Marketing

Strategy &
Management
© Diane M. Phillips
 Chapter 7
Target markets: Identifying
and targeting those
individuals most likely to
respond to the marketing
strategy
Learning objectives

1. Describe the IPAT model and how it can be adapted for

regenerative systems
2. Describe the 3-step process of segmentation, targeting
and positioning.
3. Distinguish between the 4 methods of segmentation and
describe the benefits of a layered segmentation strategy.
4. Explain the concept of positioning and why repositioning is
often difficult.
5. Create an argument for why it makes sense to discard the
four key assumptions from traditional marketing thought
when it comes to the sustainability market.

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1. A crowded world & IPAT (1 of 4)

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1. A crowded world & IPAT (2 of 4)

• The IPAT model – vividly depicts the increased harm on the

environment caused by increases in population, affluence
and harmful/destructive technologies.

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1. A crowded world & IPAT (3 of 4)

• Carbon footprint – a
measure of the greenhouse
gases that are emitted
(especially CO2) by a
country’s or another entity’s
level of economic activity
and consumption.

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1. A crowded world & IPAT (4 of 4)

• Regenerative systems – are those that repair and strengthen

damaged systems, making them healthier and more capable of
performing at peak capacity again. In applying this concept to the IPAT
model, there is reason for hope:
– Technology – rather than destructive technologies, new innovations
can spur progress towards renewable energy systems, for example.
– Affluence – governments and businesses can shift towards policies
and operations that promote successful and thriving economies that
are based on regenerative, rather than exploitive principles.
– Population – every person now existing within a regenerative
system is driven by efforts to recharge, restore, repair and rebuild,
so the population component of the model drives more positive
change.

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2. Segmentation process (1 of 22)

• The segmentation process describes the 3-step process

by which the target market is identified and selected through
segmentation, targeting and positioning.

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2. Segmentation process (2 of 22)

a. Segmentation - the entire

market is broken up into
smaller groups using criteria
that make sense for the
product.

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2. Segmentation process (3 of 22)

a. Segmentation (cont):
1) Demographic criteria – the market is broken up
according to demographic characteristics like age,
gender, income, education, family size or ethnicity.
– Bottom of the pyramid customers – individuals who
survive on less than $2/day. Approximately 4 billion
people. Marketers can address the needs of these
consumers, while doing so in culturally appropriate and
environmentally sensitive ways.

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2. Segmentation process (4 of 22)

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2. Segmentation process (5 of 22)

a. Segmentation (cont):
2) Psychographic criteria – the market is broken up
according to criteria such as consumer attitudes, interests
or lifestyles.
– Examples:
o Vans and its pursuit of ‘outcasts and misfits’
o LOHAS Consumers – Lifestyles of health and
sustainability. These consumers don’t just talk about
their concern for the environment, they also act on
those concerns.

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2. Segmentation process (6 of 22)

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2. Segmentation process (7 of 22)

a. Segmentation (cont):
3) Geographic criteria – the market is broken up according
to regions, countries, states, cities, neighbourhoods or
postal codes.
– Examples:
o Global food companies that alter their flavour profiles
for different parts of the world.
o High-end outdoor clothing manufacturer Canada
Goose.

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2. Segmentation process (8 of 22)

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2. Segmentation process (9 of 22)

a. Segmentation (cont):
4) Behavioural criteria – uses the
consumer’s purchase and consumption
behaviour to segment the market.
– Purchase volume
– User status
– Consumer needs
• Example:
– Carhartt consumers use the brand for 2
unique needs: function and fashion

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2. Segmentation process (10 of 22)

a. Segmentation (cont):
5) Layered criteria – occurs when several different types of
criteria are used to segment the market.
– There are countless ways to layer criteria to create customer
segments.
– Example:
– A London African-Caribbean radio station used three
separate layers to segment its market:
o People living in London (geographic)
o Church goers (psychographic)
o Members of the African Caribbean community
(demographic)
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2. Segmentation process (11 of 22)

b. Selecting the Ideal Group of Consumers: Targeting

– Targeting – the selection of 1-2 segments that the marketing
team believes is most likely to respond in a favourable way to
our offering.
o Target market – the group of individuals that the marketing
team wishes to pursue. It is made up of individuals that have
similar needs and wants, and will likely respond in a similar
fashion to marketing efforts.

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2. Segmentation process (12 of 22)

b. Selecting the Ideal Group of Consumers: Targeting

– Targeting (cont):
1) Criteria for selecting the target market:
o How well will the new market segment fit with our existing
target markets?
o Is it possible to take advantage of any synergies?
o How easy will it be for our organization to satisfy the needs
of this target?
o Will this market segment have a potential for long-term
growth?

