MKT201 –LESSON PLAN – WEEK 4
Lesson Title:
SEGMENTATION, TARGET MARKETS AND POSITIONING
Subject Area(s):
MARKETING, ENTRENEURSHIP, ADVERTISING
Lesson Summary
Students will learn the parts of marketing segmentation, target markets and positioning for use in planning their marketing of a
product and a service. Students will create a graphic organizer and/or info-graphic styled image to present their work.
Learning Objectives
By the end of this lesson, the students will:
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LO 1 Explain the process of STP marketing.
STP marketing is the process of segmenting, targeting, and positioning. Marketers pursue this set of
activities to formulate marketing strategies for their brands. STP marketing also provides a strong
foundation for the development of advertising campaigns. While no single approach can guarantee
success in marketing and advertising, STP marketing should be considered when customers in a
category have heterogeneous wants and needs.
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LO 2 Describe bases for identifying target segments.
In market segmentation, the goal is to break down a heterogeneous market into more manageable
subgroups or segments. Markets can be segmented on the basis of usage patterns and commitment
levels, demographics, geography, psychographics, lifestyles, benefits sought, SIC codes, or stages in the
purchasing process. Different bases are typically applied for segmenting consumer versus business-tobusiness markets.
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LO 3 Discuss criteria for choosing a target segment.
In STP marketing, after segment identification, an organization must settle on one or more segments as a
target for its marketing and advertising efforts. Several criteria are useful in establishing a target
segment: the organization's ability to serve the segment in question, the size of the segment and its
growth potential, and the intensity of the competition the firm is likely to face in the segment. Often,
small segments known as market niches can be quite attractive because they will not be hotly contested
by numerous competitors.
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LO 4 Identify the essentials of a positioning strategy.
The P in STP marketing refers to the positioning strategy, which should guide all marketing and
advertising activities undertaken in pursuit of the target segment. Effective positioning strategies should
be linked to the substantive benefits offered by the brand. They are also consistent internally and over
time, and they feature simple and distinctive themes. Options for positioning strategies include benefit
positioning, user positioning, and competitive positioning.
Vocabulary:
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Target market -a specific group of people you are trying to reach.
Market segmentation -the process of dividing a larger market into smaller parts.
Mass market -all the customers for a type of product.
Demographics -statistics that describe a population.
Geographic segmentation -segmenting a market based on where customers live.
Psychographic segmentation -dividing a market based on mental and emotional characteristics of
customers.
Behavioral segmentation -dividing a market based on the way customers use a product or act toward a
product.
Census -count of all the people in a country made by the government on a regular basis.
Generation -group of people born during a particular period of history.
Segmentation variable -customer characteristic that is used to segment a market.
80/20 rule -majority of business’s profits come from a small number of customers; 80 percent of sales
come from 20 percent of the customers.
Market segment profile -detailed description of the typical consumer in a market segment.
References:
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www.claritas.com/MyBestSegments/Default.jsp
www.adage.com/blog/adagestat/761
www.nrf.com
http://adage.com/section/american-demographics/195
http://bigconsumerblog.wordpress.com
Current news clips from MSNBC, ABC news-nightline, Bloomberg or other business news site
Instructional Aids:
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Chapter 4 Lecture Presentation: Segmentation, Target Marketing and Positioning
Adage website for current demographic stats
Current event video clips from business sources: ex. MSNBC, ABC news-nightline, Bloomberg
A variety of print ads of the same brand /product marketed differently to different market segments
A variety of magazines that range from lifestyle, entertainment, family, news, etc. interests
Other Materials Needed:
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2.
3.
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6.
7.
Incentive for introduction activity such as a snack or café drink coupon.
‘sticky’ notes
Segmentation handout
Target Marketing handout
Positioning Handout
Current stats from Adage Stat of the day
Access to www.Piktochart.com
Equipment Needed:
1.
2.
3.
4.
Target board (or projection) and rubber darts, or picture projected on screen or whiteboard
Computer with presentation program/software, Internet access & projector
Access to iPads, video cameras and editing software (optional)
Computers for students to conduct research and create materials for projects
Learner Preparation:
1.
Before class, instructor should ask students bring in a picture of their favorite product and a description of a
service that can be purchased.
Lesson Introduction
Before class, set up a target in the front of the room.
