Market Segmentation
and Product Positioning
Exercise
1. If Starbucks Via was a person, what would
that person be like? Describe his/her
characteristics and interests.
2. What does this tell you?
Are your descriptions consistent with the way Starbucks
Via is being promoted (and positioned)?
MacBeth and Kyle love Via!
Far Out Via Coffee
What is Market Segmentation?
• Market segmentation is the process of dividing a market
into groups of similar consumers and selecting the most
appropriate group(s) of individuals for the firm to serve
• Why Segment?
• Fragmentation: Different groups have different
needs/wants
• Allows marketers to establish appropriate marketing mix
for a given segment
Five Tasks
In Market
Segmentation:
(1) Analyze Consumer-Product Relations
Analyzing C-P Relations involves figuring out how affect,
cognition and behavior are relevant to how consumers
experience a product
Three Approaches
1.
Brainstorming to figure out what types of consumers are
most likely to buy product and how they differ from other
groups of customers
2.
Focus groups can be used to identify what customers
want, their values, etc.
3.
Secondary research can be used to gain additional
information on key market segments
Five Tasks
In Market
Segmentation:
(2) Investigate Segmentation Bases
• Four common segmentation bases
•
Benefit
•
Psychographic
•
Person/situation
•
Geodemographic
Benefit Segmentation
• Divide the market up on the basis of the benefits they seek
from a product.
• An example: toothpaste
Psychographic Segmentation
• Psychographics
• Uses psychological, sociological, anthropological
factors to develop segments
• Personality (sensation seeking)
• Motives (status)
• Lifestyles (HOGs)
• VALS2 (Values + Lifestyles) System
• Based on psychological characteristics that relate
to consumer behavior
• Can Identify Prevalence of 8 Types by Zip Code
Values and Lifestyles (VALS) System
Innovators
Ideals
Achivem.
High Resources
High Innovation
Self Expr.
Thinkers
Achievers
Experiencers
Believers
Strivers
Makers
VALS Web Site
Survivors
Low Resources
Low Innovation
VALS Types – Part 1
VALS Types – Part 2
Person/Situation Segmentation
• Divide market up on the basis of the benefits certain types
of individuals (person) desire in certain situations (situation)
• Different strokes, for different folks…in different situations
• An Example: Old Spice
Person/Situation Segmentation (Steps)
• Figure out if there are different usage situations that influence
which attributes are important
• Assess perceptions of different segments about product in
different situations
• Create “user” x “usage” matrix
Home
Kids
Adults
• (cont. on next slide)…
Sports
Person/Situation Segmentation (Steps)
• Rank cells in terms of market share
• Identify important benefits sought in each cell of matrix
• Figure out where your competitors are located in the matrix
• Position your product in matrix and figure out how well you are
meeting the need relative to your competitor
• Identify opportunities based on segment size, needs, and
competitive advantage of your offering
Demographic Segmentation
• Demographic Segmentation
• Age, sex,, income, education, family size, occupation,
marital status
• Sociocultural Segmentation
• Culture, religion, race, social class
• Generational Segmentation
• Kids, tweens, teens, Gen X, Gen Y, Gen Z, Boomers
Geodemographic Segmentation
• Geodemography
• Combination of geographic and demographic
information
• Creates classifications of actual, addressable,
mappable neighborhoods where consumers live
and shop
• PRIZM NE system by Claritas
• Assumes consumers in certain neighborhoods
are similar in many respects and that the best
prospects are those who actually use a product
or other consumes like them
• 66 clusters: (one example) 
Sample Claritas (PRIZM) Cluster
More
Clusters
YOUNG INFLUENTIALS (22)
Once known as the home of the nation's yuppies, Young
Influentials reflects the fading glow of acquisitive yuppiedom.
Today, the segment is a common address for younger, middleclass singles and couples who are more preoccupied with
balancing work and leisure pursuits. Having recently left college
dorms, they now live in apartment complexes surrounded by
ball fields, health clubs, and casual-dining restaurants.
Five Tasks
In Market
Segmentation:
(3) Positioning
Four Steps in Positioning
1.
Evaluate (direct and indirect) competition
2.
Create product/service with competitive advantage
•
Attribute (Komperdell Gloves – Seamless Technology)
•
Use or application (A Snapple A Day)
•
Product user (Zales – three store concepts)
•
Product class (Position margarine as butter)
•
Competitor (Burger King vs. McDonalds)
•
Price/quality (Target – an upscale discounter)
•
Emotion (Nike - Just Do It!)
(3) Positioning
Four Steps in Positioning
1.
Evaluate (direct and indirect) competition
2.
Create product/service with competitive advantage
3.
Develop marketing mix to appeal to target segment
4.
Measure response and adapt strategy if needed
•
May need to reposition product/service
•
Repositioning may involve bringing old brand back to
life (retro brand).
Creating the Brand Personality
• Brand Personality
• A distinctive image that captures a product’s or
service’s essence (character, benefits)
• Where does my brand stand?
• Ask customers what characteristics are important
• Measure your brand and competition on those
dimensions
• Plot and evaluate your brand’s location in a
perceptual map
Describe These Brand Personalities
Volvo Wagon
Lamborghini
Perceptual Map
Classy/Distinctive
Porsche
Lincoln
Mercedes
BMW
Position
Conservative
Sporty
Ford
Plymouth
Positioning
Bases
Toyota
VW
Practical/Affordable
Five Tasks
In Market
Segmentation:
(4) Select Segmentation Strategy
• Four basic segmentation strategy alternatives
• Do not to enter the market
• Be a mass marketer instead of segmenting
• Market to only one segment
• Market more than one segment and design a
separate marketing strategy for each
Criteria for Successful Segmentation
• Sustainable
• Large enough to justify its own marketing mix
• Identifiable and Measurable
• If not, can not determine whether it’s sustainable
• Accessible
• Must be able to reach segment with marketing mix
• Responsive
• The segment responds differently than another segment
• If not, no need to develop unique marketing mix
Five Tasks
In Market
Segmentation:
(5) Design the Marketing Mix
• Marketing Mix
•
•
•
•
Product
Price
Promotion
Place
• Closely linked with the segmentation strategy
Wrapping Up
An Application to Sports Marketing
Some of My Favorite Products
What Do All These
Products Do For Me?
“Means End Chain”
Product
Attributes
Functional
Consequences
Psychological
Consequences
Personal
Values