9-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. CHAPTER Segmentation, Targeting, and Positioning 9 McGraw-Hill/Irwin Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved.

9-2 LEARNING OBJECTIVES © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Outline the different methods of segmenting a market. Describe how firms determine whether a segment is attractive and therefore worth pursuing. Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing. Determine the value proposition. Define positioning, and describe how firms do it. Segmentation, Targeting, and Positioning LO1 LO2 LO3 LO4 LO5

9-3 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 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 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 1: Establish Overall Strategy or Objectives Check Yourself Derived from mission and current state ©M. Hruby.

9-5 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 2: Segmentation Methods

9-6 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. CHECK YOURSELF 1. What are the various segmentation methods?

9-7 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 3: Evaluate Segment Attractiveness SEGMENT ATTRACTIVENESS SubstantialReachableResponsiveProfitableIdentifiable

9-8 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 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

9-9 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Substantial  Too small and it is insignificant  Too big and it might need it’s own store ©Jerry Arcieri/Corbis

9-10 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Reachable Know the product exists Understand what it can do Recognize how to buy ©Digital Vision/PunchStock

9-11 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Responsive React positively to firm’s offering Move toward the firms products/services Accept the firm’s value proposition Customers must:

9-12 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Profitable

9-13 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 4: Selecting a Target Market  Conde Nast has more than 20 niche magazines focused on different aspects of life. ©M Hruby

9-14 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Segmentation Strategy Targeting Strategies DifferentiatedConcentrated Micromarketing or one-to-one Undifferentiated or mass marketing

9-15 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 5: Develop Positioning Strategy Value Salient Attributes Symbol Competition Positioning Methods Photo by Tiffany Rose/WireImage/Getty Images

9-16 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 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.

9-17 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. CHECK YOURSELF 1. What is a perceptual map? 2. Identify the six positioning steps.

9-18 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Benefit segmentation groups consumers on the basis of the benefits they derive from products or services. Glossary

9-19 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education. Glossary

9-20 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers. Glossary

9-21 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Geographic segmentation organizes customers into groups on the basis of where they live. Glossary

9-22 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Behavioral segmentation divides customers into groups based on how they use the product or service. Glossary

9-23 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 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

9-24 Return to slide © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire. Glossary