Market Segmentation, Targeting, and Positioning

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Chapter 7

• Market Segmentation, Targeting, and Positioning

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Steps in Market Segmentation, Targeting, and
Positioning
Market Segmentation 1. Identify bases for
segmenting the market 2. Develop segment profiles
Market Targeting 3. Develop measure of
segment attractiveness 4. Select target segments
Market positioning 5. Develop positioning for
target segments 6. Develop a marketing mix
for each segment
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Step 1. Market SegmentationLevels of Market
Segmentation
Mass Marketing Same product to all consumers (no
segmentation, i.e Coca-Cola)
Through market segmentation, companies divide
large, heterogeneous markets into smaller
segments that can be reached more efficiently and
effectively with products and services that match
their unique needs.
Segment Marketing Different products to one or
more segments (some segmentation, i.e. Marriott)
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Step 1. Market SegmentationLevels of Market
Segmentation
Niche Marketing Different products to subgroups
within segments (more segmentation, i.e. Standard
or Luxury SUVs)
Micromarketing Products to suit the tastes of
individuals and locations (complete segmentation)
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Step 1. Market SegmentationDemographic
Segmentation

• Dividing the market into groups based on
  variables such as
• Age
• Gender
• Family size or life cycle
• Income
• Education
• Religion
• Race/Ethnicity
• Generation
• Nationality

Most Popular Bases Easiest to Measure
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Step 1. Market SegmentationDemographic
Segmentation Generation
GI generation 16 M
Millennials 45 M
Silent Generation 35 M
Generation Y 60 M
Baby Boomers 78 M
Generation X 57 M
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Step 1. Market SegmentationPsychographic
Segmentation
Divides Buyers Into Different Groups Based on
Values
Lifestyle
Personality
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Step 1. Market SegmentationPsychographic
Segmentation
VALS Segmentation System
Actualizers
High Resources
High Innovation

Achievers
Fulfilleds
Experiencers
Makers
Strivers
Believers
Strugglers
Low Resources
Low Innovation
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Step 1. Market SegmentationBehavioral
Segmentation

• Dividing the market into groups based on
  variables such as
• Occasions
• Benefits
• User status
• Usage rate
• Loyalty status

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Step 1. Market SegmentationRequirements for
Effective Segmentation
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Step 2. Market TargetingEvaluating Market
Segments

• Segment Size and Growth
• Analyze current sales, growth rates and expected
  profitability for various segments.
• Segment Structural Attractiveness
• Consider effects of competitors, availability
  of substitute products and, the power of buyers
  suppliers.
• Company Objectives and Resources
• Company skills resources needed to succeed in
  that segment(s).
• Look for Competitive Advantages.

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Step 2. Market TargetingMarket Coverage
Strategies
Market
Company Marketing Mix
Company Marketing Mix 1
Segment 1
Company Marketing Mix 2
Segment 2
A. Undifferentiated Marketing
Segment 3
Company Marketing Mix 3
Segment 1
Company Marketing Mix
Segment 2
B. Differentiated Marketing
Segment 3
C. Concentrated Marketing
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Step 3. Choosing a Positioning Strategy

• Products Position - the way the product is
  defined by consumers on important attributes -
  the place the product occupies in consumers
  minds relative to competing products.
• Marketers must
• Plan positions to give their products the
  greatest advantage in selected target markets,
• Design marketing mixes to create these planned
  positions.

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Step 3. Choosing a Positioning Strategy

• Positioning requires determining a frame of
  reference and identifying points-of-parity and
  points-of-difference.
• Category membership sets of products with which
  a brand competes.
• Points-of-parity brand associations that are
  shared with other brands in the category.
• Points-of-differentiation attributes or benefits
  that consumers strongly associate with a brand,
  positively evaluate, and could not find in
  competitive brands.

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Step 3. Choosing a Positioning Strategy

• Positioning Statement
• To (target consumers and need) our (brand) is a
  (concept) that (points-of-difference).
• Example Mountain Dew
• To young, active soft-drink consumers who have
  little time for sleep, Mountain Dew is the soft
  drink that gives you more energy than any other
  brand because it has the highest level of
  caffeine.

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Identifying Possible Competitive Advantages
Services Differentiation i.e. Delivery,
Installation, Repair Services, Customer
Training Services
Product Differentiation i.e. Features,
Performance, Style Design, or Attributes
Image Differentiation i.e. Symbols, Atmospheres,
Events
Personnel Differentiation i.e. Hiring, Training
Better People Than Competitors Do