ASK: Who thinks they can hit the target’s bull’s eye on the first try?
SAY: I will give _____ (prize) for the first person who can hit the target on the first try. (Have one or two students come
up and try to hit the bull’s eye. Give a prize to the first person who can hit it on the first try)
ASK: How does this activity relate to marketing?
SAY: In order for marketing companies to develop a market strategy for their product or service, they first need to define
a few things - their segmentation, then target market and eventually the positions for the market. If they miss the bull’s
eye (defining that market), all their marketing efforts will not successful and they will not be profitable.
Today, you get to play role of marketer and analyze the large mass market, and break it up into segments to define your
target market.
Lesson Outline
I.
Market segmentation vs. mass marketing – mass marketing appeals to all people. Market
segmentation takes the larger market and divides it up into smaller sections based on customer
characteristics.
II.
Market segmentation methods -Market segment methods are used to identify customers with similar
wants and needs.
1. Retail companies choose one or more of these characteristics known as variables to define their
target market.
2. A customer’s characteristics is called a segmentation variable.
3. Marketers divide the most common variables into various categories: geographic, demographic,
psychographic, and behavioral.
III.
Geographic–based on where customers live. Geographic variables considered:
1. Location -where people live such as northwest United States; Texas
2. Climate -climate and weather
3. City size -small city, urban, suburbs, rural areas, metroplex
4. Show students the map of the United States slide and explain how different parts of the country
have different needs.
IV.
Demographics–statistics about a population. Demographic variables considered:
1. Age
2. Generations
3. Gender
4. Ethnicity
5. Income
6. Disposable income -income remaining after taxes have been deducted.
7. Discretionary income -income remaining after the necessities of life have been paid for.
8. Family size
9. Family life cycle
10. Go to the Adage stat of the day and print out different demographic charts & graphs. Hand out the
different charts to students. Ask them to find the people who have the same chart/graph as they
do. Have each group analyze and interpret the chart and share their findings with the class.
11. FACT: According to Adage, Every 100,000 babies above the 2010 base of 4 million will add
$1.5 to $2 billion in annual consumer spending.
V.
Psychographics–based on mental and emotional characteristics of customers: Psychographic variables
considered:
1. Hobbies
2. Social activities
3. Lifestyle
4. Interests
5. Attitudes
6. Ask students what extracurricular hobbies/ interests they are involved in and why.
7. Tell students to imagine they are in front of the magazine section of a bookstore. What kinds of
magazines are available?
8. According to a recent consumer survey conducted by BIGInsight, two in five adults 18+ (60.0%)
indicate that they regularly or occasionally purchase organic products. This figure increases to
nearly seven in ten adults living out West.
VI.
Behavioral -based on the way customers use a product or act toward a product.
1. Features desired
2. Usage rate – 80/20 rule 3. Brand loyalty
VII.
Once the marketer has combined two or more variables, they have a target market.
VIII.
A complete market segment profile is when a marketer uses variables to include geographic location,
demographics, psychographics, and behavior relevant to brand.
IX.
This is a complete vivid picture of the target market. A company can now create a market strategy to
meet the specific needs and wants of this customer.
X.
Ask students, “Who plays sports?” Ask them what kind of shoes they need in order to perform well.
XI.
Ask students about their cell phone plans and point out that cell phone plans are based on their usage
of the service.
XII.
Ask students to look in their wallet and see what retail store reward cards they have and use. Ask
them what makes them loyal to a brand? Discuss each of the brands messages.
Lesson Instructions
PART I: SEGMENTATION
Tell students to select a partner. Have a variety of magazines available for students to use as a visual resource and/or that
can be scanned if needed.
Review the SEGMENTATION HANDOUT. Keep in mind that there are more segments listed here than you will need
– it is likely that only some of these segments will be appropriate for you. Ideally, you should look to select 4 to 8 of the
market segment examples and then fine-tune them for your requirements.
1.
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4.
Choose two products. One should be a physical good and one should be a service.
Using the list of market segment ideas (or your own), construct a market segment for each product and service.
How similar/different is your segmentation approach between the two markets.
Be ready to share your market segmentation approach with the rest of the class. What were the common segments
utilized?
5. In your opinion, which market segmentation structure (in the class) would be the most effective for helping select
a target market and developing an appropriate marketing strategy?
