Segmentation, positioning,

targeting
Segmentation,
positioning, targeting

„Not everyone likes the same cereal, restaurant, college, or

movie.“
Philip
Kotler
Segmentation,
positioning, targeting
Therefore, marketers start by dividing the
market into
segments:

• geographic

• demographic

• psychographic

• behavioral differences among buyers.

 Segmentation, positioning, targetin
After identifying market segments, the marketer decides
which
present the greatest opportunities - which are its target
markets.

For each, the firm develops a market offering that it positions

in the
minds
of the target buyers as delivering some central
benefit(s).
 Segmentation, positioning,
targeting
Volvo develops its cars for buyers to whom
safety is a major concern,positioning its vehicles as the
safest a
customer can buy.
Segmentation, positioning,
targeting
Segmentation, positioning,
targeting
Segmentation, positioning,
targeting
Geographic
segmentation
 Geographic segmentation divides the
market into geographical units such as:

 nations
 states
 regions,
 counties
 cities
 neighborhoods.
Geographic
segmentation
The company can operate in one or a few areas,
or it can operate in all
 but pay attention to local variations. In that way it
can tailor marketing programs to the needs and
wants of local customer groups in trading areas,
neighborhoods, even individual stores.
 In a growing trend called grassroots marketing, such
activities concentrate on getting as close and
personally relevant to individual customers as
possible.
Geographic
segmentation
Škoda
Rapid:
 India

European
Market
Demographic
segmentation
In demographic segmentation, we divide the
market on variables such as:

 age
 family size
 family life cycle
 gender
 income
 occupation (job)
Demographic
segmentation
In demographic segmentation, we divide the
market on variables such as:

 education
 religion
 race
 generation
 nationality
 social class
Demographic
segmentation
One reason demographic variables are so
popular with marketers is that they’re often
associated with consumer
needs and wants. Another is that they’re easy to
measure.

Even when we describe the target market in

nondemographic terms (say, by personality type),
we may need the link back to demographic
characteristics in order to estimate the size of the
market and the media we should use to reach it
efficiently.
Demographic
segmentation
 Age and life-cycle stage

Colgate offer three main lines of products to

target:

 kids
 adults
 older consumers
Demographic
segmentation
 Life stage

•People in the same part of the life cycle may still differ in their life stage. Life stage
defines a person’s major concern, such as:

 going through a divorce

 going into a second marriage
 taking care of an older parent
 deciding to cohabit with another person
 deciding to buy a new home…

•These life stages present opportunities for marketers who can help people cope with
Demographi
c
segmentatio
n
 Gender

Men and women have different attitudes and behave

differently, based partly on genetic makeup and partly
onsocialization.
Women tend to be more communal-minded and men
more self- expressive and goal-directed; women tend to
take in more of the data in their immediate environment
and men to focus on the
part of the environment that helps them achieve a goal.

A research study examining how men and women shop

found that men often need to be invited to touch a
product, whereas women are likely to pick it up without
prompting. Men often like to read product information;
Demographi
c
segmentatio
n
 Income

Income segmentation is a long-standing practice in such

categories as:

 automobiles
 clothing
 cosmetics
 financial services
 travel

 However, income does not always predict the best

customers for a given product. Blue-collar workers were
among the first purchasers of color television sets; it was
cheaper for them to buy these sets than to go to movies
and restaurants.
Demographi
c
segmentatio
n
 Generation
Each generation or cohort is profoundly influenced by the
times in which it grows up—the music, movies, politics,
and defining events of that period.

Members share the same major cultural, political,

and economic experiences and have similar outlooks
and values.

Marketers often advertise to a cohort by using the icons

and images prominent in its experiences.They also try
to develop products and services that uniquely meet the
particular interests or needs of a generational target.
Here is how one bank targeted Gen Y consumers.
Demographi
c
segmentatio
n
 Race and Culture

Multicultural marketing is an approach recognizing

that different ethnic and cultural segments have
sufficiently different needs and wants to require
targeted marketing activities, and that a mass
market approach is not refined enough for the
diversity of the marketplace.

