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Segmentation, Targeting, and Positioning

McGraw-Hill/Irwin

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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 9 – Segmentation, Targeting, and Positioning

Outline the different methods of segmenting a market.

Describe how firms determine whether a segment is attractive and therefore worth pursuing.

Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

Determine the value proposition.

Define positioning, and describe how firms do it.

Segmentation, Targeting, and Positioning

LO1

LO2

LO3

LO4

LO5

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LEARNING OBJECTIVES

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These are the learning objectives for this chapter.

Segmentation, Targeting, Positioning Process

Step 1

Strategy or Objectives

Step 2

Segmentation Methods

Step 3

Evaluate Segment Attractiveness

Step 4

Select Target Market

Step 5

Identify and Develop Positioning Strategy

Segmentation

Targeting

Positioning

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Previous chapters addressed how to plan marketing strategy; this chapter focuses on how firms use that strategy to identify the target markets they will serve.

Step 1: Establish Overall Strategy or Objectives

Check Yourself

Derived from mission and current state

©M. Hruby.

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Remind students that any strategy must be consistent with the firm’s mission statement and be based on the current assessments from SWOT analyses

Step 2: Segmentation Methods

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Group activity: Divide the class into groups. Have them choose either a manufacturer or national retailer. Have them describe their segmentation method and then evaluate whether or not it is the best segmentation method for that firm.

CHECK YOURSELF

What are the various segmentation methods?

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Geographic, Demographic, Psychographic, Geodemographic, Benefits, and Behavioral.

Step 3: Evaluate Segment Attractiveness

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Marketers first must determine whether the segment is worth pursuing, using several descriptive criteria: Is the segment identifiable, substantial, reachable, responsive, and profitable.

SEGMENT ATTRACTIVENESS

Substantial

Reachable

Responsive

Profitable

Identifiable

Who is in their market?

Are the segments unique?

Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Ask students: When would these women all be in the same segment? When would they be in different segments?

These women would appear in the same segment if the segmentation variable were gender but in individual segments based on race or lifestyle. They also may be in different geographic or income segments, for example.

Substantial

Too small and it is insignificant

Too big and it might need it’s own store

©Jerry Arcieri/Corbis

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Just because a firm can find a market does not necessarily mean it represents a good market. But size in terms of number of people is not the only consideration; despite its small size, the market for the original Hummer was incredibly profitable, and therefore was substantial

Reachable

©Digital Vision/PunchStock

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The Internet has enabled more people to be reached more easily, but various areas around the world simply cannot be served because they aren’t accessible to marketing messages or because there isn’t adequate distribution.

Ask students: What types of media influence the way they shop? The answer may lead to an interesting discussion about how difficult it is to reach Generation Y customers either because they don’t participate in traditional media such as newspapers or because they are skeptical about being influenced by commercial messages.

Know the product exists

Understand what it can do

Recognize how to buy

Responsive

Customers must:

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Group activity: Nike is very successful at selling sports related goods. Would consumers accept personal care products from Nike? Why or why not? Develop a list of potential products for Nike.

Ask students: Are any of the following acceptable: cologne, deodorant, toothpaste, or hair gel. Why or why not? What about Nike towels, sheets, or pajamas? What differences can you identify between these two types of product categories? Students are likely to say they will not understand the value proposition and the company’s expertise. Yet other students might say that they will believe in personal care product because Nike offers superior products.

React positively to firm’s offering

Move toward the firms products/services

Accept the firm’s value proposition

Profitable

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A hot segment today may not last long enough to make it worth investment. Many firms are investigating when and how much to invest in the Millennial/GenY generational cohort. Firms in financial services and housing understand that it provides a new potential market, but the debt levels this segment carries makes it difficult to target effectively.

Step 4: Selecting a Target Market

Conde Nast has more than 20 niche magazines focused on different aspects of life.

©M Hruby

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Hallmark looks at geographic segmentation when building new stores. They also use benefit segmentation for their online cards. In general, a company matches their competencies with the attractiveness of target markets.

Segmentation Strategy

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Ask students: What is an example of a mass market product? Answer: There are very few mass market products. Even commodity goods such as flour are now differentiated.

Ask students: What are examples of products that use differentiated, concentrated, and micromarketing segmentation strategies?

Differentiated = Coca Cola

Concentrated = Helena Rubenstein or Clinique

Microtargeting = Financial Services Providers

Targeting Strategies

Differentiated

Concentrated

Micromarketing or one-to-one

Undifferentiated or mass marketing

Step 5: Develop Positioning Strategy

Photo by Tiffany Rose/WireImage/Getty Images

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Positioning strategies generally focus on either how the product or service affects the consumer or how it is better than competitors’ products and services.

When positioning against competitors, the objective is to play up how the brand being marketed provides the desired benefits better than do those of competitors.

Firms thus position their products and services according to value, salient attributes, and symbols, and against competition.

Salient Attributes

Positioning Methods

Symbol

Competition

Value

Positioning Steps

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This slide provides the steps necessary to develop the positioning map on the next slide. Switch back and forth on these two slides to explain the positioning map.

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify the market’s ideal points and size.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

3. Identify competitors’ positions.

CHECK YOURSELF

What is a perceptual map?

Identify the six positioning steps.

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A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind.

Determine consumers’ perceptions and evaluations of the product or service in relation to competitors’, identify competitors’ positions, determine consumer preferences, select the position, monitor the positioning strategy.

Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

Glossary

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Return to slide

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Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

Glossary

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Return to slide

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Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Glossary

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Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Geographic segmentation organizes customers into groups on the basis of where they live.

Glossary

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Geographic segmentation organizes customers into groups on the basis of where they live.

Behavioral segmentation divides customers into groups based on how they use the product or service.

Glossary

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Behavioral segmentation divides customers into groups based on how they use the product or service.

Psychographic segmentation, or psychographics, allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices.

Glossary

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The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.

Glossary

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Return to slide

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The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.