Chapter 8
Market
Segmentation,
Targeting, and
Positioning
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Selecting a Target Market
 Before a marketing mix strategy can be
implemented, the marketer must identify,
evaluate, and select a target market.
Market
Target market
8-2
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Types of Markets
 Consumer products
 Business products
 The key to classification is to
identify the purchaser and the
reasons for buying the goods.
8-3
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 KC Masterpiece
 Product Targeted at
Selected Consumers
8-4
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 Cattlemen’s
 Product Targeted at
the Business Market
8-5
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An example of a consumer
product is the following
advertisement for Kenmore
from Sears.
8-6
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The Role of Market Segmentation
 Market Segmentation: division of the total
market into smaller, relatively homogeneous
groups
8-7
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No Market Segmentation
8-8
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Segmented by Sex
8-9
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Segmented by Age
8-10
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 Tom’s of Maine
 Targeting a Specific
Marketing Segment
8-11
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Understanding market segmentation
plays an important role in developing
a firm’s successful marketing
strategy. While there are several
means available to segmenting the
market place the one described in
this Kellogg's advertisement is…..?
8-12
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Criteria for Effective Segmentation
The market segments must be
measurable.
Marketers must be able to effectively
promote to and serve a market segment.
Market segments must be sufficiently large.
The number of segments must match the
firm’s capabilities.
8-13
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Class Discussion
Is segmentation for
nonprofit marketers of
more, less, or the same
importance than for profitoriented marketers?
8-14
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Segmenting Consumer Markets
8-15
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Segmenting Consumer Markets
 Geographic Segmentation: Dividing an
overall market into homogeneous groups on
the basis of their locations
8-16
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 Pampers
 This ad is an
example of
geographic
segmentation.
8-17
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 Crunch Fitness
Centers
 Using
Geographic
Segmentation
8-18
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Using Geographic Segmentation
 Demand for some goods and services can
vary according to the geographic region
 Most major brands get 40-80 percent of their
sales from core regions
 Climate is an important segmentation factor
8-19
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 Kubota
 Segmentation by
Residence
Location
8-20
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Segmenting Consumer Markets
 Demographic segmentation:
dividing consumer groups
according to characteristics
such as sex, age, income,
occupation, education,
household size, and stage in
the family life cycle
8-21
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 Segmenting by gender
Marketers must ensure that traditional
assumptions are not false
Some firms start by targeting one gender
and then switch to both
Some companies market successfully to
both genders
8-22
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Segmentation by Gender:
Oxygen.com.
Advertisement for its website
for women.
8-23
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 Segmenting by age
Many firms identify
market segments
on the basis of age
Products are often
designed to meet
the specific needs
of certain age
groups
8-24
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 Segmenting by age
Sociologists attribute different
consumer needs and wants among
various age groups to the cohert effect
8-25
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 Boomers—People born
from 1946 until 1965.
8-26
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Segmentation by Age,
specifically Boomers.
Diet Pepsi brings together two
generations.
8-27
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 Seniors—By 2025,
Americans who are
over age 65 will make
up nearly 20 percent of
the population.
8-28
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Targeting Seniors:
America Online’s ad aimed at
older computer users.
8-29
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 Ethnic Group
Segmentation
Census Bureau
projects that by
2050, nearly half
of the population
of the US will
belong to
nonwhite minority
groups.
8-30
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Who do you think this
advertisement is directed to?
8-31
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 Family Life Cycle
Stages Segmentation
 The process of family
formation and
dissolution.
 The underlying theme
is that life stage, not
age per se, is the
primary determinant
of many consumer
purchases.
8-32
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 Segmenting by household type
The “traditional family” has declined over the
years
8-33
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 Engel’s law: As family income increases:
8-34

A smaller percentage of expenditures go for
food

The percentage spent on housing and
household operations and clothing remains
constant