Consider that McDonald’s now does 40 percent of

its U.S. business with ethnic minorities. Its highly
successful “I’m Lovin’ It” campaign was rooted in
hip-hop culture but has had an appeal that
transcended race and ethnicity
Demographic
segmentation
 Race and Culture (example)

Lesbian, Gay, Bisexual, and Transgender (LGBT)

 The lesbian, gay, bisexual, and transgender (LGBT)

market is estimated to make up 5 percent to10
percent of the population and have approximately
$700 billion in buying power.

Many firms have recently created initiatives to target this

market:
 American Airlines created a Rainbow Team with a
dedicated LGBT staff and Web site that has emphasized
community-relevant services such as an event calendar
of gay-themed national events.
 According to one survey of the gay and lesbian
community, Absolut,Apple, Levi’s, and Bravo and
Psychographic
segmentation
 Psychographics is the science of using
psychology and demographics to better
understand consumers.
 In psychographic segmentation, buyers are divided
into different groups on the basis of
psychological/personality traits, lifestyle, or
values. People within the same demographic
group can exhibit very different psychographic
profiles
Psychographic
segmentation
 One of the most popular commercially
available classification systems based on
psychographic
measurements is Strategic Business Insight’s (SBI)
VALS™ framework.VALS, signifying values and
lifestyles, classifies
U.S. adults into eight primary groups based on
responses to a questionnaire featuring 4
demographic and 35 attitudinal questions.The
VALS system is continually updated with new
data from more than 80,000 surveys per
year.You can find out which VALS type you are by
going to the SBI Web site
Psychographic
segmentation
Psychographic
segmentation
 The four groups with higher resources are:

 1. Innovators - Successful, sophisticated, active, “take-charge” people

with high
self-esteem.
 Purchases often reflect cultivated tastes for relatively upscale, niche-
oriented productsand services.
 2. Thinkers - Mature, satisfied, and reflective people motivated by
ideals and who value order,
 knowledge, and responsibility.They seek durability, functionality, and
value in
products.
 3. Achievers - Successful, goal-oriented people who focus on career
and family.
They favor
 premium products that demonstrate success to their peers.
 4. Experiencers - Young, enthusiastic, impulsive people who seek
variety and
excitement.
 They spend a comparatively high proportion of income on fashion,
Psychographic
segmentation
 The four groups with lower resources are:

 1. Believers - Conservative, conventional, and

traditional people with concrete beliefs.They prefer
 familiar, local-made products and are loyal to established
brands.
 2. Strivers - Trendy and fun-loving people who are
resource- constrained.They favor stylish
 products that emulate the purchases of those with
greater material
wealth.
 3. Makers - Practical, down-to-earth, self-sufficient people
who like to work with their hands
 They seek lokal-made products with a practical or functional
purpose.
 4. Survivors - Elderly, passive people concerned about
change and loyal to their favorite brands.
Behavioral
segmentation
In behavioral segmentation, marketers divide
buyers into groups on the basis:

 of their knowledge of
 attitude toward
 use of
 response to a product
Behavioral
segmentation
 Needs and benefits

 Not everyone who buys a product has the same

needs or wants the same benefits from it. Needs-
based or benefit- based segmentation is a widely
used approach because it identifies distinct market
segments with clear marketing implications.
Constellation Brands identified six different benefit
segments.
Behavioral segmentation
(segments)
 Needs and benefits (example - the wine
market)
 Enthusiast (12 percent of the market). Skewing
female, their average income is about $76,000 a year.
About 3 percent are
“luxury enthusiasts” who skew more male with a
higher income.

 Image Seekers (20 percent). The only segment

that skews male, with an average age of 35. They
use wine basically as a badge to say who they are,
and they’re willing to pay more to make sure they’re
getting the right bottle.

 Savvy Shoppers (15 percent). They love to shop

and believe
they don’t have to spend a lot to get a good bottle of
Behavioral segmentation
(segments)
 Needs and benefits (example - the wine
market)
 Traditionalist (16 percent). With very
traditional values, they like to buy brands they’ve
heard of and from wineries
that have been around a long time.Their
average age is 50
and they are 68 percent female.

