on 
his particular target audience. This process is known as Market Segmentation. Market segmentation 
cannot be done in isolation. It has to be followed by „targeting the market? and „positioning the 
product?. Marketing targeting aims at evaluating and comparing the various segments to see their 
attractiveness and deciding as to which segment the marketer should focus. After the decision about 
target market has been made, next step consists of positioning of the product in order to place the 
product so that it occupies a distinct place in the market as well as in the minds of the consumers.  
The sequential relationship between segmentation (S), targeting (T), and positioning (P), popularly 
called STP, is shown in Figure  
  
23 
 
Figure : Sequential Relationship between STP 
__________________________________________________________________________________
___
 
______________________________________________________________________________ 
 
Session 1: Market Segmentation 
 
Concept of Market Segmentation 
Market segmentation can be defined as the process of dividing the total heterogeneous market into 
relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics. In 
other words, Market segmentation involves dividing a market into smaller segments that might 
require different products. 
Therefore, we can also say that a market segment is that portion of a larger market in which the 
individuals, groups, or organizations share one or more characteristics that cause them to have 
relatively similar product needs. 
 
 
 
 
Figure- showing the segmentation 
How to segment a Market? Or on what bases can a market be segmented: 
Market segmentation
Targeting  the market Positioning the product 
in the segment
24 
 
 Primarily, there are two broad categories of markets for which the segmentation has to be done: 
i) Consumer markets 
ii)  Business markets 
Consumer markets are the markets where the consumers buy products for their own consumption. 
Whereas, in business markets, business, industrial houses or business persons buy goods and services 
for use in their organizations or production units for producing goods and services. Since these 
markets are quite different from each other, the bases for segmenting them are also different. 
Here, we will discuss the various bases for segmenting consumer markets only. 
Bases for segmenting consumer markets 
Marketers generally use the following four bases for segmenting their markets, as shown in the figure 
below. 
 
Figure: Bases of Market Segmentation 
 
 
 
Geographic Segmentation 
Bases of 
Segmentation  
Geographic Demographic Psychographic Behavioural
Geographic
Regions Climate States
25 
 
Geographical segmentation means segmenting the market on the basis of geography. Geographic 
segmentation focuses on dividing the whole market into different geographic units, such as regions, 
states, urban, rural, climate, etc. People residing in different geographical locations might be having 
different needs and hence requiring different products. For example, people living in rainy areas 
would be requiring raincoats, umbrellas, boots while people living in deserts would not be requiring 
them. Therefore, the marketer has to see whether the product produced by him will cater to which 
market segment. The marketers marketing raincoats will have to segment their market on the basis of 
geography (i.e. weather).  Similarly, food habits also change with geographical locations. The food 
habits of South Indians are different from those residing in North or West India. The marketer has to 
keep this in mind.  In case of multinational companies, the companies segment the market by 
continent/country/region in the first instance, and then go for segmentation on other bases.  
 
 
 
 
Figure: Geographic Segmentation 
 
Demographic Segmentation 
 
Demographic segmentation is done on the basis of the demography of a country. The demography 
means the composition of human population of a country. Therefore, Demographic segmentation may 
be based on factors like age group, income level, gender, education status, religion, occupation 
and so on.  
The tastes and needs of people of different age-groups are different. Children need toys, books, 
chocolates etc., while the needs of elders will be quite different.  Hence, the marketer has to see that 
Demographic
Age Gender Income
Education 
level
Occupation
Religion
26 
 
the product they have produced is for all age-groups or for a particular age-group. If the product is for 
a particular age-group, they will have to identify that segment and target that segment only.  
 
Figure Demographic Segmentation 
Similarly, the marketer can also segment his market on the basis of gender (male/female), income-
group (high income group, middle income group, low income group), education (literate, illiterate), 
occupation (skilled workers, non-skilled workers)  etc. Of all these, income-group is the most 
commonly used basis by the marketers. For example, in Railways, AC I class, AC II tier, AC III tier, 
and ordinary class are the segments based on income group. 
 
Figure showing Age Segmentation