Segmentation, Targeting, and Positioning Chapter 8

Segmentation, Segmentation, Targeting, and Targeting, and

PositioningPositioning

Chapter 8Chapter 8

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Objectives

Be able to define the three steps Be able to define the three steps of target marketing: market of target marketing: market segmentation, target marketing, segmentation, target marketing, and market positioning.and market positioning.

Understand the major bases for Understand the major bases for segmenting consumer and segmenting consumer and business markets.business markets.

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Objectives

Know how companies identify Know how companies identify attractive market segments attractive market segments and how they choose a target and how they choose a target marketing strategy.marketing strategy.Comprehend how companies Comprehend how companies position their products for position their products for maximum competitive maximum competitive advantage.advantage.

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Sells multiple brands Sells multiple brands within the same within the same product category for product category for a variety of productsa variety of productsBrands feature a Brands feature a different mix of different mix of benefits and appeal benefits and appeal to different segmentsto different segments

Has also identified Has also identified different niches different niches withinwithin certain segments certain segments

Tide offers seven Tide offers seven different product different product formulations to serve formulations to serve different niches’ different niches’ needsneeds

cProcter & GambleProcter & Gamble

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Definition

Market Segmentation:Market Segmentation: Dividing a market into distinct Dividing a market into distinct

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

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Figure 8-1:

Steps in Market Segmentation, Targeting,

and Positioning

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Market Segmentation

Segmenting Segmenting Consumer MarketsConsumer MarketsSegmenting Segmenting Business MarketsBusiness MarketsSegmenting Segmenting International MarketsInternational MarketsRequirements for Requirements for Effective SegmentationEffective Segmentation

Geographical segmentationGeographical segmentation Marketing mixes are Marketing mixes are

customized geographicallycustomized geographically

Demographic segmentationDemographic segmentationPsychographic Psychographic segmentationsegmentationBehavioral segmentationBehavioral segmentationUsing multiple Using multiple segmentation variablessegmentation variables

Key TopicsKey Topics

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Market Segmentation

Geographic Geographic Segmentation VariablesSegmentation Variables

City or City or Metro SizeMetro Size

NeighborhoodNeighborhood

DensityDensity

ClimateClimate

World Region World Region or Countryor Country

U.S. RegionU.S. Region

StateState

CityCity

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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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Market Segmentation


Geographical segmentsGeographical segmentsDemographic segmentationDemographic segmentation Most popular typeMost popular type Demographics are closely Demographics are closely

related to needs, wants and related to needs, wants and usage ratesusage rates

Psychographic Psychographic segmentationsegmentationBehavioral segmentationBehavioral segmentationUsing multiple Using multiple segmentation variablessegmentation variables


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Market Segmentation

Demographic Demographic Segmentation VariablesSegmentation Variables

AgeAgeGenderGenderFamily sizeFamily sizeFamily life cycleFamily life cycleIncomeIncomeRaceRace

OccupationOccupationEducationEducationReligionReligionGenerationGenerationNationalityNationality

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What type of demographic segmentation is reflected by this ad?

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Market Segmentation


Geographic segmentsGeographic segmentsDemographic Demographic segmentation segmentation Psychographic Psychographic segmentationsegmentation Lifestyle, social class, and Lifestyle, social class, and

personality-based personality-based segmentationsegmentation

Behavioral segmentationBehavioral segmentationUsing multiple Using multiple segmentation variablessegmentation variables


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Swatch targets those with an active lifestyle

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Market Segmentation


Geographic segmentsGeographic segments

Demographic Demographic segmentation segmentation

Psychographic Psychographic segmentationsegmentation

Behavioral segmentationBehavioral segmentation Typically done firstTypically done first

Using multiple Using multiple segmentation variablessegmentation variables


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Market Segmentation

Behavioral Behavioral Segmentation VariablesSegmentation Variables

OccasionsOccasions

BenefitsBenefits

User StatusUser Status

User RatesUser Rates

Loyalty StatusLoyalty Status

Readiness StageReadiness Stage

Attitude Toward Attitude Toward the Productthe Product

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

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Checkout Direct offers retailers & manufacturers an excellent method of reaching segments of heavy users, as well as users of the direct competition.

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Market Segmentation


Geographic segmentsGeographic segments

Demographic Demographic segmentation segmentation

Psychographic Psychographic segmentationsegmentation

Behavioral segmentationBehavioral segmentation

Using multiple Using multiple segmentation variablessegmentation variables PrizmPrizm


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Visit PRIZM’s “You are Visit PRIZM’s “You are where you live” where you live” website.website.

Enter the zip code(s) of Enter the zip code(s) of your choice. your choice.

Were you Were you surprised by surprised by what you what you found? found?