 Satisfied Sippers (14 percent). Not knowing

much about wine, they tend to buy the same
brands. About half of what they drink is white
zinfandel.
Behavioral
segmentation
 Decision roles

People play five roles in a buying decision: Initiator,

Influencer, Decider, Buyer, and User.

 For example, assume a wife initiates a purchase by

requesting a new treadmill for her birthday.The
husband may then seek information from many
sources, including his best friend who has a treadmill
and is a key influencer in what models to consider.
After presenting the alternative choices to his wife, he
purchases her preferred model, which ends up being
used by the entire family. Different people are playing
different roles, but all are crucial in the decision process
and ultimate consumer satisfaction.
Behavioral
segmentation
 User and usage

 Occasions Occasions mark a time of day, week,

month, year, or other well-defined temporal aspects of
a consumer’s life.

 We can distinguish buyers according to the

occasions when they develop a need, purchase
a product, or use a product.

 For example, air travel is triggered by occasions

related to business, vacation, or family. Occasion
segmentation can help expand product usage.
Behavioral
segmentation
 User status

 Every product has its nonusers, ex-users,

potential users, first-time users, and regular
users.

 Blood banks cannot rely only on regular donors

to supply blood; they must also recruit new first-
time donors and contact ex-donors, each with a
different marketing strategy.The key to attracting
potential users, or even possibly nonusers, is
understanding the reasons they are not using.
Behavioral
segmentation
 Usage rate

 We can segment markets into:

 light, medium, and heavy product users.

 Heavy users are often a small slice but account for a high
percentage of total consumption. Heavy beer drinkers
account for 87 percent of beer consumption—almost
seven times as much as light drinkers.

 Marketers would rather attract one heavy user than

several light users.

 A potential problem, however, is that heavy users are often

either extremely loyal to one brand or never loyal to any
brand and always looking for the lowest price.They also may
have less room to expand their purchase and consumption.
Behavioral
segmentation
 Loyality status

 four groups based on brand loyalty status:

 Hard-core loyals - Consumers who buy only one

brand all the time

 Split loyals - Consumers who are loyal to two or three

brands

 Shifting loyals - Consumers who shift loyalty from one

brand to another

 Switchers - Consumers who show no loyalty to any

Behavioral
segmentation
Market
Targeting
 There are many statistical techniques for
developing market segments. Once the firm has
identified its market- segment opportunities, it
must decide how many and which ones to
target.Marketers are increasingly combining
several variables in an effort to identify smaller,
better- defined target groups.

 A bank may not only identify a group of wealthy

retired adults but within that group distinguish
several segments depending on current income,
assets, savings, and risk preferences.This has led
some market researchers to advocate a needs-
based market segmentation approach, as
introduced previously.
Market
Targeting
Five key criteria for useful market
segments:
 Measurable
 The size, purchasing power, and characteristics of the segments can be
measured.
 Substantial.
 The segments are large and profitable enough to serve. A segment
should be the largest possible homogeneous group worth going after
with a tailored marketing program.
 Accessible
 The segments can be effectively reached and served.
 Differentiable
 The segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs. If married and
unmarried women respond similarly to a sale on perfume, they do not
constitute separate segments.
 Actionable.
 Effective programs can be formulated for attracting and serving the
segments.
Market Targeting (Roger Best -
the seven-step)
 Group customers into segments based on similar ne
 1. Needs-Based Segmentation benefits sought by customers in solving a particular con
problem.

 For each needs-based segment, determine which demogr

lifestyles, and usage behaviors make the segment distinct
 2. Segment Identification identifiable (actionable).

 Using predetermined segment attractiveness criteria (suc

 3. Segment Attractiveness market growth, competitive intensity, and market access),
the overall attractiveness of each segment.

 Determine segment profitability.

