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LEARNING OBJECTIVES

Learning Objectives

How does a firm decide what type of segmentation strategy to use?

What is the best method of segmenting a market?

How do firms determine whether a segment is attractive?

What is positioning and how do firms do it?

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Coke Zero

Why a new Diet Soda?

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Segmentation, Targeting, Positioning Process

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Step 1: Establish Overall Strategy or Objectives

Check YourselfCheck YourselfDerived from mission and current state

Derived from mission and current state

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Segmentation Strategy

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A firm’s segmentation strategy must be consistent with and derived from the firm’s

_______________, as well as its current situation.

A. perceptual map

B. disclosure statement

C. mission and objectives

D. self-concept

E. lifestyle

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Step 2: Describe Segments

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Geographic Segmentation

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Demographic Segmentation

U.S. Census Bureau Website

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Demographic segmentation is the most common basis of consumer market segmentation, because these segments are:

A. easy to define and usually easy to reach.

B. psychographically distinct.

C. self-value, self-contained segments.

D. defined by the benefits consumers’ receive.

E. all of the above.

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Balancing Act Career Moms

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Psychographic Segmentation

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VALS Website

VALS Framework

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Benefit Segmentation

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Geodemographic Segmentation

Claritas Website

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State Farm Not Insuring Mississippi

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Loyalty Segmentation

Much cheaper to keep an existing customerMuch cheaper to keep an existing customer

Lifetime value

Lifetime value

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One of the reasons marketers utilize _______________ segmentation is the high cost of

finding new customers.

A. geographic

B. benefit

C. psychographic

D. loyalty

E. geodemographic

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Step 3: Evaluate Segment Attractiveness

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Identifiable

• Who is in their market?• Are the segments unique?• Does each segment require a unique

marketing mix?

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Substantial

Too small and it is insignificant

Too big and it might need it’s own store

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Reachable

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Responsive

Customers must:

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Profitable

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Profitable Segments

Segment size = 60 million (<15 yrs)

Segmentation Adoption Percentage = 35%

Purchase Behavior = $500 x 1 time purchase

Profit margin % = 10%

Fixed Cost = $50MIs this segment profitable?Is this segment profitable?

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Step 4: Selecting a Target Market

How does Hallmark select target markets?

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Segment Attractiveness

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Step 5: Identify and Develop Positioning Strategy

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Step 5: Identify and Develop Positioning Strategy

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Value

Meet Grandpa Tony, now retired:

He knows the price of everything.

He clips coupons.

He goes to multiple stores to get the best price.

He is willing to pay more for quality.

He trusts brand names.

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Value

Meet Celia, college freshman:

Reasons for her college choice:

Close to home.

Good academic reputation.

Good financial aid package.

Did we mention cute guys?

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Symbol

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Competition

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Positioning

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When selecting a target market, a marketer should:

A. determine a customer’s objective.

B. describe past market segments.

C. evaluate the attractiveness of each consumer.

D. Match the firm’s competency with a market segment’s attractiveness.

E. identify a positioning strategy.

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Positioning Steps

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Perceptual Maps

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Repositioning

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Glossary

Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

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Glossary

Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

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Glossary

Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

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Glossary

Geographic segmentation organizes customers into groups on the basis of where they live.

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Glossary

Loyalty segmentation classifies customers by whether they buy almost exclusively from the firm.

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Check Yourself

1. Identify the steps in the segmentation process

2. What are the four segmentation strategies?

3. What are the various segmentation methods?

4. Identify four positioning strategies.

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Check Yourself

1. What is a perceptual map?

2. Identify the five positioning steps.

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Glossary

Psychographic segmentation, or psychographics, allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices.

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Glossary

The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.

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