Segmentation, Targeting,
and Positioning
Chapter 8
Objectives
Be able to define the three steps
of target marketing: market
segmentation, target marketing,
and market positioning.
Understand the major bases for
segmenting consumer and
business markets.
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Objectives
Know how companies identify
attractive market segments
and how they choose a target
marketing strategy.
Comprehend how companies
position their products for
maximum competitive
advantage.
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Procter &
c Gamble
Sells multiple Has also identified
brands within the different niches
same product within certain
category for a segments
variety of products
Brands feature a Tide offers seven
different mix of different product
benefits and formulations to
appeal to different serve different
segments niches’ needs
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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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Figure 8-1:
Steps in Market
Segmentation, Targeting,
and Positioning
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Market Segmentation
Key Topics Geographical
segmentation
Segmenting Marketing mixes are
customized
Consumer Markets geographically
Segmenting Demographic
Business Markets segmentation
Segmenting Psychographic
International segmentation
Markets Behavioral
Requirements for segmentation
Effective Using multiple
Segmentation segmentation variables
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Market Segmentation
Geographic
Segmentation Variables
World Region City or
or Country Metro Size
U.S. Region Neighborhood
State Density
City Climate
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Discussion Question
Geographical climate is
a legitimate means of
segmentation for many
products or services.
Name several examples of
products for which need
(and demand) would vary
on a geographical basis.
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Market Segmentation
Key Topics Geographical segments
Demographic
Segmenting segmentation
Consumer Markets Most popular type
Demographics are closely
Segmenting related to needs, wants
Business Markets and usage rates
Segmenting Psychographic
International segmentation
Markets Behavioral
Requirements for segmentation
Effective Using multiple
Segmentation segmentation variables
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Market Segmentation
Demographic
Segmentation Variables
Age Occupation
Gender Education
Family size Religion
Family life cycle Generation
Income Nationality
Race
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Corvallis map of income
distribtuion
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Salem Hispanic Population
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Portland Household Income
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Bend price of homes
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What type of demographic segmentation
is reflected by this ad?
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Market Segmentation
Key Topics Geographic segments
Demographic
Segmenting segmentation
Consumer Markets Psychographic
Segmenting segmentation
Business Markets Lifestyle, social class,
and personality-based
Segmenting segmentation
International Behavioral
Markets segmentation
Requirements for Using multiple
Effective segmentation
Segmentation variables
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Swatch targets
those with an
active lifestyle
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Market Segmentation
Key Topics Geographic segments
Demographic
Segmenting segmentation
Consumer Markets Psychographic
Segmenting segmentation
Business Markets Behavioral
Segmenting segmentation
International Typically done first
Markets
Using multiple
Requirements for segmentation
Effective
variables
Segmentation
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Market Segmentation
Behavioral
Segmentation Variables
Occasions Loyalty Status
Benefits Readiness Stage
User Status Attitude Toward
User Rates the Product
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Occasion segmentation: Altoids’ “Love
Tin” is a “curiously strong valentine”
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Checkout Direct
offers retailers &
manufacturers an
excellent method
of reaching
segments of
heavy users, as
well as users of
the direct
competition.
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Market Segmentation
Key Topics Geographic segments
Demographic
Segmenting segmentation
Consumer Markets Psychographic
Segmenting segmentation
Business Markets Behavioral
Segmenting segmentation
International Using multiple
Markets
segmentation
Requirements for variables
Effective
Prizm
Segmentation
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Discussion Question
Visit PRIZM’s “You are
where you live”
website.
Enter the zip code(s) of
your choice.
Were you
surprised by
what you
found?
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Example Market segments for J.C.