 4. Segment Profitability
 For each segment, create a “value proposition” and produ
positioning strategy based on that segment’s unique cust
needs and characteristics.
 5. Segment Positioning
 Create “segment storyboard” to test the attractiveness o
segment’s positioning strategy.

 6. Segment “Acid Test”  Expand segment positioning strategy to include all aspect
marketing mix: product, price, promotion, and place.
Selecting the Market
Segments
 Full market coverage

 Multiple segment
specialization

 Single segment
concentration

 Individual marketing
Full market
coverage
•  With full market coverage, a firm attempts to serve all customer group
with all the products they might need. Only very large firms such as Micro
(software market), General Motors (vehicle market), and Coca-Cola
(nonalcoholic beverage market) can undertake a full market coverage strat
Large firms can cover a whole market in two broad ways: through
differentiated or undifferentiated marketing
Full market
coverage
 Differentiated marketing
 In undifferentiated or mass marketing, the firm
ignores segment differences and goes after the
whole market with one offer. It designs a
marketing program for a product with a
superior image that can be sold to the broadest
number of buyers via mass distribution and
mass communications. Undifferentiated
marketing is appropriate when all consumers
have roughly the same preferences and the
market shows no natural segments. Henry Ford
epitomized this strategy when he offered the
Model-T Ford in one color, black.
Full market
coverage
 Undifferentiated marketing
 In differentiated marketing, the firm sells different
products to all the different segments of the market.
Cosmetics firm Estée Lauder markets brands that
appeal to women (and men) of different tastes:The
flagship brand, the original Estée Lauder, appeals to
older consumers; Clinique caters to middle-aged
women; M.A.C. to youthful hipsters;Aveda to
aromatherapy enthusiasts; and Origins to
ecoconscious consumers who want cosmetics
made from natural ingredients.
Multiple segment
specialization
 With selective specialization, a firm selects a subset
of all the possible segments, each objectively attractive
and appropriate.
There may be little or no synergy among the
segments, but each promises to be a
moneymaker.

 When Procter & Gamble launched Crest

Whitestrips, initial target segments included newly
engaged women and brides- tobe as well as gay
males.The multisegment strategy also has the
advantage of diversifying the firm’s risk.
Multiple segment
specialization
product specialization, the firm sells a certain product to
several different market segments. A microscope
manufacturer, for instance, sells to university, government,
and commercial laboratories, making different instruments
for each and building a strong reputation in the specific
product area.The downside risk is that the product may be
supplanted by an entirely new technology.

 market specialization, the firm concentrates on serving

many needs of a particular customer group, such as by
selling an assortment of products only to university
laboratories. The firm gains a strong reputation among this
customer group and becomes a channel for additional
products its members can use.The downside risk is that the
customer group may suffer budget cuts or shrink in size.
Single segment
specialization
 With single-segment concentration, the firm
markets to only one particular segment. Porsche
concentrates on the sports car market and
Volkswagen on the small-car market - its foray into the
large-car market with the Phaeton was a failure
Single segment
specialization - Niche
A niche is a more narrowly defined customer group
seeking a distinctive mix of benefits within a
segment.Marketers usually identify niches by dividing
a segment into subsegments.
Whereas Hertz,Avis, Alamo, and others specialize in
airport rental cars for business and leisure travelers,
Enterprise has attacked the low-budget, insurance-
replacement market by primarily renting to customers
whose cars have been wrecked or stolen. By creating
unique associations to low cost and convenience in
an overlooked niche market, Enterprise has been
highly profitable.
Individual
marketing
 segments of one

 customized
marketing

 one-to-one
marketing
Individual
marketing
Today, customers are taking more individual initiative in
determining what and how to buy.They log onto the Internet;
look up information and evaluations of product or service
offerings; conduct dialogue with suppliers, users, and product
critics; and in many cases design the product they want.

 Customerization combines operationally driven mass

customization with customized marketing in a way that
empowers consumers to design the product and service offering
of their choice.The firm no longer requires prior information
about the customer, nor does it need to own
manufacturing. It provides a platform and tools and “rents”