Marketing

Chapter 7
Segmentation, Targeting, and
Positioning

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Learning Objectives
After studying this chapter you should be able to:
7.1 Describe how marketers segment their markets
7.2 Define what makes a segment attractive for targeting
7.3 Understand the various strategies that can be used to
target
7.4 Analyze the concept of “positioning” and how marketers
use it to connect products to targets

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Segmenting the Market (1 of 13)
• Identify the characteristics of geographic segmentation
– Segmentation - The process and criteria whereby
marketers divide up the world’s consumers into discrete,
definable, identifiable groups
– Geographic segmentation - Grouping consumers based
on where they live

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Segmenting the Market (2 of 13)
Figure 7.1 Examples of Segmentation by Geographic Distinction

Type of
Marketing
Effort Example(s) Geographic Distinction
Product • Parkas This winter-wear product will appeal to all consumers living in places with long, cold,
snowy winters.
Geographic distinction is not particular to one specific place, but rather to places
with similar climates around the world.
Service • Lawn care This service will appeal to owners of homes with garden and lawn areas requiring a
level of care that might warrant professional services.
Geographic distinction is partially by climate, but more importantly by
neighbourhood, as houses tend to have lot sizes similar to others in their
neighbourhood.
Cause • Reducing This cause is particularly focused on those who live in the area of the school and
speed limits in a those whose children attend the school.
school zone Geographic distinction is related to location of residence in relation to school.

Person • City councillor These elected officials serve a specifically defined geographic area.
Geographic distinction is related to the area of the city in which the voter lives.
Place • Local restaurant Unless it is for a special event, travel destination, or very renowned restaurant, most
restaurant visitors are not willing to travel very far to eat.
Geographic distinction is that, particularly for undistinguished eateries (e.g., diner,
coffee shop), consumers will likely choose what is near vs what is best.

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Segmenting the Market (3 of 13)
• Identify the characteristics of demographic segmentation
– Demographic segmentation ― Grouping consumers
based on the facts and statistical measures of their lives

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Segmenting the Market (4 of 13)
Figure 7.2 Key Demographic Measures (and Applications)
Measure Advantages
Age • Great when for safety, legal, or
developmental reasons age is a
determining factor for identifying
the consumer
Gender • A primary factor for products or
services distinguished by gender
usage based on biology, anatomy,
or culture
Income • Allows marketers to develop
products and services with various
features and levels of quality to
address the financial means of
different groups of consumers
• Even in smaller but very wealthy
segments of the population, there
are profitable marketing
opportunities
Disadvantages
• Physical and cognitive development can differ
widely at early ages, thereby reducing the
viability of this measure. Age for many adults is
more of a “state of mind.”
• Often misused for products that offer little real
distinction for different genders
• Are criticized for promoting gender stereotypes
• Can be insensitive or offensive as perspectives
on the definition of “gender” change
• Income levels are not as stable and predictable
as age and gender
• Strongly impacted by external economic forces
• Competition in the wealthiest and smallest
segments can be fierce and difficult to break in to
• From a societal view, can be seen as promoting
“class” distinctions in society
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Segmenting the Market (5 of 13)
Measure Advantages Disadvantages
Household • Very clear and distinct • Like gender, becoming increasingly fluid
Composition product and service and diverse—mixed families, later
needs based on who marriages, later divorces, smaller families.
lives in a household and These demographics are changing rapidly
the stage of life, such as and differ greatly across Canada.
singles living alone,
families with pets, newly
married couples
Income • Often easy to identify, • Can be a very limited market in terms of
find, and focus on size and growth potential. The ability to
geographically as well expand into the mainstream is
as through media questionable.
already focusing on that • Already saturated with competitive
community products
• In some communities,
can be a significant
market (e.g.,East Asians
in Vancouver, South
Asians in Toronto)

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Segmenting the Market (6 of 13)
• Identify the characteristics of psychographic segmentation
– Psychographic segmentation — Grouping consumers
based on similar attitudes, beliefs, lifestyle, and values

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Segmenting the Market (7 of 13)
Figure 7.3 Comparing Demographics and Psychographics
Aspect Demographics Psychographics
Source • Many databases exist, but • There are syndicated studies, but no large
Statistics Canada has the database with consistent and historical data.
most comprehensive
database.
Accuracy • Compliance to completing • There is no reliable way to measure or correlate
the Census is 99% of all the accuracy of the data.
Canadian households. We
have very clear
demographic measures.
Propriety • While organizations may • While syndicated research does exist, many
develop their own organizations conduct their own analysis based
demographic analysis, most on their own criteria.
sources are widely available.

Use as • Very clear, articulated, • Requires much more interpretation and analysis
Segmentation defined • In some areas, consumers are more motivated
• Very specific and measured by psychographic than demographic factors,
making psychographics a more appropriate way
of segmenting

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Segmenting the Market (8 of 13)
Aspect Demographics Psychographics
Advantages • Good, reliable data • Often used to develop greater insights
readily available and is in touch with what motivates
• Widely used and consumers
agreed upon as a • Proprietary data development can be a
methodology competitive advantage
• A very effective tool • Often inspires creative communication
when used ideas, media opportunities, and new
appropriately products
• Certain aspects yield
predictability (every
year we get 1 year
older)
Disadvantages • Often more • Very difficulty to work with; very easy to
convenient than misinterpret or misdirect data
relevant • Does not always yield segments that are
• Data is widely easily reachable (see Module 7.2)
available and so
offers no proprietary
advantage.

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Segmenting the Market (9 of 13)
• Identify the characteristics of psychographic segmentation
– Psychographics are useful in a variety of product areas
(see Figure 7.4)

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Segmenting the Market (10 of 13)
Figure 7.4 Where Are Psychographics Applied?

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Segmenting the Market (11 of 13)
• Identify the characteristics of behavioural segmentation
– Behavioural segmentation — Grouping consumers by
how they act, how they engage with the product, and
how they utilize the product (see Figure 7.5)

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Segmenting the Market (12 of 13)
Figure 7.5 Breakdown of Behaviours and Their Impact on
Segmentation
Behaviour Impact on Segmentation
Loyalty • Consumers who only use one brand are
more valuable than those who switch.
• Loyalty does not necessarily mean
enthusiasm. Sometimes consumers are
loyal because of convenience or
indifference.
Usage Rate • Consumers who use a lot of a product or
service, or who use it up quickly, are
more valuable.
• Marketers might also be interested in
non-users: non-category users, former
users, competitive users.
User Status • Is the consumer new to the category or
the brand or has the consumer been
there a long time?
• New users are more open to new brands,
while long-time users are much more
familiar with the category.
Examples
• Cigarette smokers tend to smoke only one brand for
life,3 while beer consumers may drink several brands
• Buying coffee at your “regular” place because it is on
your way to work
• Dishwasher-detergent consumers tend to use up their
purchases at a similar rate regardless of size
purchased because big users will buy a big box and
use frequently, while light users will buy a small box
and use occasionally.
• Non-users might be a potential source of new
consumers.
• Someone who is dealing with a new medical
condition may have little idea about treatment
options.
• A long-term condition might mean the consumer is
more educated about and has tried more options.
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Segmenting the Market (13 of 13)
Behaviour Impact on Segmentation
Involvement • Consumers who care more about
the product, brand, or category
simply because it is an area that
appeals to them require different
marketing efforts than those who
are in the category reluctantly..
Benefits • The same product or service may
Sought provide different benefits to
different consumers.
• Marketers need to understand
why the consumer is interested in
their product.
Occasion • The occasion for which a product
or service is to be used may be a
way of dividing consumers.
Examples
• An automobile trade show might appeal more
to consumers who consider themselves
knowledgeable about and interested in cars.
• Students who have no idea of their career
ambitions but have been pressured into
choosing a post-secondary program might be
less interested in the content and
extracurricular activities.
• Even a cheap watch will tell time. Consumers
of luxury timepieces are less interested in
their accuracy than they are in their style,
aesthetics, and brand.
• A scientist for whom experiments in which
accurate timekeeping is a critical factor is
uninterested in looks, style, or image but is
concerned about reliability and accuracy.
• There is an entire industry focused on the
specific occasion of weddings—from dresses,
venues, and honeymoon resorts, to event
planning.
• The needs, desires, and requirements are
very different from any other clothing,
vacation, or event needs.
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Targeting Segments (1 of 2)
• Explain what makes for a good target
– Characteristics of a good target segment are:
1. Distinct and divisible
2. Reachable (media and distribution)
3. Considerable (size, profit, potential)
4. Approachable
a. Brands, products, or services to which
consumers have low levels of loyalty or
commitment
b. New consumers who are entering the segment
c. Consumers who might be concerned or
unhappy with their current choices
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Targeting Segments (2 of 2)
• Define the uses and value of targeting
– While finding the best consumer segments to focus on
is the ultimate goal of targeting, it can also be useful in
other ways:
1. Identifying the least desirable segments
2. Identifying potential or future target segments
3. Identifying segments where your competition might
have more appeal or an advantage

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Marketing Strategies for Targets (1 of 3)
• Define marketing strategies for large targets
1. Mass marketing – Treating the consumer target
segment or segments as relatively uniform, using one
marketing message, one product or product format,
and no customization
2. Differentiated marketing – Multiple segments that
provide enough suitable and significant target
opportunities to justify developing several very distinct
marketing activity plans

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Marketing Strategies for Targets (2 of 3)
Figure 7.6 Differentiated Marketing in the Hospitality
Category
Segment Transient Family Vacation Business Traveller Couples Vacation
Distinguishing • One-night stay • Week or more • Short-term stay • Week or more
Characteristics • Highway • Amenities (one to three • Luxury
travellers, • Located near nights) • Amenities,
airline layovers activities • Located near facilities
• Familiar brand • Other families airport or business • No families
• Highly recommended • Business services • Romantic or
on review sites by • Room service or exotic locations
other families restaurant • Uniqueness
• Reliability
Ideal Product • Inexpensive, • Family-resort type of • Clean, modern • Warm weather
Offering clean, safe offering with room or picturesque
hotel or motel entertainment, • 24-hour business location
near major family-friendly food services • Privacy
highway or offerings, family • Conference or • Adventurous
airport Suites meeting rooms activities
• Well- • Business chain
established
brand
reputation

