Segmentation, Targeting, and
Positioning
 Segmentation
 Product positioning strategy
 Bases for segmentation
 Positioning
 Targeting
 Repositioning
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
1

Although not all these consumers are completely alike, they share relatively similar needs and wants
Marketing action: involves efforts, resources, and decisions--product, distribution, promotion, and price
Segmentation :
“Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
2

Southwest
Airlines
Auto makers
 Undifferentiated Strategy (no intended difference from competitors; no specific consumer group sought out)
 Concentrated Strategy
(differentiation; one consumer segment sought)
 Differentiated Strategy (same firm makes different versions for different segments)
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
3

 Air Travel
 Business/Executive : Inflexible; relatively price insensitive (Small number of people, but travel often)
 Leisure Traveler/Student : Relatively flexible; very price sensitive (other methods of travel-e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment)
 Comfort Travelers : Comfort (e.g., space, food) important; willing to pay (Small segment)
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
4

Examples (2): Restaurant Diners
Low
Low Convenience
Fancy Restaurants
--e.g., Ritz Carlton
High
High-end delivered food
E.g.,
--speed
--location
Local, “unbranded” fast food restaurants
Denny’s
McDonald’s
Taco Bell
High
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
5



Boundaries between product categories are blurred-”soft drinks” or “non-alcoholic beverages?”
Any number of “dimensions” possible--but too many variables cut segment size
 Segments must
 differ meaningfully from others
 large enough to be profitable
 be serviceable (have need that can be met cost effectively)
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
6

 Potential for increased profit and
ROI
 Similarity of needs of consumers within
 Differences of needs of members of different segments
 Feasibility of serving each specific segments
 Cost effectiveness of identifying members of each segment
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
7

Bases for Segmentation: Consumer
Characteristics
 Geographic
 Regional

 Area characteristics: The
PRIZM system
Income ≠ willingness to spend!
 Occupation
 Demographics
 Gender
 Age
 Ethnicity
 Household size
 Marital status



Single, never married
Married
Divorced
 Presence of children
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
8

Bases for Segmentation: Behavior and Buying Situations
 Benefits sought
 Behavior
 Involvement
 Usage rates and status

“80/20” rule—20% of consumers may account for 80% of consumption
 Media preferences
 Preferred shopping outlets
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
9

 Soft drink preferences —some segmentation variables



Preferred taste: Cola, lime, no taste, natural juice, ice tea
Calorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low calories
Usage occasion: Multi-pack for home; single can/bottle; fountain drink
 Price sensitivity/brand loyalty: Willingness to pay more for name brand or specialty soda
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
10

 Price sensitive, non-brand loyal colataste, full-flavor segment, multi-pack
 Price insensitive, cola taste, brand loyal, low calorie, multi-pack
 Price insensitive, natural juice, taste sensitive, single serving
Typical behaviors of these consumers.
Circumstances may involve occasional variations.
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
11

 “Head-on” competition
 Airlines (want to differentiate but have difficulty pulling it off in practice)
 Beef products
 Differentiation

Burger King: Grilled instead of McDonald’s fried burgers


Halmark: “When you care to send the very best…”
Hertz (vs. “Not exactly”)
 Zachy Farms (chicken)
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
12

 “You can’t be all things to all people”
---> choose one or more groups
 Focus narrows scope of competition, but demands are greater
 Repositioning : Changing established position may be difficult -
- e.g.,
 Sears
 McDonald
Good sales; poor everyday values
Lunch; not dinner
Good for children
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
13

 Cadillac: “It’s not your father’s car.”
 Geritol: “Not too young for Geritol.”
 Orange juice: “It isn’t just for breakfast anymore.”
 Chocolate milk for adults
NOTE: Repositioning is difficult. It will take a great deal of advertising support.
There is no guarantee that consumers will cooperate
!
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
14

Some Brands That Were Dropped
Rather Than Repositioned
 ValueJet  AirTran
 Packard Bell  e-Machines
 German Communist Party  Party for
Democratic Socialism
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
15

 Sales potential
 Competitive presence/ potential
 Cost of service
 Feasibility of service
 Impact on segments already served
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
16

 “Loss Prevention Associate”
 “Sales Counselor”
 “Pre-Owned” or “Previously Loved”
Vehicle
 “Gaming”
MKTG 370
SEGMENTATION, TARGETING, AND POSITIONING
Lars Perner, Instructor
17