Chapter 8
Market Segmentation, Targeting,
and Positioning Strategies
Objectives
Define market
Explain market segmentation
Relate marketing mixes to target markets
Identify various marketing strategies
Understand key market segment selection
considerations
Identify and apply segmentation variables
Understand positioning strategy
What is a Market?
Ability
Willingness
Resources
Segmentation Works
Because ...
Not all buyers alike
Subgroups may be identified
Subgroups smaller and more
homogeneous
Easier to satisfy smaller groups
Major Steps in
Segmentation & Targeting
1.
Break
market
down
2.
Group
into
segments
3.
Choose
target
market
TARGET MARKET
Choosing Market Segments
We need a
Distinguishing/stable
characteristic
Significant size
Accessible with
distribution &
promotion
Responsive (similar
needs)
Measurable potential
YES
response to
each of these!
Segment Cross-Classification:
Aerobic Shoes
Gender
M
Geography
F
Japan
Western
Europe
U.S.
14 - 21
Age
22 - 29
Matching the Marketing
Mix to Target Market
Our target market:
Women aged 14-21 living
in the United States
The right…
Product?
Price?
Promotion?
Place?
Possible Strategies for
Target Marketing
Undifferentiated
marketing
Possible Strategies for
Target Marketing
Concentrated Marketing
80 / 20 Principle
Majority fallacy
80/20 Rule
A relatively small percentage of
customers accounts for a
disproportionately large share of the sales
Share of
customers
Target
customers
20%
Share of
sales
Target
customers
80%
Possible Strategies for
Target Marketing
Differentiated marketing
Multiple market segmentation
Possible Strategies for
Target Marketing
Custom Marketing: “To each his/her own.”
Custom Marketing
One-to-one marketing
Uses data basedmarketing and
information technology
For example...
FOR REPEAT HOTEL GUESTS
•Your name
•Room preferences
•Special requests
•Smoking or non smoking
•Credit card number
•Frequent hotel user discount
Bases for Segmenting
Consumer Markets
Demographic
Sociographic
Lifestyle
Geographic
Behavior
Consumption
Predispositions
Bases for Segmenting
Business Markets
Geography
Organizational charateristics
Purchase behavior
Usage patterns
Organizational predispositions
Positioning
The way consumers perceive the brand
relative to its competition
ID competitive advantage
Stress salient characteristics
Differentiate
Market Positioning Map:
Tea - 1980s
Traditional flavor


Iced

Lipton
Luzianne

Tetley
Hot
Nestea

Unique flavor
Celestial Seasons
Repositioning: Tea - Late
1990s
Traditional flavor


Tetley Rounds

Lipton Rounds

Iced
Lipton
Luzianne

Arizona Iced Tea



Tetley
Hot

Lipton Natural Teas
Nestea
Snapple

Celestial Seasons

Unique flavor
Lipton Flavored
Review
Define market
Explain market segmentation
Relate marketing mixes to target markets
Identify various marketing strategies
Understand key market segment selection
considerations
Identify and apply segmentation variables
Understand positioning strategy