Strategic Marketing, 3rd edition

Chapter 5: Segmentation, targeting, and positioning strategies

Perceptual Mapping
 Learning Objectives

 To understand the ways in which companies can segment markets

 To discern how marketers can measure the effectiveness of identified

target segments

 Be able to differentiate among the various ways in which marketers

can reach the identified market segments

 Be able to explain the importance of positioning the product in the

head of the target consumer

 To know how to use important tools for perceptual mapping

 To know how to achieve a powerful position within the mind of the

target consumer
 Introduction

• Market segmentation is vital for company success

• Dividing the market into reasonable segments is the
starting point
• Develop a series of strategic goals & strategies to
reach the identified target
• This chapter will present possible foundations for
effective segmentation & mechanisms
 Foundations for Effective Segmentation
• It is unlikely for any company to appeal to an entire
market
• Identify segments of consumers
• Tailor offerings to meet the NWDs of that particular
group of consumers
• Market segmentation involves the identification of
subgroups of consumers with similar wants and buying
requirements
• This helps the firm configure its marketing mix
 Market Segmentation

Market segmentation divides a market into

well defined slices. A market segment consists
of a group of customers who share similar sets
of needs and wants. The marketer’s task is to
identify the appropriate number and nature of
market segments and decide which ones to
enter.
Criteria for Identifying Segments
 Geographic Segmentation

In the geographic segmentation approach, markets are divided

into different geographic units. It ranges from local to global.
These units may include nations, cities, or even neighborhoods.

Marketers can operate in one or few areas, or it can operate in all but
pay attention to local variations.
Discussion 1: if you are managing a fast food chain restaurant, how
will your approach in different geographical areas change?
Discussion 2: If you managing a bank, will your services change from
one geographical region to another?
 Geographic Segmentation
• Focuses on the
where issue
• Local segmentation
often used by small
firms
• Keeps the market
confined to a
manageable area
• Global Segmentation
: The company sees
the entire world as
its appropriate
playing field
– Potential for
cultural
inappropriatenes
s
Need to also consider topography
Costs of overcoming physical obstacles
Example: Home healthcare market
 Demographic Segmentation

In demographic segmentation: demography is the study of human

population and it comprises of parameters that can be statistically
measured.
Gender (which now can be masculinity and femininity).
Occupation: white collar, blue collar, retirees/pensioners, unemployed,
students
Stage of family life cycle: single, young married, married with
children/no children, married with older children, empty nesters.
 Demographic Segmentation
• Gender: gender segmentation involves choosing males or females as the target
audience
• Age: Sony and MS have popular computer gaming systems and hand held
systems – Sony’s Playstation and PSP and MS’s x-box. Aim is to reach the
computer savvy youth with considerable discretionary income
• Cohort of Society: baby boomers (46-65): personal acquisitions are important.
genX (66-76): cynical, great economic power; genY(77-94): interested in urban
lifestyle, outdoor activities, genz/millennials (95-2012): multi cultural,
interested in high-tech products, social media savvy, well educated.
• Level of Education: complexities of certain products make them more
appropriate for proper evaluation and usage by individuals with higher levels
of education. Calculators, computers, music and DVDs for high school and
college students.
• Level of Income: disposable (left after taxes and credits, used for purchasing
basic necessities like food, shelter and clothing); discretionary (left over from
disposable income after acquiring basic necessities and used to by fashion,
cosmetics, fragrances and leisure like vacation, fitness club membership)
 Demographic Segmentation
Religion: some products are not allowed in certain religions. Acceptable
articles and types of clothing can be dictated by religion eg coverings by
women
 Demographic Segmentation
Ethnicity: ads are run with Asian American, African American and
Hispanic American settings which include appropriately
representation models, locales, music and language
 Demographic Segmentation
Family life cycle stage
–Existence of the extended family in
many developing countries is an
important consideration sincere there
are various members of the family unit
who can play a variety of roles in the
product/service choice process.
–Family life cycle stage: dependent
(<24), pre family (<35),family (<65), late
• Life conditions that have a
potential impact of
product/service purchase
decisions
–Social class/status : Upper, Upper
Middle, Middle, lower middle, skilled , (a) Poor (below $1.25, (b)
working, lowest. Vulnerable non-poor ($1.25-
2.00); (c) Middle Class ($2.00-
3.00), (d) Upper middle class
($3.00-4.00) and (e) Rich
( $4.00).
 Psychographic Segmentation
• Psychographic segmentation divides the market on
the basis of human personality and lifestyle.
• Lifestyle is a person’s pattern of living and how they
interact in the world.
• Personality refers to the unique psychological
characteristics.
 Psychographic Segmentation
• Psychographic Bases
• AIOAVs – Activities, Interests, Opinions, Attitudes and Values
Perceptual issues: Combining individuals who are psychologically similar
in their orientation; Excellent potential for effective targeting segments,
understanding how the segments live their daily lives. Segments which
are exactly the same in terms of demographics may be significantly
different in terms of their psychological makeup
 Psychographic Segmentation
1. Lifestyle
– The ways in which individuals choose to live their lives
– What types of activities they enjoy, what life settings they desire
and who they surround themselves with

