Segmentation, Targeting,
and Positioning
Professor Lawrence Feick
University of Pittsburgh
Outline
• Definitions
• Segmentation and Targeting
– segmentation bases
– criteria
• Positioning
– definition and uses
– perceptual maps
• Summary
Definitions: markets
• Market
– people or organizations with the willingness,
ability, and authority to buy a product
• Target market
– people or organizations to whom a particular
marketing mix is aimed
• Segmentation
– dividing a heterogeneous market into
homogeneous submarkets
Definitions: targeting approaches
• Mass market (undifferentiated marketing)
• Segmentation
– focus (concentrated marketing, niche
marketing)
– multi-segment (differentiated marketing)
Segmentation questions
• Segmentation
– dividing a heterogeneous market into
homogeneous submarkets
• Questions:
– heterogeneous on what?
– on what basis to divide?
– how finely to divide?
Segmentation bases
• Segmentation base: the variable or variables
on which the market is divided
• A good segmentation base should:
– yield differences in product behavior
– give insight into why consumers buy
– help guide marketing mix decisions
Types of segmentation bases
• Independent of product category
– demographic characteristics
– geographic characteristics
– psychographic/AIO characteristics
• Product category related
– benefits sought/needs met
– product usage, brand loyalty, price sensitivity
Examples of demo/geo-graphics
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Age
Income
Education
Marital status
Family lifecycle
Region of country
Ebony, June 1998
Family Circle, June 1998
Proprietary geodemographic
segmentation solutions
• Census data updated and augmented with
purchases, subscriptions, auto registrations
• Group (cluster) geographic regions that are
similar: often zip code-based
• Uses: direct mail, media buys, site location
• Eg: PRIZM from Claritas. Check it out:
– http://www.claritas.com/prizm.htm
Examples of psychographics
• Activities
– work, hobbies, social events, vacation, clubs
• Interests
– family, home, job, community, fashion, food
• Opinions
– self, politics, social issues, business, culture
• Lifestyle
– VALS2 groups
What is your VALS 2 type?
• Typical questions:
– I follow the latest trends in fashion
– I would rather make something than buy it
– I would like to spend a year or more in a
foreign country
• Check it out at:
– http://future.sri.com/vals/survey.html
Examples of benefits sought
• Toothpaste
– cavity prevention, whiteness, fresh breath
• Cake mix
– ease of preparation, cost, taste, uniqueness
• Cameras
– ease of use, technical features, compactness
Redbook, July 1998
Examples of product-related
segmentation
• Product usage: nonusers, light users, heavy
users
– e.g., beer, soft drinks, movie renters
• Brand loyalty: loyals and switchers
– e.g., laundry detergent, coffee
• Price sensitive v. price insensitive
Selecting segments
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Segment size
Segment growth and growth potential
Present and future competition
Consumer purchase ability and likelihood
Reachability
Positioning
• Usage is sloppy- often combining a brand’s
position with the marketers actions to create
the position
• Position: brand meaning perceived by the
target market in terms of
– other, competing products
– perceived product characteristics, features
How the manufacturer sees the
product
Manufacturer’s view
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It is made from a durable alloy
It is sold through independent dealers
It has a three year warranty
It is the best we have ever produced
How the customer sees the
product
Target market’s view
• It looks really good and seems sturdier than
brand x or y
• Can it fit in my apartment?
• Would people like me buy one?
Positioning matters!
• Virginia Slims
• Acura, Lexus, Infiniti
• Vodka
What affects a product’s
position?
• Product: design, features, style, packaging,
warranty
• Price: price level, discounts
• Promotion: message, media, sales
promotion, publicity
• Distribution: exclusivity of coverage, types
of retailer
Issues in positioning
• What/how many characteristics do
consumers use to distinguish products?
• Where are existing products located with
respect to these characteristics?
• Where is an ideal product located?
Perceptual mapping
• Statistical tools used to locate products in
terms of perceived characteristics
• Interpretation:
– Products closer together are perceived as
similar
– Similarity relates to competitiveness
• Can also plot “ideal points”
Perceptual maps: examples
• Pain reliever map (text page 251)
• US auto industry circa 1985
Perceptual map of the US auto
market circa 1985
Classy, prestigious, distinctive
Cadillac
Mercedes-Benz
Porsche
BMW
Chrysler
Conservative,
Buick
Oldsmobile
Pontiac
older appeal
Chevrolet
Datsun
Toyota
Dodge
Volkswagen
Practical, inexpensive to
own and operate
Sporty, youth
oriented,
performance
Questions
• What is the most likely competitor for
Cadillac?
• Would a GM manager be happy about
Buick and Oldsmobile?
• How is VW perceived in the US in 1998
compared to the mid 1980s?
Reprise: segmentation, targeting,
and positioning
• Benefits:
– focus on meeting customer needs, wards off
competition, and helps anticipate changes
– increases focus on longer term relationship
• Costs
– segments foregone
• Issues
– Colt 45, Joe Camel