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, semitropical

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
Special promotions
& labels for
holidays.
Special products for
special occasions.

Benefits Sought
Different segments
desire different
benefits from the
same products.

Loyalty Status
Nonusers, ex-users,
potential users,
first-time users,
regular users.

Usage Rate
Light, medium,
heavy.

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

Lefties are hard

to identify and
measure, so few
firms target this
segment.

Measurable
Accessible
Substantial
Differentiable
Actionable

Evaluating Market
Segments
Segment Size and Growth
Potential
Sales, profitability and growth rates

Segment Structural
Attractiveness
Competition, substitute products,
buyers & supplier power, new
entrants (Porters 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
solution
Product and
service elements
that all segment
members value

Discretionary
options
Some segment
members value
Options may
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

eBays 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 companys customers using the
variables we discussed in class.

In-class Activity
Developing a Segmentation
Scheme

Develop a PSYCHOGRAPHIC/USAGE segmentation scheme for

each of the following types of consumers.
Segment the market into three or more substantive groups.
Be sure to think of the key psychological/usage drivers of
consumption.
Name your segments the more creative, the better!

Consumers

Vacationers
Internet Users
Restaurant Patrons
Eco-friendly product consumers
Smartphone Users
Grocery Store Shoppers