Penney Conservative
Size: 23% of population
16% of sales
Age: 35-55 years old
Values: Conservative
values satisfied with
present status
Employment: Has job, or
career
Income: Limited
disposable income
Benefits sought: Price-
driven, reacts to sales,
wants easy care and
comfort, Not interested in
fashion, Defines value as
Price, Quality, Fashion
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Traditional
Size: 38% of population
40% of total sales
Age: 25-49 years old
Values: Traditional values
Active, busy, independent,
self-confident
Employment: Family-and
job/career-oriented
Income: Considerable
income
Benefits sought: Wants
traditional styling, seeks
clothes that last, Interested
in newness, Defines value
as Quality, Fashion, Price
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Update
Size: 16% of
population 24% of
total sales
Age: 25-49
Values: Contemporary
values Active, busy,
independent, very self-
confident
Employment: Family-
and job/ career-
oriented
Income: considerable
income
Benefits sought:
Wants newness in
color and style, Shops
often, Defines value as
Fashion, Quality, Price
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Example Toothpaste Benefit segments
Sensory
Segment
Sociable
Segment
Worrier
Segment
Independent
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Sensory Segment
Principle benefit
sought: Flavor and
product appearance
Demographic
strengths: Children
Special behavior
characteristics: Users
of spearmint-flavored
toothpaste
Brands: Colgate
Lifestyle
characteristics:
Hedonistic
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Sociable Segment
Principle benefit sought:
Brightness of teeth
Demographic strengths:
Teens, young people
Special behavior
characteristics:
Smokers
Brands: Macleans, Ultra
Brite
Lifestyle characteristics:
Active
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Worrier Segment
Principle benefit sought:
Decay prevention
Demographic strengths:
Large Families
Special behavior
characteristics: Heavy
users
Brands: Crest
Lifestyle characteristics:
Conservative
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Independent Segment
Principle benefit
sought: Price
Demographic
strengths: Men
Special behavior
characteristics:
Heavy users
Brands: Cheapest
Brand
Lifestyle
characteristics:
Value oriented
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Market Segmentation
Key Topics Demographic segmentation
Industry, company size,
location
Segmenting
Operating variables
Consumer Markets Technology, usage status,
Segmenting customer capabilities
Business Markets Purchasing approaches
Segmenting Situational factors
International Urgency, specific
application, size of order
Markets
Personal characteristics
Requirements for Buyer-seller similarity,
Effective attitudes toward risk, loyalty
Segmentation
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Market Segmentation
Key Topics Geographic segmentation
Location or region
Segmenting Economic factors
Population income or level of
Consumer Markets economic development
Segmenting Political and legal factors
Business Markets Type / stability of
Segmenting government, monetary
regulations, amount of
International bureaucracy, etc.
Markets Cultural factors
Requirements for Language, religion, values,
Effective attitudes, customs,
Segmentation behavioral patterns
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Market Segmentation
Key Topics Measurable
Size, purchasing power, and
profile of segment
Segmenting
Accessible
Consumer Markets Can be reached and served
Segmenting Substantial
Business Markets Large and profitable enough
Segmenting to serve
International Differentiable
Respond differently
Markets
Actionable
Requirements for
Effective programs can be
Effective developed
Segmentation
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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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Figure 8-2:
Target Marketing
Strategies
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Target Marketing
Choosing a Target-
Marketing Strategy
Requires Consideration of:
Company resources
The degree of product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing
strategies
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Target Marketing
Socially Responsible Targeting
Some segments are at special risk:
Children
Inner-city
minority
consumers
Internet
shoppers
Controversy occurs when the methods
used are questionable.
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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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Porsche is
positioned on
the basis of
performance
and freedom.
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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 errors
Under-
positioning
Over-
positioning
Confused-
Positioning
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Positioning
Criteria for Meaningful Differences
Important Distinctive
Superior Communicable
Preemptive Affordable
Profitable
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Figure 8-3:
Possible Value Propositions
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Discussion Question
View the ad at right.
Evaluate the level of
benefits and the price.
What value proposition
is being expressed?
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Positioning
Choosing a Positioning Strategy:
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).
Communicating the chosen position
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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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BusinessNow
Zoots Video Clip
Zoots Drycleaning
has adapted its
service to meet the
needs of its target
market and reflect
Click the picture above to play video its positioning.
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