Eight different segments:

1. TV opposing Moderates: does things in moderation
2. Unromantic Thrill Seekers: looks for thrills but not interested
in social or romantic activities
3. Unexcited Romantics: prefer quiet, leisurely and romantic
activities to thrills
4. Lazy Opportunists: prefer not to be active
5. Interactive Party Animals: prefer activities involving social
interactions
6. Introvert Individuals: prefer to do things on their own
7. Outgoing Socializers: prefer social activities
8. Rushing Adrenaline Addicts: prefer activities involving
excitement and motion
 Psychographic Segmentation
2. Personality Traits

Kotler lists four main variations of personality Traits:

• Compulsive
• Gregarious
• Authoritarian
• Ambitious

Aaker in his research identified five personality traits for brands:

sincerity, ruggedness, sophistication, competence and excitement
• Excitement: carefree, spirited, youthful, friendly
• Sincerity: genuine, kind, family-oriented, thoughtful
• Ruggedness: rough, tough, outdoors, athletic
• Competence: successful, accomplished, influential, a leader,
innovative, intelligent
• Sophistication: elegant, prestigious, pretentious
Sincerity

Competence
Ruggedness

Excitement
 Psychographic Segmentation
Personality Types
• Ambitious Personality: Someone with
a strong determination and desire to
succeed and become really big.
• Authoritarian: dictatorial personality.
They want to control others.
• Gregarious: outgoing, extrovert,
friendly and sociable.
• Compulsive Personality: it is a mental
condition which makes consumers do
certain things/develop certain habits
which is out of their control. However,
in the depth of their heart, they might
want to discontinue. For example:
Eating habits, orderliness, extreme
sense of cleanliness.
 Psychographic Segmentation
Core Values:
• Conservatism: traditional
thought process
• Intellectual Autonomy :
freedom of thought ,curious,
creative, innovative
• Affective Autonomy :freedom
of action, Adventurous)
• Hierarchy: social power
• Mastery: successful,
ambitious, competent ,
confidence
• Egalitarian Commitment:
Loyalty, Honesty, equality,
Responsibility)
• Harmony: love for all
 Lux Mountain dew

