Segmentation, Targeting, and

Positioning

Building the Right Relationships with the Right

CustomersChapter 7

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Learning Goals

1. Learn the three steps of target marketing, market segmentation, target marketing, and market positioning

2. Understand the major bases for segmenting consumer and business marketing strategy

3. Know how companies identify attractive market segments and choose target marketing strategy

4. Realize how companies position their products for maximum competitive advantage in the marketplace

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• Sells multiple brands within the same product category for a variety of products

• Brands feature a different mix of benefits and appeal to different segments

• Has also identified different niches within certain segments

• Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs

Case StudyProcter & GambleProcter & Gamble

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Steps in market segmentation, targeting and

positioningMarket Segmentation

Identify bases for segmenting the market Develop segment profiles

Target Marketing Develop measure of segment

attractiveness Select target segments

Market Positioning Develop positioning for target segments Develop a marketing mix for each segment

Goal 1: Learn the three steps of target marketing

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Figure 8-1:

Steps in Market Segmentation, Targeting,

and Positioning

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DefinitionMarket Segmentation:

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Goal 2: Understand the major bases for segmentation

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Segmenting Consumer Markets

Geographical segmentationDemographic segmentation

Most popular segmentation

Psychographic segmentation Lifestyle, social class, and

personality-based segmentation

Behavioral segmentation

Goal 2: Understand the major bases for segmentation

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• World region or country

• U.S. region• State• City

• Neighborhood• City or

metro size• Density• Climate

Geographic Segmentation Variables

Goal 2: Understand the major bases for segmentation

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Geographical climate is Geographical climate is a legitimate means of a legitimate means of segmentation for many segmentation for many products or services.products or services.

Name several examples of Name several examples of products for which need products for which need (and demand) would vary (and demand) would vary on a geographical basis. on a geographical basis.

Discussion Question

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Demographic Segmentation Variables

• Age• Gender• Family size• Family life

cycle• Income

• Occupation• Education• Religion• Race• Generation• Nationality

Goal 2: Understand the major bases for segmentation

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What type of demographic segmentation is reflected by this ad?

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• Occasions• Benefits• User Status• Attitude

Toward the Product

• User Rates• Loyalty Status• Readiness

Stage

Behavioral Behavioral Segmentation VariablesVariables

Goal 2: Understand the major bases for segmentation

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Swatch targets those with an active lifestyle

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Occasion segmentation: Altoids’ “Love Tin” is a “curiously strong valentine”

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Segmenting Business Markets

Demographic segmentation Industry, company size, location

Operating variables Technology, usage status, customer

capabilitiesPurchasing approachesSituational factors

Urgency, specific application, size of orderPersonal characteristics

Buyer-seller similarity, attitudes toward risk, loyalty

Goal 2: Understand the major bases for segmentation

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Segmenting International Markets

Geographic segmentation Location or region

Economic factors Population income or level of economic

developmentPolitical and legal factors

Type / stability of government, monetary regulations, amount of bureaucracy, etc.

Cultural factors Language, religion, values, attitudes,

customs, behavioral patterns

Goal 2: Understand the major bases for segmentation

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Requirements for Effective SegmentationMeasurable

Size, purchasing power, and profile of segment

Accessible Can be reached and served

Substantial Large and profitable enough to serve

Differentiable Respond differently

Actionable Effective programs can be developed

Goal 2: Understand the major bases for segmentation

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Target Marketing

Target Market Consists of a set of buyers who

share common needs or characteristics that the company decides to serve

Goal 3: Know how companies identify and target attractive segments

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Target Marketing

Evaluating Market Segments Segment size and growth Segment structural attractiveness

• Level of competition• Substitute products• Power of buyers• Powerful suppliers

Company objectives and resources

Goal 3: Know how companies identify and target attractive segments

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Target Marketing

Selecting Target Market Segments

Undifferentiated (mass) marketing

Differentiated (segmented) marketing

Concentrated (niche) marketing Micromarketing (local or

individual)

Goal 3: Know how companies identify and target attractive segments

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Choosing a Target Marketing Strategy

Considerations include: Company resources The degree of product variability Product’s life-cycle stage Market variability Competitors’ marketing

strategies

Goal 3: Know how companies identify and target attractive segments

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Target Marketing

Socially Responsible Targeting Some segments, especially

children, are at special risk Many potential abuses on the

Internet, including fraud Internet shoppers

Controversy occurs when the methods used are questionable

Goal 3: Know how companies identify and target attractive segments

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Positioning

Positioning: The place the product occupies in

consumers’ minds relative to competing products.

Typically defined by consumers on the basis of important attributes.

Involves implanting the brand’s unique benefits and differentiation in the customer’s mind.

Positioning maps that plot perceptions of brands are commonly used.

Goal 4: Realize how companies position their products

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Porsche is positioned on the basis of performance and freedom.

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Identifying possible competitive advantagesChoosing the right competitive advantageChoosing a positioning strategy

Differentiation can be based on

Products Services Channels People Image

Topics Topics

Choosing a Positioning Strategy

Goal 4: Realize how companies position their products

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Market Segmentation• How many differences to

promote? Unique selling

proposition Several benefits

• Which differences to promote? Criteria include: Important Distinctive Superior Communicable Preemptive Affordable Profitable

Topics Topics Identifying possible competitive advantagesChoosing the right competitive advantageChoosing a positioning strategy

Goal 4: Realize how companies position their products

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Market Segmentation

• Value propositions represent the full positioning of the brand

• Possible value propositions: More for More More for the Same More for Less The Same for Less Less for Much Less

Topics Topics Identifying possible competitive advantagesChoosing the right competitive advantageChoosing a positioning strategy

Goal 4: Realize how companies position their products

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Figure 8-3:

Possible Value Propositions

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Developing a Positioning Statement

Positioning statements summarize the company or brand positioning

EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference)

Goal 4: Realize how companies position their products

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Communicating the Positioning

Companies must be certain to DELIVER their value propositions.Positions must be monitored and adapted over time.

Goal 4: Realize how companies position their products