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C H A P T E R

Segmentation, Targeting, and Positioning

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

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Outline the different methods of segmenting a market.

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

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

Determine the value proposition.

Define positioning, and describe how firms do it.

Segmentation, Targeting, and Positioning

LO1

LO2

LO3

LO4

LO5

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Segmentation, Targeting, Positioning Process

Step 1 • Strategy or Objectives

Step 2 • Segmentation Methods

Step 3 • Evaluate Segment Attractiveness

Step 4 • Select Target Market

Step 5 • Identify and Develop Positioning Strategy

Segmentation

Targeting

Positioning

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Step 1: Establish Overall Strategy or Objectives

Check Yourself Derived from mission and current state

©M. Hruby.

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Step 2: Segmentation Methods

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CHECK YOURSELF

1. What are the various segmentation methods?

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Step 3: Evaluate Segment Attractiveness

SEGMENT ATTRACTIVENESS

Substantial

Reachable

ResponsiveProfitable

Identifiable

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Identifiable

Who is in their market? Are the segments unique? Does each segment require a unique marketing mix?

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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

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Reachable

Know the product exists

Understand what it can do

Recognize how to buy

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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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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

Targeting Strategies

Differentiated

Concentrated

Micromarketingor

one-to-one

Undifferentiated ormass marketing

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Step 5: Develop Positioning Strategy

• Value• Salient Attributes• Symbol• Competition

Positioning Methods

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Positioning Steps

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

2. Identify the market’s ideal points and size.

3. Identify competitors’ positions.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

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CHECK YOURSELF

1. What is a perceptual map?

2. Identify the six positioning steps.

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Benefit segmentation groups consumers on the basis of the benefits they derive from products or services.

Glossary

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Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education.

Glossary

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Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Glossary

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Geographic segmentation organizes customers into groups on the basis of where they live.

Glossary

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Behavioral segmentation divides customers into groups based on how they use the product or service.

Glossary

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Psychographic segmentation, or psychographics, allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices.

Glossary

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The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire.

Glossary