Chapter 5: Market Segmenting, Targeting, and Positioning

by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond
Principles of Marketing

Chapter 5Chapter 5
Market Segmenting, Targeting,Market Segmenting, Targeting,
and Positioningand Positioning
©2010 Flat World Knowledge, Inc.

Learning ObjectivesLearning Objectives
1. Distinguish between targeted marketing and
mass marketing and explain what led to the
rise of each.
2. Describe how targeted marketing can benefit
firms.
3. Explain why companies differentiate among
their customers.

Targeted marketing—selecting a group(s) of consumers for marketing
1.A relatively new phenomena
2.A rifle approach
vs.
Mass marketing—selling the same product to all consumers
1.Came first
2.Evolved with mass production
3.A shotgun approach
Mass vs. Targeted MarketingMass vs. Targeted Marketing

Benefits in Segmenting and TargetingBenefits in Segmenting and Targeting

Targeting MarketsTargeting Markets

Segment and Target Existing CustomersSegment and Target Existing Customers
Finding new customers is more expensive than keeping existing ones!
• Changing vendors can be a hassle for customers, too.
• Both parties can benefit by a continued relationship .
Economic downturns make it hard to find new customers.
• Focusing on current customers is required.
• Social networking sites are being followed by providers of products.
Not all customers are equal.
• Often it is found that 20% of the customers account for 80% of sales or profits.
• But, impactful customers have clout—they may want different products.

One to One Marketing StepsOne to One Marketing Steps

Mass marketing—selling the same product to everyone
Differentiated marketing—targeting select groups
Major vs. minor customers—all customers are not equal
•It costs significantly more to find a new customer vs.
keeping current ones.
• 20% of the customers can lead to 80% of revenue/profits
• CRM products and messages tailored to major customers
Key TakeawaysKey Takeaways

Segmenting MarketsSegmenting Markets
Learning Objectives
1.Understand techniques used in segmentation.
2.Explain why some marketing people use
segmentation while others do not.

Types of Segmentation BasesTypes of Segmentation Bases

Segmenting by BehaviorSegmenting by Behavior
Benefits—segmenting buyers by the benefits that they seek from the product
Usage—segmenting buyers by the frequency that they use/buy products
Application—segmenting buyers by the way in which they use products
Knowing the benefits that buyers seek, how often they purchase
the product, and the manner in which the product is used allows
marketing people to tailor products to buyers for optimum results.

Segmenting by DemographicsSegmenting by Demographics
Demographic segmentation is the most commonly used technique because
of the ready access to extensive global data and information.
Product needs and wants are readily identified
with life cycle, purchasing power, and interests
of classes of individuals
Demographic factors aid
the targeting of markets.

Where do buyers live? What are the unique needs/wants in this area?
Geocoding is the process of mapping customer zip code and purchase information.
http://www.claritas.com/MyBestSegments/Default.jsp?ID=20
Geodemographics combines both geographic and demographic information.
Claritas PRISM NE is a good source to see how this process works.
(bring up the site with an online computer)
Segmentation by GeographySegmentation by Geography

Segmentation by PsychographicsSegmentation by Psychographics

Psychographic SegmentationPsychographic Segmentation

Value and Lifestyle (VALS)Value and Lifestyle (VALS)
SRI did/is doing this with VALS
• value
• life style
• primary and secondary
• now a Pacific data base is available
Take the survey at
http://www.sric-bi.com/vals/surveynew.shtml

The VALS TypesThe VALS Types
Innovators—successful, satisfied, take charge people
Thinkers—mature, satisfied, comfortable, well informed
Achievers—goal oriented, conservative, predictable, stable
Experiencers—young, enthusiastic, seek variety and excitement
Believers—conservative, conventional, moral codes, in organizations
Strivers—trendy, fun loving, seek approval, job vs. career
Makers—practical, self sufficient, suspicious of large institutions
Survivors—few resources, concerned with safety, low motivation

Segmentation uses criteria to classify buyers
• Behavioral—how buyers behave towards products
• Geographic—where buyers live
• Demographic—age, income, education, ethnicity, etc.
• Psychographic—buyer values and lifestyles
Firms may use more than one technique to get a fuller picture of buyers.
Marketing professionals gather qualitative and quantitative information.

Learning Objectives
1.What makes some markets more attractive then others?
2.Describe various market segmentation strategies.
3.Global segmenting strategies.
Market Targeting StrategiesMarket Targeting Strategies

Targeting CriteriaTargeting Criteria

Multi-Segment MarketingMulti-Segment Marketing
Pursuing multi-segment markets reduces the risk from competition.
Some firms, including those with limited resources,
choose to concentrate activities to a very select set of customers
(concentrated marketing).
Niche marketing addresses very select groups of customers—
big fish, small pond.
Microtargeting addresses unique characteristics of buyers that combine
a variety of features identified with individuals or small groups. It raises
The issue of ethics as to how the targeting information was developed.

Targeting techniques for global markets
may be the same as domestic markets.
Due to varying customs and ethnicities most
companies tailor their products and messages
for global markets.
Targeting Global MarketsTargeting Global Markets

Targeting Criteria
1.Can it be profitable?
2.Is it growing?
3.Is there room for another competitor?
4.Is it accessible?
5.Are sufficient resources available?
6.What is the fit with company objectives?
Other Target-segment Considerations
1.Multi-segment
2.Concentrated marketing
3.Microtargeting
4.Global target parameters

Positioning OfferingsPositioning Offerings
Learning Objectives
1.Explain positioning and targeting customers.
2.Describe product positioning and mapping.
3.Explain what repositioning is designed to do.

PositioningPositioning
Positioning—allowing a product to stand out
from competition
Positioning can use a perceptual map and seeks
a position where competitors are not clustered.
Re-positioning—moving a product
to a different place in buyers’ minds

Chapter 5: Market Segmenting, Targeting, and Positioning

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Chapter 5: Market Segmenting, Targeting, and Positioning