Discussion Question

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Market Segmentation


Demographic segmentationDemographic segmentation Industry, company size, locationIndustry, company size, location

Operating variablesOperating variables Technology, usage status, Technology, usage status,

customer capabilitiescustomer capabilities

Purchasing approachesPurchasing approaches

Situational factorsSituational factors Urgency, specific application, Urgency, specific application,

size of ordersize of order

Personal characteristicsPersonal characteristics Buyer-seller similarity, attitudes Buyer-seller similarity, attitudes

toward risk, loyaltytoward risk, loyalty


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Market Segmentation


Geographic segmentationGeographic segmentation Location or regionLocation or region

Economic factorsEconomic factors Population income or level of Population income or level of

economic developmenteconomic development

Political and legal factorsPolitical and legal factors Type / stability of government, Type / stability of government,

monetary regulations, amount of monetary regulations, amount of bureaucracy, etc.bureaucracy, etc.

Cultural factorsCultural factors Language, religion, values, Language, religion, values,

attitudes, customs, behavioral attitudes, customs, behavioral patternspatterns


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Market Segmentation


MeasurableMeasurable Size, purchasing power, and Size, purchasing power, and

profile of segmentprofile of segment

AccessibleAccessible Can be reached and served Can be reached and served

SubstantialSubstantial Large and profitable enough to Large and profitable enough to

serveserve

DifferentiableDifferentiable Respond differentlyRespond differently

ActionableActionable Effective programs can be Effective programs can be

developeddeveloped


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Target Marketing

Evaluating Market SegmentsEvaluating Market Segments Segment size and growthSegment size and growth Segment structural attractivenessSegment structural attractiveness

Level of competitionLevel of competition Substitute productsSubstitute products Power of buyersPower of buyers Powerful suppliersPowerful suppliers

Company objectives and resourcesCompany objectives and resources

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Figure 8-2:

Target Marketing Strategies

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Target Marketing

Choosing a Target-Choosing a Target-Marketing Strategy Marketing Strategy Requires Consideration of:Requires Consideration of: Company resourcesCompany resources The degree of product variabilityThe degree of product variability Product’s life-cycle stageProduct’s life-cycle stage Market variabilityMarket variability Competitors’ marketing Competitors’ marketing

strategiesstrategies

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Target Marketing

Socially Responsible Targeting Socially Responsible Targeting Some segments are at special risk:Some segments are at special risk:

ChildrenChildren Inner-city Inner-city

minority minority consumers consumers

Internet Internet shoppers shoppers

Controversy occurs when the methods Controversy occurs when the methods used are questionable.used are questionable.

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Positioning

Positioning:Positioning: The place the product The place the product

occupies in occupies in consumers’ minds consumers’ minds relative to competing relative to competing products.products.

Typically defined by Typically defined by consumers on the consumers on the basis of important basis of important attributes.attributes.

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Positioning

Choosing a Positioning Strategy:Choosing a Positioning Strategy: Identifying possible competitive Identifying possible competitive

advantages -- many potential advantages -- many potential sources of differentiation exist:sources of differentiation exist: ProductsProducts ServicesServices ChannelsChannels PeoplePeople ImageImage

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Porsche is positioned on the basis of performance and freedom.

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Positioning

Choosing a Positioning Strategy:Choosing a Positioning Strategy: Choosing the right competitive Choosing the right competitive

advantageadvantage How many differences to promote?How many differences to promote?

• Unique selling propositionUnique selling proposition• Positioning errors to avoidPositioning errors to avoid

Which differences to promote?Which differences to promote?

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Positioning

Criteria for Meaningful DifferencesCriteria for Meaningful Differences

ImportantImportant

SuperiorSuperior

PreemptivePreemptive

DistinctiveDistinctive

CommunicableCommunicable

AffordableAffordable

ProfitableProfitable

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Figure 8-3:

Possible Value Propositions

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View the ad at right.View the ad at right.

Evaluate the level of Evaluate the level of benefits and the price. benefits and the price.

What value proposition What value proposition is being expressed?is being expressed?

Discussion Question

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Positioning

Choosing a Positioning Strategy:Choosing a Positioning Strategy: Developing a positioning statementDeveloping a positioning statement

Positioning statements summarize the Positioning statements summarize the company or brand positioningcompany or brand positioning

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

Communicating the chosen positionCommunicating the chosen position

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Positioning

Choosing a Positioning Strategy:Choosing a Positioning Strategy: Communicating and delivering the Communicating and delivering the

chosen positionchosen position Entire marketing mix must support the Entire marketing mix must support the

chosen strategy chosen strategy May require changes to the product, May require changes to the product,

pricing, distribution or promotion. pricing, distribution or promotion.

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Zoots Video Clip

Zoots Drycleaning has adapted its service to meet the needs of its target market and reflect its positioning.

BusinessNow

Click the picture above to play video

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Segmentation, Targeting, and Positioning Chapter 8