•Lecture 6 content: Segmenting, Targeting and Positioning..

Very common
concepts and backbone of marketing, so stay focused 

•I would hope to reach the finish line today: I will cover try to cover all the
slides of today’s lecture, so I am hoping to reach that finish line .

•Break in between the lecture today: You guys and me will deserve a break for
5 minutes in between the lecture delivery content. Just knock me in and tell
me to stop , when you feel the need (Do not tell me to stop after 10 minutes
of listening)
 LET’S GET STARTED WITH
TODAY’S LECTURE CONTENT 
 SEGMENTATION,
TARGET MARKETING,
AND POSITIONING

McGraw-Hill Part 2: Use Information to Drive Marketing Decisions

Education
 Learning Objectives

Explain the criteria for effective segmentation.

Identify the various approaches to market segmentation.

Describe the steps in target marketing.

Define positioning and link it to the use of the marketing mix.

Use and interpret perceptual maps.

Identify sources of differentiation.

 Fulfilling Consumer Needs and Wants

Market segmentation
Target marketing
Positioning
EXHIBIT 7.1 MARKET SEGMENTATION, TARGET MARKETING, AND POSITIONING

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 What Is Segmentation?

Segmentation seeks to find one or more factors

about members of a heterogeneous market that
allow for dividing of the market into smaller,
more homogeneous subgroups.
The purpose is to develop different marketing
strategies to best meet the segments’ distinct
needs and wants.
 What Is Segmentation?

Not all customers are alike.

Subgroups of customers can be identified on some
basis of similarity.
The subgroups will be smaller and more
homogeneous than the overall market.
Needs and wants of a subgroup are more efficiently
and effectively addressed than would be possible
within the heterogeneous full market.
 Criteria for
Effective Segmentation

1. Is the segment of sufficient size?

2. Is the segment readily identifiable and can it be
measured?
3. Is the segment clearly differentiated on one or
more important dimensions?
4. Can the segment be reached in order to deliver
the value of the product?
Geographic Segmentation
Demographic Segmentation
 Geo-demographics

Hybrid of geographic and demographic.

PRIZM-NE database profiles every zip code in the U.S. by
demographic and psychographic methods.
Winner’s Circle
• Wealthy suburban lifestyle
• 35-54-years-old
• Married/couples
• Large families
• $100,000 median income
• Area with parks, golf courses
• Near upscale malls
• They travel, shop, ski, eat out
 Psychographic Segmentation

Personality, lifestyle, and values.

AIO: Attitudes, interests, and opinions
VALS data based on level of resources and primary
motivation.
EXHIBIT 7.9 VALS™ FRAMEWORK

Reprinted with permission from VALSTM Program, SRI Consulting Business Intelligence (SRIC-BI); www.sric-bi.com/VALS.
1.Innovators –  The class of consumer at the top of the vals framework.  They are
characterized by High income and high resource individuals for whom independence is very
important. They have their own individual taste in things and are motivated in achieving the
finer things in life.

2.Thinkers –  A well educated professional is an excellent example of Thinkers in the vals

framework. These are the people who have high resources and are motivated by their
knowledge. These are the rational decision making consumers and are well informed about
their surroundings. These consumers are likely to accept any social change because of their
knowledge level.

3.Believers- The subtle difference between thinkers and believers is that thinkers make their
own decisions whereas believers are more social in nature and hence also believe other
consumers. They are characterized by lower resources and are less likely to accept innovation
on their own. They are the best class of word of mouth consumers.

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4. Achievers –  The achievers are mainly motivated by – guess what –Achievements. These
individuals want to excel at their job as well in their family. Thus they are more likely to
purchase a brand which has shown its success over time. The achievers are said to be high
resource consumers but at the same time, if any brand is rising, they are more likely to adopt
that brand faster.

5. Strivers –  Low resource consumer group which wants to reach some achievement are
known as strivers. These customers do not have the resources to be an achiever. But as they
have values similar to an achiever, they fall under the striver category. If a striver can gain the
necessary resources such as a high income or social status then he can move on to becoming
an achiever.

6.Experiencers –  The group of consumers who have high resources but also need a mode of
self expression are known as Experiencers. Mostly characterized by young adults, it consists
of people who want to experience being different. This class of consumers is filled up with
early adopters who spend heavily on food, clothing and other youthful products and services.

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8. Makers –  These are consumers who also want self expression but they are limited
by the number of resources they have. Thus they would be more focused towards
building a better family rather than going out and actually spending higher amount of
money. Making themselves into better individuals and families becomes a form of self
expression for the Makers.

9. Survivors –  The class of consumers in the Vals framework with the least

resources and therefore the least likely to adopt any innovation. As they are not likely
to change their course of action regularly, they form into brand loyal customers. An
example can include old age pension earners living alone for whom the basic
necessities are important and they are least likely to concentrate on anything else.

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 Behavioral Segmentation

Benefits Sought looks to identify the crucial value-

adding properties of an offering.
• Key starting place for segmentation
Usage Patterns:
• Light, medium, or heavy users
• 80/20 rule
Loyalty programs build on satisfying heaviest users.
 Segmenting Consumer Markets

Firms use multiple segmentation

approaches simultaneously.

Firms develop a profile of a segment that might

include aspects of any or all of the segmentation
approaches.
Segmentation
 Steps in Target Marketing

Analyze market segments.

Develop profiles of each potential target market.
Select a target marketing approach.
 Segmenting Business Markets 1

Demographic Purchasing Approaches

• Industry
• Company size
• Location
Operating Variables
• Technology
• User Status
• Customer capabilities
• Purchasing Function
organization
• Power Structure
• Nature of existing
relationships
• General purchasing
policies
• Purchasing criteria
 Segmenting Business Markets 2

Situational Factors Personal characteristics

• Urgency • Buyer-seller similarity
• Specific application • Attitudes towards risk
• Size of order • Loyalty
 Target Marketing: Market Segment
Analysis

Analyze market segments

 Target Marketing: Profiles

Develop profiles of each potential target market

 EXHIBIT
CONTINUUM OF TARGET MARKETING APPROACHES
7.12

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 Target Marketing: Select an Approach

Select a target marketing approach.

 Positioning

The firm must turn its attention to creating,

communicating, and delivering the value offering to
the target markets……Positioning the product so that
consumers understand its ability to fulfill their needs
and wants.
Positioning is not what the company does to the
product. It’s what the company does to the mind of
the customer.
 Positioning and Research

Positioning studies often starts with focus groups that

develop set of attributes.
Next, surveys are developed that have respondents
rate the attributes of the firm and of its competitors.
Finally, gap analysis is used to determine gaps in what
the company promises customers and what it actually
delivers. Analysis identifies gaps by attribute in
importance vs. delivery and vs. competitors.
 EXHIBIT
EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
7.13A

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 EXHIBIT EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
7.13B (HOTEL)

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 EXHIBIT
EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS
7.13C

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Sources of Differential Competitive
Advantage

Company Advantage
Walmart Price leadership
Apple Innovative leadership
Ritz-Carlton Service leadership
BMW Product leadership
Southwest Airlines Personnel leadership
Amazon Convenience leadership
Harley-Davidson Image leadership
 Positioning Errors

Company Error
Audi Underpositioning
Dell, Tiffany’s Overpositioning
McDonald’s Confused positioning
AIG Doubtful positioning