Targeting and Positioning

Market segmentation involves aggregating prospective buyers into groups that:
1. Have common needs and
2. Will respond similarly to the marketing action.
The groups that result from the market segmentation process are called market segments , a relatively homogeneous collection of prospective buyers.

Product differentiation, in the broadest sense , involves a firm’s using different marketing mix activities, such as product features and advertising, to help consumers perceive the product as being different and better than competing products.
In a narrower sense, product differentiation involves a firm’s selling two or more products with different features targeted to different market segments.

1. One Product & Multiple Market
Segments
2. Multiple Products & Multiple Market
Segments
3. Segments of One: Mass Customization

Five Steps in Segmenting and Targeting
Markets
Identify market needs
• Form prospective buyers into segments
• Form products to be sold into groups
• Develop a market-product grid and estimate size of markets
• Select target markets
•
Take marketing actions to reach target markets

1. Forming buyers into segments
1. Potential for increased profit and ROI.
2. Similarity of needs of potential buyers within a segment.(Homogeneity)
3. Difference of needs of buyers among segments.(Heterogeneity)
4. Feasibility of marketing action to reach a segment.
5. Simplicity and cost of assigning potential buyers to segments.

Canadian Consumer Market Segmentation Variables
MAIN DIMENSION SEGMENTATION
VARIABLES
CUSTOMER CHARACTERISTICS
Geographic
Demographic
TYPICAL
BREAKDOWNS
Region
City or Census
Metropolitan area
(CMA) size
Density
Climate
Gender
Age
Race
Life Stage
Income
Family size
Home ownership
Education
Atlantic, Quebec, Ontario, Prairies, British Columbia
Under 5,000; 5,000-19,999; 20,000-49,999; 50,000-99,999;
100,000-249,999; 250,000-499,999; 500,000-999,999;
1,000,000 or more
Urban; suburban; small town; rural
East; West
Male; female
Under 6; 6-11; 12-17; 18-24; 25-34; 35-44; 45-54; 55-64; 65-74;
75 and over
White; Black; Asian; Native; other
Young single; young married; older married; etc.
Under $10,000; 10,000-19,9999; 20,000-29,999; 30,000-39,999
40,000-54,999; 55,000-74,999; $75,000+
1; 2; 3; 4; 5 or more
Own home; rent home
Grade school or less; some high school; high school graduate; some college; college graduate

Canadian Consumer Market Segmentation Variables
MAIN DIMENSION SEGMENTATION
VARIABLES
CUSTOMER CHARACTERISTICS
Behavioural Benefits sought
Usage rate
User status
Loyalty status
TYPICAL
BREAKDOWNS
Quality; service; low cost
Light user; medium user; heavy user
Non-user; ex-user; prospect; first-time user; regular user
None; medium; strong
Psychographic
Personality Gregarious; compulsive; extroverted; introverted
Lifestyle (GoldFarb
Segments)
Structured; discontented; fearful; assured; resentful; caring

2. From products to be sold into groups
• The products a firm sells must be formed into meaningful groups so customers can relate to them.
• This is the reason supermarket products are organized into similar groups by aisles and department store offerings by department

3. Develop a market-product grid and estimate size of markets
BREAK-
FAST
PRODUCTS: MEALS
BETWEEN-
MEAL
LUNCH SNACK MARKETS DINNER
AFTER-
DINNER
SNACK
STUDENT
Dormitory
Apartment
Day Commuter
Night Commuter
NONSTUDENT
Faculty or Staff
Live in area
Work in area
0
0
1
0
1
1 3 0 3
3 3 2 1
0 3 2 1 0
0 0 1 3 2
3 1 1 0
1 2 2 1
3 0 1 0
Key: 3 Large market; 2 medium market; 1 small market; 0 no market

4. Select target markets a) Criteria to Use in Picking the Target Segments
1.
Size : The estimated size of the market to determine whether or not it is worth going after.
2.
Expected Growth : The size of the market may be small, but if it is growing significantly it may be worth going after.
3.
Competitive position : The less competition the more attractive the market.
4.
Cost of reaching the market : Is the market accessible to a firm’s marketing actions? If not it should not be pursued.
5.
Compatibility with the organization’s objectives and resources.
b) Choose the segments

5. Take marketing actions to reach target markets
• The purpose of developing a marketproduct grid is to trigger marketing actions to increase revenues and profits.
• Develop and execute an action plan.

is . . . .
a method of presenting and relating data having two or more variables. Cross tabs are used to analyze and discover relationships in the data.
An important aspect of cross tabulations is deciding which two variables should be paired together for analysis.

1. Paring the questions. Which questions to cross tabulate.
2. Forming cross tabulations. Examining the answers to the two chosen questions
1. Raw data
2. Row percentages
3. Column percentages
4. Total percentages

A. ABSOLUTE FREQUENCIES
AGE OF
HEAD OF
HOUSEHOLD
(YEARS)
ONCE
A WEEK
FREQUENCY
2 OR 3
TIMES
OR MORE A MONTH
ONCE
A MONTH
OR LESS
24 or less
25 to 39
40 or over
Total
TOTAL
144
46
52 19 215
58 29 133
82 69 87 238
272 179 135 586
B. ROW PERCENTAGES: RUNNING PERCENTAGES HORIZONTALLY
AGE OF
HEAD OF
HOUSEHOLD
(YEARS)
ONCE 2 OR 3
A WEEK TIMES
OR MORE A MONTH
ONCE
A MONTH
OR LESS TOTAL
24 or less
25 to 39
40 or over
Total
67.0%
34.6
24.2 8.8 100.0%
43.6 21.8 100.0
34.4 29.0 36.6 100.0
46.4% 30.6% 23.0% 100.0%

Product Positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive offerings.
1.
Head-to-Head Positioning : involves competing directly with competitors on similar attributes in the same target market.
2.
Differentiation Positioning : involves seeking a less competitive, smaller market niche in which to locate a brand.

A key to positioning a product effectively is the perceptions of consumers. In determining a brand’s position and the preferences of consumers, companies obtain three types of data from consumers :
1. Evaluations of the important attributes for a product class.
2. Judgments of the existing brands with the important attributes.
3.
Ratings of an “ideal” brand’s attributes.