Steps in Segmentation,

Targeting, and Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Market Segmentation
• Represents an effort to identify and categorize groups of customers
and countries according to common characteristics.
• companies can’t be all things to all people because buyers
differ in terms of their needs, wants, and demands.
Accordingly, just as with consumer markets and B2B
markets, companies typically find it necessary to segment
international markets.

7-3
Step 1. Market Segmentation
Levels of Market Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)

Segment
Segment Marketing
Marketing
Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)

Niche
Niche Marketing
Marketing
Different
Different products
products to
to subgroups
subgroups within
within segments
segments
(( more
more segmentation)
segmentation)

Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals or
or locations
locations
(complete
(complete segmentation)
segmentation)
Step 1. Market Segmentation
Bases for Segmenting Consumer Markets

Geographic

Nations, states,
regions or cities

Demographic
Age, gender,
family size and
life cycle, or
income
Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses
Step 1. Market Segmentation
Bases for Segmenting Business Markets

Personal Demographics
Characteristics

Bases
Bases
for
for Segmenting
Segmenting
Situational Business
Business Operating
Factors Markets
Markets Characteristics

Purchasing
Approaches
 Methods of Segmenting Emerging Markets
• Geographical segmentation,
• Just as with domestic markets, international markets can be segmented geographically. A
company might segment by regions, such as Western Europe, the Middle East, Africa, Latin
America, etc. Keep in mind, however, that although geographic segmentation groups countries
by location, they may be very different from one another in other respects.
• For example, if you were to consider the countries included in a Western European region,
you’d find that, both culturally and economically, the United Kingdom and Scotland are very
similar, but both differ significantly from neighboring Ireland.
• Similarly, people in West Africa tend to share similarities in dress, cuisine, and music, but these
characteristics aren’t shared extensively with groups outside of West Africa .
• In terms of geographic segmentation, marketers also need to consider the infrastructure of the
country—the basic physical systems of the nation, such as roads, sewage treatment,
communication, water treatment, electricity, etc.
• China has invested billions of dollars in an effort to strengthen its economy and
global trade through its Belt and Road Initiative (BRI), a vast network of railways,
energy pipelines, and highways through six economic corridors, both westward
through former Soviet republics and southward to Pakistan, India, and Southeast
Asia.
• In order to expand maritime trade traffic, China is investing in port development
along the Indian Ocean, from Southeast Asia to East Africa and parts of Europe.
The BRI spans a multitude of infrastructure projects intended to promote the flow
of goods and foreign investment and is expected to impact more than 80 countries
 Segmentation Based on Political and Legal
Factors
• Segmenting consumer markets, it’s often done on the basis of factors such as age, gender,
product usage, personality, etc. : country characteristics.
• political and legal factors, such as the type and stability of the government, how receptive the
government is to foreign firms, monetary regulations, and how complex the bureaucracy of the
nation is.There are numerous other governmental policies that can interfere with international
trade, such as tariffs (taxes imposed on imports), import quotas, currency controls, and local
content requirements.
• In 2022, in response to Russia’s invasion of Ukraine, major sanctions have been put in place
against Russia by the United States, the European Union, and the United Kingdom. For
example, the United Kingdom imposed a 35 percent tax on some Russian imports, and several
international companies like McDonald’s, Coca-Cola, Starbucks and Marks & Spencer have
either suspended operations in Russia or have withdrawn altogether. It doesn’t take much to
imagine the financial impact on Russia as a result of these sanctions
 Segmentation Based on Economic Factors
• Economic factors—the level of economic development and the income levels of the
population.
• This is often differentiated on the basis of whether the country is developing, developed, or
underdeveloped.
• This classification is based on the nation’s economic status (i.e., gross domestic product, gross
national product, per capita income, degree of industrialization, and standard of living).
• According to the United Nations in 2020, 36 countries were classified as developed;
interestingly enough, all of these countries were located in either North America, Europe, or
“Developed Asia and Pacific.”
• The United Nations categorized 126 countries as developing, and all of these were located in
either Africa, Asia, Latin America or the Caribbean.
 Segmentation Based on Cultural Factors
• Cultural factors, such as common language, religions, values, and attitudes, can also be used to
segment a country or region.
• McDonald’s uses a “think global, act local” strategy to help meet the cultural needs of various
market segments. On one hand, it offers a standardized menu of offerings worldwide, like
McNuggets and the McFlurry. On the other hand, it customizes other offerings on its menu to
adapt to the cultural requirements of consumers. For example, in India, in order to appeal to
vegetarian and non-beef-eating customers, McDonald’s introduced the Maharaja Mac, which is
made with a corn and cheese patty. The company also used the term “Maharaja” to appeal to
India’s history and liking of royalty and called it the “Social Burger” to suggest that it can be
eaten quickly, giving people more time to spend with friends.
• lounge where customers can enjoy their meals
Cultural Factors
• McDonald’s not only customizes its menu based on where it operates, but it also
customizes its digital and TV advertisements depending on each country and
consumer segment.
• For example, in Singapore, McDonald’s ads attempted to appeal to consumers’ love
of nightlife by showing how McDonald’s can enhance a night out, whereas in the
United Kingdom, the company created cartoon ads focusing on Happy Meals to
attract the large segment of children in the UK.
• Not to be outdone by McDonald’s, Burger King also offers a wide variety of
international menu items that aren’t available in the United States. Did you know
that there’s a Spicy Shrimp Whopper available in Japan and a SufganiKing (Donut
Burger) in Israel? In Norway, where there is one sauna for every two people, Burger
King opened a fully operational spa complete with a 15-person sauna and media
 Cultural Factors
• One model that is particularly useful in assessing culture is social psychologist Geert Hofstede’s cultural dimensions, originally
