Market Segmentation
Jeremy Kees, Ph.D.
Segmentation, Targeting, and Positioning
• Market Segmentation
– Market segment—a group of customers who
share a similar set of needs and wants
• NOT to be confused with targeting and
positioning
Our overall intent is to…
1. Identify groups of similar customers and
potential customers
2. Prioritize the groups
3. Understand their behavior
4. Respond with appropriate marketing
strategies that satisfy the different
preferences of each chosen segment
Segmentation, Targeting, and Positioning
• The idea is that (typically) we can’t be all
things to all people
• There is not one product/service that is
ideal for all consumers
• Gladwell Talk….
We can segment a market by…
Geography
• Dividing the market into
different geographical units
such as…
– Region of the world or country
– City or country size
– Climate
We can segment a market by…
Demographics
• Dividing the market based on…
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age
gender
sexual orientation
family size
family life cycle
household type
income/expenditure patterns
occupation
education
socioeconomic status
religion
nationality/race/ethnic group
We can segment a market by…
Psychographics
• Divide market based on…
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Psychological traits
personality
lifestyles
values
attitudes
• Tom’s of Maine
– Targeting a Specific
Marketing Segment
– Which segment?
Psychographic Segmentation
We can segment a market by…
Product Characteristics / Behavior
• Divide market based on knowledge of,
attitude toward, use of, or response to a
product
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benefit sought
product usage rate
brand loyalty
product end use
readiness-to-buy stage
How are these organizations
segmenting the market??
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Oxygen.com
Kellogg's
Mabellene
Budweiser
Segmenting based on one variable ….
Claritas Example…
Ok, we’ve segmented the
market…. Now what?
General Strategy Options (as they relate to
target marketing)
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Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Micromarketing
Patterns of Target Market Selection
Undifferentiated Marketing
• Ignore segment differences and go after
the whole market with one market offer
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1 Pricing strategy
1 Promotional program aimed at everybody
1 Type of product with little/no variation
1 Distribution system aimed at entire market
• What kinds of products can we use this
strategy with?
Differentiated Marketing
• Operate in several market segments and
design different programs for each
segment
P&G
Multi-Segment Strategy
• Perhaps the most effective segmentation
strategy
• Marriott.com
Product Differentiation Results In…
• Reduced Price Sensitivity
• Fewer Direct Competitors
• Drawbacks / Risks / Ethical Issues??
– Mini Cooper
– Norelco
Concentrated Marketing
• It allows a firm to specialize because it
can focus all energies on satisfying one
group's needs
• A firm with limited resources can
compete with larger organizations
• Can you think of when a concentration
strategy is appropriate?
– example
Micromarketing
• Most extreme form of segmentation
• Also called one-to-one marketing or mass
customization
• Examples?
Determinants of Targeting Strategy
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Company Resources
Product Homogeneity
Stage in PLC
Competition
Positioning
A marketing strategy that emphasizes serving a
specific market segment by achieving a
certain position in buyers’ minds relative to
the competition
• Attributes
• Price/quality
• Competitors
• Application
• Product user
• Product class
Positioning
• Oftentimes, positioning focuses on Pointsof-difference (PODs)
– The act of designing the company’s offering
and image to occupy a distinctive place in the
minds of the target market
• Energizer
• Duracell