chapter segmentation, targeting, and positioning nine Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9-2 LEARNING OBJECTIVES LO 9-1Outline the different methods of segmenting a market. LO 9-2Describe how firms determine whether a segment is attractive and therefore worth pursuing. LO 9-3Articulate the differences among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing. LO 9-4Determine the value proposition. LO 9-5Define positioning and describe how firms do it.

9-3 Segmentation, Targeting, Positioning Process Step 1 Strategy or Objectives Step 2 Segmentation Methods Step 3 Evaluate Segment Attractiveness Step 4 Select Target Market Step 5 Identify and Develop Positioning Strategy Segmentation Targeting Positioning

9-4 Step 1: Establish Overall Strategy or Objectives Check Yourself Derived from mission and current state ©M. Hruby.

9-5 Step 2: Segmentation Methods Segmentation MethodSample Segments GeographicContinent: North America, Asia, Europe, Africa Within U.S.: Pacific, mountain, central, south, mid-Atlantic, northeast DemographicAge, gender, income PsychographicLifestyle, self-concept, self-values BenefitsConvenience, economy, prestige BehavioralOccasion, loyalty

9-6 Geographic Segmentation ©ImagineChina

9-7 Demographic Segmentation Most common segmentation strategy U.S. Census Bureau Website ©Stockbyte/Getty Images

9-8 Psychographic Segmentation PsychographicSelf-values Self-conceptLifestyles ©Benetton Group SPA; Photo by: Oliviero Toscani

9-9 Geodemographic Segmentation Claritas Website Source: Reprinted with permission of The Nielsen Company.

9-10 Benefit Segmentation ©image100/PunchStock Michael Hevesy/Photodisc/Getty Images

9-11 Behavioral Segmentation Occasion segmentation Loyalty segmentation Royalty-Free/CORBIS

check yourself What are the various segmentation methods?

9-13 Step 3: Evaluate Segment Attractiveness SEGMENT ATTRACTIVENESS SubstantialReachableResponsiveProfitableIdentifiable

9-14 Identifiable Who is in their market? Are the segments unique? Does each segment require a unique marketing mix? Liquidlibrary/Dynamic Graphics/Jupiterimages Comstock Images/JupiterImages

9-15 Substantial Too small and it is insignificant Too big and it might need it’s own store ©Jerry Arcieri/Corbis

9-16 Reachable Know the product exists Understand what it can do Recognize how to buy ©Digital Vision/PunchStock

9-17 Responsive React positively to firm’s offering Move toward the firms products/services Accept the firm’s value proposition Customers must:

9-18 Profitable HomeownersBusinesses Segment size75,0001,000 Segment adoption percentage 1%20% Purchase behavior Purchase price Frequency of purchase $ times $ times Profit margin percentage 60%80% Fixed costs$400,000$1,000,000 Segment profit$140,000$600,000

9-19 Step 4: Selecting a Target Market Conde Nast has more than 20 niche magazines focused on different aspects of life. ©M Hruby

9-20 Segmentation Strategy Targeting Strategies DifferentiatedConcentrated Micromarketing or one-to-one Undifferentiated or mass marketing

9-21 Step 5: Develop Positioning Strategy Value Salient Attributes Symbol Competition Positioning Methods Photo by Tiffany Rose/WireImage/Getty Images

9-22 Positioning Steps 1. Determine consumers’ perceptions and evaluations in relation to competitors’. 2. Identify the market’s ideal points and size. 3. Identify competitors’ positions. 4. Determine consumer preferences. 5. Select the position. 6. Monitor the positioning strategy.

9-23 Perceptual Maps

check yourself What is a perceptual map? 2.Identify the six positioning steps.

Return to slide 9-25 Benefit segmentation groups consumers on the basis of the benefits they derive from products or services. Glossary

Return to slide 9-26 Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education. Glossary

Return to slide 9-27 Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers. Glossary

Return to slide 9-28 Geographic segmentation organizes customers into groups on the basis of where they live. Glossary

Return to slide 9-29 Behavioral segmentation divides customers into groups based on how they use the product or service. Glossary

Return to slide 9-30 Psychographic segmentation, or psychographics, allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices. Glossary

Return to slide 9-31 The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire. Glossary