Week Five
Segmentation
Targeting and
Positioning
Ajax Persaud
Dhruv Grewal
Copyright © 2012 McGraw-Hill Ryerson Limited
Shirley Lichti
Michael Levy
Chapter Objectives
LEARNING OBJECTIVES
LO1 Describe the STP process
LO2 Describe the bases marketers use to segment
a market
LO3 Discuss the criteria for determining the
attractiveness of a segment and whether it is
worth pursuing (targeting)
LO4 Explain how a firm decides what type of
segmentation strategy to use: undifferentiated,
differentiated, concentrated, or micromarketing
LO5 Explain what positioning is and describe how
do firms do it
7-2
Chapter Roadmap
7-3
Coke Zero
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

“Real Men” didn’t want diet drinks
Segment of men who wanted a lower
calorie beverage
Very successful new product launch
7-4
LO1
Segmentation Targeting Positioning
Process
7-5
LO1
Step 1: Establish Overall Strategy or
Objectives
Consistent with
mission statement
Derived from mission
and current state
7-6
LO2
Step 2: Profile Segments
Segmentation Sample Segments
Base
Geographic
Country, province, city, urban, rural, climate
Continent: North America, Asia, Europe, Africa
Region: Atlantic, Central, Western Canada
Demographic
Age, gender, income, education, occupation,
ethnic background, religion, family life cycle, etc.
Psychographic
Lifestyles, Values, Personality, Self Concept
Behavioural
Benefits sought, Usage rates, User status,
Loyalty
7-7
LO2
Geographic Segmentation



Divide market into
separate geographic
units
Countries, regions
provinces, cities,
neighbourhoods,
climate, etc.
Develop appropriate
marketing programs
7-8
Test Your Knowledge
Geographic segmentation is most useful for companies whose
products satisfy needs that vary by __________.
A)
gender
B)
region
C)
age
D)
nationality
7-9
LO2
Demographic Segmentation


Most common method
Divide market into groups
based on:
–
–
–
–
–
–
–


gender
age
ethnic group
family lifecycle stage
household type
income
Other, e.g. occupation,
education, religion
Census excellent source of
segmentation data
Statistics Canada Census data
7-10
LO2
Psychographic Segmentation
How consumers
describe themselves
Self-values


Self-concept

Lifestyles
7-11
LO2
VALS Framework
VALS Website
7-12
LO2
Behavioural Segmentation
Benefits
Sought
User Status
Usage Rate
Loyalty
7-13
LO2
Using Multiple Segmentation Methods
7-14
Test Your Knowledge
Which of the following tools is widely used for geodemographic
segmentation?
A)
PRISM
B)
LSAT
C)
GNP
D)
LIMRA
7-15
LO2
Finding a Place to Live
How can geodemographic segmentation be used to
help consumers find the perfect place to live?
7-16
LO2
Case in Point: Neighborhood Scout
Challenge
Answer
Results
To help homebuyers find the
perfect neighborhood for their
needs.
Use geodemographic segmentation
to identify the neighborhoods that
most closely match their needs and
wants.
A patented neighborhood search
engine with 70,000 subscribers and
more than 1 million people who have
used the service.
7-17
LO2
7-18
LO3
Step 3: Evaluate Segment
Attractiveness
7-19
LO3
Identifiable



Who is in their market?
Are the segments unique?
Does each segment require a unique marketing mix?
Discussion question
When would these women all be in the same segment? When would
they be in different segments?
7-20
LO3
Reachable
Know the
product exists
Understand
what it can do
Recognize
how to buy
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LO3
Responsive
Customers must:



React positively to firm’s
offering
Move toward the firm’s
products/services
Accept the firm’s value
proposition
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LO3
Substantial and Profitable

Size matters

Too small and
segment is
insignificant, not
profitable

Growth potential
equally important
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LO3
Profitable Segments
• Segment size = 60
million (<15 yrs)
• Segmentation Adoption
Percentage = 35%
• Purchase Behavior =
$500 x 1 time purchase
• Profit margin % = 10%
• Fixed Cost = $50M
Is this segment profitable?
7-24
Test Your Knowledge
Which of the following factors would be most useful in
determining whether or not a product will be profitable?
A)
the region where the consumer lives
B)
the inflation rate
C)
the defection rate
D)
the speed of the distribution factors
7-25
LO4
Step 4: Selecting a Target Market
You are a marketing manager for
a denim company and need to
choose a target market for a
new line of jeans.
 Both the consumers pictured
wear jeans.
 How do you choose?
7-26
LO4
Segmentation Strategy
7-27
Test Your Knowledge
Which of the following products is most likely to use an
undifferentiated segmentation strategy?
A)
shoes
B)
jewellery
C)
cereal
D)
flour
7-28
LO5
Step 5: Identify and Develop
Positioning Strategy
Positioning
Methods
•
•
•
•
•
Value
Product Attributes
Benefits & Symbolism
Competition
Market Leadership
7-29
Test Your Knowledge
Positioning strategies generally focus on either how the product
or service affects the consumer or how it is _______________.
A)
better than the previous year’s product line
B)
advertised on the Internet
C)
better than competitors’ products and services
D)
positioned relative to the company mission
statement
7-30
LO5
Value
Meet Grandpa Tony, now retired:
 He knows the price of everything he has
ever bought.
 He clips the newspaper coupons.
 He goes to multiple stores to get the best
price.
 He is willing to pay more for quality.
 He trusts brand names.
• The relationship of price to quality
• Different consumers = different value
7-31
LO5
Product Attributes
Meet Selia, first year student.
Reasons for her college choice:
 Close to home.
 Good academic reputation.
 Good financial aid package.
 Did we mention cute guys?


Focus on the attributes that are
most important
Vary by target market
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LO5
Benefits and Symbolism
7-33
LO5
Competition
Position
against a
specific
competitor
Position
against an
entire product
classification
7-34
Market Leadership
May emphasize their leadership position within
their industry.
7-35
Positioning by Using Perceptual
Mapping
When developing a positioning strategy, firms go
through 5 important steps
Perceptual Map : Displays, in two or more
dimensions, the position of products or
brands in the consumer’s mind.
The position of each brand is denoted by a small
circle, and the numbered asterisks denote
consumers’ Ideal points (Where a particular
market segment’s ideal product would lie on
the map
7-36
LO5
Positioning Steps
1. Determine consumers’ perceptions and
evaluations in relation to competitors’.
2. Identify competitors’ positions.
3. Determine consumer preferences.
4. Select the position.
5. Monitor the positioning strategy.
7-37
LO5
Perceptual Maps
7-38
LO5
Repositioning

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Whirlpool: New design
Surf detergent: New message
Elizabeth Arden: New faces
YM: New audience
Gallo: New image
Aqua Velva: New packaging
Arm & Hammer: New uses
7-39