published in the 1970s. Hofstede had studied IBM employees in over 50 countries and identified five dimensions that could be
used to distinguish one culture from another. Four of these dimensions directly affect marketing in different cultures:
 Power Distance Index (PDI). . A high PDI score suggests that society accepts an unequal distribution of power, whereas a
low PDI score means that power is shared and widely dispersed. This cultural dimension plays an important role in marketing
because, in countries where there is a high power distance index, marketers need to appeal to the leadership or the head of the
family, whereas in low power distance index countries, it’s more important to reach a broad range of “ordinary” people who
will be the ultimate decision makers.
 Individualism versus Collectivism (IDV). This dimension refers to whether the culture emphasizes the needs and goals of the
group as a whole or whether individual needs are paramount.Think of individualism and collectivism as an “I” versus a “we”
orientation. An individualistic society places emphasis on attaining personal goals, whereas a collectivist culture places
emphasis on group goals and the well-being of the group. The United States has a very high individualism score of 91,
compared to many Latin American countries such as Ecuador and Guatemala, which have single-digit individualism
scores.The implications for marketing are important here because for countries with high individualism, the marketing
messages should emphasize how your products or services benefit them individually, such as by saving time and rewarding
themselves. On the other hand, in countries with a low individualism ranking, it’s more important to stress how buying your
company’s products will benefit the community as a whole.
 Uncertainty Avoidance (UAI). This dimension refers to the degree to which a society avoids risk or ambiguity.
Societies with a high degree of uncertainty avoidance compensate for this uncertainty by establishing rules,
policies, and procedures, whereas societies with low uncertainty avoidance more readily accept change. The UAI
for the United States is 46, putting it into the moderate range compared to European nations like Italy (UAI of 75)
and Poland (UAI of 93).49 Let’s consider how this affects marketing. Cultures with high uncertainty avoidance
generally prefer to have product characteristics clearly spelled out, complete with product warranties and money-
back guarantees. For example, if you want to market automobiles in that type of culture, it would be important to
focus on the safety features of the car. Conversely, cultures with low uncertainty avoidance are more accepting of
trying something new.
 Masculinity/Femininity (MAS). This dimension refers to the degree to which gender-specific roles are valued in
the society: Are “masculine” values such as achievement, ambition, and acquisition or “feminine” values such as
quality of life and service to others valued more? In countries with a high masculinity ranking (e.g., Japan), men
are intended to lead; women are supposed to follow. This is in direct contrast to countries with a low masculinity
ranking (such as the United States and Canada), where women are treated equally to men and gender roles are
more fluid. Societies with low masculinity would tend to respond negatively to gender-oriented promotion, so a
neutral approach that appeals to both men and women would be more appropriate. 50 Consider how many brands
in the United States focus on female empowerment and positive body image. That type of advertising would not
appeal to a society with a masculine orientation.
• target marketing is a more efficient, effective, and affordable way to reach customers
and generate business. It’s simply a subset of the total market.
• For example, a children’s toy may have a target market of boys between the ages of 6
and 12, but it’s the boys’ parents (who actually purchase the toy) who are the target
audience.
• A buyer persona is a semi-fictional representation of an ideal customer that helps
marketers understand and relate to the target market. Buyer personas are intended to
help marketers “visualize” those to whom they are selling so they can fine-tune their
marketing messages .
• Best Buy used personas in precisely this way. Its buyer personas are “Buzz” (the young
tech enthusiast), “Barry” (the wealthy professional), “Ray” (the family man), and “Jill”
(a soccer mom who is the main shopper for the household but usually avoids electronics
stores).
 Name. It may seem silly to include a made-up persona name like Best Buy did, but it’s done so that the
marketing team can more easily discuss their customers and plan how to reach them.
 Age. The age (or age range) of a persona allows for understanding generation-specific characteristics. As we
pointed out in our earlier discussion of using age as a way to segment the market, consumers within the
same age group tend to share characteristics and purchase preferences.
 Interests. The interests of the buyer persona describe things like hobbies or what they do in their spare time.
 Media Usage. What media platforms does the buyer persona use? Television, radio, the Internet? This is
important because the marketer wants to know where to reach these “people” with their marketing
messages.
 Finances. The income and other financial characteristics of the buyer personas help marketers glean insights
as to what types of products or services will pique the interests of these buyer personas. These financial
characteristics also assist in making decisions about price points and promotions that would be successful in
reaching these customers.
• Brand Affinities. Do they like certain brands? If so, this can provide the marketer with valuable information
about the type of content to which they best respond
Product Positioning Defined
• Product positioning is the process of deciding and communicating how an organization wants its market to
think and feel about a product or service.
• This third and final step is contained in what’s known as the segmenting, targeting, and positioning model,
the STP model. With the STP model, a company segments the market, selects the target market, and positions
its products and services into the existing marketplace (see Figure 5.12). In their book Positioning: The Battle
for Your Mind, marketing gurus Al Ries and Jack Trout write, “The basic approach of positioning is not to
create something new and different, but to manipulate what’s already up there in the mind
Marriott International
• owns several different hotel chains that target specific consumer groups:
 Courtyard by Marriott focuses on over-the-road travelers who aren’t looking for
luxury and all the amenities; they just want a basic, clean hotel in which to stay
during their trip.
 Ritz-Carlton hotels are by their nature more luxurious and target those travelers
who don’t mind paying a premium price for more luxury and amenities.
 Marriott ExecuStay hotels are aimed at professionals who need a longer-term
place to stay (i.e., an extended stay hotel).
Approaches to Product Positioning

