C H A P T E R

SEGMENTATION, TARGETING, AND POSITIONING

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Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

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L E A R N I N G O B J E C T I V E S

Segmentation, Targeting, and Positioning

LO1 Identify the five steps in the segmentation, targeting and positioning process.

LO2 Outline the different methods of segmenting a market.

LO3 Describe how firms determine whether a segment is attractive and therefore worth pursuing.

LO4 Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

LO5 Define positioning, and describe how firms do it.

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Victoria’s Secret

Photo by Duffy-Marie Arnoult/WireImage/Getty Images

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Segmentation, Targeting, Positioning Process

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Step 1: Establish Overall Strategy or Objectives

Check Yourself Derived from mission

and current state

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Step 2: Segmentation Methods

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Geographic Segmentation

©ImagineChina

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Demographic Segmentation

Most common segmentation strategy

U.S. Census Bureau Website

©Stockbyte/Getty Images

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Balancing Act Career Moms

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Psychographic Segmentation

Psychographic Self-values

Self-concept Lifestyles

©Benetton Group SPA; Photo by: Oliviero Toscani

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VALS Website

VALS Framework

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Geodemographic Segmentation

Claritas Website

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State Farm Not Insuring Mississippi

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Benefit Segmentation

©image100/PunchStock ©image100/PunchStock Michael Hevesy/Photodisc/Getty Images

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Behavioral Segmentation

Occasion segmentation

Loyalty segmentation

Royalty-Free/CORBIS

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Check Yourself

1. What are the various segmentation methods?

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Step 3: Evaluate Segment Attractiveness

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Identifiable

• Who is in their market?

• Are the segments unique?

• Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Substantial

• Too small and it is insignificant

• Too big and it might need it’s own store

©Je

rry

Arc

ieri

/Co

rbis

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Reachable

Know the product exists

Understand what it can do

Recognize how to buy

©Digital Vision/PunchStock

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Responsive

React positively to firm’s offering

Move toward the firms products/services

Accept the firm’s value proposition

Customers must:

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Profitable

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Profitable Segments

• Segment size = 60 million (<15 yrs)

• Segmentation Adoption Percentage = 35%

• Purchase Behavior = $500 x 1 time purchase

• Profit margin % = 10%

• Fixed Cost = $50M Is this segment profitable?

©Comstock/PunchStock

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Step 4: Selecting a Target Market

• Conde Nast has more than 20 niche magazines focused on different aspects of life.

©M Hruby

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Segmentation Strategy

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Step 5: Develop Positioning Strategy

•Value

•Salient Attributes

•Symbol

•Competition

Positioning Methods

Photo by Tiffany Rose/WireImage/Getty Images

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Positioning

Green Giant for Business Wire via Getty Images

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Perceptual Maps

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Positioning Steps

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify competitors’ positions

3. Determine consumer preferences.

4. Select the position.

5. Monitor the positioning strategy.

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Check Yourself

1. What is a perceptual map?

2. Identify the five positioning steps.