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2. Segmentation process (13 of 22)

b. Selecting the Ideal Group of Consumers: Targeting

– Targeting (cont):
1) Criteria for selecting the target market:
o From a competitive standpoint, will it be a good move to
serve this target market?
o Is the target market big enough to produce a profit?
o Is the target market easy to reach?
2) Selecting niche markets – target markets that are created
from very narrowly defined segments.
o Example: H&M’s pursuit of the sustainably-minded, Gen Z
gamer market.

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2. Segmentation process (14 of 22)

b. Selecting the Ideal Group of Consumers: Targeting

– Targeting (cont):
3) Creating new markets – perhaps the marketing team can
identify a new Blue Ocean opportunity, where organization
can meet consumer needs with very little or no competitive
pressure.
4) Market retreat – the act of ceding control to another firm in
order to focus attention on another target market.

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2. Segmentation process (15 of 22)

c. Differentiating your product from the competition:

positioning
– Positioning – the process of creating a distinct set of
meanings in the minds of consumers that sets the product
apart from the competition.
1) Positioning map – a 2 or 3-dimensionsl representation
of the position of the organization’s products and those
of its competition. A useful tool to identify opportunities.

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2. Segmentation process (16 of 22)

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2. Segmentation process (17 of 22)

c. Differentiating your product from the competition:

positioning
– Positioning (cont):
2) Positioning statement – a brief description of what
the product or service will do for the target market and
how it will solve a problem consumers might have.
o Example: for budget-conscious business travelers
within Europe, Lufthansa offers reliable service,
business-focused amenities, and more on-time arrivals
than any other carrier. We can do this because we
have access to more gates in more cities than anyone
else.
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2. Segmentation process (18 of 22)

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2. Segmentation process (19 of 22)

c. Differentiating your product from the competition:

positioning
– Positioning (cont):
3) Consumer personas – a fictional character created by
the marketing team that represents the demographic,
psychographic, geographic, behavioural, and layered
characteristics of the target market.
o Personalizes and reminds the marketing team about
the target market.

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2. Segmentation process (20 of 22)

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2. Segmentation process (21 of 22)

c. Differentiating your product from the competition: positioning

– Positioning (cont):
4) Repositioning – occurs when the organization works to
shift the brand or product’s existing position to a new
position. Because the marketing team has already invested
significant effort in positioning the offering, it can be
particularly difficult to reposition.
o Why reposition?
• New innovations or technologies.
• Over time, markets shift.
• Sometimes, bad things happen and we need to shift
away from negative brand associations.
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2. Segmentation process (22 of 22)

c. Differentiating your product from the competition: positioning

– Positioning (cont):
5) Blue Ocean Positioning – a unique opportunity with a new
segment and new market in which a timely, relevant,
innovative and effective value proposition is created.
o The potential to set new standards for product performance
and consumer expectations.

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3. Different target markets require
different strategies (1 of 2)
• Now that the target market is identified, the marketing team
now works to adjust the 4 elements of the marketing mix –
product, price, place and promotion – to the specific needs
of the target market.
– Example:
Diagnostic telemedicine platforms have several different
target markets. One of them is emergency first
responders. When targeting this market, the marketing
team must create a marketing strategy unique to this
market’s needs.

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3. Different target markets require
different strategies (2 of 2)

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4. The sustainability market

• In order to successfully target the sustainability market, marketers must

first discard some old assumptions about how markets work.
a. Crushing Traditional Market Assumptions
1) The sanctity of markets – in fact, if markets are permitted to work with
perfect efficiency (unregulated and unrestricted), they will not
necessarily sort out disparities in supply, demand and wealth.
2) The sovereignty of consumers – the idea that the customer is always
right is hopelessly myopic.
3) The satisfaction of needs – after their basic needs are satisfied, any
additional consumption does not necessarily make consumers more
satisfied or better off.
4) The peripheral nature of nature – failure to recognize the primacy of
nature blinds decision-makers to the impact of climate and other
ecological disruptions.
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Chapter summary

• The IPAT model can be adapted for regenerative systems by

looking at each component of the model as an opportunity, not
a liability.
• The 3 main steps of segmentation, targeting and positioning
result in a clearly-defined group of individuals that is likely to
positively respond to your value proposition.
• Segmentation can be accomplished using demographic,
psychographic, geographic, behavioural and layered criteria.
• Positioning is accomplished by carefully creating meaning for
your offering in the minds of consumers.
• The traditional assumptions about how markets work are no
longer relevant in today’s sustainably-focused world.
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