1. Market Segmentation, Targeting and Positioning
chapter 7

2. Ch. 7 Objectives
Understand the concepts: market segmentation, and target marketing. positioning
Learn the advantages and disadvantages of target marketing
Discuss segmentation criteria, strategies, and seg. bases
Understand typical positioning strategies

3. What is a market? Individuals or organizations who:
Are willing, able, and capable of purchasing a firm’s product
Segmentation is critical because demand is often heterogeneous

4. Market Segmentation/Targeting
Market Segmentation is:
The process of dividing up the total market into distinct subsets of customers with common needs or characteristics
Targeting is:
Selecting one or more segments that are appropriate

5. Target Marketing Advantages
Easier analysis of potential and actual consumers
Tailoring of products to market
Assessment of demand potential
Identify competing products
Increased sales effectiveness

6. Target Marketing Disadvantages Increased marketing costs
More complex strategy to implement
Narrow segmentation can impact brand loyalty
Ethics and stereotyping issues
Can hinder a “Global” Brand Image
Faux segmentation may be viewed cynically
See Excedrin Migraine:

8. Market Criteria Segmentable markets are: Heterogeneous Measurable
Substantial
Actionable
Companies must be able to respond to preferences with an appropriate marketing mix
Accessible
Market must be efficiently reachable

9. Segmentation Variables
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

10. Demographics Age Income Gender Occupation Education Ethnicity
Family Life Cycle

11. Segmentation Variables
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

12. Geographics By region of country Micro-Beers do it
Campbell’s Soup does it
Frito-Lay does it:

13. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

14. Psychographic Segmentation
Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)

15. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

16. Benefits Sought
Find (or create) a key benefit that the product satisfies
Toothpaste Example:

17. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

18. Situation Segmentation
Time of Year / Week, Event etc.

19. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation

20. Behavior/Usage Segmentation
Markets can be segmented by how often or how heavily consumers use a specific product
80/20 Principle - 80% of revenue generated by 20% of customers
Light Users
80%
Heavy Users
20%

21. Behavior/Usage Segmentation
80/20 true for many products
For Beer it’s 88% to 16%
Who are the heavy users?

22. Product Positioning

23. How to Position Brands:
Positioning:
“an image that a product projects in relation to competitive products and to the firm’s other products”

24. 7 Ways to Position (differentiate) a product
Show MGD clip(s)
How is MGD differentiated?
1) Product Attribute
It has something that others do not have
Whatever attributes seem important to consumers
Key attribute may in reality be bogus...

25. 7 Ways to Position (differentiate) a product
Show Kia clip
2) By Competitor
Show Similarity
Show Difference

26. 7 Ways to Position (differentiate) a product
3) By Cultural Symbol (brand marks)

27. TV Ad.

28. 7 Ways to Position (differentiate) a product
4) By Price / Quality
Can be high or low (Generics)
5) By Product Class
Different type of product/service, but provides the same or better benefits
Example: New AmTrak Acela service to NY

29. 6) By Use or Application
Typically used to add uses of product and expands user base

30. 7 Ways to Position (differentiate) a product
7) By Product User
Product is positioned for a particular group of users
List some potential target markets for cellular phones: