Segmentation

1. Segmentation, Targeting,
and Positioning
Building the Right
Relationships with the Right
Customers
Chapter 7

2. Learning Goals
1. Learn the three steps of target marketing,
market segmentation, target marketing,
and market positioning
2. Understand the major bases for
segmenting consumer and business
marketing strategy
3. Know how companies identify attractive
market segments and choose target
marketing strategy
4. Realize how companies position their
products for maximum competitive
advantage in the marketplace
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3. Case Study
Procter & Gamble
• Sells multiple brands • Has also identified
within the same product different niches within
category for a variety of certain segments
products • Product modifications
are useful: Tide offers
• Brands feature a seven different product
different mix of benefits formulations to serve
and appeal to different different niches’ needs
segments
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4. Steps in market segmentation,
targeting and positioning
Market Segmentation
 Identify bases for segmenting the market
 Develop segment profiles
Target Marketing
 Develop measure of segment
attractiveness
 Select target segments
Market Positioning
 Develop positioning for target segments
 Develop a marketing mix for each
segment
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Goal 1: Learn the three steps of target marketing

5. 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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Goal 2: Understand the major bases for segmentation

6. Segmenting Consumer
Markets
Geographical segmentation
Demographic segmentation
 Most popular segmentation
Psychographic segmentation
 Lifestyle, social class, and
personality-based segmentation
Behavioral segmentation
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Goal 2: Understand the major bases for segmentation

7. Geographic Segmentation
Variables
• World region • Neighborhood
or country • City or
• U.S. region metro size
• State • Density
• City • Climate
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Goal 2: Understand the major bases for segmentation

8. Demographic Segmentation
Variables
• Age • Occupation
• Gender • Education
• Family size • Religion
• Family life cycle • Race
• Income • Generation
• Nationality
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Goal 2: Understand the major bases for segmentation

9. Behavioral Segmentation
Variables
• Occasions • User Rates
• Benefits • Loyalty Status
• User Status • Readiness Stage
• Attitude Toward
the Product
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Goal 2: Understand the major bases for segmentation

10. Segmenting Business
Markets
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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Goal 2: Understand the major bases for segmentation

11. Segmenting International
Markets
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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Goal 2: Understand the major bases for segmentation

12. 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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Goal 2: Understand the major bases for segmentation

13. Target Marketing
Target Market
 Consists of a set of buyers who
share common needs or
characteristics that the company
decides to serve
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Goal 3: Know how companies identify and target attractive segments

14. 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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Goal 3: Know how companies identify and target attractive segments

15. Target Marketing
Selecting Target Market Segments
 Undifferentiated (mass) marketing
 Differentiated (segmented)
marketing
 Concentrated (niche) marketing
 Micromarketing (local or individual)
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Goal 3: Know how companies identify and target attractive segments

16. Choosing a Target
Marketing Strategy
Considerations include:
 Company resources
 The degree of product variability
 Product’s life-cycle stage
 Market variability
 Competitors’ marketing strategies
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Goal 3: Know how companies identify and target attractive segments

17. Target Marketing
Socially Responsible Targeting
 Some segments, especially
children, are at special risk
 Many potential abuses on the
Internet, including fraud Internet
shoppers
 Controversy occurs when the
methods used are questionable
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Goal 3: Know how companies identify and target attractive segments

18. Positioning
Positioning:
 The place the product occupies in
consumers’ minds relative to competing
products.
 Typically defined by consumers on the
basis of important attributes.
 Involves implanting the brand’s unique
benefits and differentiation in the
customer’s mind.
 Positioning maps that plot perceptions of
brands are commonly used.
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Goal 4: Realize how companies position their products

19. Choosing a Positioning
Strategy
Topics Differentiation can be based
on
Identifying possible  Products
 Services
competitive advantages  Channels
Choosing the right  People
 Image
competitive advantage
Choosing a positioning
strategy
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Goal 4: Realize how companies position their products

20. Market Segmentation
Topics • How many differences to
promote?
 Unique selling
Identifying possible proposition
competitive advantages  Several benefits
Choosing the right • Which differences to
competitive advantage promote? Criteria include:
Choosing a positioning  Important
 Distinctive
strategy
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
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Goal 4: Realize how companies position their products

21. Market Segmentation
Topics • Value propositions
represent the full
Identifying possible positioning of the brand
competitive advantages • Possible value
Choosing the right propositions:
competitive advantage  More for More
 More for the Same
Choosing a positioning
 More for Less
strategy
 The Same for Less
 Less for Much Less
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Goal 4: Realize how companies position their products

22. Developing a
Positioning Statement
Positioning statements summarize
the company or brand positioning
 EXAMPLE: To (target segment and
need) our (brand) is (concept) that
(point-of-difference)
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Goal 4: Realize how companies position their products

23. Communicating the
Positioning
Companies must be certain to
DELIVER their value propositions.
Positions must be monitored and
adapted over time.
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Goal 4: Realize how companies position their products