Segmentation, Targeting & Positioning

Why do this?

Overview: Segmentation, Targeting & Positioning
Market Segmentation - Principles
Segmentation Variables
Geographic
Demographic
Psychographic
Behavioral
Other (anything!)
No single best way to segment a market.
Often best to combine variables and identify smaller, better-
defined target groups.

Geographic Segmentation
Divide markets into different geographic units.

Examples:
World Region or Country: North America, Western
Europe, European Union, Pacific Rim, Mexico, etc.
Country Region: Pacific, Mountain, East Coast, etc.
City or Metro Size: New York, San Francisco
Population Density: rural, suburban, urban
Climate: northern, southern, tropical, semi-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.

Usually the worst variable to use.
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
Geodemographic Segmentation
PRIZM, by Claritas
Organized by ZIP code
Based on U.S. Census data
Profiles on 260,000+ U.S. neighborhoods
62 clusters or types

Claritas Prizm
Requirements for Effective Segmentation
Segments must be

Measurable
Accessible
Substantial
Differentiable
Actionable

Lefties are hard to
identify and measure, so
few firms target this
segment.
Segment Size and Growth Potential
Sales, profitability and growth rates
Segment Structural Attractiveness
Competition, substitute products,
buyers & supplier power, new
entrants (Porters Five Forces)
Company Objectives and
Resources
Core competencies
What business do we want to be
in?
Evaluating Market Segments

Targeting Segments - Overview
Market Preference Patterns
Ignores segmentation opportunities

Undifferentiated (Mass) Marketing
Differentiated (Segmented) Marketing
Targets several segments
and designs separate offers
for each.

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

Question du Jour
Should the same company produce and market brands
that compete with each other?



Niche Marketing
Targets one or a couple small segments
Niches have very specialized interests


Tailoring products and marketing programs to suit
the tastes of specific individuals and/or locations.

Micromarketing
Flexible Marketing Offerings

Naked/Core solution
Product and service
elements that all
segment members
value

Discretionary options
Some segment
members value
Options may carry
additional charges
Patterns of Target Market Selection:
Product x Market Matrices
Controversies and concerns

Targeting the vulnerable and
disadvantaged
Cereal, Cigarettes, Alcohol, Fast-food

The Catch-22 of Targeting
Psychological Reactance
Failure to target seen as prejudice
Socially Responsible Targeting
The place a product occupies in consumers
minds relative to competing products.

Positioning
eBays positioning: No
matter what it is, you
can find it on eBay!
Positioning Example
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 SUVs
Price vs. Orientation Dimensions
Competitive advantages
Points of Parity
Points of Difference => Differentiation

Positioning results from differentiation and
competitive advantages.

Positioning may change over time.
Positioning Strategy
6-29
Sources of Differentiation

Product Design
Quality
Additional Services
Image
People (Staff)
Price
Other
Choosing the Right Competitive Advantages
The best competitive advantages are

Important
Distinctive
Superior
Communicable
Pre-emptive
Affordable (to company and consumer)
Profitable

Moral: Avoid meaningless differentiation.
Under-positioning:
Not positioning strongly enough.

Over-positioning:
Giving buyers too narrow a picture of the product.

Muddled Positioning:
Leaving buyers with a confused image of the product.

Positioning Errors

Generic Product Positions
& Value Propositions
Question du Jour
Which is more important: Product or Positioning?



In-class Activity
Describe how each of the following brands,
companies, or products is positioned:
In-class Activity, Part 2
Choose one of the companies/brands and
Identify relevant direct competitors
Choose the two dimensions that are most
important to consumers
Develop a perceptual positioning map
Are there any opportunities in this category?
In-class Activity, Part 3
Choose a company and invent a segmentation scheme for
that companys customers using the variables we discussed in
class.
In-class Activity
Developing a Segmentation Scheme
Develop a PSYCHOGRAPHIC/USAGE segmentation scheme for each of the
following types of consumers.
Segment the market into three or more substantive groups.
Be sure to think of the key psychological/usage drivers of consumption.
Name your segments the more creative, the better!
Consumers
Vacationers
Internet Users
Restaurant Patrons
Eco-friendly product consumers
Smartphone Users
Grocery Store Shoppers