CHAPTER 3
SEGMENTATION &
POSITIONING
Generic vs Product Market
Narrowing Down to Target Markets
A Market Grid Diagram with Submarkets
The bicycle-riders product market
Submarket 1
Exercisers
Submarket 2
Off-Road
Adventurers
Submarket 3
Transportation
Riders
Submarket 4
Socializers
Submarket 5
Environmentalists
Concept: divide a broad product-market (or generic market) into
homogeneous submarkets
Three Ways to Develop MarketOriented Strategies
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Single Target Market Approach
 select one homogeneous segment as the target
Multiple Target Market Approach
 select two or more target segments
 develop a different marketing mix for each
segment
Combined Target Market Approach
 combine submarkets into a single target market
 develop one marketing mix for the combined target
Criteria for Segmenting
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Homogeneous
 similar responses to marketing mix
 similar segmenting dimensions
Heterogeneous
 different responses to marketing mix
 different segmenting dimensions
Substantial
 segment is big enough to be profitable
Operational
 useful for identifying customers
 helpful in deciding on marketing mix
Some Examples of Possible Segmenting Dimensions
and Typical Breakdowns for Consumer Markets
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Needs (Benefits Sought)
 Economic, functional, physiological, social, and more detailed
needs
Attitudes
 Favorable or unfavorable attitudes
Lifestyles
Purchase relationship
 Favorable and ongoing; intermittent; none; bad relationship
Brand familiarity
 Insistence, preference, recognition; nonrecognition; rejection
Geographic
 By country, region, size of city
Income
 Under $20,000, $20,000 to $39,999, $40,000 or over
Examples of Possible Segmenting Dimensions for
Business Markets
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Type of organization (computer software)
Closeness of relationship with customer (travel services)
Size (buildings)
North American Industry Classification System (NAICS)
codes (machinery)
Geographic location (electronic parts)
Type of product (X-ray film)
Buying situation (automobile components)
Source loyalty (office supplies)
Reciprocity (transporting services)
Possible Segmenting Dimensions for
Business/Organizational Markets
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Kind of relationship
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Type of customer
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Weak loyalty --------> strong loyalty to vendor
Single source --------> multiple vendors
"Arm's length" dealings--------> close partnership
No reciprocity --------> complete reciprocity
Manufacturer, service producer, government agency, military, nonprofit,
wholesaler or retailer (when end user), and so on
Demographics
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Geographic location (region of world, country, region within country, urban -------> rural)
Size (number of employees, sales volume)
Primary business or industry (North American Industry Classification System)
Number of facilities
Possible Segmenting Dimensions for
Business/Organizational Markets
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How customer will use product
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Type of buying situation
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Installations, accessories, components, raw materials,
supplies, professional services
Decentralized --------> centralized
Buyer --------> multiple buying influence
Straight rebuy --------> modified rebuy --------> new-task
buying
Purchasing methods
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Vendor analysis, inspection buying, sampling buying,
specification buying, competitive bids, negotiated contracts,
long-term contracts
Toothpaste Market Segment Description
Segment Name
The sensory
segment
Principal benefit Flavor, product
sought
appearance
Demographic
Children
strengths
Users of
Special
spearmint
behavioral
flavored
characteristics
toothpaste
Brands
disproportion- Colgate, Stripe
ately favored
Personality
High selfCharacteristics
involvement
Life-style
Hedonistic
characteristics
The sociables
segment
Brightness of
teeth
Teens, young
people
The worriers
segment
Decay
prevention
The
independent
segment
Price
Large families
Men
Smokers
Heavy users
Heavy users
Macleans, Plus
White Ultra
Brite
Crest
Brands on sale
High sociability
Active
High
High autonomy
hypochondriasis
Conservative
Value-oriented
Positioning and Differentiation
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Positioning analysis is based on how (potential) customers
think about a firm's current or potential offering
Positioning considers how customers think about
competitors' offerings as well as the firm’s own offering
Positioning analysis identifies what kind of offering different
segments see as ideal
Differentiation focuses on developing a marketing mix that
target customers will see as distinct from competing mixes
Positioning and differentiation help with combining and
segmenting, by revealing which segments view the market
in similar (or dissimilar) ways