Chapter 2
Segmentation,
Segmentation,
Targeting,
Targeting,
and Positioning
and Positioning
Snapshot From the Marketplace
To succeed in today’s highly fragmented
marketplace, firms have to isolate key
market segments and reach these
segments with maximum possible impact.
Examples include innovative programs
such as Facebook’s “Instant
Personalization” and Kimberly-Clark’s
“parentstages.”
Mass-Marketing Strategy
Is a philosophy that presumes
consumers are uniform and that
broad-appeal products and marketing
programs suffice
Mass-Market Strategy (cont’d)
In 1908, Henry Ford’s mass-market strategy
involved using economies of scale to produce
the Model-T, a standardized, low-priced
automobile.
His basic assumption: Customers have
homogeneous preferences
Other examples of a mass-market strategy
include early Coca-Cola and the Bell Telephone
System
Ineffectiveness of Mass-Marketing
Consumers that comprise the marketplace
are heterogeneous, consisting mostly of
smaller niches of people, each with unique
demographic and lifestyle characteristics.
Consequently, marketers employ
strategies to match products to markets
via separate marketing mixes.
Segmentation Examples
http://www.pg.com/en_US/brands/all_brand
s.shtml
http://www.tide.com/enUS/productLanding.jspx
www.nissanusa.com
Q. 1. Define Marketing
Concept and Market
Orientation.
Marketing Concept
A market-focused, customer-oriented,
coordinated marketing effort aimed at
generating customer satisfaction as the key to
satisfying organizational needs.
Market Orientation
The organizational generation of market
intelligence pertaining to current and future
consumer needs, dissemination of that
intelligence across departments, and
organization-wide responsiveness to that
intelligence.
Q. 2. What are the various
components of the Market
Orientation?
Market Orientation
Customer Focus
Market Intelligence
Coordinated marketing
Environmental conditions
Degree of competitiveness in the industry
Q. 3. What are the three
major steps in segmenting
consumer markets?
Segmenting Consumer Markets:
The Product-Market Matching Strategy
The three components of the productmarket matching strategy are:
Market segmentation
Market targeting
Positioning
Product-Market Matching Strategy
Segmentation
Act of dissecting the marketplace into submarkets
that require different marketing mixes
Targeting
Process of reviewing market segments and deciding
which one(s) to pursue
Positioning
Establishing a differentiating image for a product or
service in relation to its competition
No Market Segmentation
Segmented by Sex
Segmented by Age
Q. 4. Define Market
Segmentation.
Segmentation
Segmentation
Act of dissecting the marketplace into submarkets
that require different marketing mixes
Q. 5. What are the four
basic segmentation
criteria?
I. Segmentation
Variables used to segment consumer
markets:
Geographic
Demographic
Psychographic
Behavioral
Geographic Segmentation
Partitions the market based on climate,
location, surroundings, and terrain
Example
Clothing, food, and automobile manufacturers,
as well as the media—including electronic, print,
and broadcast vehicles—often use geographic
segmentation to accommodate the specific
needs and interests of geographically dispersed
customers
Demographic Segmentation
Partitions the market based on factors
such as age, stage of the family life cycle,
gender, race and ethnicity, as well as
occupation
Demographic Segmentation (cont’d)
Age: A significant correlation exists
between consumption of certain
products/services and age (e.g., healthcare products/services, insurance, and
investments)
Stage of the family life cycle: Stages of
the FLC determine demand for housing,
furniture, appliances, children’s products
and services, as well as long-distance
phone services.
Demographic Segmentation (cont’d)
Gender: Important in the case of many
products/services such as cosmetics, perfumes,
clothing, and jewelry.
Race and ethnicity: Products/services targeted
along ethnic lines range from clothing and
cosmetics to foods and entertainment.
Occupation: A factor related to income,
education, and employment status. Occupational
breakdowns range from professional and
technical workers to unskilled labor.
Geodemographic Segmentation
Partitions the market by considering data on small
units of geography, such as neighborhoods, zip
codes, or census tracts
Examples:
PRIZM 66-cluster
ESRI Tapestry organized into 12 Life Mode and 11
Urbanization summary groups
Acxiom’s PersonicX household-level segmentation
system
Geodemographic Segmentation (cont’d)
How PRIZM is used:
PRIZM reveals to clients, such as BMW and
AOL, who their customers are and where they
reside by zip code, census tracts, and city
blocks.
It provides consumption indices (potential)
for a variety of product categories in various
market regions.
Psychographic Segmentation
Partitions the market based on lifestyle and
personality characteristics
Example
Psychographic segmentation
can be accomplished by
using AIO inventories—
questionnaires that
reveal consumers’
activities, interests,
and opinions
Behavioral Segmentation
Partitions the market based on attitudes
toward or reactions to a product and to its
promotional appeals
Examples: Behavioral segmentation can be
done on the basis of:
Usage rate or quantity usually purchased
Benefits sought from a product
Degree of loyalty to a brand or a store
Degree of sensitivity or responsiveness to
marketers’ promotional offers
II. Market Targeting
Once segmentation is complete, a portrait
of the market known as a market profile
emerges.
Market profile
A portrait of the various market
segments and competitors’ positions in
them relative to a specific product
Market Targeting (cont’d)
Marketing managers evaluate the various
segments in the market profile. They then
decide on how many and which one(s) to
pursue.
This targeting decision is dependent on a
firm’s financial resources as well as its
production and marketing capabilities.
Q. 6. What three
strategies are helpful in
serving target markets?
Types of Market-Targeting Strategies
Undifferentiated Strategy
The market is viewed as a single large homogeneous
domain where a single marketing mix suffices.
Multisegment Strategy
The market is viewed as two or more segments requiring
different marketing mixes.
Concentration Strategy
Focusing marketing effort on a single segment.
2-23
Choosing Market Segments to Target
Undifferentiated Segmentation
Differentiated Segmentation or
Multi-Segment Marketing
Concentrated Segmentation
or Niche Marketing
Targeting Considerations
Criteria a firm must consider before selecting
market segment(s):
Size
Measurability
Compatibility
Defendability
Potential
Accessibility
Stability
Q. 7. Define Positioning.
III. Positioning
Deciding how the organization wants the company
and its brands to be perceived and evaluated by
target markets.
Once marketers have segmented the market and
selected the target, the product offering needs to be
properly positioned.
A product’s position is the manner in which a
product is perceived by consumers as compared to
their perception of competitors’ offerings.
Positioning (cont’d)
The decision concerning the price to
charge for the product/service, the
promotional activities to employ, and the
type of distribution channel selected to
deliver the item to consumers, all affect
the positioning of a brand in the
marketplace.
Clothing Stores
 Target
 Wal-Mart
 Saks Fifth Avenue
 Kohl’s
 Dollar General
 Dillard's
 Sears
 Family Dollar
 Nordstrom
 Neiman Marcus
 JC Penney
Copyright © 2012
by South Western,
a division of
Cengage
Learning. All rights
reserved.
Selecting a Unique Selling Proposition
A successful positioning strategy for many
firms rests on the selection of a single
benefit to emphasize in promotional
messages for the brand.
Creating a brand personality is one of the
primary goals of positioning.
Repositioning
Repositioning can take one or more of the
following forms:
Modifying an existing brand
Targeting it to a new market segment
Emphasizing new product uses and benefits
Stressing different features with the intention
of boosting sales