Segmentation, Targeting &

Positioning
Overview: Segmentation, Targeting &
Positioning

Why do this?
 Market Segmentation -
Principles
• Segmentation Variables
– Geographic
– Demographic
– Psychographic
– Behavioral
– Other (anything!)
• No single best way to segment a market.
• Often best to combine variables and identify
smaller, better-defined target groups.
 Geographic Segmentation
• Divide markets into different geographic
units.

• Examples:
– World Region or Country: North America, Western
Europe, European Union, Pacific Rim, Mexico, etc.
– Country Region: Pacific, Mountain, East Coast, etc.
– City or Metro Size: New York, San Francisco
– Population Density: rural, suburban, urban
– Climate: northern, southern, tropical, semi-tropical
Demographic Segmentation
• Use Differences in:
– age, gender, family size, family life cycle,
income, occupation, education, race, and
religion

– Most frequently used segmentation

variable
• Ease of measurement and high availability.

– Usually the worst variable to use.

 Psychographic
Segmentation

Psychographic
segmentation divides a
market into different
groups based on social
class, lifestyle, or
personality
characteristics.
People in the same demographic
classification
often have very different lifestyles and
 Behavioral Segmentation
• Occasion • Loyalty Status
– Special promotions – Nonusers, ex-users,
& labels for holidays. potential users, first-
– Special products for time users, regular
special occasions. users.

• Benefits Sought
– Different segments • Usage Rate
desire different – Light, medium,
benefits from the heavy.
same products.
Loyalty Status
Segmentation

Hard-core

Split
loyals
Shifting
loyals
Switcher
s
User & Loyalty Status
Segmentation
 Geodemographic
Segmentation
• PRIZM, by Claritas
– Organized by ZIP code
– Based on U.S. Census data
– Profiles on 260,000+ U.S.
neighborhoods
– 62 clusters or types
Claritas’ Prizm
 Requirements for Effective
Segmentation

Segments must be
– Measurable
– Accessible
– Substantial
– Differentiable
“Lefties” are hard
to identify and – Actionable
measure, so few
firms target this
segment.
 Evaluating Market
Segments
• Segment Size and Growth Potential
– Sales, profitability and growth rates
• Segment Structural Attractiveness
– Competition, substitute products,
– buyers & supplier power, new entrants
(Porter’s Five Forces)
• Company Objectives and Resources
– Core competencies
– “What business do we want to be in?”
Targeting Segments - Overview
Market Preference Patterns
 Undifferentiated (Mass)
Marketing
– Ignores segmentation opportunities
 Differentiated (Segmented)
Marketing
– Targets several
segments and
designs separate
offers for each.

– Coca-Cola (Coke, Sprite, Diet

Coke, etc.)
– Procter & Gamble (Tide,
Cheer, Gain, Dreft, etc.)
– Toyota (Camry, Corolla,
Prius, Scion, etc.)
Question du Jour

Should the same company produce and market brands that compete with each other?
 Niche Marketing
– Targets one or a couple small
segments
– Niches have very specialized
interests
 Micromarketing
• Tailoring products and marketing
programs to suit the tastes of specific
individuals and/or locations.
Flexible Marketing Offerings

• “Naked”/Core • Discretionary
solution options
– Product and – Some segment
service elements members value
that all segment – Options may
members value carry additional
charges
Patterns of Target Market Selection:
Product x Market Matrices
 Socially Responsible
Targeting
• Controversies and
concerns
– Targeting the vulnerable and
disadvantaged
• Cereal, Cigarettes, Alcohol, Fast-food

– The “Catch-22” of Targeting

• Psychological Reactance
• Failure to target seen as prejudice
 Positioning

The place a product occupies in consumers’ minds

relative to competing products.
Positioning Example

eBay’s positioning: No
matter what “it” is, you
can find “it” on eBay!
 Positioning Example

To (target segment and need) our (brand) is a

(concept) that (point-of-difference).

“To busy mobile professionals

who need to always be in the
loop, Blackberry is a wireless
connectivity solution that allows
you to stay connected to people
and resources while on the go
more easily and reliably than the
competing technologies.”
Positioning Maps: Luxury SUVs
Price vs. Orientation Dimensions
 Positioning Strategy
• Competitive advantages
• Points of Parity
• Points of Difference => Differentiation

Positioning results from differentiation

and competitive advantages.

Positioning may change over time.

Sources of Differentiation

– Product Design
– Quality
– Additional Services
– Image
– People (Staff)
– Price
– Other

6-29
Choosing the Right Competitive
Advantages
• The best competitive advantages are…

– Important
– Distinctive
– Superior
– Communicable
– Pre-emptive
– Affordable (to company and consumer)
– Profitable

Moral: Avoid meaningless differentiation.

 Positioning Errors
• Under-positioning:
– Not positioning strongly enough.

• Over-positioning:
– Giving buyers too narrow a picture of the product.

• Muddled Positioning:
– Leaving buyers with a confused image of the product.
Generic Product Positions
& Value Propositions
Question du Jour

Which is more important: Product or Positioning?

 In-class Activity
• Describe how each of the following
brands, companies, or products is
positioned:
 In-class Activity, Part 2
• Choose one of the companies/brands
and…
– Identify relevant direct competitors
– Choose the two dimensions that are
most important to consumers
– Develop a perceptual positioning map
– Are there any opportunities in this
category?
 In-class Activity, Part 3
• Choose a company and invent a segmentation
scheme for that company’s customers using the
variables we discussed in class.