Segmentation, Targeting and PositioningLinking Customer Needs to Marketing

Action

Jahanzaib Yousaf 2

• After studying this chapter, you should be able to:

• Define the three steps of target marketing: market segmentation, target marketing, and market positioning• List and discuss the bases for segmenting consumer and business markets• Explain how companies identify attractive market segments and choose a

market coverage strategy• Discuss how companies position their products for maximum competitive

advantage in the marketplace

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Learning Objectives

Jahanzaib Yousaf 3

TARGET MARKETING PROCESS

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WHO TO

SERVE?3 STEPS:1. Segmentation2. Targeting3. Positioning

Jahanzaib Yousaf 4

STP

•Market segmentation: dividing market into distinct groups which will require separate marketing mixes

• Target marketing: choosing which group(s) to appeal to

•Market positioning: creating a clear, distinctive position in the consumer’s mind relative to competition

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Consumer Market Segmentation

• Geographic:• Regions• Size/density• Climate

• Demographic:• Age/generation• Gender• Family size/life-cycle• Income• Occupation• Religion• Ethnic origin

• Psychographic:• Social class• Lifestyle• Personality

• Behavioral:• Occasions• Benefits• User status• Usage rate• Loyalty status• Readiness state• Attitude toward product

Geographic Segmentation

• Divide markets into different geographic units.

• Examples:• World Region or Country: Middle East, South Asia or Pakistan, India etc.• Country Region: Punjab, KPK, Sindh, etc. • City or Metro Size: Lahore, Karachi.• Population Density: rural, suburban, urban• Climate: northern areas, southern, tropical

Demographic Segmentation

• Use Differences in:• age, gender, family size, family life cycle, income,

occupation, education, race, and religion

•Most frequently used segmentation variable• Ease of measurement and high availability.

Psychographic Segmentation

Psychographic segmentation divides a

market into different groups based on social

class, lifestyle, or personality

characteristics.

People in the same demographic classification

often have very different lifestyles and personalities.

Behavioral Segmentation

• Occasion• Special promotions &

labels for holidays.• Special products for

special occasions.

• Benefits Sought• Different segments

desire different benefits from the same products.

• Loyalty Status • Nonusers, ex-users,

potential users, first-time users, regular users.

• Usage Rate • Light, medium, heavy.

Loyalty Status Segmentation

Switchers

Shifting loyals

Split loyals

Hard-core

User & Loyalty Status Segmentation

Requirements for Effective Segmentation• To be useful, market segments must be:•Measurable:• Size, purchasing power, and profiles can

be measured• Accessible:• Segments can be reached

• Substantial:• Large enough to be profitable

• Actionable:• Programs can be developed to attract

and serve the segments

“Lefties” are hard to identify and measure, so few firms target this segment.

Market Preference Patterns

Target Marketing Strategies

Undifferentiated Marketing (Mass Marketing)

• Appeals to a broad spectrum of people• Efficient due to economies of scale• Effective when most consumers have similar needs

Differentiated Marketing (Segment Marketing)

• Develops one or more products for each of several customer groups with different product needs

• Coca-Cola (Coke, Sprite, Diet Coke, etc.)• Procter & Gamble (Tide, Cheer, Gain, Dreft, etc.)• Toyota (Camry, Corolla, Prius, Scion, etc.)

Concentrated Marketing (Niche Marketing)

• Entails focusing efforts on offering one or more products to a single segment• Useful for smaller firms that do not have

the resources to serve all markets• Niches have very specialized interests

Micro Marketing• Local Marketing• Individual Marketing (one-to-one Marketing)

• Segments are so precisely defined that products are offered to exactly meet the needs of each individual• Example: Levi’s Original Spin (custom) jeans, hair stylists

• Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual• Example: Proctor & Gamble’s products at Reflect.com Form

Products to Be Sold into Groups

The place a product occupies in consumers’ minds relative to

competing products.

Positioning

eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

Positioning Example

• Competitive advantages• Points of Parity (POP)• Points of Difference (POD) =>

Differentiation

Positioning results from differentiation and competitive advantages.

Positioning may change over time.

Positioning Strategy

To (target segment and need) our (brand) is a (concept) that (point-of-difference).

Positioning Example

“To busy mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that allows you to stay connected to people and resources while on the go more easily and reliably than the competing technologies.”

Positioning Maps: Luxury SUVsPrice vs. Orientation Dimensions

Generic Product Positions & Value Propositions

In-class Activity

• Describe how each of the following brands, companies, or products is positioned: