Principles of MarketingMKT3010

Chapter 9Segmentation, Targeting,

and Positioning

Patricia Knowles, Ph.D.

Associate ProfessorClemson University 1

2Principles of MarketingMKT3010 2

Segmentation, Targeting, and Positioning These are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

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.

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Segmentation, Targeting, and Positioning ProcessPrevious chapters addressed how to plan marketing strategy; this chapter focuses on how firms use that strategy to identify the target markets they will serve.

Principles of MarketingMKT3010

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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Step 1: Establish Overall Strategy or Objectives

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Any strategy must be consistent with the firm’s mission statement and be based on the current assessments from SWOT analyses.

Check YourselfDerived from mission and

current state

©M. Hruby.

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Step 2: Segmentation Methods

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Check Yourself

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1. What are the various segmentation methods?

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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

ResponsiveProfitable

Identifiable

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Identifiable

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• Who is in their market?

• Are the segments unique?

• Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Substantial

• Too small and it is insignificant

• Too big and it might need it’s own store

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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

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Reachable 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.

Know the product exists

Understand what it can do

Recognize how to buy

©Digital Vision/PunchStock

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Responsive

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React positively to firm’s offering

Move toward the firms products/services

Accept the firm’s value proposition

Customers must:

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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.  

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Step 4: Selecting a Target Market

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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.

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

©M Hruby

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Segmentation

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Targeting Strategies

Differentiated

Concentrated

Micromarketingor

one-to-one

Undifferentiated ormass marketing

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Step 5: Develop Positioning Strategy

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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.

Positioning Methods

• Value• Salient Attributes• Symbol• Competition

Photo by Tiffany Rose/WireImage/Getty Images

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Positioning Steps

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Check Yourself

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1. What is a perceptual map?

2. Identify the six positioning steps.

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Glossary

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

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.

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.

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.

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