9-1 CHAPTER SEGMENTATION, TARGETING, AND POSITIONING 9 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9-2 LEARNING OBJECTIVES 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 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

9-6 CHECK YOURSELF 1.What are the various segmentation methods?

9-7 Step 3: Evaluate Segment Attractiveness SEGMENT ATTRACTIVENESS SubstantialReachableResponsiveProfitableIdentifiable

9-8 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 Substantial  Too small and it is insignificant  Too big and it might need it’s own store ©Jerry Arcieri/Corbis

9-10 Reachable Know the product exists Understand what it can do Recognize how to buy ©Digital Vision/PunchStock

9-11 Responsive React positively to firm’s offering Move toward the firms products/services Accept the firm’s value proposition Customers must:

9-12 Profitable Segments  Segment size = 60 million (<15 yrs)  Segmentation Adoption Percentage = 35%  Purchase Behavior = $500 x 1 time purchase  Profit margin % = 10%  Fixed Cost = $50M Is this segment profitable? ©Comstock/PunchStock

9-13 Step 4: Selecting a Target Market  Conde Nast has more than 20 niche magazines focused on different aspects of life. ©M Hruby

9-14 Segmentation Strategy Targeting Strategies DifferentiatedConcentrated Micromarketing or one-to-one Undifferentiated or mass marketing

9-15 Step 5: Develop Positioning Strategy Value Salient Attributes Symbol Competition Positioning Methods Photo by Tiffany Rose/WireImage/Getty Images

9-16 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 Perceptual Maps

9-18 CHECK YOURSELF 1.What is a perceptual map? 2.Identify the six positioning steps.

9-19 Return to slide Benefit segmentation groups consumers on the basis of the benefits they derive from products or services. Glossary

9-20 Return to slide Demographic segmentation groups consumers according to easily measured, objective characteristics such as age, gender, income, and education. Glossary

9-21 Return to slide Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers. Glossary

9-22 Return to slide Geographic segmentation organizes customers into groups on the basis of where they live. Glossary

9-23 Return to slide Behavioral segmentation divides customers into groups based on how they use the product or service. Glossary

9-24 Return to slide 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

9-25 Return to slide The Value and Lifestyle Survey (VALS) is a psychographic tool that classifies consumers into eight categories based on their answers to a questionnaire. Glossary