Part II: TARGET MARKET
Review the TARGET MARKET HANDOUT. Further analyze your segmentation for the best target markets for
your product and service. Pick the two most attractive market segments (part I) and create a target market
profile based on the major categories:
1.
2.
3.
4.
Which attributes are the most attractive? Why?
Which attributes would you NOT target? Why not?
Which particular factors did you rely upon the most to help guide your decision?
What other information would you need to help you select the best target market for a firm?
Part III: POSITIONING (Optional)
Review the POSITIONING HANDOUT. Develop the positioning statement for each of the target markets for
your products/services. Be ready to explain your statement and what it means.
What do you want to be known for?
Ask yourself the following questions:
1. Who is your target customer and what is their problem? What solutions do you offer them?
2. Which features and benefits of my product/service are most important to customers?
3. Which of these do I do extremely well?
4. What sets me apart from my competition?
5. What makes you special?
Look at your business through the eyes of your customers:
1. How do they define what you do?
2. Why do they choose to do business with you or one of your competitors?
3. Is it your quality, price, service, unique product, variety, location, return policy, hours of operation,
convenience or packaging which makes your offer most appealing?
COMPUTER SKILLS MASTERY:
1. Visit www.piktochart.com and setup a free account. (or other computer program)
2. Review the sample types of charts created by other users.
3. Create three graphic organizers - charts/diagrams/info-graphics for each product and service:
a. Segmentation
b. Target Market
c. Positioning statement
FINAL OUTPUT
1. Create a presentation to present products/services and results to the class.
a. Use Powerpoint/Google Slides/Emaze.com/Prezi.com
Assessment Rubric:
Category
Comprehension
Preparedness
Enthusiasm
Speaks Clearly
Posture and Eye
Contact
Identified two or more
segments for each
product/service
6
4
Student is able to accurately Student is able to accurately
answer almost all questions answer most questions posed
posed by classmates about the by classmates about the
topic.
topic.
Student seems pretty
Student is completely
prepared but might have
prepared and has obviously
needed a couple more
rehearsed.
rehearsals.
Facial expressions and body
Facial expressions and body
language sometimes
language generate a strong
generate a strong interest and
interest and enthusiasm about
enthusiasm about the topic in
the topic in others.
others.
2
0
Student is able to
Student is unable to
accurately answer a few accurately answer questions
questions posed by
posed by classmates about
classmates about the topic.
the topic.
The student is somewhat
Student does not seem at all
prepared, but it is clear that
prepared to present.
rehearsal was lacking.
Very little use of facial
Facial expressions and
expressions or body
body language are used to
language. Did not generate
try to generate enthusiasm,
much interest in topic being
but seem somewhat faked.
presented.
Speaks clearly and
Often mumbles or cannot be
Speaks clearly and distinctly Speaks clearly and distinctly
distinctly most (94- 85%)
understood OR
all (100-95%) the time, and all (100- 95%) the time, but
of the time. Mispronounces mispronounces more than
mispronounces no words.
mispronounces one word.
no more than one word.
one word.
Stands up straight, looks
Stands up straight and
relaxed and confident.
Sometimes stands up
Slouches and/or does not
establishes eye contact with
Establishes eye contact with
straight and establishes eye look at people during the
everyone in the room during
everyone in the room during
contact.
presentation
the presentation.
the presentation.
Student put thought into the
segmentation and developed
it thoroughly
Student put some thought
into the segmentation.
Student needs to think Student did not any thought
about the segmentation and into the segmentation and it
explain.
has not been developed.
Identified two or more
put thought into the
target market attributes Student
target market attributes and
for each market
developed it thoroughly
segment
Student put some thought
into the target market
attributes.
Student needs to think
about the target market
attributes and explain.
Student did not any thought
into the target market
attributes and it has not
been developed.
Student put some thought
into the positioning
statement.
Student needs to better
develop the positioning
statement.
Student did not put any
thought into the positioning
statement.
Create a positioning
statement
Student put thought into the
positioning statement and can
explain it thoroughly
Developed a
presentation
Student created a presentation
Student created a
Student created a
Student did not create a
with one of the technologies
presentation but there are
presentation with one of the
presentation with one of the
presented and checked it for
many grammar and
technologies presented
technologies presented.
grammar and punctuation.
punctuation problems
SCORE:
Handout-SEGMENTATION PART I:
Here is a list of 15 possible market segments (as shown in the below diagram) that could exist in virtually any
market. Your task for this activity is to construct your own segmentation approach, using the following list as a guide.
