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Segmentation, Segmentation, Targeting, and Targeting, and

Positioning: Building the Positioning: Building the Right Relationships with Right Relationships with

the Right Customersthe Right CustomersChapter 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 and attractive market segments and how they choose a target 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 Sells multiple brands within the brands within the same product same product category for a category for a variety of productsvariety of products

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

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

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

Procter & GambleProcter & Gamble

Case Study

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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, or behavior who characteristics, or behavior who might require separate products might require separate products or marketing mixes.or marketing mixes.

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Market Segmentation

• Segmenting Consumer Segmenting Consumer MarketsMarkets

• Segmenting Business Segmenting Business MarketsMarkets

• Segmenting Segmenting International MarketsInternational Markets

• Requirements for Requirements for Effective SegmentationEffective Segmentation

• Geographical segmentationGeographical segmentation Marketing mixes are Marketing mixes are

customized geographicallycustomized geographically

• Demographic segmentationDemographic segmentation Most popular segmentationMost popular segmentation Demographics are closely Demographics are closely

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

• Psychographic Psychographic segmentationsegmentation Lifestyle, social class, and Lifestyle, social class, and

personality-based personality-based segmentationsegmentation

• Behavioral segmentationBehavioral segmentation Typically done firstTypically done first

Topics Topics

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Geographic Segmentation Geographic Segmentation VariablesVariables

Market Segmentation

• World Region World Region or Countryor Country

• U.S. regionU.S. region• StateState• CityCity

• NeighborhoodNeighborhood• City or City or

Metro SizeMetro Size• DensityDensity• ClimateClimate

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Demographic Segmentation Demographic Segmentation VariablesVariables

Market Segmentation

• AgeAge

• GenderGender

• Family sizeFamily size

• Family life cycleFamily life cycle

• IncomeIncome

• OccupationOccupation

• EducationEducation

• ReligionReligion

• RaceRace

• GenerationGeneration• NationalityNationality

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Behavioral Segmentation Behavioral Segmentation VariablesVariables

Market Segmentation

• OccasionsOccasions

• BenefitsBenefits

• User StatusUser Status

• User RatesUser Rates

• Loyalty Loyalty StatusStatus

• Readiness Readiness StageStage• Attitude Toward the ProductAttitude Toward the Product

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Market Segmentation





• Demographic segmentationDemographic segmentation Industry, company size, Industry, company size,

locationlocation

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

customer capabilitiescustomer capabilities

• Purchasing approachesPurchasing approaches

• Situational factorsSituational factors Urgency, specific Urgency, specific

application, size of orderapplication, size of order

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

attitudes toward risk, attitudes toward risk, loyaltyloyalty

Topics Topics

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Market Segmentation





• Geographic segmentationGeographic segmentation Location or regionLocation or region

• Economic factorsEconomic factors Population income or level Population income or level

of economic developmentof economic development

• Political and legal factorsPolitical and legal factors Type / stability of Type / stability of

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

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

attitudes, customs, attitudes, customs, behavioral patternsbehavioral patterns

Topics Topics

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Market Segmentation





• MeasurableMeasurable Size, purchasing power, Size, purchasing power,

and profile of segmentand profile of segment

• AccessibleAccessible Can be reached and served Can be reached and served

• SubstantialSubstantial Large and profitable Large and profitable

enough to serveenough to serve

• DifferentiableDifferentiable Respond differentlyRespond differently

• ActionableActionable Effective programs can be Effective programs can be

developeddeveloped

Topics Topics

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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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Target Marketing

• Target Marketing StrategiesTarget Marketing Strategies Undifferentiated (mass) Undifferentiated (mass)

marketingmarketing Differentiated (segmented) Differentiated (segmented)

marketingmarketing Concentrated (niche) marketingConcentrated (niche) marketing Micromarketing (local or Micromarketing (local or

individual) marketingindividual) marketing

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Target Marketing• Choosing a Target-Marketing Choosing a Target-Marketing

Strategy Requires Consideration Strategy Requires Consideration of: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 strategiesCompetitors’ marketing strategies

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Target Marketing

• Socially Responsible Targeting Socially Responsible Targeting Some segments are at special Some segments are at special

risk:risk: ChildrenChildren Inner-city minority consumersInner-city minority consumers Internet shoppersInternet shoppers

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

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Positioning

• Positioning:Positioning: The place the product occupies The place the product occupies

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

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

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Positioning• Choosing a Positioning Strategy:Choosing a Positioning Strategy:

Identifying possible competitive Identifying possible competitive advantagesadvantagesProducts, services, channels, people or Products, services, channels, people or

image can be sources of differentiation.image can be sources of differentiation.

Choosing the right competitive Choosing the right competitive advantageadvantageHow 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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Criteria for Criteria for Meaningful DifferencesMeaningful Differences

Positioning

• ImportantImportant

• SuperiorSuperior

• PreemptivePreemptive

• DistinctiveDistinctive

• CommunicablCommunicablee

• AffordableAffordable• ProfitableProfitable

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Positioning

• Choosing a Positioning Choosing a Positioning Strategy:Strategy: Selecting an overall positioning Selecting an overall positioning

strategystrategyMore for More Value PropositionMore for More Value PropositionMore for the Same Value PropositionMore for the Same Value PropositionThe Same for Less Value PropositionThe Same for Less Value PropositionLess for Much Less Value PropositionLess for Much Less Value PropositionMore for Less Value PropositionMore for Less Value Proposition

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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