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Marketing Strategies for Targets (3 of 3)
• Define marketing strategies for smaller targets
1. Niche or specialty marketing — Focuses on best
serving the needs of one very specifically defined
segment
2. Micro marketing — Attempts to focus on as small and
cohesive a segment as it can, right down to an
individual consumer or a very small geographic cluster

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Positioning (1 of 9)
• Analyze the concept of “positioning” and how marketers use
it to connect products to targets
– Figure 7.7 on the following slide defines two key points
about where things are located on a map:
1. They need a universally accepted basis of
comparison
2. Things on a map can be defined relative to where
they are on that basis of comparison

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Positioning (2 of 9)
Figure 7.7 Map of New Jersey and Connecticut

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Positioning (3 of 9)
• Understand the concept of positioning
– Positioning (perceptual) map — Used to chart, identify,
and locate where different products, brands, or concepts
exist relative to one another, in the minds of consumers,
based on certain criteria defined by the marketer

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Positioning (4 of 9)
Figure 7.8 Positioning Map Example

Source: Based on Social Tables “The Ultimate Guide to The World’s Top Hotel Brands and
Their Properties,” https://www.socialtables.com/blog/hotels/guide-worlds-top-brands/
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Positioning (5 of 9)
• Understand the concept of positioning
– How positioning maps are used:
1. They identify how consumers are impacted by our
marketing efforts
2. They tell us how our consumers see our
competition
3. They can identify areas of opportunity
4. They can identify areas to avoid
5. We could also learn which quadrants are the most
popular with consumers
6. Multiple maps may be developed to get a fuller
understanding of the consumers’ perspective

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Positioning (6 of 9)
• What is the universally accepted basis for comparison in the
world of marketing?
• How do marketers choose what axes to use?
– Marketers define “suitable” as a critical factor for why a
consumer would choose one product in a category over
another

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Positioning (7 of 9)
Figure 7.9 Examples of Potential Mapping Criteria by
Category

Category List of Potential Mapping Criteria

Automobiles Performance, fuel economy, size, seating, style
Fashion Casual, formal, business wear
Snacks Child vs adult, healthy, junky, sweet
Laundry Detergent Cleaning, fabric care, stain removal, colour preservation
Shampoo Oily vs dry hair, dandruff care, treated hair, conditioning
Games Child vs adult, educational, traditional, electronic

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Positioning (8 of 9)
• A special warning about the use of “price” and “quality” as
positioning axes
– These are often the most widely used and considered
(and seemingly obvious and important) criteria;
however:
1. Price is not the same as value
2. Price is sometimes not the issue
3. Quality is a subjective and vague term

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Positioning (9 of 9)
• Understand the concept of repositioning
– Repositioning — A conscious effort to modify the
perception or position of a product, brand, or service in
order to take advantage of a different market opportunity

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Summary
• Geographic, demographic, psychographic, and behavioural
segmentation have been explored
• The characteristics of a good target segment have been
identified
• Defined the Uses and Value of Targeting
• Defined Marketing Strategies for Large and Small Targets
• Analyzed the concept of “positioning” and how marketers
use it to connect products to targets

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Mini Case: Issues and opportunities
with demographics
1. Section 7.1.2 discusses the use of demographics for
segmentation purposes. Two examples, gender and age,
are discussed in case boxes. Based on your own
experiences as a consumer, how much do you
agree/disagree with the findings of the case boxes? Is
gender used far too often as a shortcut, or as a consumer
is this a powerful distinction for your buying decision-
making process? What about age – do you agree with
Foote that people of a certain age tend to have similar
buying habits, so all you need to do is look at what the
largest age blocks buy and follow the trend?

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Mini Case: Use of multiple
segmentation tools
1. Kellogg’s used both traditional demographic segmentation
(gender) and psychographic (attitude) in their breakfast
cereal marketing for their Nourish line. Is this effective?

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Mini Case: The tobacco industry and
targeting
1. The case discusses an issue where the very criteria of
what makes a good target were unmet, thereby
diminishing the argument in defense of advertising
tobacco. What do you think – do you think that tobacco
companies should be allowed to advertise their products if
they are legal? If they can’t advertise, should it be illegal?

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Mini Case: Perceptual maps
1. Just as Chapter 2 introduced us to the concept of the
“mission” being key to the success of the organization’s
efforts, this section introduces us to the importance of
defining the correct parameters for our positioning
mapping. While “price” and “quality” are pretty generic,
other criteria might be more specific to our category focus.
What are some other examples of “generic” criteria that
may be defining but not specific?

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Mini Case: Repositioning Las Vegas
1. The example of the repositioning effort of Las Vegas
identifies a number of key issues associated with trying to
change people’s perceptions. What are they?

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