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UGB229Marketing Management

Lecture 8- Segmentation, Targeting,and Positioning

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Learning Goals1. Learn the three steps of target marketing,

market segmentation, target marketing, andmarket positioning

2. Understand the major bases for segmentingconsumer and business marketing strategy

3. Know how companies identify attractivemarket segments and choose targetmarketing strategy

4. Realize how companies position theirproducts for maximum competitiveadvantage in the marketplace

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Sells multiple brandswithin the same product category for a variety of productsBrands feature adifferent mix of benefits

and appeal to different segments

Has also identifieddifferent niches withincertain segmentsProduct modificationsare useful: Tide offersseven different product formulations to servedifferent niches needs

C ase StudyProcter & GambleProcter & Gamble

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Steps in market segmentation,

targeting and positioningMarket Segmentation

I dentify bases for segmenting the market

Develop segment profilesTarget MarketingDevelop measure of segmentattractivenessSelect target segments

Market PositioningDevelop positioning for target segmentsDevelop a marketing mix for each segment

Goal 1: Learn the three steps of target marketing

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DefinitionMarket Segmentation:

Dividing a market into distinctgroups with distinct needs,characteristics, or behavior whomight require separate products ormarketing mixes.

G oal 2: Understand the major bases for segmentation

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Segmenting C onsumer

MarketsGeographical segmentationDemographic segmentation

Most popular segmentationPsychographic segmentation

Lifestyle, social class, and

personality-based segmentationBehavioral segmentation

G oal 2: Understand the major bases for segmentation

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Geographic segmentation divides the

market into different geographicalunits such as nations, regions,states, counties, or cities

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W orld regionor country

U.S. regionStateC ity

NeighborhoodC ity ormetro sizeDensityC limate

Geographic Segmentation

Variables

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Demographic segmentation divides the

market into groups based on variablessuch as age, gender, family size, family lifecycle, income, occupation, education,religion, race, generation, and nationality

Demographic segmentation is the mostpopular segmentation method becauseconsumer needs, wants, and usage oftenvary closely with demographic variables and

are easier to measure than other typesof variables

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Demographic Segmentation

Variables AgeGenderFamily sizeFamily life cycleI ncome

OccupationEducationReligionRaceGeneration

Nationality

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Psychographic segmentationdivides buyers into differentgroups based on social class,lifestyle, or personality traits

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Behavioral segmentation dividesbuyers into groups based on theirknowledge, attitudes, uses, orresponses to a product:-

OccasionBenefits soughtUser statusUsage rateLoyalty status

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OccasionsBenefitsUser Status

Attitude Towardthe Product

User RatesLoyalty StatusReadiness Stage

BehavioralBehavioral Segmentation

Variables Variables

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Segmenting Business

MarketsDemographic segmentation

I ndustry, company size, locationOperating variables

Technology, usage status, customer capabilitiesPurchasing approachesSituational factors

Urgency, specific application, size of orderPersonal characteristics

Buyer-seller similarity, attitudes toward risk, loyalty

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Segmenting I nternational

MarketsGeographic segmentation

Location or regionEconomic factors

Population income or level of economicdevelopment

Political and legal factorsType / stability of government, monetaryregulations, amount of bureaucracy, etc.

C ultural factorsLanguage, religion, values, attitudes, customs,behavioral patterns

G oal 2: Understand the major bases for segmentation

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Requirements for Effective

SegmentationMeasurable

Size, purchasing power, and profile of segment Accessible

C an be reached and servedSubstantial

Large and profitable enough to serveDifferentiable

Respond differently

ActionableEffective programs can be developed

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C riteria forsuccessful segmentation

Clear differences

in consumer preferences for aproduct must

exist.

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C riteria forsuccessful segmentation

D ifferencepreferences for aproduct must beidentifiable andcapable of being

related tomeasurablevariables.

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Th e proposed

market segmentmust h ave enoug h size and

purch

asing power to be profitable.

C riteria for

successful segmentation

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Companies mustbe able to respondto differencepreferences wit h an appropriate

marketing mix.

C riteria for

successful segmentation

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Th e proposedmarket segmentmust be readilyaccessible andreac h able wit h

market programs.

C riteria for

successful segmentation

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Target Marketing

Target MarketC onsists of a set of buyers who sharecommon needs or characteristicsthat the company decides to serve

G oal 3: Know how companies identify and target attractive segments

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Target Marketing

Evaluating Market SegmentsSegment size and growthSegment structural attractiveness

Level of competitionSubstitute productsPower of buyers

Powerful suppliersC ompany objectives and resources

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Target MarketingSelecting Target Market Segments

Undifferentiated (mass) marketing

Differentiated (segmented)marketingC oncentrated (niche) marketingMicromarketing (local or individual)

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Target Marketing

Socially Responsible TargetingSome segments, especially children,are at special riskMany potential abuses on theI nternet, including fraud I nternetshoppersC ontroversy occurs when themethods used are questionable

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Positioning

Positioning:The place the product occupies inconsumers minds relative to competingproducts.Typically defined by consumers on thebasis of important attributes.I nvolves implanting the brand s uniquebenefits and differentiation in thecustomer s mind.Positioning maps that plot perceptions ofbrands are commonly used.

G oal 4: Realize how companies position their products

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Example of Positioning Map C arBrands in USA

Price (Y-axis) andorientation(X-axis)

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I dentifying possiblecompetitive advantagesC hoosing the rightcompetitive advantageC hoosing a positioning

strategy

Differentiation can be basedon

Products

ServicesC hannelsPeopleI mage

TopicsTopics

C hoosing a Positioning

Strategy

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Market SegmentationHow many differences topromote?

Unique sellingpropositionSeveral benefits

W hich differences topromote? C riteria include:

I mportantDistinctiveSuperiorC ommunicablePreemptive

AffordableProfitable

TopicsTopicsI dentifying possiblecompetitive advantagesC hoosing the rightcompetitive advantageC hoosing a positioning

strategy

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Market Segmentation

Value propositionsrepresent the fullpositioning of the brandPossible value propositions:

More for MoreMore for the SameMore for LessThe Same for LessLess for Much Less

TopicsTopicsI dentifying possiblecompetitive advantagesC hoosing the rightcompetitive advantageC hoosing a positioning

strategy

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Developing a

Positioning StatementPositioning statements summarizethe company or brand positioning

EXAMPLE: To (target segment andneed) our (brand) is (concept) that(point-of-difference)

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C ommunicating the

PositioningC ompanies must be certain toDELI VER their value propositions.Positions must be monitored andadapted over time.

G oal 4: Realize how companies position their products