(you can make up your own market segments and descriptions).
Market segment ideas
Convenience driven consumers
These are consumers that are looking to simplify the purchase, or its
process, and are primarily seeking the benefit of convenience.
Budget conscious shoppers
These consumers may make their purchase decision based on the
lowest price, or select the product that represents the best value for
money.
Focus on quality
This is a segment of consumers who are interested in higher quality
products and services. Many consumers in this segment believe that
buying higher quality represents better value over time.
Rational, value for money
The consumers in this market segment are more involved in the
purchase decision and look to make decisions on a “best product
solution” basis.
Attracted to strong brands
This market segment is less involved in their purchase decision, and
will rely upon a strong brand to guide their purchase decision.
Environmentally aware
This is an emerging segment consisting of people who take into
account the environmental impact of their purchases.
Family focused
This market segment is a family or household unit has one main
grocery buyer who is purchasing on behalf of themselves and other
people in the family unit.
Health and diet conscious
In various markets, particularly food, beverages, medicines, vitamins,
health centers – this is a growing market segment that is quite
interested in the health and well-being aspects of the product.
Service/relationship focus
Particularly in service industries, there would be a market segment that
would be interested in quality of service provided and/or developing a
relationship with the firm and its staff.
Flexibility is important
The tailoring of a product offer is becoming more important to some
groups of consumers, as highlighted by the needs of this market
segment.
Social status
Consumers in this segment use brands and products as a means to
signal their self-identity and social status. This would be quite common
in markets such as cars, alcohol, cigarettes, holiday destinations,
restaurants, clothing, jewelry, and so on.
Variety seekers
Many markets will have a group of consumers who seek out variety.
Some consumers simply like change and choice, whereas others like
to experience new things.
Benefit seekers
In some markets, there are usually multiple segments that are seeking
a particular benefit from a product. The brand should be positioned
around a specific product attribute – common in fast moving consumer
goods.
Just for me
The “just for me” market segment of those consumers interested in
their own needs and pleasures. They will seek out product solutions
that make them feel good, even though they may be expensive or not
necessarily healthy.
Existing customers
The final market segment provided in this list of potential market
segments is simply the firm’s/brand’s existing customer base. Although
this would need to be segmented down further, as per the above
market segments, it is highlighted here as it is sometimes overlooked.
Handout-Targeting
Part II
Next, further analyze segment for the best target markets for your product and service. Pick the two most
attractive market segments (part I) and create a target market profile based on the major categories:
Demographics:
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Age & generation
Ethnicity
Income
Occupation
Religion
Education
Family size
Gender
Geo-graphics:
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Location
City size
Climate
Psychographics:
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Lifestyle
Attitudes
Hobbies
Interests
Social activities
Behavioral:
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Features desired
Usage rate
Brand loyalty
Main consumer needs
Usage level
Level of brand loyalty
Price sensitivity
Product involvement levels
Retailer preferences
KEY MEASURES
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Segment size measures
Segment growth rate
Proportion of the overall market
COMPETITION and COMMUNICATION
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Main competitive offerings
Main media choices
QUESTIONS
1. Which attributes are the most attractive? Why?
2. Which attributes would you NOT target? Why not?
3. Which particular factors did you rely upon the most to help guide your decision?
4. What other information would you need to help you select the best target market for a firm?
Handout-Positioning
(Part III)
Finally, develop the positioning statement for each of the target markets for your products/services. Be ready to
explain your statement and what it means.
WHAT DO YOU WANT TO BE KNOWN FOR?
Ask yourself the following questions:
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Who is your target customer and what is their problem? What solutions do you offer them?
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Which features and benefits of my product/service are most important to customers?
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Which of these do I do extremely well?
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What sets me apart from my competition?
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What makes you special?
Look at your business through the eyes of your customers:
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How do they define what you do?
Why do they choose to do business with you or one of your competitors?
Is it your quality, price, service, unique product, variety, location, return policy, hours of operation,
convenience or packaging which makes your offer most appealing?