• Woman
• 20-25
• Man
• 20+
• Beautiful
• Manly looks
• Glamorous • Macho man
• Colorful Gown • Jacket with
• Red sporty look
• Successful • Sports shoes
• Backpack green
• Happy
• Cap
• Confident
 Psychographic Segmentation
VALS Typology
• An approach to segmentation incorporating both psychological and
demographics
• Eight separate groups for segmentation purposes in USA
– Actualizers: successful, self image, self esteem focused. (10 % of
population)
– Fulfilleds: educated, practical, older gen, hierarchy focused (11% of
population)
– Experiencers : impulsive, variety seeking, younger, looking for
excitement, follows trends (13% of population)
– Achievers: career oriented, family focused, buys prestige goods
(14% of population)
– Believers: patriotic, conservative, religious, community oriented,
prefer local brands. (17% of population)
– Strivers: financially under performers, (12% of population)
– Makers; manual skills, self sufficient, independent (12% of
population)
– Strugglers; elderly who are poor, lack skills, uneducated, basic need
focused. (12% of population)
 Behavioral Segmentation
Behavioral segmentation divides consumers into groups according to
the following characteristics:
A. User Status: non-users, ex-users, potential users, first time users,
regular users. Blood bank (regular donors, first-time donors, ex
donors), non branded oral care product users (potential).
B. Usage Rate: light user, medium user, heavy user. Industrial
marketers refer to the 80-20 rule, meaning 20% of their buyers
account for 80% of their sales volume.
C. Loyalty Level: Brand insistence, brand loyalty, split loyalty, shifting
loyalty, no loyalty
D. Benefits Segmentation: In terms of key benefits that consumers
seek from the use of some product/service
Behavioral Segmentation: Types of Loyalty
•Brand Insistence: highest level of loyalty, reflects the consumer who
when faced with the favorite brand not being available, will not buy any
alternative
•Brand Loyalty: consumer will buy the favorite brand if it is available,
but fi it is not available, another brand may be purchased instead
•Split Loyalty: reflects loyalty to more than one brand
•Shifting Loyalty: consumers who are loyal to one brand for a period of
time and then shift to another brand for a period of time
•Switchers: those who have no loyalty to any brand in that product or
service class
Targeting
 Targeting
Targeting
• This involves deciding on the segment to serve and the best action
plans to reach the identified segment

o o k i ng a t it:
n t w a y s o fl o n
Five d i ffe re Co n c e n tr a ti
s e g m e n t
• Single pe c ia l iz ati o n
e l e c tiv e S
• S c i a l iz ati o n
ro d u ct Spe
• P
e c ia l i z a ti o n
p
• Market S t Coverage
u ll M a r ke
• F

http://www.yourarticlelibrary.com/marketing/
5-patterns-of-target-market-selection-that-
may-considered-by-a-company/22178
A. Single Segment Concentration (niche)
• One product is geared
towards one market
segment in a niche strategy
• Say, company X uses this
strategy when it produces
a typical product for a
single type of market like
plasma TV
• Certain companies print
only law books or only
medical books.
 Affordable range, Ethnic products for urban youth (female)

Alkananda 6 yard Story

 B. Selective Specialization (mass/niche)
Firm aims different product variants/ranges at different segments with the idea of one product
per segment (umbrella brand/ corporate brand)
There may be little or no synergy among the segments, but this strategy has the advantage of
diversifying the firm’s risk.

Direct marketing solution

http://marketing-case-
studies.blogspot.com/2009/01/hummer-
campaign.html
 Personal care

Room care
Demographics: Men and women between 18 to 34 years old, that have
a high disposable income (around $2,000), if student, then those who
spend comfortably, are salaried, belong mostly to generation Y, college
educated, average income around $22,500 per year.
Typically single men and women (bachelors), heterosexual.

Psychographics and Behavioral:

Innovators (or people who are able to adapt to new technologies and
embrace them), beauty conscious (focused on physical appearance),
people who are actively involved in sports or are popular sports fans.
Quality of shave Executives, working men and women Regular and
heavy users High autonomy, value oriented Gillette
Convenience Employees Regular and heavy users Hedonistic, high self-
involvement Gillette
Technology/Fashion Teens/youth, mid-level executives First time users,
appearance conscious High sociability, active Gillette
Price Conscious Low income, illiterates, unaware Laggards, non-regulars
Hypochondriac, conservative Local players
 C. Product Specialization (mass market)
• Firm aims a particular product variant (individual brand) to a variety
of different segments
 D. Market Specialization (mass market)
• Firm aims a variety of product variants (multiple brands) at one
particular broad market segment
• Company can implement this strategy by producing all sorts of home
appliances like TV, washing machine, refrigerator and micro oven for
middle class people
 E. Full Market Coverage (mass market)
• Firm uses undifferentiated/ differentiated marketing
aiming a variety of product variants across a variety
of segments
Target: young female who prefer professional make ups (UK)
https://nyxcosmetics-world.tumblr.com/post/151265376081/post-5-nyx-target-market
 Measuring Effectiveness of Target Segments
As per Kotler (2003) segments must be
• Measurable: the size, purchasing power and characteristics of the
segments can be measured
• Accessible: segments can be effectively reached and served.
• Substantial: large enough and capable of generating sufficient
profits. It wouldn’t pay if an automobile manufacturer developed
cars for people are four feet tall
• Differentiable: truly distinct from other segment sin terms of
composition and response to marketing stimuli
• Actionable: effective programs can be formulated for attracting and
serving the segments
Positioning
 Positioning
• Perceptual Position within the mind
of the consumer
P T E N A IR L I N E S IN
• Target Consumer has a clear and TO
distinctive image in mind 2017
• Keep the Brand Name at the top of 1      Q a ta r A ir w a y s
the choice
S i n g a p o re A ir lin es
• Al Reis and Jack Trout - ladder inside 2   
n
every consumers head for each and 3   ANA All Nippo
every product and service Airways
• All competing brands known to the
consumer are placed on different 4   Emirates
steps of the ladder. Goal is to get to 5   Cathay Pacific
the top step where consumers have 6   EVA Air
chosen a particular brand as the bet
or their favorite. 7   Lufthansa
• Being on the top of the ladder allows 8      Eti h a d A ir w a y s
the firm to enjoy Consumer
 H a in a n A ir li n e s
Franchise (behavioral+attitudinal) 9  
a ru d a In d o n e sia 
10 G
 Developing a Positioning Statement
• A statement that summarizes a company’s or brand’s positioning.
• An external and internal foundation for the brand
• Brand Mantra/ Essence is for internal use
• To be effective, it must be Clear, Consistent ,Credible and Competitive

The three key components of a positioning statement:

• The Audience and Context
• The Value Propositions (PODs)
• The Action Components that will be used by the
company to deliver the value proposition to the
audience in the context identified.
 Developing a Positioning Statement
The 4 Cs of Positioning
• Clarity: in terms of target market and differential advantage
• Consistency: maintain a consistent message
• Credibility: in the minds of the target customer--they must believe the claim
• Competitiveness: the differential advantage should offer the customer something
of value competitors cannot provide (competitors should be named if possible)
 Developing a Positioning Statement
Audience: [Convince] To business managers and professionals engaged
in making time sensitive decisions about international business,
USP: [That] DHL delivers on time
Contextual Logic: [Because] its pickup, transportation and delivery
system is wholly-owned and managed by DHL personnel, not by third
party providers.
Excellence. Simply Delivered
78:83: When it absolutely positively has to be there overnight.
 The Positioning Statement
Volvo: For upscale American families, Volvo is
the family automobile that offers maximum
safety. (tagline: Volvo: for Life)

[Convince] Busy, mobile

professionals who need to
always be in the loop
[That] BlackBerry is a
wireless connectivity
solution
[Because] it gives you an
easier, more reliable way to
stay connected to data,
people and resources while
on the go
https://essaysamurai.c
o.uk/positioning-
strategy-of-grameen-
phone/
 Class Exercise

• Select a brand of your choice.

• Write a positioning statement for this brand.
 Perceptual Mapping
• Perceptual mapping is a
diagrammatic
technique used by
strategists that
attempts to visually
display the perceptions
of a brand relative to
their competition in the
customer mindset.
• It represents a visual
picture of how
customers perceive
different brands in their
mindset.
• Hence, it is not what
the strategist believes,
its about the
perception of the
consumers.
 Perceptual Map UK
Confectionery Brands
Positioning and the importance of Consistency

• The key strategic issue associated with

positioning is to present a clear and consistent
message to the target audience
• The company that constantly tinkers with
image stands the chance of confusing its
target market
• http://www.tornosnews.gr/en/tourism-
businesses/villa-rentals/14392-skift-airbnb-
quietly-positioning-to-disrupt-the-mice-
industry.html