Segmenting, Targeting, and Positioning Cornerstones of Marketing Management

Professor Charles D. Schewe

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation
1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments

Market Targeting
3. Evaluate attractiveness of each segment 4. Select the target segment(s)

Market Positioning
5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept

Basic Market-Preference Patterns

(a) Homogeneous preferences (b) Diffused preferences (c) Clustered preferences

Creaminess

Creaminess

Sweetness

Sweetness

Creaminess Sweetness

Market Aggregation The Strategy of Mass Marketing

Advantages & Disadvantages Product Differentiation

Step 1. Market Segmentation

Levels of Market Segmentation
Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products to suit the tastes of individuals and locations (complete segmentation)
Local Marketing
Tailoring brands/ promotions to local customer groups

Individual Marketing
Tailoring products/ programs to individual customers

Market Segmentation Subdividing the Market

Steps in the Market Segmentation Process

Determine Market Boundaries Decide Which Segmentation Variables to Use Collect and Analyze Segmentation Data Develop a Profile of Each Segment Target Segments to be Served Design a Marketing Plan

Bases for Segmenting Consumer Markets

Geographic
Region, City or Metro Size, Density, Climate

Demographic
Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Psychographic
Lifestyle or Personality

Behavioral
Occasions, Benefits, Uses, or Attitudes

Step 1. Market Segmentation

Bases for Segmenting Business Markets
Personal Characteristics

Demographics

Situational Factors

Bases for Segmenting Business Markets

Operating Characteristics

Purchasing Approaches

Effective Segmentation
Measurable Substantial Accessible Differential Actionable
Size, purchasing power, profiles of segments can be measured. Segments must be large or profitable enough to serve. Segments can be effectively reached and served. Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Descriptive Bases
Age Gender Income Occupation Education Family Size or Family Life Cycle

Religion or Nationality

Geographic Bases
Region Density Climate Population

Behavioral Bases
User Status & Brand Loyalty Personality/Lifestyle Social Class Occasion Readiness to Buy Benefits Sought Usage Rate

Heavy and Light Users of Common Consumer Products

PRODUCT (% USERS)
Soups and detergents (94%) Toilet tissue (95%) Shampoo (94%) Paper towels (90%) Cake mix (74%) Cola (67%) Beer (41%) Dog food (30%) Bourbon (20%)

HEAVY HALF

LIGHT HALF

75% 71% 79% 75% 83% 83% 87% 81% 95%

25% 29% 21% 25% 17% 17% 13% 19% 5%

Single Versus Multiple Variable Segmentation

Step 2. Market Targeting

Evaluating Market Segments
Segment Size and Growth
Analyze sales, growth rates and expected profitability for various segments.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Five Patterns of Target Market Selection

Single-segment concentration

M1 M2 M3 P1 P2 P3 P1 P2 P3

M1 M2 M3 P1 P2 P3
Market specialization

Selective specialization

Product specialization

M1 M2 M3

M1 M2 M3 P = Product M = Market P1 P2 P3 P1 P2 P3

M1 M2 M3

Full market coverage

Step 2. Market Targeting

Market Coverage Strategies
Company Marketing Mix
A. Undifferentiated Marketing

Market

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

B. Differentiated Marketing

Segment 1 Segment 2 Segment 3

Company Marketing Mix

Segment 1 Segment 2 Segment 3

C. Concentrated Marketing

Step 2. Market Targeting

Choosing a Market-Coverage Strategy
Company Resources Product Variability Products Life-Cycle Stage Market Variability Competitors Marketing Strategies

Positioning the Offering

Positioning is the act of designing the companys offering and image to occupy a distinctive place in the the target markets mind. P 298

The BCG Competitive Advantage Matrix

Number of Approaches to Achieve Advantage
Few Many Specialized

Size of the Advantage

Large

Volume

Small

Stalemated

Fragmented

Product Differentiation
Conformance Quality

Form

Features

Performance

Quality

Durability

Reliability

Repairability

Style

Design

Services Differentiation
Ordering Ease Customer Consulting

Installation

Miscellaneous Services

Delivery

Customer Training

Maintenance & Repair

Differentiation
Personnel Channel

Image Differentiation
Media Atmosphere

Symbols

Events

Important

Profitable

Distinctive

Differences Worth Establishing

Affordable Superior

Preemptive

Perceptual Map
Live shows Easy to reach Good food Fantasy Exercise Fun rides Disneyland Knotts Berry Farm
1.0

Little waiting
0.8

Educational, 0.6 animals Marineland 0.4 of the Japanese Pacific 0.2 Deer Park
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -0.2

Magic Mountain

-0.4 -0.6 -0.8

Busch Gardens Economical

Lion Country Safari

Positioning Strategies
Product Attributes Benefits, Problem Solutions & Basic Needs Price & Quality Specific Use Against Other Products Product User Against a Competitor