Segmentation, Targeting, and Positioning

Chapter 7

Definition
Market Segmentation:
Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.
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Steps in Market Segmentation, Targeting, and Positioning

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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation

Geographical segmentation
Marketing mixes are customized geographically

Demographic segmentation Psychographic segmentation Behavioral segmentation Using multiple segmentation variables
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Market Segmentation
Geographic Segmentation Variables
Examples: World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc. Country Region: Pacific, Mountain, East Coast, etc. City or Metro Size: New York, San Francisco Population Density: rural, suburban, urban Climate: northern, southern, tropical, semitropical
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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation

Geographical segments Demographic segmentation

Most popular type Demographics are closely related to needs, wants and usage rates

Psychographic segmentation Behavioral segmentation Using multiple segmentation variables

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Market Segmentation
Demographic Segmentation Variables
Most frequently used segmentation variable. Ease of measurement and high availability.

Age Gender Family size Family life cycle Income Ethnicity

Occupation Education Religion Generation Nationality

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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation

Geographic segments Demographic segmentation Psychographic segmentation

Lifestyle, social class, and personality-based segmentation

Behavioral segmentation Using multiple segmentation variables

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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation

Geographic segments Demographic segmentation Psychographic segmentation Behavioral segmentation

Typically done first

Using multiple segmentation variables

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Behavioral Segmentation Variables

Occasions
Special promotions & labels for holidays. Special products for special occasions.

Loyalty Status
Nonusers, ex-users, potential users, first-time users, regular users.

Benefits
Different segments desire different benefits from the same products.

User Status

Readiness Stage Attitude Toward the Product User Rates

Light, medium, heavy.
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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation

Geographic segments Demographic segmentation Psychographic segmentation Behavioral segmentation Using multiple segmentation variables
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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation
Demographic segmentation
Industry, company size, location

Operating variables
Technology, usage status, customer capabilities

Purchasing approaches Situational factors

Urgency, specific application, size of order

Personal characteristics
Buyer-seller similarity, attitudes toward risk, loyalty
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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation
Geographic segmentation
Location or region

Economic factors
Population income or level of economic development

Political and legal factors

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

Cultural factors
Language, religion, values, attitudes, customs, behavioral patterns
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Market Segmentation
Key Topics
Segmenting Consumer Markets Segmenting Business Markets Segmenting International Markets
Requirements for Effective Segmentation
Measurable
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
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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

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Target Marketing Strategies

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Undifferentiated (Mass) Marketing

Ignores segmentation opportunities

 Targets several segments and designs separate offers for each.

Differentiated (Segmented) Marketing

Coca-Cola (Coke, Sprite, Diet Coke, etc.) Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.) Toyota (Camry, Corolla, Prius, Scion, etc.)

Question du Jour
Should the same company produce and market brands that compete with each other?

Niche Marketing
Targets one or a couple small segments Niches have very specialized interests

Micromarketing
Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations.

Target Marketing
Choosing a TargetMarketing Strategy Requires Consideration of:
Company resources The degree of product variability Products life-cycle stage Market variability Competitors marketing strategies
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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.
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Positioning
Choosing a Positioning Strategy:
Identifying possible competitive advantages -- many potential sources of differentiation exist:
Products Services Channels People Image

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Positioning
Choosing a Positioning Strategy:
Choosing the right competitive advantage

How many differences to promote?

Unique selling proposition Positioning errors to avoid

Which differences to promote?

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Positioning
Criteria for Meaningful Differences Important
Superior Preemptive

Distinctive
Communicable Affordable

Profitable
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Positioning
Choosing a Positioning Strategy:
Communicating and delivering the chosen position
Entire marketing mix must support the chosen strategy May require changes to the product, pricing, distribution or promotion.

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