UGB229

Marketing Management
Lecture 8- Segmentation, Targeting,
and Positioning
 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

7-2
 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

7-3
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

7-4
Goal 1: Learn the three steps of target marketing
 Definition
Market Segmentation:
 Dividing a market into distinct
groups with distinct needs,
characteristics, or behavior who
might require separate products or
marketing mixes.

7-5
Goal 2: Understand the major bases for segmentation
 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
Geographic segmentation divides the
market into different geographical
units such as nations, regions,
states, counties, or cities

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7-8
 Geographic Segmentation
Variables
• World region • Neighborhood
or country • City or
• U.S. region metro size
• State • Density
• City • Climate

7-8
Goal 2: Understand the major bases for segmentation
Demographic segmentation divides the
market into groups based on variables
such as age, gender, family size, family life
cycle, income, occupation, education,
religion, race, generation, and nationality

Demographic segmentation is the most

popular segmentation method because
consumer needs, wants, and usage often
vary closely with demographic variables and
are easier to measure than other types of
variables

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7-9
 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
Psychographic segmentation
divides buyers into different
groups based on social class,
lifestyle, or personality traits

7 - 11
7-13
Behavioral segmentation divides
buyers into groups based on their
knowledge, attitudes, uses, or
responses to a product:-
• Occasion
• Benefits sought
• User status
• Usage rate
• Loyalty status

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7-14
 Behavioral Segmentation
Variables
• Occasions • User Rates
• Benefits • Loyalty Status
• User Status • Readiness Stage
• Attitude Toward
the Product

7 - 13
Goal 2: Understand the major bases for segmentation
 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

7 - 14
Goal 2: Understand the major bases for segmentation
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
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
 Criteria for
successful segmentation

tive
Distinc •Clear differences
in consumer
preferences for a
product must
exist.

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 Criteria for
successful segmentation

•Difference
Me
a preferences for a
Ide sura
ntif ble
iab
le
product must be
identifiable and
capable of being
related to
measurable
variables.
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 Criteria for
successful segmentation

l
•The proposed
ti a
b sta
n
market segment
Su
must have enough
size and
purchasing power
to be profitable.

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 Criteria for
successful segmentation
•Companies must
Act
io nab
le
be able to respond
to difference
preferences with
an appropriate
marketing mix.

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 Criteria for
successful segmentation

Acc
•The proposed
ess
ible market segment
must be readily
accessible and
reachable with
market programs.

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 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
 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
 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
 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
 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
 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
Example of Positioning Map – Car
Brands in USA

Price (Y-
axis) and
orientation
(X-axis)

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 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
 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 7 - 30
Goal 4: Realize how companies position their products
 Market Segmentation
Topics
Identifying possible
competitive advantages
Choosing the right
competitive advantage
Choosing a positioning
strategy
Goal 4: Realize how companies position their products
• Value propositions
represent the full
positioning of the brand
• Possible value propositions:
 More for More
 More for the Same
 More for Less
 The Same for Less
 Less for Much Less
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 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
 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