Marketing Chapter 6: Segmentation and Targeting

Chapter 6: Segmentation, Targeting, and Positioning

• This chapter examines the process of targeting specific market segments
• Learning Objectives:
  • Describe bases marketers use for segmenting markets.
  • Identify criteria for evaluating segment attractiveness.
  • Explain various targeting strategies (undifferentiated, differentiated, concentrated, micromarketing).
  • Describe positioning and execution by firms.

Segmentation, Targeting, & Positioning

• Who is the target market for SOCIAL LITE Vodka?
• Product location strategy
• Multiple segmentation strategies were employed

The Segmentation-Targeting-Positioning Process

• Step 1: Establish overall strategy or objectives (consistent with the mission statement or derived from mission and current state)
• Step 2: Segmentation bases (geography, demographics, psychographics, behavior)
• Step 3: Evaluate segment attractiveness (identifiable, reachable, substantial and profitable, responsive)
• Step 4: Select target market (assessment of attractiveness of the opportunity and organization's competencies)
• Step 5: Identify and develop positioning strategy (value, product attributes, benefits & symbolism, competition, market leadership)

Segmentation Bases

• Geographic: Continent, country, region, city, climate
• Demographic: Age, gender, income, education, occupation, family size, family life cycle, religion, ethnicity
• Psychographic: Lifestyle (Innovators, Thinkers, Achievers, Experiencers), personality/self-concept, social class
• Behavioral: Benefits sought, usage rate, loyalty

Geographic Segmentation

• Divide market into separate geographic units (countries, regions, provinces, cities, neighborhoods)
• Develop appropriate marketing programs

Demographic Segmentation

• Most common method to divide market into groups
• Basis for dividing based on: Gender, age, ethnic group, family lifecycle stage, household type, income, occupation, education, religion
• Census data is an excellent source of segmentation data

Psychographic Segmentation

• How consumers describe themselves: Self-values, self-concept, lifestyles
• Marketers use this to appeal to one's self-concept

VALS Types

• Identified using a questionnaire and a program
• Classifies consumers into segments like Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, and Survivors.

Behavioural Segmentation

• Includes benefits, occasion, usage rate, and loyalty.

Geodemographic Segmentation

• Uses a combination of geographic, demographic, and lifestyle characteristics to segment a market
• "Birds of a feather flock together"

Step 3: Evaluate Segment Attractiveness

• Identifiable: Knowing who is in the market and whether the segments are unique
• Reachable: Understanding what the product can do and how consumers will get to it.
• Substantial and Profitable: Evaluating the size and growth potential of the segments.
• Responsive: Ensuring that customers react positively.

Step 4: Select Target Market

• Target market selection is based on SWOT analysis
• Attractiveness of the opportunity
• Organization's competencies

Targeting Strategies

• Undifferentiated: One product/service for the whole market.
• Differentiated: Separate products/services for distinct market segments.
• Concentrated: Targeting one specific segment of the market
• Micromarketing (One-to-One): Tailored product/service for individual customer wants/needs.

Undifferentiated Targeting Strategy

• Product/service perceived to provide the same benefits to everyone

Differentiated Targeting Strategy

• Targeting several market segments with different offerings

Concentrated (Niche) Targeting Strategy

• Selecting a single, primary market segment and focusing all energies on providing a product to fit that segment's needs

Micromarketing

• Tailoring a product/service to an individual customer's needs

Step 5: Identify & Develop Positioning Strategy

• Methods
  • Value
  • Product attributes
  • Benefits & symbolism
  • Competition
  • Market leadership

Value

• Relates price to quality; different consumers have different value perceptions.

Product Attributes

• Focuses on the attributes that are most important to the target market.

Benefits & Symbolism

• Emphasizes brand benefits and psychological meaning.

Competition

• Options
  • Position against a specific competitor
  • Position against an entire product classification

Positioning by Using Perceptual Mapping

• Steps
  • Determine consumer perceptions
  • Identify market's ideal points and size
  • Identify competitors' positions
  • Determine consumer preferences
  • Select the position
  • Monitor the positioning strategy

Repositioning

• Changing a brand's focus to adjust to target new markets or align core emphasis with changing market preferences.