The percentage spent on other items
increases
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 Jaguar
 Segmentation
based on income
8-35
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 Demographic Segmentation Abroad
 Obtaining the data necessary for global
demographic segmentation is often
difficult
 Many countries do not operate regularly
scheduled census programs
 Daily life cycle data is difficult to apply in
global demographic segmentation
efforts
8-36
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Class Discussion
Give three examples of how OCCUPATION
could effect buying behavior?
8-37
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 Psychographic Segmentation
Divides a population into groups that have
similar psychological characteristics,
values, and lifestyles
The most common method for developing
psychographic profiles of a population is to
conduct a large-scale survey
8-38
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A lifestyle advertisement.
PlanetRX.com’s ad aimed at
busy moms.
8-39
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 Shedd Aquarium
 Service Appealing
to Creatives and
Fulfilleds
8-40
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VALS 2 - Network
ACTUALIZERS
8%
Principle
Oriented Status
FULFILLED
11%
BELIEVERS
16%
Oriented Action
ACHIEVERS
13%
Oriented
EXPERIENCERS
12%
MAKERS
13%
STRIVERS
13%
STRUGGLERS
12%
8-41
Abundant Resources
Minimal Resources
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 Psychographic Segmentation of Global
Markets like those done by Roper Starch can
paint useful pictures of the residents of
various countries.
8-42
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 Roper Starch
Strivers
Devouts
Altruists
Intimates
Fun seekers
Creatives
8-43
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 Using Psychographic
Segmentation
Psychographic
profiles produce rich
descriptions of
potential target
markets
8-44
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 Product-related segmentation: dividing a
consumer population into homogeneous
groups based on characteristics of their
relationships to the product
8-45
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 Benefits
Focuses on the
attributes that
people seek in a
good or service
and the benefits
that they expect
to receive from
that good or
service
8-46
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 Eclipse
 Segmenting by
Benefits Sought
8-47
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Benefit segmentation:
Maybelline’s “Express 3 in 1
Makeup” ad stresses ease of
use.
8-48
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 Usage Rates
Markets often divided into heavy-user,
moderate-user, and light-user segments
The 80/20 principle holds that a big
percentage of a product’s revenues comes
from a relative small, loyal percentage of
total customers
8-49
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 Brand Loyalty
Segmenting consumers grouped according
to the strength of brand loyalty felt toward a
product
8-50
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The Market Segmentation Process
 Stage I: Identify Segmentation Process
 Stage II: Develop Relevant Profile
 Stage III: Forecast Market Potential
 Stage IV: Forecast Market Share
 Stage V: Select Specific Segment
8-51
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 Stage I: Identify Segmentation Process
Two methods:
Segments are predefined by managers
based on their observation of likely users
Segments are defined by asking
customers which attributes
are important
8-52
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 Stage II: Develop Relevant Profile
Must develop a profile of the typical
consumer and each segment
Helps to accurately match consumer needs
with the firm’s marketing offers
8-53
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 Stage III: Forecast Market Potential
Market segmentation and market
opportunity analysis combine to produce a
forecast of market potential within each
segment
8-54
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 Stage IV: Forecast Market Share
The next step is to forecast the
firm’s probable market share
A specific marketing strategy must
be designed to serve the targeted
segments
The firm determines the expected
level of resources it must commit to
tap the potential demand in each
segment
8-55
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 Stage V: Select Specific Segment
The preceding steps allow management to
assess the potential for achieving
company goals and to justify committing
resources in developing one or more
segments
Marketers also weigh more than
monetary costs and benefits
at this stage
8-56
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Strategies for Reaching
Target Markets
8-57
Undifferentiated
Marketing
Differentiated
Marketing
Concentrated
Marketing
Micromarketing
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 Undifferentiated marketing: when a firm
produces only one product or product line
and promotes it to all customers with a single
marketing mix
Sometimes called mass marketing
Much more common in the past
Undifferentiated
Marketing
8-58
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Example of an ad using
undifferentiated marketing.
Ad’s copy states “A wireless
phone for everyone”
8-59
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 Differentiated marketing: when a firm
produces numerous products and promotes
them with a different marketing mix designed
to satisfy smaller segments
Differentiated
Marketing
8-60
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 Differentiated
Marketing
 Procter and Gamble
Practicing
Differentiated
Marketing
8-61
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 Lunchables
 Using a
Differentiated
Marketing Strategy
8-62
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 Concentrated marketing: when a firm
commits all of its marketing resources to
serve a single market segment
Concentrated
Marketing
8-63
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 Micromarketing:
involves targeting
potential customers at
a very basic level
 GeneSolutions
targeting a specific
occupation
8-64
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 Selecting and Executing a Strategy
No single, best choice strategy suits all
firms
Determinants of a market-specific strategy:
Company resources
Product homogeneity
Stage in the product life-cycle
Competitors’ strategy
8-65
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 Positioning: a marketing strategy that
emphasizes serving a specific market
segment by achieving a certain position in
buyers’ minds
 Positioning map
 Reposition
8-66
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Hypothetical
Competitive
Positioning
Map for
Selected
Retailers
8-67
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Class Discussion
Where would you position these automobiles on
this Positioning Map?
BMW
Taurus Accord
Expensive
Corolla
Sporty
Conservative
Inexpensive
8-68
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Class Discussion
Where would you place other cars?
BMW
Expensive
Accord
Sporty
Taurus
Conservative
Corolla
Inexpensive
8-69
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