• There are two main types of product positioning in marketing:

head-to-head and differentiation.
• Head-to-Head Positioning
• Head-to-head positioning For instance, let’s imagine that you
have a small kiosk in a shopping mall where you serve freshly
baked pretzels. If your kiosk makes different flavors of dough
from scratch and your competitors use only processed frozen
dough, you can set your pretzel business apart from your
competitors in your customers’ minds by emphasizing that
selling point.
 Amazon: “For consumers who want to purchase a wide range of products online with quick delivery,
Amazon provides a one-stop online shopping site. Amazon sets itself apart from other online retailers with
its customer obsession, passion for innovation, and commitment to operational excellence.”
 Apple: “For individuals who want the best personal computer or mobile device, Apple leads the technology
with the most innovative products. Apple emphasizes technological research and advancement and takes an
innovative approach to business best practices—it considers the impact our products and processes have on
its customers and the planet.”
 McDonald’s: “For individuals looking for a quick-service restaurant with an exceptional customer
experience, McDonald’s is a leader in the fast-food industry, with friendly service and consistency across
thousands of convenient locations. McDonald’s dedication to improving operations and customer
satisfaction sets it apart from other fast-food restaurants.”
• Coca-Cola: “For individuals looking for high quality beverages, Coca-Cola offers a wide range of the most
refreshing options—each creates a positive experience for customers when they enjoy a Coca-Cola brand
drink. Unlike other beverage options, Coca-Cola products inspire happiness and make a positive difference in
customers’ lives, and the brand is intensely focused on the needs of consumers and customers.”